How Much Should You Budget for Market Research Costs

How Much Should You Budget for Market Research Costs

Pri­ma­ry and sec­ondary mar­ket research stud­ies are use­ful to stake­hold­ers in the home improve­ment indus­try for a vari­ety of pur­pos­es, from prod­uct devel­op­ment and under­stand­ing mar­ket siz­ing to inform­ing strate­gies for suc­cess in go-to-mar­ket strate­gies broad­ly or even spe­cif­ic means, like dig­i­tal mar­ket­ing and adver­tis­ing efforts.

It’s impor­tant for home improve­ment brands to reg­u­lar­ly review indus­try data and insights to stay com­pet­i­tive and inno­v­a­tive. Sec­ondary mar­ket research pro­vides a cost-effec­tive way to main­tain aware­ness of the gen­er­al home improve­ment landscape. 

What is Secondary Market Research?

There are two main types of mar­ket research: pri­ma­ry and sec­ondary. The for­mer refers to first-per­son data-col­lec­tion meth­ods that you con­duct your­self to get direct insights and infor­ma­tion from indi­vid­u­als involved in the indus­try, such as cus­tomers, dis­trib­u­tors, pro­fes­sion­als and tar­get buy­er per­sonas. The most com­mon meth­ods for col­lect­ing pri­ma­ry mar­ket research include sur­veys and inter­views, which can be cus­tom designed to answer your spe­cif­ic brand’s questions.

Sec­ondary mar­ket research, on the oth­er hand, refers to data that is col­lect­ed by third-par­ties, such as reports pub­lished by research insti­tu­tions; aca­d­e­m­ic stud­ies; jour­nal arti­cles; news reports; and demo­graph­ic infor­ma­tion col­lect­ed by gov­ern­men­tal agen­cies. From these already exist­ing resources, your team of research ana­lysts can pull data that is rel­e­vant to your prod­uct cat­e­gories and tar­get buy­er per­sonas, but you will be lim­it­ed by the kinds of ques­tions asked and ana­lyzed by these third-parties.

How to Allocate Budget for Market Research

You must deter­mine the appro­pri­ate bal­ance in how much you should allo­cate annu­al­ly to sec­ondary mar­ket research ver­sus cus­tom, pri­ma­ry mar­ket research to get the data and sta­tis­tics you need to thrive in the home improve­ment industry. 

It’s your respon­si­bil­i­ty to ensure you are max­i­miz­ing your company’s mar­ket research bud­get well and uti­liz­ing any exist­ing, inter­nal cus­tomer insights resources effectively.

Because sec­ondary research is not pro­pri­etary to your orga­ni­za­tion, and there­fore not cus­tomized to answer your teams’ spe­cif­ic ques­tions, it is gen­er­al­ly costs less and takes less time to access. Accu­rate sec­ondary research with­in the home improve­ment indus­try is hard to come by! 

That’s why The Home Improve­ment Research com­mis­sions cus­tom mar­ket research stud­ies on behalf of mem­ber orga­ni­za­tions to help fill the infor­ma­tion void and enable your team to con­duct fur­ther pri­ma­ry mar­ket research on your brand spe­cif­ic questions.

HIRI mem­bers have on-demand access to valu­able insights and the raw data regard­ing var­i­ous top­ics and trends with­in the home improve­ment indus­try, including 

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How Much Does Secondary Research Cost?

Decid­ing how much to invest in sec­ondary research for your home improve­ment brand depends on your over­all mar­ket­ing bud­get. Most com­pa­nies ded­i­cate a por­tion of their annu­al bud­get to access pay­walled sec­ondary data that will help them under­stand their com­peti­tors and cus­tomers bet­ter; the exact amount can range from more than $500,000 annu­al­ly to less than $25,000 depend­ing on the size of your company.

As a gen­er­al rule of thumb, you should allo­cate rough­ly 25 per­cent of your total mar­ket research bud­get to sec­ondary research. For a brand that has a total mar­ket research bud­get of $120,000 annu­al­ly, this would amount to about $30,000, where­as a mega-com­pa­ny, like a home improve­ment retail­er, with a mar­ket research bud­get of $1,000,000 across depart­ments might spend close to $250,000 on sec­ondary research. 

As a point of ref­er­ence, a full-mar­ket report, which includes details about the market’s cur­rent state along with future pro­jec­tions, typ­i­cal­ly ranges from $3,500 to $5,000, per sec­ondary research report. For a basic indus­try report, you might spend just $100 to $1,000, while a detailed report on a par­tic­u­lar prod­uct or ser­vice could cost clos­er to $15,000 per report.

In con­trast, an annu­al, com­pa­ny-wide HIRI mem­ber­ship is but a small frac­tion of the cost to employ just one FTE research analyst.

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What Factors Affect Market Research Cost?

When decid­ing how much of your bud­get to spend on sec­ondary mar­ket research, it’s impor­tant to under­stand what fac­tors impact the cost and val­ue to col­lect the data.

There are a vari­ety of mar­ket research ser­vices and method­olo­gies cur­rent­ly in use for the home improve­ment indus­try. The type of method­ol­o­gy used to col­lect data for a report or study will affect the cost. This includes 

  • how many par­tic­i­pants were includ­ed in the research
  • the inci­dence rate
  • the data col­lec­tion method
  • incen­tives used to gain participation
  • and oth­er expens­es asso­ci­at­ed with col­lect­ing the data — such as trav­el and labor

All impact the over­all cost of mar­ket research for the par­ty con­duct­ing it.

When you pay for var­i­ous kinds of sec­ondary research, your cost will often vary based on fac­tors like

  • the exclu­siv­i­ty of the research
  • the type and cal­iber of the agency con­duct­ing the research
  • how detailed the data set and report is
  • scope of research appli­ca­tion; in oth­er words, how broad vs. nar­row the appli­ca­tions for the infor­ma­tion is

You should expect to invest more to get high­ly detailed indus­try data and insights from a rep­utable source, but this kind of research will also pro­vide greater val­ue to you in terms of accu­ra­cy, thor­ough­ness and relevance.

As with any invest­ment, the val­ue of sec­ondary mar­ket research depends on how you apply it with­in your com­pa­ny across prod­uct devel­op­ment and inform chan­nel, mar­ket­ing, and sales efforts. All forms of mar­ket research are valu­able for fur­ther­ing your brand’s growth, pri­or­i­tiz­ing new mar­kets, and increas­ing rev­enue, but only if it’s used effec­tive­ly to iden­ti­fy tan­gi­ble actions and inform strate­gic decision-making.

How to Optimize Your Market Research Budget

Bud­get­ing for mar­ket research is a siz­able invest­ment for brands look­ing to under­stand their mar­ket and their cus­tomers accu­rate­ly; but, for small- to medi­um-sized com­pa­nies, it can feel dif­fi­cult try­ing to keep up with larg­er brands that have more resources to spend.

What is now known as The Home Improve­ment Research Insti­tute was formed as a coop­er­a­tive between six of the largest home improve­ment man­u­fac­tur­ers and retail­ers in 1981 to solve that prob­lem. HIRI mem­bers have unlim­it­ed, on-demand access to home improve­ment indus­try spe­cif­ic research used by over a hun­dred top brands in the home improve­ment indus­try, Lowe’s and Home Depot included. 

HIRI mem­bers get detailed reports and the raw data sets cov­er­ing about the home improve­ment mar­ket, chan­nel, and both project and prod­uct spe­cif­ic research among Pros and DIY cus­tomers. That means you, as a mem­ber, have access to rough­ly $1 mil­lion worth of sec­ondary mar­ket research annu­al­ly, giv­ing you a greater return on your invest­ment and cre­at­ing a more lev­el play­ing field with larg­er competitors.

Quality Secondary Market Research for the Home Improvement Industry

If you’re look­ing to max­i­mize your mar­ket research bud­get and grow your com­pa­ny, con­sid­er mem­ber­ship in HIRI

HIRI is com­posed of the top retail­ers, man­u­fac­tur­ers, dis­trib­u­tors, pub­lish­ing com­pa­nies, and trade asso­ci­a­tions in the home improve­ment indus­try. With mem­bers from every cor­ner of the home improve­ment mar­ket, we can ensure detailed and well-round­ed research that’s essen­tial to keep­ing you on the lead­ing edge of the market. 

As a coop­er­a­tive, our goal is to pro­vide com­pa­nies of all sizes serv­ing with­in the home improve­ment indus­try with action­able resources, rang­ing from raw data to digestible exec­u­tive sum­maries, to help shape and guide your strate­gic busi­ness decisions.

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