It is widely understood that large enterprises invest millions of dollars a year on both quantitative and qualitative market research. However, it is far less well known that market research is just as important -- if not in some cases more vital -- for smaller businesses, since competing primarily or exclusively on price is typically not an effective or sustainable approach. What’s more, while large enterprises can afford to make mistakes with their advertising and marketing, small businesses have little if any margin for error. That is why Hewlett-Packard could write off $885 million for its massive HP touchpad failure, while most small businesses could not afford to write off $85,000.
With this being said, opening the budget floodgates is not strategic. Businesses need to know how much they have to spend and, indeed, how much they need to spend in order to achieve their objectives. To that end, here are 5 questions to help you determine an optimal market research budget:
1. What do we need to learn about our marketplace and target markets?
Essentially, all effective and results-based market research is geared towards solving a specific, practical and important business problem. Rather than asking “what can we afford to solve?”, it is smarter to ask “what do we need to solve?” and then work backwards to see what is practical and feasible.
2. What do we need to learn about our competition?
While tools like SWOT analysis shed light on what the competition looks like, there is much more to the story – such as what competitors are spending on, how they are perceived in the marketplace, and so on. Market research dives deep to reveal these insights.
3. What information do we have, and what do we need?
In some cases, a business may have some of the building blocks for a robust market research project. For example, it may have valuable data gleaned through surveys or other tools. Understanding what you already have that can be exploited and what needs to be obtained directly influences the required budget.
4. What types of information do our various teams need?
Most businesses require more than one type or kind of market research . For example, sales teams may want insights on the most profitable channel partners, while technical teams may want insights on how to drive self-support adoption and usage. Both of these needs are legitimate and will help the business lower costs and increase profitability.
5. What is our in-house level of expertise?
The vast majority of businesses do not have the in-house market research expertise they require. Unfortunately, various online tools that promise to close this knowledge gap are often part of the problem rather than the solution, because they cannot correct for bias and other risks. As such, businesses often end up getting information they want and expect (whether they consciously acknowledge this or not), instead of what they truly need: an objective, data-driven picture.
To learn more about how to determine your market research budget, contact the experts at Communications For Research today. You’ll speak with our co-CEO Colson Steber who can either build out a research plan based on your market research budget or he can work with you to determine your market research needs and build out a budget from there.
For more information on how to communication the value of market research to your clients, download our FREE eBook: