Market research

Definition of market research

Market research refers to collecting and analysing information in the market about the capabilities available in the market to satisfy the needs of an agency. Market research is a continuous process whereby an agency gathers a variety of market information including the available products and services, characteristics of these products and services, capabilities of available suppliers, business trends, industry trends, or even related business practices (Manuel, Halchin & Lunder, 2015). Once this data is obtained, entities can analyse and use it to make informed decisions regarding whether there are available products in the market that can meet the needs of the firm. 

The purpose of market research according to FAR

It is the requirement of the federal law and the Federal Acquisition Regulation (FAR) to conduct market research as this is linked to a more effective acquisition outcome. Market research is done for various purposes including the following:

  • Support acquisition planning, strategies, requirements and trade-offs
  • Identify solutions that can help meet the needs and wants of an agency
  • Determine the availability of commercially available products and whether they can be modified to meet the needs of agency
  • Understand the commercial markets, current market forces and the factors that shape these markets and forces
  • Develop product descriptions or statement of objectives that could enable firms develop their own commercial products and services to meet market needs
  • Understand the cost of the available alternatives
  • Develop contract terms and conditions that reflect the current commercial business practices
  • Identify the features of successful acquisition practices of other entities

Market research as a collaborative process

Market research brings together different stakeholders with each playing their roles and responsibilities in the market research process. Before conducting market research, the team must be identified early enough so that the process can be planned and the market research conducted according to plan. The type and number of stakeholders in the market research team will depend on the nature and purpose of the marker research being conducted. The team might be composed of:

  • The acquisition team – this is made up of specialists picked from different departments and assigned the role of implementing a new product or service or project.
  • The market research team – this might include the individuals selected to conduct the actual market research on a selected item.
  • The integrated product team – this team is made up of individuals tasked with the role of overseeing the design and implementation of a product or service. The team usually performs its role under the guidance of a chairperson of the team.

This implies that the acquisition and the market research processes require a lot of collaboration between the acquisition team and the integrated product team. While the market research team is responsible for gathering the available information in the market regarding the required service, the acquisition team helps ensure an agency uses the right approach to acquire supplies, products or services.

Types of market research

There are two types of market research: strategic market research and tactical market research. Also known as market surveillance, strategic market research is the study of the overall market and industry. It is also a continuous process and it occurs when the acquisition team gathers information and data to stay updated regarding the current products, services and technology in an industry (Veterans Affairs, 2018). This information can serve as a background when the team is trying to understand the general market situation regarding a product or service. The strategic market research also yields data that explains industry capability, availability of products and services, existing competing forces in the market and alternative products or supplies available.

Tactical market research is also known as market investigation and it basically focuses on a specific requirement. It is only done during specific situations during the acquisition process to provide comprehensive information regarding a product’s capabilities. While doing tactical market research, the entity should consider its needs and requirements including the product features, costs, quality and availability upon request. The research process can also be critical in determining whether the available options can be modified to meet the needs of the firm. Other information that can be revealed during tactical research include technical strengths and weaknesses of available sources, patent and data rights, available supplies and their prices, industry trends, and relevant laws and regulations (HHS, 2018).

When to do market research

According to FAR 10.001(a)(2), market research should be done in the following circumstances:

  • Before an agency develops new requirements guidelines and specifications for acquisitions
  • Before asking for offers in the market for acquisitions with value that is more than simplified acquisition threshold
  • Before asking for offers in the market for acquisitions with value that is less than simplified acquisition threshold when there is information to justify the cost
  • Before asking for offers for acquisitions that might result in bundled contracts
  • As a continuous process to enable a firm take advantage of commercially available solutions including the capabilities of small firms (Department of Defense, 2008).


Leave a Reply