The 2008 Survey of Market Research Buyers

In March 2008, Asia Research embarked on a ground breaking survey of companies in Asia who commission market research with external firms.  The key objectives were to establish trends in the type of research companies are undertaking, how they buy research, who they use, and satisfaction with their vendors.  It also obtained opinions on the benefits of using independent research firms compared to that of the large multi-national research houses.

The survey was undertaken through telephone interviews with buyers of market research; typically market research and marketing managers.  The initial survey covered Multi-National companies and large corporations based in Singapore, Malaysia, and Hong Kong.  A total of 120 ‘buyers’ were surveyed including individuals who hire external market research firms at least once a year, and who are personally involved in dealing with these firms throughout the project cycle.

Buyers were sampled from a range of industries including consumer goods, IT, telecoms, financial services, automotive, healthcare, industrial goods, Government, and others.

The Research Business:

Companies are active users of market research: on average about 5 projects a year are commissioned.  Consumer goods companies are the most active buyers, commissioning on average over 7 projects a year.

A range of methodologies are undertaken: the core of the industry is of course quantitative research including classic forms of research such as brand image and customer satisfaction tracking, usage and attitude (U&A) studies and segmentation.

Most companies are also undertaking qualitative research (86%), and desk research (70%).  Overall qualitative research accounted for 40% of all research commissioned in the last year.

It was also noted that about half of all companies subscribe to syndicated research with this being most common among consumer goods companies.

Notably ‘newer’ forms of research are now quite common: around half of all companies are engaged in market sizing and competitive intelligence.  Automotive companies are more likely to undertake this type of research compared other sectors.

Over half of buyers commission research outside of their home market.  Even in Malaysia, that is often considered to be a very domestically focussed market, about 40% of companies are undertaking research in other markets.  Companies in Singapore commission research in more markets than their counterparts in Hong Kong with an average of 9 markets researched compared to 6 for Hong Kong.

Looking ahead the most investment in research is expected to be in the large, high growth markets of China and India.  Other emerging markets are also important including Vietnam, Indonesia, and Thailand, notably ahead of the more mature markets such as Japan, Hong Kong, and Singapore.

The Supply Market:

Most companies maintain a portfolio of market research suppliers: the average buyer has used 3 different suppliers in the last year.  Looking ahead, a net increase is expected with 22% stating that they will increase the number of suppliers they use compared to 10% decreasing (the remainder stating no change or could not say).

The market research firms used include the ‘usual suspects’ such as Synovate and Nielsen (leading the market at 44%
and 42% penetration respectively), followed by TNS,
Research International, and Millward Brown.

However, this hides a more fragmented market.  In total, 55 different market research suppliers were encountered in this survey.

Firstly there are the established independents such as Acorn and Asia Insight, and the more specialized international firms such as GfK, IDC, and IMS.  Then there are some of the more recent entrants to the market such as Kadence (part of the Kadence Group headquartered in the UK) who started their Asian operations in Singapore in 2004, Insight Asia – originally headquartered in Jakarta who also entered Singapore in 2004, and Saffron Hill – a break away from Synovate setting up operations in 2001. 

Buyers are also using firms from outside of their home market.  These include firms in Australia, e.g. East & Partners and Jones Donald, and from even further afield such as BDRC in the UK and KS&R in the US.

Notably companies are also sourcing their market research through management consultancies: AT Kearney, KPMG and PWC were recorded as ‘research suppliers’ in this survey.

Perceptions of the Market Research Firms:

Generally most corporations are satisfied with their suppliers of market research, although less than 10% describe themselves as “very satisfied” implying that relatively few firms are really delighting their clients.  Generally research firms are getting the ‘pure servicing’ aspects correct such as client servicing (responsiveness, communication, etc), timeliness of project execution, experience of researchers assigned to projects, and quality of account manager.

However, areas where more than 40% are less than satisfied is quality of interviews and moderation, the presentation, and the insight and direction in the reports delivered.  Dissatisfaction is most acute in the last area where over half are less than satisfied.

Overall 91% of companies use Multi-National Research house (e.g. Synovate, Nielsen, TNS, Research International, Millward Brown etc.), and 70% use independent firms.  Many buyers commented on the relative advantages of using each type of firm.

The main advantages of using multi-national research houses are their international experience and network, but also their access to databases such as customer satisfaction benchmarks.  Buyers also acknowledge the ability of multi-national firms to share best practice and templates across their groups, e.g. standardised questionnaires and research tools.  Some comments from respondents pertaining to the advantages of using multi-national research firms are as follows:

“They give more solutions that cannot be given by the local companies. They have strong international networks. They might have solutions from other countries regarding the same problems that we are experiencing now.”

 “They have the tools and have more learning exposure from other countries in different categories.  They also have the necessary database that can be compared from research conducted awhile back with the research nowadays”.

“They have good standards with good methodologies.  For Usage and Attitudes studies they have good quality control and the field work team are also good”.

The leading perceived advantage of using independent firms is price or better value for money.  Many feel that the independent firms can also provide better service such as being more flexible and accommodating to client needs.  This can be advantageous when projects need to be completed in a fast turn around time – one-in-eight state that independent firms are faster.

Although some buyers argue multi-nationals have more experience, a similar number point out that independent firms actually have the specialism for certain industry sectors.  They can also give more tailored solutions that might be a better fit to the client’s needs as opposed to the imposition of generic black box solutions commonly associated with the multi-national research houses.

Although 10% state that Multi-Nationals have ‘more resources’, some feel that independent firms will actually dedicate more resources to specific projects, and will go the extra mile such as putting very senior staff on the projects who can provide more detail in the reports.  Some comments relating to the advantages of using independent firms are:

“Very fast and cheap, and flexible in including doing additional work without necessary pro-rating the cost… the owner (of the business) actually handled the work himself and also did the report”

 “Better value and servicing – more concise and give exactly what is wanted.  The local researcher can understand the local markets better, while Multi Nationals use expats for presentations but they have actually not been hands-on in the research findings and surveys.”

“With one MNC research firm, their presentation was far too complicated for the company’s needs”

Outlook:

The use of independent firms versus multi-nationals is likely to remain the same: some expecting to use them more, a similar number expecting to use them less.  However many recognize that it is too difficult to predict who they will source their research from in the future, for example their specific research requirements could favour one company type over the other, and many companies are in a position to deliver the best proposal in competitive tender.

Notably a third of companies are sourcing research from ‘new sources’.  Some companies are using various forms of in-house research, e.g. having their management trainees undertaking desk research or telecom companies implementing SMS-based surveys with their customers through in-house resources.  Other companies are undertaking research through media or web searches or buying off-the-shelf reports.  However, companies are also going to other types of third party vendor including media agencies, freelance consultants, or obtaining information through their distributors or other trading parties.

Despite this, the outlook for the research industry is bright: 39% of the buyers in the survey stated that they expect their organization to spend more on market research in the next 2 years compared to just 4% stating less (the remainder stating no change).

It is evident that the Multi-national research houses will continue to dominate the quantitative regional research business.  Clients recognize the advantage of using them for their regional network, their consistent standards, plus the benefit of drawing on their library of benchmarks.

However, independents have a distinct advantage: firstly in terms of fees – can the multi-national research houses continue to justify a premium when much of it is not returned in value add?  And secondly and perhaps more importantly, there is view that second tier suppliers such as the independents have to demonstrate more value add to break into the larger buyers of research.  This can be through leveraging off industry specialism, assigning more senior staff to project teams, and just being more fun and friendly to work with.   They might also be better placed to close the current areas of client dissatisfaction pertaining to lack of insight and direction in research reports.

The other question is whether talented researchers in the large multi-national research houses will themselves be satisfied with churning out trackers in data factories, rather than getting involved in the more interesting ad hoc projects that clients might be more inclined to place with the independents.