Transcript Slide 1

Developments in the
Global Market Research Industry
by Ted Vonk
Budapest, 11 November 2004
Agenda
• Developments and changes in the Market
Research Industry during the last 10 years
• Future developments until 2010
• Global Industry Study
Metamorphosis
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MR: Adds Value to Business and Society
• Connects demand and supply
• MR Creates
The
Market Research
Profession
– Transparency
– Effectiveness
– Efficiency
• Contributes to
– Social insight
– Quality of society
Metamorphosis
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Market Research has Scientific Roots …..
The Market
Research Industry
However, it became an Industry..
In 2003
• Growth of World Market
towards $ 18,9 billion
(€ 16,8 billion)
• Europe : $ 8,3 billion
(€ 7,3 billion)
• Hungary: $ 53 million
(€ 47 million)
• Emerging external challenges
Metamorphosis
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External Dynamics Drive Change
•
GLOBALISATION
•
ICT/TECHNOLOGY
•
NEW ENTRANTS/COMPETITORS
•
LEGISLATIVE PRESSURE
•
DIFFERENT REQUIREMENTS
•
CHANGE OF POLITICAL AND
ECONOMIC SYSTEMS
Metamorphosis
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The
Market Research
Industry
5
Globalisation of the marketing area
• … the driving force behind growing demand for
research
– MR has become integral part of marketing mix
• Clients of market research asked for:
–
–
–
–
Worldwide coverage
Consistent quality
Harmonisation of the ways of working
Branded products
• Mergers and acquisitions in the MR industry
– Economies of scale
– Research product development
– ICT investments
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Globalisation of the MR industry
Mergers and Acquisitions have reshaped the MR
industry landscape
•Concentration of providers
– Top 25 agencies: 60% of global turnover
•Acquisitions will continue
– In first half 2004: 17 M&A by top 25
– Alliances in audience measurement (VNU/WPP)
– Publishers and providers of marketing services show
interest in the MR industry
•Listed at the stock exchanges
– Different ways of working
– Short term policy, shareholders value
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Top 10 Research Providers
Provider
Country
VNU (Nielsen Media, AC Nielsen)
TNS
IMS
Kantar Group (RI, Millward.Brown)
GfK Group
Ipsos
IRI
Weststat
Synovate
NOP World
NL
UK
UK
UK
Ger
Fr
USA
USA
UK
UK
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xMillion
US$
3.048
1.561
1.381
1.002
673
644
554
381
358
336
8
There is room for small/medium agencies
•
•
•
•
Local business
Closer to clients/partnerships
Specific industry (niche) area’s
Growing demand of small and medium
sized companies for research
Metamorphosis
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ICT/Technology
• All data collection computer assisted
• Shift within data collection methods
– Face-to-face and CATI will go down
– Direct registration of behaviour
• Online data collection still to come
• Advanced tools for analysis within reach
• Integration of information from different
sources
• Online delivery of results
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New entrants and competitors
• No entrance barriers
– Anyone can enter the business
– No big investments needed anymore
• Competitors from other industries
– CRM suppliers
– Consultancy firms
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Legislative pressure
• Legislation is a threat for the MR industry
– Privacy laws
– Data protection laws
• Legislation does not distinguish Direct
marketing and market research
• Restrictive measures limits the ways to
conduct MR
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Self regulation helps….
….to avoid restrictive legislation
– Ethical codes and guidelines, quality standards
– Do-not-call system, Anti-spam
– Adhered to by the whole industry:
“One industry, one voice”
• ESOMAR and EFAMRO have developed several
initiatives to stimulate self regulation and to fight
against threatening legislation
– Monitoring system of drafted legislation
– National associations joined these initiatives
Metamorphosis
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Different requirements of end-users
• From “nice to know ”towards“ needs to
know”
• Research that directly contributes to the
business:
– Actionable results
– Predictive insights
– Precise, timely and tailored
• Ability to link propriety data, purchasing
data and research data
• Integrated understanding of business
• More creativity
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A different type of MR emerging…
From Risk-Aversive MR
To a more Strategic one
Go/No Go
Type of
research
Needs-driven
Insightful
Type of
research
Monitoring
Type of
research
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Client companies will drive change
Changes in the industry will be increasingly demand
driven (“demand pull”)
• 1000 top clients already spend 80%
• 65% of their budgets go to 25 companies
• For “Best Solutions” they will not wait for a topprovider (in-house, outside, new entrants)
…pressure to adapt current MR business model
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The Current Business Model…..
The Traditional Value Chain*
Assets/Core
Competences
Inputs,
Raw material
Product /
Service
Offering
Product/Service
rapportage
The
Channels
offeringonderzoek
Customer
* Source: The Profit Zone, Slywotzky & Morrison
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The Current Business Model…..
* Source: The Profit Zone, Slywotzky & Morrison
Traditional Phases of Development in MR
(large and medium sized companies)
build up research
technology/
build data factory
add local/
regional
competence
add domainspecific/
sector competence
add marketing
competence
(pre-structured
solutions/acc.mgt)
Characteristics:
• Huge investments in “data manufacturing”
• Value based on data delivery (tracking, syndicated, simple ad hoc)
• Focus on shareholder growth/profit
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Reputation vs. Margin
The amount
of reputation
The amount
of profit
Business
Insights
Business
Insights
Data
Delivery
Data
Delivery
Dominant Business model:
• does not support “Best
Solution”/ Consulting
Services if they do not
help sell data.
• focuses on increasing
factory load & coverage
• Helps to sell products
and syndicated services
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…. change of rules of the game
MR Industry to Innovate:
 Improve value add ….and move to a much wider context:
from data management to decision facilitation
(using variety of sources…..meeting demand for actionable
insights)
 Reverse value orientation: transform business model
The
Customer
Channels
Product /
Service
Offering
Product/Service
rapportage
Inputs,
Assets/Core
offering
onderzoek
Raw
material
Competences
 Change in take-off phase
Metamorphosis
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What does this mean in practice?
• Focus is shifting from the quality of data collection
towards better decision support and a clear
contribution in improving decision making
• Market researchers need to demonstrate that they
can make the difference. Not only providing facts,
but also look at the consequences
• MR industry should extend its offer to both data
collection and evidence based consultancy
– Become more specialists in a certain area
– More business oriented market researchers
– To be able to analyze multiple, imperfect data sets
Metamorphosis
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How to enter the added value business?
• Force research technicians to specialize along
industries or practices
• Accumulate marketing knowledge around branded
products which serve important marketing
applications (brand equity, advertising, CSM)
• Attract skilful consultants from management
consultancies
• Combine research competence with marketing
competence
We are able to think!!!!
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And will this happen…..?
Vision 2010 study
Vision 2010 study
• Online study among researchers from all
over the world about industry
developments
• Fieldwork: June 2004
• 1351 respondents (837 providers and 514
clients)
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Expected changes
Will the market research industry in 2010 be different as compared with
today?
No, will be almost the
same
14%
Don't know
3%
(n=1351)
Yes, will be different
83%
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Changes in Industry composition in 2010
Main changes in the market research industry in 2010
in industry composition and ways of working
Stronger Consultancy role
13%
Consolidation of Industry will continue
11%
Split between (large) data providers and (small)
specialized consultancies/agencies
7%
5%
Faster research
More focus on decision making
4%
(n=1115)
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Research Process related changes in 2010
Main changes in the market research industry in 2010
research process related changes
30%
Shift towards online research
More intensive usage of new technologies
27%
More advanced tools and techniques to analyse
10%
Greater role for (Access) panels, less random
sampling
7%
Delivery via Internet
7%
Quality of sampling will decrease
5%
(n=1115
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Trends with impact on ways of working
Trends that will have most impact on ways of working
(Industry composition related scenario's)
Clients will require far more creativity and business intelligence
from providers
53%
Market research will become more important because of greater
incorporation in companies strategic planning
32%
The consolidation of the industry will continue (more mergers)
20%
Innovation of the industry will be driven by small agencies/niche
players
19%
Consulting companies will take over territory of market research
providers, turning these providers into mere data- providers
Clients will cut back on their internal research departments,
making providers work with end-users directly
(n=1351)
16%
13%
Metamorphosis
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Trends with impact on ways of working
Trends that will have most impact on ways of working
(research process related scenario's)
Internet research will continue to revolutionize the
business
35%
There will be much more data available from different
sources
27%
Respondent cooperation will dramatically decrease
22%
Market research data will be more integrated with
CRM-data
21%
Most of data collection will be done via large access
panels
15%
Parts of the research process will be outsourced to
cheaper countries
Data collection will mainly be done by large providers
(n=1351)
14%
7%
Metamorphosis
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Most likely to happen situation next 10 years
Most likely to happen siuation in next ten years
41%
More partnerships between providers and clients
will emerge
30%
40%
The research market will be divided into data
providers and information consultancies
32%
9%
No change and same issues as today
20%
Vision 2010 survey
Marco Polo,
6%
Traditional market research will disappear
12%
4%
Don't know
6%
Metamorphosis
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Most serious threats for MR industry
Most serious threaths for the Market research Industry in the next 5-10
years
Missing skills to recognize the difference between
good and poor quality of research by clients
54%
Decreasing response rates
37%
New competitive sources for information
32%
25%
Other parties adding value to market research data
Government regulation and legislation
New market research companies that leverage the
Internet
Metamorphosis
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24%
18%
(n=1351)
31
Potential success factors
Potential success factors - very important
Understanding business and domain specific
issues
72%
Recruitment and training of a new generation of
researchers
60%
58%
Standards of performance/quality standards
Different/additional requirements for professional
skills
Promotion of the industry/raising the perception
of the industry
47%
42%
Exchange of best practises
40%
Respondent rates
40%
Metamorphosis
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(n=1351
32
Global Industry Study
Global Industry study 2003
• Annual study about MR industry turnover
• Associations and experts provide
information
• 40 associations completed the
questionnaire
• Experts estimated the turnover in 21 other
countries
• Figures should be treated as ESIMATES
Metamorphosis
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MR Turnover per region
EU15
New member states
Other Europe
Total Europe
North America
Central and South America
Asia Pacific
Middle East & Africa
Total World
2002
6,327
191
368
6,885
2003
7,608
243
435
8,285
6,707
632
2,239
205
16,668
7,137
685
2,569
246
18,922
Turnover in million US$
Metamorphosis
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Share of global market per Region
EU15
New EU member states
Other Europe
Total Europe
North America
Central and South America
Asia Pacific
Middle East & Africa
Total World
Metamorphosis
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%
40.2
1.3
2.3
43.8
37.7
3.6
13.6
1.3
100.0
36
Calculating growth rates….
……means eliminating the effect of
changing exchange rates…….
Euro changed from 1US$ = € 1.06 in 2002
to 1US$ = € 0.89 in 2003
By creating a ceteris paribus situation
the effect of the exchange rates has been
eliminated and the growth rates have
become actual
Metamorphosis
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Countries with a real growth rate over 10%
Real growth rate 2002/03
(adjusted for inflation)
%
Chile
30.6
China PR.
28.0
Bulgaria
23.6
Vietnam
23.3
Philippines
20.9
Mexico
17.2
India
16.9
Slovak Rep.
14.8
Poland
14.7
Indonesia
13.4
Hungary
11.5
Czech Rep.
11.0
Argentina
10.0
Metamorphosis
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Growth rate per Region
EU15
New member states
Other Europe
Total Europe
unadjusted
for inflation
2002/03
%
2.8
14.0
7.9
3.4
North America
Central and South America
Asia Pacific
Middle East & Africa
Total World
5.6
18.1
6.4
4.9
5.1
Metamorphosis
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adjusted
for inflation
2002/03
%
0.7
11.8
0.7
1.0
3.3
8.3
5.6
1.1
2.7
39
EU 15: turnover 2003 and real growth rate
EU 15
UK
Germany*
France*
Italy*
Spain*
Netherlands*
Sweden
Belgium*
Finland*
Denmark
Greece*
Ireland*
Portugal*
Luxembourg*
Turnover in
US$ million
2003
Real growth rate
(adjusted for inflation)
2002/03
%
1.997
- 0.1
1.805
- 0.1
1.580
2.4
581
2.4
395
2.9
305
- 2.8
273
- 0.2
164
- 0.2
113
3.6
106
- 2.0
67
2.6
59
- 1.7
52
0.0
4
2.7
Metamorphosis
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New EU member states
Turnover in
US$ million
New Members
2003
Poland
97
Czech Rep.
53
Hungary
53
Slovak Rep.
12
Lithuania
7
Slovenia
6
Estonia
6
Latvia
5
Cyprus
3
Total
243
Real growth rate
(adjusted for inflation)
2002/03
14.7
11.0
11.5
14.8
9.9
5.3
2.0
- 2.8
2.0
11.8%
Metamorphosis
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41
Other Europe
Turnover in
Real growth rate
US$ million (adjusted for inflation)
Other Europe 2003
2002/03
Bulgaria
7
23.6
Norway
90
- 3.9
Romania
12
- 3.8
Russia
85
4.6
Switzerland
162
4.1
Turkey
50
- 8.4
Total
435
0.7
Metamorphosis
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42
Price Index of Research
USA
Japan
Sweden
UK
France
Germany
Belgium
Netherlands
Finland
Spain
Austria
242
230
180
170
158
152
138
137
116
115
105
Italy
Greece
Portugal
Czech Rep
China
Turkey
Poland
Russia
Ukraine
India
Bulgaria
Metamorphosis
Consumer Trends in Time and Space
92
81
77
76
70
70
52
50
48
37
29
43
Countries with highest MR spend per capita
UK
Sweden
France*
USA
Switzerland
Germany*
Finland*
Norway
Denmark
Australia
Netherlands*
New Zealand
US$ per capita
33.80
30.82
26.40
22.88
22.55
21.90
21.72
19.94
19.89
19.60
18.97
18.11
Metamorphosis
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Spending per capita in East and Central Europe
US$ per capita
UK
33.80
USA
22.88
Hungary
5.31
Czech Rep.
5.19
Slovenia
3.24
Poland
2.52
Slovakia
2.17
Croatia
1.99
Bulgaria
0.87
Russia
0.59
Romania
0.55
Ukraine
0.31
China
0.30
India
0.06
Metamorphosis
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Domestic and international clients
Bulgaria
Czech Rep.
Hungary
Poland
Romania
Russia
Slovakia
Slovenia
Total
Domestic
Clients
55
80
84
89
78
75
64
74
76
Metamorphosis
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Clients from
outside country
45
20
16
11
22
25
36
26
24
46
Consumer vs Non-Consumer Research
Romania
Czech Rep.
Hungary
Slovakia
Russia
Slovenia
Poland
Bulgaria
Total
Consumer
Research
Non-consumer
Research
%
88
80
79
78
70
68
64
60
%
12
20
21
22
30
32
36
40
78%
22%
Metamorphosis
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Expenditure per research method
Czech Rep.
Slovakia
Slovenia
Russia
Hungary
Romania
Poland
Bulgaria
Weighted Total
Total
quantitative
%
82
81
80
75
72
71
68
65
Total
qualitative
%
13
15
15
25
25
18
20
25
Other
%
5
4
5
0
3
11
12
10
81
14
5
Metamorphosis
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Spending quantitative research methods
Bulgaria
Czech Rep.
Hungary
Poland
Romania
Russia
Slovakia
Slovenia
Post
%
0
1
1
0
0
0
0
3
Tel
%
10
14
18
8
6
20
20
40
f-to
-f
%
50
40
50
44
53
55
57
32
Netherlands
Total
16
7%
29
20%
23
31%
Metamorphosis
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Online
%
0
1
1
0
11
0
0
3
20
6%
Other
%
5
25
2
16
1
0
4
2
Total
%
65
82
72
68
71
75
81
80
0
16%
88
81%
49
Online research starts to take off slowly
• Netherlands in the lead:
– 2003: 20% of all Market Research on-line
research
– 2004: about 40%
– Shift towards large access panels
• What makes it happen in the Netherlands?
– Internet penetration over 70%
– Constraints of other methods (non-response,
costs for interviewers)
– Acceptation by clients
• Other countries will follow soon
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In Conclusion
•
•
•
•
•
Market Research industry is full of changes
Transforming to a major industry
The need for change is recognized
A lot of change has still to come
Period of change is a period of
opportunities
• However, market researchers need to
demonstrate that they can make a
difference….
Metamorphosis
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