How to do market research

The goal of conducting market research is to understand the marketplace for a service or product before you enter into a contract of any type. Good market research prepares an agency to enter into a competitive bidding process, which is legally binding, with a clear understanding of the service or product and how to recognize quality.

Market research has two distinct phases and purposes:

1. Market surveillance is a continuous process to stay informed about industry trends, new technologies, and other information about a marketplace of goods and services needed to fulfill an agency’s mission.

   For instance, if you were doing market surveillance research for user experience (UX) research and design services, you would ask questions like:

   • What is “user experience”?
   • What does the practice of user experience design consist of?
   • What makes for a good user experience?
   • What are the characteristics of developers of good user experiences?
   • What qualifications and experience do these developers have? Market surveillance is strategic. Consistent market research gives you a good grasp of accurate, relevant, and timely information about a market. This knowledge makes it easier for an agency to complete a market research report or an acquisition plan as needed.

2. Market investigation is research focused on specific sources, materials, or potential competitors to fulfill a particular agency requirement. It is usually done to complete a market research report for an active procurement.

   It involves more pointed questions than those used in market surveillance. If you were doing market investigation for UX research and design services, your questions would be:

   • Who has delivered products with a good user experience?
   • Where can I find a good user experience provider?
     • Are there professional associations or conferences for user experience?
     • Are there trade publications or other information sources about user experience?
   • What have they worked on? Have they worked with government agencies before?
   • Do any of these companies have existing contracts through an available Federal Supply Schedule (FSS), another Governmentwide Acquisition Contract (GWAC), or any kind of pre-established vehicle or framework that reduces acquisition effort without sacrificing quality in the final product?
   • Are any of them under a recognized socioeconomic program or status, such as the 8(a) program or Service-Disabled Veteran-Owned Small Business (SDVSOB) program?

While it’s common to think that market surveillance always comes before market investigation, they often happen in parallel because each informs the other. Use both market surveillance and investigation to understand what is available.

Before starting, keep in mind that market research shouldn’t identify a preferred or specific manufacturer, model, or brand. Doing so eliminates all of a buyer’s negotiating power. Market research is a forecasting exercise. It can’t be used in place of the government’s source selection or evaluation process to determine a contract award. It also can’t favor a specific vendor that may eventually be awarded a contract. So, don’t rush from market surveillance to investigation and forget to continue surveillance. Fight the urge to pick a single brand name or company.

Also, expect things to change. Needs often change by the end of a market research process.

Sources of market information

As a best practice, government buyers should rely on many primary and secondary sources of information.

Primary sources include:

• Vendors
  • Manufacturers
  • Distributors
  • Resellers
• Other buyers
  • Private sector
  • Other agencies
    • Colleagues
  • Nonprofit organizations
• Independents
  • Experts
  • Specialized consultants
  • Research companies

Secondary sources include:

• White papers or similar position statements
• Trade journals
• News reports
• Academic journals
• Subject-matter literature
• Databases
• Case studies

Engaging with sources

Agencies can engage directly or indirectly with a source.

Direct contact is when an agency communicates with a source in conversation or writing. A source may provide a lot of information, but the agency should weigh this information carefully since the source may be a future competitor.

Indirect contact is when a researcher reviews material without directly engaging a potential future competitor or talks with an impartial party.

Most market research should be done indirectly. It is easier than direct and less prone to the risk of creating bias towards a vendor.

Requests for Information (RFIs)

Requests for Information are a popular market research tool. Often they’re the only market research an agency conducts before awarding a contract.

RFIs have a place in market research, such as when the government truly has no idea how it could solve a problem or satisfy a need. But more reliable information can be found through indirect research on the internet.

Before using an RFI, consider that:

• RFIs usually consist of a set of questions that can’t respond to changing agency needs. They’re not a dynamic, evidence-based form of inquiry that develops over a period of time.
• Responding to an RFI is a lot of work for most businesses, especially small companies and companies new to competing for government contracts.
• Most RFIs are made up of boilerplate marketing material — regardless of the agency or topic.
• RFIs increase the likelihood of a protest because even though vendors reuse content, they are labor-intensive and often expensive for a company to prepare.

Mitigating risks

The U.S. government is the largest buying entity in the world. In general, government agencies are primary targets for vendor sales and “capture management” or “capture planning,” in which a company tries to gain an advantage for winning a contract.

Common sales tactics include:

• Cold contact: Someone you’ve never met calls or emails you about their company and offerings and how they can help you.
• Name-dropping: A salesperson tries to gain influence with you by mentioning the name of someone higher up in your agency than you or suggesting they’ve talked with someone in your agency with influence over the project.
• Networked introduction: The vendor develops a good reputation with one customer and then asks that customer to introduce or refer them to other potential customers within an organization.
• Big pitch: The vendor engages in a broad or organized effort to present to a large group of agency staff to nurture excitement and interest in buying their company's product, service, or other offering.

While salespeople can help educate potential customers about their company’s offerings and reflect on their needs, sales capture is rife for potential abuse.

Government employees work on behalf of the American public and have ethical and professional standards by which they must conduct themselves. Numerous laws and regulations also guide the communication or actions of government employees.

Employees that don’t adhere to these standards, such as guidance provided in FAR 9.5 for Organizational and Consultant Conflicts of Interest, may face civil or criminal penalties. Depending on the violation, this could mean fines, suspension, firing, and even felony prison time.

Those standards, laws, and regulations shouldn’t deter government employees from interacting with vendors as part of market research. They provide needed protection from aggressive sales tactics.

Keep all interactions with salespeople professional, transparent, and courteous. And keep in mind:

• Any information shared could directly affect that vendor’s preparation of a proposal. By law, all vendors that could fulfill the agency’s requirements must have the exact same information. If one vendor is given more or different information they may gain an unfair competitive advantage. If information isn’t shared consistently, it could lead to a protest.
• All government personnel have a responsibility to protect proprietary or confidential information and not share it with companies or potential competitors.
• Government personnel must avoid the appearance of commitment before the contract is awarded. Only a person that is officially delegated with the authority to award and sign contracts can obligate the government to an agreement with a contractor.

To avoid giving one vendor more or different information than others:

• Start every conversation with a disclaimer like:
  • “Nothing discussed in this meeting authorizes you to work, start work, or otherwise obligates the government. This conversation is only for market research purposes. Any assumption on your part or on the part of your company is a mistake and has no effect on the government.”
  • “We are talking for market research purposes only. This conversation in no way obligates the government or should make you believe that we have entered into a contract of any kind.”
• Treat all potential bidders fairly and impartially.
• Imagine that all interactions with vendors have a public audience. To assess the fairness of a potential action, consider if an impartial, casual observer would believe you, as a government employee, acted responsibly and reasonably.
• Reach out to experienced procurement professionals to learn best practices for conducting interactions, documenting exchanges, and developing requirements for competitive solicitations.