Based on 103 telephone surveys with clients who engage external firms for market research at least once a year, there are grounds for more optimism for the research industry in Singapore. After years of stagnation, during which the research industry never seemed to recover from post-financial-crisis gloom, a net 11% of clients report an increase in budgets for research in 2014 compared to a net 2% in 2013, and a net 5% in 2012.
Despite this, the market remains highly competitive, and structural changes will place further pressure on agencies. The survey showed that the fragmentation of the industry, which was most notable in 2012 and 2013, continues and might be increasing further. The average number of suppliers of market research used in the last year is 3.9 and has risen steadily over the last few years from 3.4 in 2011.
Most clients now use both the large multinational agencies and smaller independent agencies. Direct engagement of online panel companies is also quite common, but seems to have stabilised at around 40% of clients. Additionally, 12% of clients also claim to be using Community Panels (self-made access panels built from clients’ own customer databases).
The biggest shift in the last year has been the increase in the use of DIY research (e.g. in-sourced research). About half of clients (48%) use this, and this corresponds to the increase in dedicated/specialised market researchers within client organisations. Again, about half of clients now hold “research” or “insight” specific job titles (up from 36% in 2012), and with it they appear to be undertaking a lot of research themselves without the aid of external firms or consultants.
The influence of procurement within client organisations is also increasing, with half of all clients now using procurement departments in contractual negotiations with suppliers compared to only about a third in 2010. While this practice is likely to increase, in some companies the market research manager themself undertakes the role of the procurement officer, since about 80% of those holding research-specific job titles claim not to use procurement departments that much.
New to the 2014 survey was an assessment of how much of a client’s budget is spent on research outside Singapore. As a regional hub, it is not surprising that over half of clients undertake international research, with about 40% of all Singapore research budget being spent on surveys in other countries. This is higher in the FMCG and consumer ordering viagra online goods sector, where clients need to focus on research in the markets with higher populations.
The supplier’s response
Paradoxically, increased competition has not resulted in much of a response from agencies. Since the “job” of the market research manager is to assess new agencies, two-thirds state that they are open to considering new agencies with a third “very open”. Yet less than half find out about new agencies through sales calls, and a similar number never even meet a new agency through credentials presentations.
But there is still a need for new and better suppliers. In the survey, we asked, “In which areas are you not entirely satisfied with your research vendors?”, and most clients had some areas to complain about. Similar to previous years, there are issues relating to superficial reading of data and weak recommendations, but many clients highlight the fact that agencies simply do not know enough about their business to really undertake research effectively.
“They lack the knowledge in our industry – our industry is unique and complex.”
“They do not know our industry well and cannot prepare the questionnaire accordingly.”
“They don’t understand our products and don’t take time to understand us. After working with them and training them, they then increase their price!”
“They don’t have time to find out more about our business, as they handle too many accounts.”
“They give data but not insightful analysis and reporting – not useful for us to take any action.”
“The bigger companies we deal with have more junior staff, and their level of knowledge is not there.”
Clients continue to stay informed of changes in the supply side of the industry through networking (e.g. consulting personal and industry contacts) and also attending conferences and seminars, the latter being far more common now than three years ago.
Based on the survey, the agencies to “watch” – those considered to be “up-and-coming and increasing their profile” – are within the first tier (with over 10% of those casting a vote), ORC International, BDRC Asia, Kadence, and Asia Insight; and the second tier (with 5%–9% of the vote), Ipsos, Truth, Vision Critical, Added Value Saffron Hill, Blackbox, and Toluna. However, what is clear is that opinions of the up-and-coming agencies are very diverse, with 22 different names mentioned, reflecting the high fragmentation in the supply market.
First published in Asia Research Magazine Q2, 2014