Financial Daily from THE HINDU group of publications
Thursday, Jul 24, 2003
MR looks for a makeover
WHEN the WPP group recently decided to pick up a 51 per cent stake in the Indian market research agency, Standard Research Systems (SRS), it was its third market research (MR) firm in the country. This in spite of the group having big-sized MR agencies such as IMRB and Research International (RI). International agencies making a beeline to invest in India, especially when the MR industry is not exactly on a `take off' mode, indicates that Western markets are already saturated and they're looking at developing countries such as India.
The Rs 400-crore MR industry in India has the potential to grow to be a Rs 1,000-crore one. At the current size, the industry is only four per cent the size of the advertising industry, while globally this figure is closer to 10 per cent. This low figure is due to a combination of two factors a small MR base and a significant number of sporadic users of MR, claims B.V. Pradeep, President, Market Research Society of India (MRSI) and Head of Consumer and Market Insights, HLL.
With the growth rate stagnant at 10 per cent for the past two years, MRSI is hoping to push up the growth of the industry to 20 per cent. Claims Pradeep, "We are not expecting the MR industry to grow more than 10 per cent this year but about three-four years ago it used to grow at about 25 per cent annually."
Presently, 40-odd corporates are estimated to use MR in India, allocating between half to one per cent of their turnover on MR and this includes a big spender like HLL. Explaining why the industry has been stagnant for a while, T. Krishna, President, Pathfinders, says, "Companies have lost faith in researchers, not necessarily research." So, while most of the smaller companies continue to use their in-house research methods, resorting to bigger MR agencies for their services is not really happening.
But the way in which MR is perceived and is used is likely to change in the future. Debi Basu, MD, TNS Mode, India, observes, "Today MR is mostly used by MNCs, but since the market is getting so competitive there is the need now to take some hardcore marketing decisions and that is where MR will be needed." Adds Rashmi Varma, Associate Director, AC Nielsen ORG-Marg Research Services, "Research has moved away from what the consumer is saying, to how it can impact marketing strategies now."
MR agencies are moving up the value chain and floating divisions within themselves and there is a tendency towards offering consultancy services, with agencies treating this as an independent service.
Last year, IMRB decided to bridge the gap between MR and consulting by floating a brand consultancy division of the WPP Group The Henley Centre. Thomas Puliyel, President, IMRB, during the launch of the consultancy division, said, "We would be serving as independent advisors to our clients for new products and development of product portfolios."
MR outfits within agencies are also reinventing themselves. Pathfinders, the MR division belonging to Lowe, has decided to integrate itself into the strategic planning functions of its agency in order to provide `ideas and solution' to clients instead of just crunching numbers. In fact, Pathfinders has repositioned itself as a strategic planning research agency than merely being the MR division of Lowe and wants to be regarded as a `specialist' in its field.
That could well be where the MR industry is possibly headed towards segmentation, with the emergence of `specialised' units, which would cater to `specific' needs of clients. "Growth has already saturated in the mature markets and niche players are already emerging in this industry," says Pathfinders' Krishna. Citing figures, Mode's Basu adds, "In the Asia-Pacific region growth rates for the MR industry are not less than 15 per cent, while in the US and UK the market hovers at growth rates of less than five per cent."
International companies looking at setting up base in India are obviously looking at this business on a long-term basis apart from the fact that India continues to be the biggest source of manpower. In the process of `reinventing' themselves MR agencies are also trying to ensure that its services are no longer treated as a commodity and have embarked upon a branding exercise for themselves.
For instance, Taylor Nelson Sofres was recently renamed as TNS to drive home the fact that it was not just another MR agency offering the same tools and data. Elaborating on the reasons behind the name change, Mike Kirkham, CEO, TNS, says, "It is no longer sufficient to provide clients with data and statistics alone, we are increasingly acting as market information advisors to provide informed insight and strategic business advice. With this in mind we have created a strong brand which will support our initiatives effectively in every market that we operate."
While TNS branded itself worldwide, IMRB undertook a similar exercise last year. Calling itself IMRB International, it sported the logo of a thumb imprint. Explaining its branding exercise, Puliyel says, "Considering the way our infrastructure has changed in different markets, in India we wanted to reinforce our scope and coverage in the business. It was only a matter of time before we needed to change the way we look." Adds Nikhil Rawal, Senior Vice-President and Executive Director, IMRB International, "At the end of the day our services have to be marketed and just like any other service, there has to be a brand image behind the various tools that we use."
Meanwhile, showcasing its various tools remains imperative for MR agencies to market themselves to their clients. Recently, MRSI held a symposium in Mumbai to enable the 12 leading MR firms in the country highlight their offerings.
Branding tools is also on the rise. Last year, IMRB decided to rebrand its qualitative and quantitative research under the Millward Brown banner offering tools brought in by the associate WPP group company, to reinforce its product offerings for the entire subcontinent. Products like Total Link (a multimedia evaluation exercise to decipher the additional impact of different media on consumers) and Customer Dynamics (ways to retain the existing brand and attract new customers) were exhibited at a seminar held by Millward Brown and IMRB. Says Rawal, "While tools have become a norm in this industry, it all depends on the kind of output one gets from these branded tools in terms of understanding the consumer mindset.''
Sharing tools with foreign partners will also continue. C.R. Sridhar, CEO, SRS-Icon Brand Navigation India, claims, "Apart from the fact that our association with WPP would expose us to what is happening within the group, there would be exchange of tools used by both which would also get marketed across more countries."
Between AC Nielsen, ORG-Marg and IMRB International, which comprise nearly half the MR industry, almost 25 tools are being talked about, but none of it is really getting used.
B. V. Pradeep
As Pradeep says, "Today, in spite of having all the global market research techniques, companies still do not realise how MR can add value in terms of decision making and as a consequence the industry growth rates are not that much." While advertising continues to enjoy the limelight, market research continues to get sidetracked. "Last year about 50 brands spent a total of Rs 1,250 crore on television advertising alone. Compared to that the kind of money spent on finding out whether these ads have worked or not would be a few lakhs of rupees or may be a crore,'' says Pradeep.
Besides, the slowdown in the industry has affected MR as well. After growing at 25 to 30 per cent in the mid '90s, it has slowed down to 10 per cent last year. Making predictions about the MR industry, Rawal says, "While the future is going to be positive and exciting, it will still be an uphill task to push growth. With companies tightening their belts, the condition for this industry is not likely to change in the next few years."
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