The State of the Market Research Industry in China

Market research is “the function that links the consumers, customers, and public to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and dontevaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.” – American Marketing Association

In China, however, it is more common to see market research of a simplified nature, with a focus primarily on data collection and the presentation of lack-of-depth findings, rather than the delivery of strategic and tactical marketing plans and consultancy. Why is this?

Pricing Constraints

First of all, many research buyers are intent on paying a much lower price for a piece of market research than for management consultancy work, as they consider the former to add less value to their businesses than the latter does. Inevitably, market research agencies will have little budget to deliver quality and insightful findings and recommendations. However, market research is actually in nature more scientific and suitable to the China market in many areas (e.g. the business-to-business field).  For example, management consultancy firms are proficient at utilising existing data (e.g. off-the-shelf and corporate reports) and their high-profile consultants’ past industrial experience. Unfortunately, in nine out of ten cases, such data are not commonly available and the experience may not be transplantable to an often premature, rapidly changing, and genetically unique market in China.  In contrast, market research studies’ emphasis on primary methods justifies their suitability.

Data Quality

china industrySecondly, in facing fierce pricing competition from within the market research industry, some irresponsible agencies are tempted to go astray, namely providing low-quality or even fraudulent data to their clients.

Such bad exceptions mean that research buyers generally have lower confidence and expectations on the research findings, and thus are unlikely to be motivated to set aside a big budget for research studies. This unfortunately impacts negatively on other, more reputable agencies, presenting them with an obstacle to providing in-depth marketing consultancy.

 Personnel

Lastly, a lack of high calibre or experienced workers is another reason that explains the situation in the market research industry, and directly affects the quality of market research studies. For instance, in many research agencies in China, most of their interviewers tend to be junior and thus have a lack of business knowledge and work experience. They possess little capability of getting hold of the right respondents and guiding them to share market insights during the survey. This unavoidably prevents the research report from being insightful.  In addition, unlike many leading management consulting firms, market research agencies sometimes find it harder to attract industry experts and MBAs, who are more qualified to deliver marketing consultancy.

Conclusion

china marketAll of the above probably appears dismal to both current market research practitioners and buyers. However, the good news is that we have been seeing some positive changes. For example, increasingly, more clients are realising how beneficial a practical market research study could be for the devising of a detailed market plan. Thus they have become less price-sensitive and are willing to increase their budget if required. This will also limit the living space of those disreputable agencies that are unable to deliver quality studies. In addition, some leading agencies are beginning to pay great attention to bringing in high-profile staff, facilitating their businesses to create reports with insightful findings and necessary customisation.  Therefore, in the long run, we can expect to see a promising future for the market research industry in the growing China market.

The Author

Daniel Sun, B2B International, daniels@b2binternational.com