Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
AI in Market Research — Shaping Smarter Procurement
- Procurement market research exceeds manual work by 30%, reports KPMG.
- AI takes over certain processes to cut the time spent on routine tasks in procurement.
- Market research is necessary for knowing your consumer base, the latest trends, and other market dynamics.
Market research is a key step for any procurement professional in making sure they make strategic decisions that align with the latest developments and trends in the global market.
Compared to traditional methods, AI’s role in market research offers faster, more efficient, and more accurate processing of data — plus more!
In this article, I will explore the role of AI in market research, how it fairs against traditional methods, and the many ways companies are using AI for market research in procurement.
Overview of AI in Market Research
In procurement market research, a key step to take in sourcing the right products for your organization is learning about your consumer base, the latest trends, and what your competitors are doing differently.
Market research in procurement helps you understand what to source, how to source it, and where to source it from. Additionally, it gives you background on what can affect changes in the market, such as natural disasters, geopolitical developments, and other external factors.
In recent years, we’ve observed the growth of AI in various processes. Notably, we’ve seen the potential of technology in helping us be more responsible, like AI in ethical sourcing.
Generative AI models like ChatGPT are set to redefine the way we research markets, industries, and consumer behavior. According to a study by KPMG, ChatGPT procurement market research exceeds manual research by more than 30%.
Benefits of AI in Market Research
There are many use cases for AI in procurement market research, but let’s focus on the three main areas procurement professionals should understand when it comes to AI-powered market research.
1. Efficient Research Process
AI can enhance the efficiency of the market research process by great volumes. Automation capabilities make it possible for AI to take over routine tasks — collecting data, conducting analysis, and identifying new trends.
This cuts the time spent on traditional and manual work. In turn, procurement professionals can move on to the next steps and focus on strategic decisions instead of spending hours processing data manually.
2. AI-Powered Insights
Artificial intelligence models like ChatGPT have analytical capabilities, meaning models can generate insights into market trends, consumer behavior, and the overall state of an industry.
Advanced algorithms and machine learning make AI ideal for finding patterns in volumes of data. This is because humans might not see certain anomalies immediately, and AI helps this by quickly processing information.
AI then generates answers to market research questions or creates a summary of the key points a procurement team needs, helping teams with accurate data to inform procurement and sourcing decisions.
3. Risk Management
AI in procurement can help teams identify potential risks and address them before they can cause disruptions. Disruptions in procurement functions can be related to the supply chain, the supplier base, the market, and other factors.
AI systems can anticipate this with predictive analytics and forecasting, notifying teams early on if there is a risk for disruptions or errors in a process.
Additionally, with AI, procurement teams can create strategies and implement contingency plans which will help companies lessen disruptions and continue operating.
Limitations of AI in Market Research
While AI offers many benefits in market research, some limitations hold it back from being 100% accurate and reliable. Namely, these three limitations in AI-powered market research.
1. Data Quality and Bias
Even if data comes from different sources, it can still be flawed, biased, or unreliable. Because AI in market research depends on data, AI systems could misinterpret or mimic biases in the data, which leads to altered results.
AI struggles to interpret unstructured data, meaning that the models might not be able to process information correctly or give accurate insights.
2. Lack of Human Context
AI can process data quite quickly, but it’s not human. Thus, it might not understand complex market dynamics. Market research can only be fully grasped with an understanding of human behavior, which AI lacks.
AI might not be able to pick up on cultural nuances, behavioral cues, and other exclusively human factors.
3. Dynamic Markets
Markets are diverse and constantly changing, affected by consumer preferences, economic changes, and technological advancements. AI models may fail to adapt to recent market trends, lacking accurate real-time updates.
Human decision-making becomes all the more crucial to harness when it comes to AI’s role in market research due to AI’s inability to accurately anticipate future outcomes.
Steps For Market Research Using AI
In procurement, market research is a step you cannot skip. Market research equips procurement professionals with knowledge and background on products, prices, suppliers, and more.
AI can offer a smarter, faster, and more effective way to research the market. Below are the five steps to take in conducting market research with AI.
1. Find Data Sources
Look at the latest news, industry reports, supplier databases, and government sources. In these areas, you’re likely to find the necessary insights for market research.
With AI tools, you can also find information from websites and news articles to further your knowledge of the latest market dynamics.
2. Prepare to Analyze Data
Before you use AI to study the data, it’s ideal to fix any errors, such as duplicates and typographical mistakes.
Preparing the data this way unifies data before it is uploaded to the AI model. This ensures professionals get the best results from the collected data.
3. Divide the Market
When using AI, it’s better to break down data for more accurate readings. Additionally, all markets are nuanced and have stark differences from others.
Using AI to divide the market into smaller parts, you can tailor your procurement process to navigate these nuances and the different needs of each subcategory.
This applies to geographical categories, industry-specific differences, consumer analysis, and others.
4. Decision Support
AI-driven decisions can further market research by offering actionable information on the market.
You can ask conversational AI to assist with supplier selection, negotiations, and inventory management decisions. AI can evaluate suppliers, potential risks, and sourcing strategies for a smarter approach to navigating the market.
5. Predictive Analytics
Predictive analytics provides a glance into future market dynamics and windows for opportunity. AI and machine learning models can forecast demand and predict price dynamics to avoid supply chain disruptions.
Professionals can look at the predictions in analytics and use it to inform how they source products and select suppliers among others.
Companies That Offer AI for Market Research
AI in market research can be incredibly complex, and every procurement professional needs the right tools to navigate this process efficiently. Below are five AI platforms for market research.
1. LevaData
LevaData uses machine learning algorithms to study past procurement data about the market to drive cost savings and optimize supplier relationships.
Moreover, LevaData uses predictive analytics to allow organizations to grasp the impacts of geographical risks and market fluctuations on their product or the supply chain.
2. Scoutbee
Scoutbee offers an AI-driven supplier discovery platform to help teams find the ideal supplier for their procurement needs.
Scoutbee uses natural language processing (NLP) and machine learning to study supplier data, supplier capabilities, and potential risks.
3. Tamr
Tamr’s AI-driven data mastering platform lets organizations unify their procurement data. Machine learning algorithms help procurement teams understand their supplier data to find potential duplicates and make the data quality more efficient.
4. Keelvar
Keelvar’s AI-powered sourcing optimization platform helps procurement professionals optimize their market research by studying supplier bids, sourcing events, and negotiations.
Furthermore, Keelvar’s solutions offer 70-100% workload automation and help reduce maverick spending by 5-10%.
5. Suplari
Suplari offers an AI spend analytics platform to help teams find cost-saving opportunities. Their platform uses machine learning algorithms to study spend patterns and find anomalies so it can recommend strategies to improve procurement processes.
My Insights on AI in Market Research
For this article, I will share my insight on AI in market research.
“I believe the way I conducted market research over the years consisted largely of five components. Firstly, we engaged in conversations with many different suppliers. From these discussions, you could glean a lot about the direction the market was moving in.
Second, we would attend trade shows to discover new trends or suppliers. The third was visiting competitors’ stores. From this, you could also gather a lot about how suppliers collaborated with other retailers and what choices you could make.
As the fourth component, we looked into annual reports. From these, you could gather relevant information about how things were going with suppliers.
The fifth and final component was external sources such as IRI, Nielsen, and pricing trackers for raw materials; for revenue and market share data. This info makes it possible to calculate whether suppliers’ potential price increases were justified.
In addition to these, there were also sources scanning the market for promotions and pricing, allowing you to see how your pricing and promotion strategy differed from competitors.
Now that I think about it, I wonder if this will change significantly with the advent of ChatGPT. In my opinion, you need to go out into the field to see the latest trends and use recent data to build your analysis.”
Conclusion
To sum up, we should embrace AI and use it to our advantage in market research. It speeds up the process, makes it more accurate, and allows procurement professionals to work more efficiently overall.
Its capabilities in automation, predictive analysis, and other tasks make it the ideal tool for helping organizations shape smarter procurement and sourcing.
While manual work is still necessary, AI is set to redefine the way we approach traditional methods of handling procurement-related tasks.
Frequentlyasked questions
What does AI do for market research?
According to a study by KPMG, ChatGPT procurement market research exceeds manual research by more than 30%.
What steps should we take using AI in market research?
Using AI for market research requires procurement professionals to find data sources, prepare data, divide the market, use AI for decision support, and leverage predictive analytics.
What are the benefits of AI in market research?
AI can automate the research process, provide insights, and help manage risks in procurement market research.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.
