Global Market Research a worldwide organisation of independent accredited market research firms, held their annual conference at the Raffles Hotel in Singapore.
Titled “Innovation in Market Research”, the conference featured a series of papers presented by client side and agency side organisations showcasing some of the latest developments and technologies in market research. This included eye tracking, community panels, neuro-insights, and new methods of analysing customer experience with service industries.
The concluding session involved round table discussions among client organisations, specifically individuals within corporations who buy market research services and use research within their organisation, with representation from financial services, hotels and hospitality, FMCG, ICT, and B2B sectors.
The feedback from clients in these round table sessions is that the research agencies themselves are the driving force behind innovation and generally this is seen as a good thing.
However many clients observe that the emphasis has been on ‘invention’ rather than ‘innovation’, meaning the focus has been on the product itself and not on the outcome, e.g. too much emphasis on the details of the research method rather than on what benefits it produces for clients.
It is recognised that while agencies have been the driving force behind innovation, some agencies can be resistant to change due to certain vested interests including existing investments in infrastructure (e.g. CATI units and revenue that can be generated from traditional ‘cost per interview’ data collection services) and also preserving cash cow syndicated studies, some of which are losing relevance or are becoming unwieldy.
And, it is also viewed that agencies can be close-minded about training, preferring instead to use their highly structured internal training programs. It is viewed that this is partly a product of ageing and conservative senior management within the agencies.
Challenges facing the industry
Most clients have identified the challenges facing market research, and the shortfalls of their existing agencies and are already changing the way they procure or undertake research.
At the top of the food chain is the senior management who ultimately pay for market research within their organisations. Research can have an ‘image problem’ with senior management. The legacy of poor research in the past can affect attitudes of senior management today, and some research buyers point out that research can be ‘abused’ by senior management, e.g. ‘to try and prove a point’ and therefore difficulties arise when research does not produce the ‘desired result’.
As a result there has been some attempts to ‘rebrand’ research within corporations, e.g. as ‘market intelligence’ or ‘consumer insight’ and perhaps more use of specialist consultants who can carry more weight with senior management. This is demonstrated by those consultants “who have an opinion” and more importantly “have the answers”. This was cited as a reason why management consultants tends to carry more weight with senior management compared to research houses.
However, where research departments are relatively new within companies, there can be a more quantifiable benefit in having them – literally demonstrated by more sales as a result of creating a research function in the company, i.e. ‘the before and after effect’.
Of course during more challenging economic times, clients face the problems of limited budgets and resources. Often a complaint from agencies, the response from clients has been to cram in more into each survey resulting in longer surveys. The temptation is even greater when you are accessing hard-to-reach audiences where recruitment costs are that much higher.
But pricing pressure from clients (or at least the perception that clients are not willing to pay a premium), has resulted in agencies putting more emphasis on cost cutting. This manifests itself in the practice of offshoring of some critical elements of the project, e.g. analysis and reporting writing, meaning the researcher presenting the findings is more removed from the results. Other common practices increasingly adopted by the larger agencies are the outsourcing of data collection which often means to the lowest cost fieldwork suppliers of questionable quality. And finally and most visibly is the superficial analysis of the results at the end of the study.
Many of these shortfalls have been notices by clients and in response there is a change in the agencies used, for example more use of boutique agencies with specialized researchers. This might account for shifts in business as seen in the research buyer survey (see Lead Article: Fragmentation!).
While agencies might not have sufficient time to provide the level of in-depth analysis that clients ask for, it is recognised by more senior people who have worked both agency and client side that there is lack of “knowledge management” within agencies, such as carrying out a proper audits of projects, e.g. what have been key lessons learnt from this project, etc.
External factors such as new regulations pertaining to privacy of customer lists means that some clients, particular those in the financial services area are insourcing their research, while access to hard to reach audiences like senior management for B2B surveys has led some clients to create alliances with 3rd parties. These can be organisations like media companies who are better able to access senior management and have better knowledge of the sector that the client wishes to research.
Data collection quality continues to be a concern with some clients and in the new era of research this is more about the quality of online surveys. As a result some clients are looking at returning to traditional survey research where there is more transparency and accountability as compared to online that is less visible.
Speed to market is crucial for some clients and they feel that research cannot be turned around fast enough. While this might result in more use of online surveys and with it going direct to online panel companies, there can sometimes be a need for ‘quick and dirty’ research which is leading some clients to develop some in-house research capabilities including using recruiters for in-house focus groups or in-store interviews.
And finally there is a view that there is a lack of new talent in the industry or junior talent is being applied in the wrong way, e.g. seniors selling in the project and then disappearing leaving the research to fresh graduates. While the natural response is for clients to choose agencies where they can access more senior researchers (again usually the boutique agencies), the lack of new talent is a wider problem that the market research industry needs to address, e.g. through proper training programs and mentoring, who they choose to recruit, and for the industry itself to make it more attractive to fresh graduates and to keep them within the industry.
Where will be in 5 years?
No one is predicting the end of the market research industry since the importance of the customer and the impact of rapidly changing markets makes consumer and business insight ever more important.
But it is recognised that the industry will experience far bigger changes in this decade compared to the last, if not all others that preceded this.
Larger agencies will struggle to maintain market share and profits, as they run out of “levers to pull”, e.g. business remodelling, offshoring and acquisitions. Their core business is eroding, e.g. cost per interview surveys, with fieldwork moving more online they are losing their traditional selling points of regional networks and data collection which many are outsourcing anyway!
Clients are already insourcing elements of their research, e.g. going direct to online panel companies, undertaking DIY research, or creating their own Community Panels. In addition they are likely to hire specialist analytics personnel.
Community Panels themselves could become integral parts of corporations’ CRM systems, without the limitations of Market Research Codes of Conduct. For example they could be used as a means of research followed by sales or vice versa, e.g. the outcome of sales and the information about customers gathered in the process of selling becomes integral to the CRM system.
The industry fragmentation, which is the theme of the lead article, will continue. Media companies, and specialist industry publications, whose core business is declining, will seek new revenue streams from non-core business activities, including market research. The niche will be their ability to tap hard-to-reach audiences such as senior management.
Analytics start-up companies and specialist consultants in new media will provide new social media text mining analytics services and will have the ability to harness the power of Big Data, e.g. customer transactional data, web analytics, etc.
Boutiques research agencies will need to adapt, and get much closer to clients acting as quasi internal research departments to a selection of key clients.
There will be more use of DIY research by corporations, spreading research adoption from large corporations to small and medium enterprises, e.g. through research services provided by Social Media and Google.
One thing we can be sure of is CHANGE!