2.1 Define market survey
A market survey, in procurement, is a systematic collection and analysis of information about the supply market for a particular good, work or service before it is procured. It finds out which suppliers can provide the item, what products and alternatives are available, the prevailing market prices, delivery times, quality levels and the terms on which suppliers trade. The procurement office uses the findings to estimate costs, prepare realistic specifications, choose the procurement method and judge whether the prices later offered by bidders are reasonable.
A market survey is different from general marketing research. Marketing research studies customers in order to sell the organisation's products; a procurement market survey studies suppliers and prices in order to buy well.
Example: before inviting quotations for 50 office chairs, a procurement officer at a state corporation visits furniture showrooms, contacts several manufacturers and checks recent prices paid by the organisation. The survey shows the price range for ergonomic chairs of the required standard, the suppliers able to deliver 50 units within a month and the usual warranty offered. This information sets the budget estimate and helps the evaluation committee tell a fair price from an inflated one.
Key features of a procurement market survey
- Purpose-driven: It is done for a specific procurement need or category, not out of general interest.
- Systematic: It follows a planned process with defined questions, sources and instruments.
- Current: It reflects present market conditions, because prices and suppliers change over time.
- Documented: Its findings are recorded in a market survey report that is kept in the procurement file.
- Objective: It gathers information from several sources and does not commit the organisation to any supplier.
When a market survey is carried out
- During procurement planning: To estimate the cost of each item in the procurement plan.
- Before preparing specifications: To know what the market can supply.
- Before a request for quotations or a tender: To set a realistic budget and identify potential suppliers.
- When prices change sharply: For example after a change in taxes, exchange rates or fuel prices.
- Before renewing a contract: To check whether the current supplier is still competitive.
- For new or unfamiliar items: Where the organisation has no price history.
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Create a free account 🔒2.2 Purpose of market survey
The purpose of a market survey is to give the procurement office reliable, current information on which to base procurement decisions. Without it, the organisation guesses at prices, writes specifications the market cannot meet and cannot tell whether a bidder…
🔒2.3 Techniques of market survey
Techniques of market survey are the methods a procurement officer uses to gather information about suppliers, products and prices. The choice depends on the value and complexity of the item, the time available, the budget for the survey and how much informatio…
🔒2.4 Instruments of market survey
Instruments of market survey are the documents and tools used to collect and record survey information in a consistent way, so that the answers from different suppliers and users can be compared. A technique is the way information is gathered (for example a su…
🔒2.5 The process of market survey
The process of market survey is the ordered set of steps a procurement office follows to plan a survey, collect information, analyse it and report the findings. Following a set process makes the survey objective, complete and easy to check, and makes sure the…
🔒2.6 Types of market survey data
Market survey data is the information collected during a market survey. It is classified by how it was obtained (primary or secondary) and by its nature (quantitative or qualitative). Knowing the type of data helps the procurement officer choose how to collect…
🔒2.7 Types of market survey
Market surveys can be classified by their purpose, their scope and how often they are done. The type chosen depends on what the procurement office needs to know: a quick price check for a routine purchase, a full study of a supply market for a major contract,…
🔒2.8 Source of market survey data
Sources of market survey data are the people, records and publications from which the procurement office obtains information about suppliers, products and prices. They are either internal (within the organisation) or external (outside it). A good survey uses s…
🔒2.9 Structure of market survey report
A market survey report is the written document that presents what a market survey found and what the procurement office recommends. It is read by the head of procurement, the user department, finance, tender or evaluation committees and, later, auditors. A cle…
🔒2.10 Type of market survey report
Market survey reports differ in their length, formality, purpose and form of presentation. The type used depends on the value and complexity of the procurement, who will read the report and the organisation's procedures. A low-value, routine purchase may need…
