Developments in the global market research industry by ted vonk budapest 11 november 2004
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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 . The Market Research Profession.

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Developments in the global market research industry by ted vonk budapest 11 november 2004

Developments in the Global Market Research Industryby Ted VonkBudapest, 11 November 2004


Agenda

Agenda

  • Developments and changes in the Market Research Industry during the last 10 years

  • Future developments until 2010

  • Global Industry Study

MetamorphosisConsumer Trends in Time and Space


Mr adds value to business and society

The Market Research Profession

MR: Adds Value to Business and Society

  • Connects demand and supply

  • MR Creates

    • Transparency

    • Effectiveness

    • Efficiency

  • Contributes to

    • Social insight

    • Quality of society

MetamorphosisConsumer Trends in Time and Space


Market research has scientific roots

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

The Market Research Industry

Market Research has Scientific Roots …..

MetamorphosisConsumer Trends in Time and Space


External dynamics drive change

The Market Research Industry

External Dynamics Drive Change

  • GLOBALISATION

  • ICT/TECHNOLOGY

  • NEW ENTRANTS/COMPETITORS

  • LEGISLATIVE PRESSURE

  • DIFFERENT REQUIREMENTS

  • CHANGE OF POLITICAL AND ECONOMIC SYSTEMS

MetamorphosisConsumer Trends in Time and Space


Globalisation of the marketing area

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

MetamorphosisConsumer Trends in Time and Space


Globalisation of the mr industry

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

MetamorphosisConsumer Trends in Time and Space


Top 10 research providers

Top 10 Research Providers

ProviderCountry xMillion US$

VNU (Nielsen Media, AC Nielsen)NL3.048

TNSUK1.561

IMSUK1.381

Kantar Group (RI, Millward.Brown)UK1.002

GfK GroupGer673

IpsosFr644

IRIUSA554

WeststatUSA381

SynovateUK358

NOP WorldUK336

MetamorphosisConsumer Trends in Time and Space


There is room for small medium agencies

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

MetamorphosisConsumer Trends in Time and Space


Ict technology

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

MetamorphosisConsumer Trends in Time and Space


New entrants and competitors

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

MetamorphosisConsumer Trends in Time and Space


Legislative pressure

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

MetamorphosisConsumer Trends in Time and Space


Self regulation helps

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

  • MetamorphosisConsumer Trends in Time and Space


    Different requirements of end users

    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

    MetamorphosisConsumer Trends in Time and Space


    A different type of mr emerging

    To a more Strategic one

    Go/No Go

    Type of

    research

    Needs-driven

    Insightful

    Type of

    research

    Monitoring

    Type of

    research

    A different type of MR emerging…

    From Risk-Aversive MR

    MetamorphosisConsumer Trends in Time and Space


    Client companies will drive change

    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 top-provider (in-house, outside, new entrants)

      …pressure to adapt current MR business model

    MetamorphosisConsumer Trends in Time and Space


    The current business model

    Product/Service offering

    rapportage

    onderzoek

    Product /

    Service

    Offering

    Assets/Core

    Competences

    Inputs,

    Raw material

    The

    Customer

    Channels

    The Current Business Model…..

    The Traditional Value Chain*

    * Source: The Profit Zone, Slywotzky & Morrison

    MetamorphosisConsumer Trends in Time and Space


    The current business model1

    Traditional Phases of Development in MR (large and medium sized companies)

    build up research

    technology/

    build data factory

    add local/

    regional

    competence

    add domain-

    specific/

    sector competence

    add marketing

    competence

    (pre-structured

    solutions/acc.mgt)

    The Current Business Model…..

    * Source: The Profit Zone, Slywotzky & Morrison

    Characteristics:

    • Huge investments in “data manufacturing”

    • Value based on data delivery (tracking, syndicated, simple ad hoc)

    • Focus on shareholder growth/profit

    MetamorphosisConsumer Trends in Time and Space


    Reputation vs margin

    Reputation vs. Margin

    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

    The amount

    of reputation

    The amount

    of profit

    Business

    Insights

    Business

    Insights

    Data

    Delivery

    Data

    Delivery

    MetamorphosisConsumer Trends in Time and Space


    Change of rules of the game

    Product/Service offering

    rapportage

    onderzoek

    Product /

    Service

    Offering

    The

    Customer

    Inputs,

    Raw material

    Assets/Core

    Competences

    Channels

    …. 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

    • Change in take-off phase

    MetamorphosisConsumer Trends in Time and Space


    What does this mean in practice

    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

    MetamorphosisConsumer Trends in Time and Space


    How to enter the added value business

    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!!!!

    MetamorphosisConsumer Trends in Time and Space


    And will this happen vision 2010 study

    And will this happen…..?Vision 2010 study


    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)

    MetamorphosisConsumer Trends in Time and Space


    Expected changes

    Expected changes

    MetamorphosisConsumer Trends in Time and Space


    Changes in industry composition in 2010

    Changes in Industry composition in 2010

    MetamorphosisConsumer Trends in Time and Space


    Research process related changes in 2010

    Research Process related changes in 2010

    MetamorphosisConsumer Trends in Time and Space


    Trends with impact on ways of working

    Trends with impact on ways of working

    MetamorphosisConsumer Trends in Time and Space


    Trends with impact on ways of working1

    Trends with impact on ways of working

    MetamorphosisConsumer Trends in Time and Space


    Most likely to happen situation next 10 years

    Most likely to happen situation next 10 years

    MetamorphosisConsumer Trends in Time and Space


    Most serious threats for mr industry

    Most serious threats for MR industry

    MetamorphosisConsumer Trends in Time and Space


    Potential success factors

    Potential success factors

    MetamorphosisConsumer Trends in Time and Space


    Global industry study

    Global Industry Study


    Global industry study 2003

    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

    MetamorphosisConsumer Trends in Time and Space


    Mr turnover per region

    MR Turnover per region

    20022003

    EU156,3277,608

    New member states191243

    Other Europe368435

    Total Europe6,8858,285

    North America6,7077,137

    Central and South America632685

    Asia Pacific2,2392,569

    Middle East & Africa205246

    Total World16,66818,922

    Turnover in million US$

    MetamorphosisConsumer Trends in Time and Space


    Share of global market per region

    Share of global market per Region

    %

    EU1540.2

    New EU member states1.3

    Other Europe2.3

    Total Europe43.8

    North America37.7

    Central and South America3.6

    Asia Pacific13.6

    Middle East & Africa1.3

    Total World100.0

    MetamorphosisConsumer Trends in Time and Space


    Calculating growth rates

    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

    MetamorphosisConsumer Trends in Time and Space


    Countries with a real growth rate over 10

    Countries with a real growth rate over 10%

    Real growth rate 2002/03

    (adjusted for inflation)

    %

    Chile30.6

    China PR. 28.0

    Bulgaria 23.6

    Vietnam23.3

    Philippines20.9

    Mexico17.2

    India16.9

    Slovak Rep.14.8

    Poland14.7

    Indonesia13.4

    Hungary11.5

    Czech Rep.11.0

    Argentina10.0

    MetamorphosisConsumer Trends in Time and Space


    Growth rate per region

    Growth rate per Region

    unadjusted adjusted

    for inflation for inflation

    2002/032002/03

    %%

    EU152.80.7

    New member states14.011.8

    Other Europe7.90.7

    Total Europe3.41.0

    North America5.63.3

    Central and South America18.18.3

    Asia Pacific6.45.6

    Middle East & Africa4.91.1

    Total World5.12.7

    MetamorphosisConsumer Trends in Time and Space


    Eu 15 turnover 2003 and real growth rate

    EU 15: turnover 2003 and real growth rate

    Turnover in Real growth rate US$ million (adjusted for inflation)

    EU 1520032002/03

    %

    UK1.997- 0.1

    Germany*1.805- 0.1

    France*1.5802.4

    Italy*5812.4

    Spain*3952.9

    Netherlands*305- 2.8

    Sweden273- 0.2

    Belgium*164- 0.2

    Finland*1133.6

    Denmark106- 2.0

    Greece*672.6

    Ireland*59- 1.7

    Portugal*520.0

    Luxembourg*42.7

    MetamorphosisConsumer Trends in Time and Space


    New eu member states

    New EU member states

    Turnover in Real growth rate US$ million (adjusted for inflation)

    New Members20032002/03

    Poland9714.7

    Czech Rep.5311.0

    Hungary5311.5

    Slovak Rep.1214.8

    Lithuania79.9

    Slovenia65.3

    Estonia62.0

    Latvia5- 2.8

    Cyprus32.0

    Total 24311.8%

    MetamorphosisConsumer Trends in Time and Space


    Other europe

    Other Europe

    Turnover in Real growth rate US$ million (adjusted for inflation)

    Other Europe 20032002/03

    Bulgaria 723.6

    Norway90- 3.9

    Romania12- 3.8

    Russia854.6

    Switzerland1624.1

    Turkey50- 8.4

    Total 4350.7

    MetamorphosisConsumer Trends in Time and Space


    Price index of research

    Price Index of Research

    USA 242Italy 92

    Japan 230Greece 81

    Sweden 180Portugal 77

    UK 170Czech Rep 76

    France 158China 70

    Germany 152Turkey 70

    Belgium 138Poland 52

    Netherlands 137Russia 50

    Finland 116Ukraine 48

    Spain 115India 37

    Austria 105Bulgaria 29

    MetamorphosisConsumer Trends in Time and Space


    Countries with highest mr spend per capita

    Countries with highest MR spend per capita

      US$ per capita

    UK33.80

    Sweden30.82

    France*26.40

    USA22.88

    Switzerland22.55

    Germany*21.90

    Finland*21.72

    Norway19.94

    Denmark19.89

    Australia19.60

    Netherlands*18.97

    New Zealand18.11

    MetamorphosisConsumer Trends in Time and Space


    Spending per capita in east and central europe

    Spending per capitain East and Central Europe

      US$ per capita

    UK33.80

    USA22.88

    Hungary5.31

    Czech Rep.5.19

    Slovenia3.24

    Poland2.52

    Slovakia2.17

    Croatia1.99

    Bulgaria0.87

    Russia0.59

    Romania0.55

    Ukraine0.31

    China0.30

    India0.06

    MetamorphosisConsumer Trends in Time and Space


    Domestic and international clients

    Domestic and international clients

    DomesticClients from Clients outside country

    Bulgaria5545

    Czech Rep.8020

    Hungary8416

    Poland8911

    Romania7822

    Russia7525

    Slovakia6436

    Slovenia7426

    Total7624

    MetamorphosisConsumer Trends in Time and Space


    Consumer vs non consumer research

    Consumer vs Non-Consumer Research

     Consumer Non-consumer Research Research

    %%

    Romania8812

    Czech Rep.8020

    Hungary7921

    Slovakia7822

    Russia7030

    Slovenia6832

    Poland6436

    Bulgaria6040

    Total78%22%

    MetamorphosisConsumer Trends in Time and Space


    Expenditure per research method

    Expenditure per research method

     Total Total

    quantitativequalitativeOther

    %%%

    Czech Rep.82135

    Slovakia81154

    Slovenia80155

    Russia75250

    Hungary72253

    Romania711811

    Poland682012

    Bulgaria652510

    Weighted Total81145

    MetamorphosisConsumer Trends in Time and Space


    Spending quantitative research methods

    Spending quantitative research methods

    f-toOn-

    PostTel-flineOther Total

    %%%%%%

    Bulgaria010500565

    Czech Rep.1144012582

    Hungary118501272

    Poland084401668

    Romania065311171

    Russia020550075

    Slovakia020570481

    Slovenia340323280

    Netherlands16292320088

    Total7%20%31%6%16%81%

    MetamorphosisConsumer Trends in Time and Space


    Online research starts to take off slowly

    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

    MetamorphosisConsumer Trends in Time and Space


    In conclusion

    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….

    MetamorphosisConsumer Trends in Time and Space


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