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Is Market Research a Necessity or a Luxury?

As I sat down to write I realized that this is not a simple question. Consider the conventional meaning of necessities (defined as must-haves) and luxuries (defined as nice-to-haves). Which category market research falls into may depend on the eye of the beholder.

Researchers (or more accurately research sellers) may want to think of themselves as producing necessities rather than luxuries. But in the consumer world necessities are also generally commodities and often sold based on price. Researchers of course want to be seen as producing something valuable, something that is worth a premium -- in other words, a luxury.  So, which is it?

Now let's look at it from a research buyer's perspective. The buyer may think of research as a necessity, something that is indispensible for making good business decisions. But in keeping with the popular perception of necessities, perhaps they feel that more than one company can provide it and are hence unwilling to pay much of a premium for it. This view would support the many research sellers who complain about the commoditization of research.

Yet another way to look at this is from the perspective of a formal definition of luxuries and necessities. In a B2C context, luxuries are defined as something on which consumers spend a higher proportion of their money as incomes rise, while necessities are something on which they spend a lower proportion of their money when incomes rise. In the B2B context, do companies spend proportionally more or less on market research as their revenues increase? I don't have actual numbers, but I suspect they spend more in actual dollars but less in percentage terms. That would classify research as more of a necessity.

But what happens when times get tough? Households cut back on luxuries, often way back, but not really on necessities. What do firms do? My experience is that research gets cut early and often and spending levels don't get back to prior levels till well into the recovery. This implies that it is more of a luxury.

Taken together all of this suggests that the question of whether research is a luxury or necessity is not a simple one. It depends on whose perspective we take and when. The table below provides one perspective on how research sellers and buyers want to think about research.


Research Sellers

Research Buyers


Good Economy




Bad Economy




In good economic times, research sellers want research to be seen as a luxury worthy of a premium, while buyers see it as a necessity (they cannot live without), but provided by many suppliers (and are hence not willing to pay much of a premium).  During bad economic times research sellers want research to be seen as a necessity and hence not cut, while buyers may see it as a luxury compared to other expenses and hence may be more inclined to cut it.

What do you think?


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Guest Saturday, 24 October 2020

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