Scope and purpose of market research
Support accurate and confident decision-making in the procurement process.
The scope of market research
Market research should aim to build insights across several elements:
- the nature of the problem to be solved
- products and services that could solve the problem
- technology trends, past and future, across domains and categories
- maturity of potential solutions with respect to use cases
- position of a technology solution on the hype cycle
- business and commercial models, with up-front and ongoing costs and benefits
- level of competition vs niche or unique solutions/capabilities
- functional capability and usability
- technology extensibility and interoperability
- supplier capability and capacity to deliver a solution
- ease of implementation
- training or change management needs
- support and service levels
- ability of supplier to meet mandatory government requirements or broader government outcomes
- understanding of what opportunities are likely to motivate suppliers
- supplier financial position, commercial viability and other supplier risks.
Why we need market insights
Buying teams can improve their awareness of the external market:
- Visibility of the external marketplace helps organisations understand market capabilities, observe developments with the competition and manage their supply base and supply chain.
- Ongoing research and insights help organisations spot key trends in the market and address related risks.
Buying teams can improve confidence in decisions:
- Insights into the external market refine internal product plans and spot opportunities.
- Insights clarify which procurement approach will maximise maturity, competition, diversity, and the ability to meet government needs.
- For innovation, insights clarify the best testing methods to include in the buying pathway. This helps reach the right suppliers and create a strong innovation buying strategy to meet business needs, ensure value for money, and future-proof capability.
For innovation procurement, insights from market research help to:
- identify specific opportunities and potential barriers or dependencies
- refine the scope of a use case and its deliverables
- enhance understanding of the problem, including stakeholders and challenges
- choose sourcing strategies, like whether to use an open market or limited supplier approach, an outcome-focused challenge statement or specifications
- build testing stages into the buying pathway to reduce uncertainty about market solutions
- assess market and solution maturity and technology readiness by use case
- develop more specific and technical requirements gradually
- update evaluation plans to reflect new requirements
- identify case studies and success stories that show solution feasibility
- recognise assumptions and constraints suppliers may need to consider
- create a business case for seed funding that can be further refined
- understand the benefits and risks of an emerging solution
- provide indicative pricing and commercial models to protect desired outcomes and value for stakeholders.
Risk of inadequate research
There are risks with poor market research. A buying team rarely knows all about suppliers and solutions before entering the market. Detailed insights are even harder to get for innovation, where solutions may be new or the market is still developing. Therefore, refining market insights during the procurement process is as crucial as the initial market research step. Still, thorough market research from the beginning will set a project up for success.
Types of risk from inadequate market research
Expand the headings below to explore the risks of missing market insights before approaching the market. Alternatively, jump to Build insights iteratively to learn how to refine insights after the market approach.
Supplier risks
Overestimating capability: Not reviewing business trends such as acquisitions and changes in company strategy may cause incorrect assumptions about supplier focus and capabilities.
Regulatory and compliance risk
- Non-compliance: Solutions may fail to meet regulatory or policy requirements if they are not properly evaluated against current laws, policies and standards, such as those applying to cyber security, data privacy and artificial intelligence.
- Legal consequences: Non-compliance can lead to legal penalties, fines and damage to reputation.
- Security consequences: Solutions that don’t meet minimum requirements can result in cyber security or data breaches, identity theft and damage to reputation.
Project impact risks
- Delays due to rework: Realising the solution is not adequate mid-project can lead to significant rework or may require a new market approach. Identifying and correcting issues mid-project can also extend project timelines.
- Overruns due to rework: Rework generally incurs additional costs. Delays across budget cycles may even result in planned budget no longer being available.
- Misdirected resources: Resources spent on suboptimal solutions could have been better used elsewhere.
- Reputational damage: Repeated failures or poor solution choices can erode trust among stakeholders and customers.
User adoption risk
- Low usability: Solutions based on assumptions may not be user-friendly. This often leads to low adoption rates and user inefficiencies.
- Resistance to change: If stakeholders aren't part of defining the problem, knowledge gaps can arise. This may result in solving the wrong problem or misjudging the scope and solution. If they miss out on providing insights during evaluation or decision-making, they may resist adopting the new solution.
Business outcome risk
- Unrealised benefits: Discovering changes during or after delivery can affect costs and benefits after buyers have invested in the project.
- Increased cost: A poor solution may raise costs due to inefficiencies, needing extra modifications or a full replacement.
- Wasted budget: Limited resources and budget may be spent on ineffective solutions, leaving no money for better options.