How Market Research Costs Can Be Justified

Market research plays a pivotal role in understanding customers, identifying market trends, and making informed business decisions. However, some organizations may question how market research costs can be justified with all other line items on a yearly budget.

In this article, we delve into the value and significance of market research, exploring the tangible benefits it brings to businesses and how the costs can be justified through actionable insights and improved decision-making.

Why Do You Need to Spend Money on Market Research?

Investing in market research is crucial for businesses as it provides valuable insights into consumer preferences, market trends, and competitive landscapes. It helps companies make informed decisions, identify opportunities, mitigate risks, and develop effective marketing strategies.

Let's dive into specific reasons why spending money on market research is worth it.

1. Improved Customer Satisfaction 

Conducting market research on customer satisfaction allows brands to better understand their audience and what they need. 

Conducted via surveys, customer satisfaction data will give a unique insight into buying preferences, habits, and what they like/dislike about a brand. 

It goes without saying that this is a fantastic way to improve your customer outreach strategy. Additionally, brands that implement this survey data will likely see increased customer loyalty. 

2. Increased Employee Wellness

This benefit is much like customer satisfaction but geared toward staff members. Employee surveys gather important data from staff about a company. 

With only 31% of young employees feeling satisfied with their job, now’s the time to hop on staff surveys. 

Employee happiness is key to a successful business! Surveys geared towards this group will reveal insight into how a company accommodates/doesn't accommodate their employees. 

With this information, leadership teams can see how they can improve their employee outreach strategies. Doing so automatically boosts employee retention and workplace positivity. 

3. Competitive Insights

It's normal to feel overwhelmed by rival businesses in your field. 

But by using market research, you can learn important data about competitors that will give you a much-needed edge. 

Conducting a competitor analysis provides:

• Data on customer pain points
• Information on sales tactics
• Important differentiators

And these are just a few points that this research can reveal. 

When this feedback is used correctly, companies can quickly rise to match their rivals. 

4. Better Market Knowledge

As you can probably guess, all this information lends itself to having an increased knowledge of your market. 

And when you know how to market yourself to your audience, you'll likely see an increase in business. 

Conducting market research will also reveal ways you can expand into different markets to grow your brand. 

Because this research always includes key data about demographics, you can use that information to reach different audiences.

5. Strategic Planning and Long-Term Business Success 

And last but not least, market research will provide future business insights for your brand. 

Identifying Market Trends and Opportunities

Continuous market research--no matter the form--keeps your brand informed of current industry trends.

This automatically gives you a competitive edge. 

These trends may be anything from consumer preferences to new industry developments. 

A proper market research company will not only inform you of these trends but will also tell you how to make your move. 

Once you've developed an understanding of the proper trends to follow, this will expose you to strategic opportunities. 

Developing Effective Marketing and Sales Strategies

Marketing and sales strategies only work when they're backed by solid data. 

This is yet another reason that makes the market research cost worth it. 

Research data can help your marketing and sales strategy by:

• Improving your message
• Target potential customers
• Desired content

Factors Influencing Market Research Costs

Now that we've covered the value of conducting market research, let's go over what goes into its cost. 

1. Scope and Scale of the Research Project

The larger your project, the more it will cost. 

Understanding how the size and key research goals will affect your budget is essential before diving in. 

• What do you want to gain out of the research?
• How will you apply the data? 
• How much data will you need? 
• Who/what will the research focus on? 

These are a few basic questions you should have squared away before starting your research. 

Additionally, your project timeframe will also end up affecting cost. The long and more in-depth the research is, the higher the cost will be. 

2. Methodology and Data Collection Techniques

Your market research cost is also affected by the type of research you use. 

If you're relatively new to this field, common methods include...

• Online surveys
• Focus groups
• In-depth interviews

And of course, all of these market research tools vary in cost. For instance, in most cases, online surveys cost much less than focus groups.

What's more, the different research elements that are involved in these methods also can lower or increase costs. 

We're talking about elements like participant size, incentives, rental spaces, and so on. 

3. Sample Size and Target Audience

If your research project requires a smaller sample size or is targeting a small audience, then the cost will likely be lower. 

On the flip side, research that requires a large respondent pool will have higher costs. 

As tempting as it may be, don't base the size of your project on cost. Depending on the project, a larger, AKA more expensive, sample size may get you the best data. 

And this is often the case. 

Larger sample sizes just require more tools and time. They may require more specialized methods of research as well, leading to an increased cost. 

What's more, the desired target audience also can affect cost. The more "niche" the target audience, the more resources will be used to reach them. 

4. Complexity of Research Objectives

Similar to what we discussed in our last section, the more complex your research techniques, the more you'll need to budget for. 

Let's say your project requires a complicated design. There will be more planning behind this and more use of resources--all leading to a higher price. 

And while we've talked about sample size and data collection, it's important to factor in the deliverable--your market research report. 

A lot of time and effort goes into creating the perfect final report to review key findings. Unsurprisingly, this can ramp up costs as well. 

5. Geographic Coverage and Market Dynamics

Where the research is conducted also plays a significant role in market research cost. 

Below are a few points to consider:

• Location: If your project requires coverage of a large region, this requires more tools and overall analysis. What's more, if the population you're targeting is harder to reach, this will also mean more in-depth tools are used.
  
• Size: When research includes a "large" location, this also means the potential for travel, the need for translation, and more.

These above points are two reasons why geography plays a big role in determining market research cost. 

Adding onto that, market dynamics also affect cost. Market dynamics are the specific characteristics of your target audience. 

First off, it's important to take the industry into account. What field is your research targeting? 

When conducting research within any industry, there will be different rules and regulations to follow. For example, the dynamics in the healthcare market will vary greatly from those in the higher education or legal market. 

This means that different research tools of varying costs will need to be used to get the right information. 

Recommended Reading: What is the Most Cost-Effective Market Research Methodology?

How to Reduce Market Research Costs

So, now you're probably curious about how you can invest in market research while still saving money. 

Each of the following steps will detail how to do this correctly. 

1. Prioritizing Research Objectives and Focusing on Key Areas

Don't head into a market research project with a million different ideas. 

Instead, stick to a few key goals that you want your research to achieve. Thankfully, a market research team can help you narrow these down. 

These goals will be solidified in your market research kickoff meeting. Doing this will also give you a clear idea of what the cost of your project will be. 

2. Utilizing Cost-Effective Research Methodologies

Only invest in what your project requires. 

Your research team will guide you through the market research process by suggesting the best route. 

That may be focus groups or it may be an online survey. 

That said, there are a few standard market research tools that are typically affordable for many companies. 

• Online surveys: These surveys are ideal for those on a budget. Fairly simple to conduct, online surveys will gather plenty of reliable data without breaking the bank. This is mainly due to the automation of online surveys, with less emphasis on human interference. 
  
  
• Online focus groups: When focus groups are conducted online, they have the potential to save you a large amount of money. The reason here is simple--traditional focus groups are pricey because of the facility rental and other related fees. And when you cut that out and move everything online, you no longer have those expenses. 

3. Leveraging Existing Data Sources and Secondary Research

This step requires you to dig a bit but is 100% worth it. 

If you have a tight budget, spend time collecting data from existing materials prior to your research. This can be time-consuming, but the more data you have going into your project, the less you'll need. 

And that means a lower cost for you! 

These documents may include:

• Existing market research reports
• Reputable studies
• Annual reports

4. Partnering with External Research Agencies or Consultants

We saved the most important for last. 

Partnering with a market research agency (like ours) will ultimately be the best way to ensure you don't go over budget. 

A seasoned team of researchers will be able to pair the proper research method based on what you're willing to spend. 

What's more, their expertise and knowledge of the different market research methods will ensure high-quality results. 

Final Thoughts

The value of market research costs cannot be overstated and can certainly be justified. It provides numerous benefits such as improved customer satisfaction, increased employee wellness, competitive insights, better market knowledge, strategic planning, and long-term business success.

While market research does come with costs, the investment is worthwhile considering the invaluable insights and data it provides.

By carefully considering the scope and scale of the research project, utilizing cost-effective methodologies, leveraging existing data sources, and partnering with external research agencies or consultants, businesses can effectively manage market research costs without compromising on the quality and depth of insights gained.

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