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Analyst relations can refer to a process, corporate position or department, but each focuses on the interaction between a company and a third-party analysis firm. The people involved in this field work for companies that use industry analysis to determine the likely direction of a market in order to decide whether to proceed with questionable projects. In order to keep the analysis objective, they use third-party analysis companies that will give both the data and the market an outside view. Analyst relations are the people or processes used to share information between the two groups.
In order to understand analyst relations, it is important to understand industry analysis. When companies undertake large projects, they do so with the understanding that they will get something out of the project. If the company doesn’t believe it will make any money or further its goals via the project, it will generally end up halted before it can even begin.
Industry analysis is the study of a market to determine the viability of an undertaking. This process looks at the market and determines what sorts of demands exist and whether a new project is different enough from competitors to carve out a distinct niche. If the market exists and the margin is high enough, a project will begin. If the niche doesn’t exist, a company will shelve the project until a later date or scrap it entirely.
While some companies perform analysis in-house, many of them use outside companies that specialize in the process. In order for these third-party companies to make informed assessments on processes, they need a great deal of information from the originating company. This information is often sensitive material and closely guarded by the parent company. In order to control the flow of information and maintain security, most companies form an analyst relations department.
This department or position is most common in technical and research companies, where market fluctuation can come on suddenly. In more stable industries, such as food production, analyst relations departments are less common, as brand name is so important. If a well-established food company comes out with a product that is much like a competitor's, the people used to buying the company’s main products are likely to buy both, regardless of market saturation.
In technology-based companies, brand name, while still important, often takes a back seat to other factors like efficiency, power or speed. In these cases, analyst relations departments are vital to prevent a company from releasing a product that is obsolete before it even comes on the market. They not only help determine project viability, but also work on time frames and marketing channels as well.
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