April 28, 2022

4 tips for effective market research

Bloga ieraksts latviski šeit

Pre-tender market research is integral to any procurement planning. But despite acknowledging its importance, many view market research as a formality or skip it altogether, due to lack of resources or experience. We have outlined 4 best practices for effective market engagement.

1. Cast a wide net

Suppliers are more than happy to engage with prospective customers, especially at the tender planning stage, and welcome any requests of information by Buyers.

And yet Buyers often talk only to  2-3 companies at this stage, contacting Suppliers they know well or are most likely to respond.

However, by contacting 5, 10 or even 20 companies at this stage, depending on the market, Buyers can gather and compare substantially more information regarding possible solutions, budgets and requirements, leaving them better prepared for tendering.

While many of the contacted Suppliers could decline the request for information, they are also more likely to engage the Buyer in future exchanges.

2. Be proactive

Suppliers typically work on a large number of projects, tenders and opportunities in parallel. This can make it hard for them to notice requests of information, for example, on Buyer webpages or procurement portals.

Buyers can increase the chance of receiving detailed Supplier responses by proactively reaching out, e.g. by sending e-mails, calling them or using tailored services.

It is also advisable to indicate the reason for contacting a Supplier, for example, by stating that the Supplier has been identified as a potential Supplier due to its past contract performance.

3. Be open (and critical) to suggestions

Suppliers view the pre-tender stage as a possibility to market their products to potential customers. As such, they are likely to provide suggestions that would favor their company if a tender is issued, such as the inclusion of favorable requirements (see our next blog post on lock-out specifications)

However, if many suppliers are given the opportunity to voice their suggestions, the Buyer is able to review and compare different viewpoints. It is likely that many Supplier suggestions can indeed benefit the Buyer, either by increasing tender competition (e.g. by lowering a requirement) or by considering alternative solutions.

It is also possible that Suppliers convince a Buyer to increase tendering requirements, for example, to receive superior value-for-money. This is likely to limit tender competition and can irritate other Suppliers, but doing so can be in the best interest of the Buyer. After all - the Buyer must defend its interests, and not those of Suppliers.

4. Go global

A common pattern for procurement specialists is to reach out to local Suppliers only, due to higher likelihood of response, common language and cooperation history. This strategy minimizes effort, but can result in a limited understanding of the market.

By communicating with Suppliers in other regions and countries, Buyers can receive a fresh perspective, and in many cases improved offers, due to Suppliers wishing to expand their markets.

English is the most common language for international communication, and even common auto-translate tools, such as Google Translate, are good enough for Suppliers to understand your purchase intent.

Also, make sure to invite international Suppliers when Tenders are announced, as they are more likely to miss them.

Sorsera platform offers a free tool for performing market research, as well as finding and engaging Suppliers.