Procurement Market Research

Market research is the process by which information on an individual

market or sector is gathered, analyzed, and interpreted for the purpose of
understanding its characteristics, trends, and dynamics. In order to gain a
useful understanding of consumer needs, preferences, and behavior as
well as the identification of possible opportunities and challenges for
businesses, market research is a key objective.

Market Research in Procurement

Market Research in the field of Procurement is a little different compared
to the usual market research being conducted by businesses and
organizations. Procurement Market research is a specific type of market
research that focuses on gathering and analyzing information related to
the procurement of goods and services by organizations or businesses.
The main objective of procurement market research is to gain insights into
suppliers, products, services, and market conditions to support informed
decision-making in the procurement process. Market research on
procurement is a critical element of the organization’s decision-making
process. It provides them with opportunities to optimize their buying
behavior, reduce costs, manage risks, and make sure that they have
access to quality goods and services.

How to Conduct Market Research?

In the area of procurement, there are a number of ways in which market
research is carried out. Surveying, measuring market shares, and
analyzing competitors’ pricing are some of the methods used. To collect
information on customers’ needs, preferences, and purchasing behavior
surveys may be used.
A percentage of a particular type of product or service that is bought by
one company or organization can be used to determine market share. To
identify how many competitors charge for similar services or products, a
comparison pricing analysis can be carried out.
Types of Market Research
1. Market Segmentation
It means that factors such as needs, wants or preferences are used to
divide the market into smaller sections. It is more convenient to target
certain products and services in order to satisfy these needs once this has
been done.
2. Market Sizing
This is used to determine the size and potential market for a particular
product or service. To that end, it may be carried out by looking at similar
products or services from the past and taking a valuation of how much
sales they have made, and using this figure as their current share in the
market.
3. Market Forecast
This indicates what is going to happen in a given industry or sector. It’s
how they determine the demand for products or services, which ones are
falling out of favor.
4. SWOT Analysis
The purpose is to analyze strengths, weaknesses, possibilities, and threats
faced by a company or organization. It will allow the organization to plan
for future growth and development more accurately when it understands
these factors.

Importance of Procurement Market Research

Market research can provide a number of benefits to your organization
that makes it one of the most important phases in the procurement
process. Here are a few key benefits that come along with market
research:
1. Supplier Identification
Identifying potential suppliers in the market who can meet the
organization’s specific requirements and standards.
2. Supplier Evaluation
This is where the evaluation of the potential suppliers on a range of
criteria, including product quality, prices, reputation, past performance,
financial stability, and capacity to meet demand takes place.

3. Cost Analysis
The purpose of Cost analysis is to determine which options are most cost-
efficient. To conduct this, an analysis shall be carried out of the cost
structure and prices of products and services provided by various
suppliers.

4. Market Trends
Monitoring Market trends, supply and demand, and industry
developments is beneficial as it impacts procurement decisions.

5. Product and Service

Allows to identify the best products and services in line with an
organization’s needs as well as quality standards.

6. Risk assessments
Identifies potential risks associated with suppliers, such as disruptions in
the supply chain, financial instability, or compliance issues, as well as
ensuring that suppliers meet legal and regulatory requirements.

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