The United States is the world’s largest economy. It accounts for 25% of the Global GDP. Americans make up less than 5% of the world’s population, but they earn 20% of the world’s income. Your company’s success is contingent on knowing this consumer base. Market Research is essential in uncertain economic times to not only navigate economic upheavals but also to take advantage of opportunities that may emerge as a result of economic changes.
The Demand for Market Research
The Business Research Company reported that the global market research services market increased from $69.6 billion in 2016 to $76.37 billion in 2021. This is a compound annual growth rate (CAGR) of 1.87%. The same report forecasted growth from $76.37 billion in 2021 to $108.57 billion in 2026 which is a CGR of 7.29%
This growth has happened and is continuing to happen because of the amount of data and complex data analysis needed on consumer consumption to make business decisions, and because of the impact of the pandemic on brand loyalty and the shift it accelerated from bricks and mortar to online shopping.
Inflation pressures and the threat of a recession requires greater understanding in the granularity of market data, according to Freedonia Custom Research, as clients refine datasets and assumptions “that may have changed over the last 18-24 months that were fairly consistent in the past.”
Common Company Reaction to an Economic Downturn
When consumers decrease spending, companies react by cutting their expenses. Consumers can’t completely stop buying during a recession but they tend to buy less, switch brands, buy alternatives or buy completely new product concepts. This potential loss of sales, often brought on just by the threat of a recession, is answered by reductions in company’s advertising, brand extensions and, yes, market research to explain those changes. This fuels the probability of a recession.
Why Market Research is Essential
With so much economic uncertainty, market research can provide predictability. Business decision-making is never more integral to a business’ success than during an economic downturn. The drastic shifts in consumer behavior during the pandemic and the ongoing threat of a recession has caused drastic shifts in consumer’s lifestyles, purchase habits and brand preferences making insights key.
If you invest in understanding these consumer changes, it is possible for your company to thrive in an economic downturn. For example, your competitors may react commonly by pulling back their brand advertising, giving your company an opportunity for more visibility. The pullback in advertising and marketing by your competitors means your dollars in the same area go further.
With competition decreasing it might be a good time to introduce a new product or product extention that responds to what consumers want in an economic downturn. Consumer research can help you recover quicker and possibly even find new areas of success.