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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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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

Provider Country xMillion US$

VNU (Nielsen Media, AC Nielsen) NL 3.048

TNS UK 1.561

IMS UK 1.381

Kantar Group (RI, Millward.Brown) UK 1.002

GfK Group Ger 673

Ipsos Fr 644

IRI USA 554

Weststat USA 381

Synovate UK 358

NOP World UK 336

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

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 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

2002 2003

EU15 6,327 7,608

New member states 191 243

Other Europe 368 435

Total Europe 6,885 8,285

North America 6,707 7,137

Central and South America 632 685

Asia Pacific 2,239 2,569

Middle East & Africa 205 246

Total World 16,668 18,922

Turnover in million US$

MetamorphosisConsumer Trends in Time and Space

share of global market per region
Share of global market per Region

%

EU15 40.2

New EU member states 1.3

Other Europe 2.3

Total Europe 43.8

North America 37.7

Central and South America 3.6

Asia Pacific 13.6

Middle East & Africa 1.3

Total World 100.0

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)

%

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

MetamorphosisConsumer Trends in Time and Space

growth rate per region
Growth rate per Region

unadjusted adjusted

for inflation for inflation

2002/03 2002/03

% %

EU15 2.8 0.7

New member states 14.0 11.8

Other Europe 7.9 0.7

Total Europe 3.4 1.0

North America 5.6 3.3

Central and South America 18.1 8.3

Asia Pacific 6.4 5.6

Middle East & Africa 4.9 1.1

Total World 5.1 2.7

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 15 2003 2002/03

%

UK 1.997 - 0.1

Germany* 1.805 - 0.1

France* 1.580 2.4

Italy* 581 2.4

Spain* 395 2.9

Netherlands* 305 - 2.8

Sweden 273 - 0.2

Belgium* 164 - 0.2

Finland* 113 3.6

Denmark 106 - 2.0

Greece* 67 2.6

Ireland* 59 - 1.7

Portugal* 52 0.0

Luxembourg* 4 2.7

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 Members 2003 2002/03

Poland 97 14.7

Czech Rep. 53 11.0

Hungary 53 11.5

Slovak Rep. 12 14.8

Lithuania 7 9.9

Slovenia 6 5.3

Estonia 6 2.0

Latvia 5 - 2.8

Cyprus 3 2.0

Total 243 11.8%

MetamorphosisConsumer Trends in Time and Space

other europe
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

MetamorphosisConsumer Trends in Time and Space

price index of research
Price Index of Research

USA 242 Italy 92

Japan 230 Greece 81

Sweden 180 Portugal 77

UK 170 Czech Rep 76

France 158 China 70

Germany 152 Turkey 70

Belgium 138 Poland 52

Netherlands 137 Russia 50

Finland 116 Ukraine 48

Spain 115 India 37

Austria 105 Bulgaria 29

MetamorphosisConsumer Trends in Time and Space

countries with highest mr spend per capita
Countries with highest MR spend per capita

  US$ per capita

UK 33.80

Sweden 30.82

France* 26.40

USA 22.88

Switzerland 22.55

Germany* 21.90

Finland* 21.72

Norway 19.94

Denmark 19.89

Australia 19.60

Netherlands* 18.97

New Zealand 18.11

MetamorphosisConsumer Trends in Time and Space

spending per capita in east and central europe
Spending per capitain East and Central Europe

  US$ per capita

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

MetamorphosisConsumer Trends in Time and Space

domestic and international clients
Domestic and international clients

Domestic Clients from Clients outside country

Bulgaria 55 45

Czech Rep. 80 20

Hungary 84 16

Poland 89 11

Romania 78 22

Russia 75 25

Slovakia 64 36

Slovenia 74 26

Total 76 24

MetamorphosisConsumer Trends in Time and Space

consumer vs non consumer research
Consumer vs Non-Consumer Research

  Consumer Non-consumer Research Research

% %

Romania 88 12

Czech Rep. 80 20

Hungary 79 21

Slovakia 78 22

Russia 70 30

Slovenia 68 32

Poland 64 36

Bulgaria 60 40

Total 78% 22%

MetamorphosisConsumer Trends in Time and Space

expenditure per research method
Expenditure per research method

  Total Total

quantitative qualitative Other

% % %

Czech Rep. 82 13 5

Slovakia 81 15 4

Slovenia 80 15 5

Russia 75 25 0

Hungary 72 25 3

Romania 71 18 11

Poland 68 20 12

Bulgaria 65 25 10

Weighted Total 81 14 5

MetamorphosisConsumer Trends in Time and Space

spending quantitative research methods
Spending quantitative research methods

f-to On-

Post Tel -f line Other Total

% % % % % %

Bulgaria 0 10 50 0 5 65

Czech Rep. 1 14 40 1 25 82

Hungary 1 18 50 1 2 72

Poland 0 8 44 0 16 68

Romania 0 6 53 11 1 71

Russia 0 20 55 0 0 75

Slovakia 0 20 57 0 4 81

Slovenia 3 40 32 3 2 80

Netherlands16 29 23 20 0 88

Total 7% 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