The Hindu Business Line : `Market research firms must offer insights too'

Indian firms specialise in non-customer facing, processes. In the coming years, countries like the Philippines and other Asian countries might take that away from us. Indian companies have to be prepared for this and work on building their comparative advantage.

SUNIL MIRANI, CEO, Ugam Solutions

Retail is on a boom and outsourcing has provided Indian businesses unprecedented fillip. In such a scenario, what role does market research play?

Ugam Solutions, provider of research and analytics services, is focused on serving the marketing information needs of global enterprises.

Providing outsourced services to the global market research and product information industry, Ugam is among India's key providers of outsourced services to the global market research industry.

It has its second International Centre for Research and Analytics in Malad and it plans to have an employee strength of 3,000 by 2009.

Sunil Mirani, CEO, Ugam Solutions, who is responsible for long-term vision and strategy, business development and human resources, shares some insight into how the Indian research scenario is shaping up and the global trends.

What are the latest trends in market research worldwide? What are the emerging concepts?

The market research industry worldwide is seeing a lot of action. The trend of consolidation from the previous year will continue. Last year alone, there were around 88 mergers and acquisitions (M&As) in the industry. These were greatly driven by the need for market research firms to get a global footprint.

India has also seen a huge growth in market research. With companies consolidating their business across the globe, there is a growing need for market research companies to expand their businesses across counties and continents.

Multi-mode research (via telephone, online and face-to-face) is another area of focus for market research firms.

Along with global coverage, companies are required to study specific markets, topics, and countries. As a result, market research companies are actively acquiring companies with similar/additional capabilities across the world.

Undoubtedly, outsourcing has been helping market research companies reduce costs. This also increases the work undertaken by these firms. The cost savings can be used by the research firms to increase their topline or they can share it with their clients or have a mix of both.

Consider the example of cell phones. Due to the availability of cheap phones, mobile penetration has significantly increased. Now we have more people buying phones; this in turn increases the size of the overall market. In a similar way, if the cost of market research decreases, more companies will do research and the overall market will grow.

Market research firms are increasingly being forced by their clients to not just provide data but also to give insights - more of consulting, modelling and prediction, which was earlier the domain of the consulting companies.

The marketing practice within a consulting company is comparable to a market research firm, as it offers research as well as consulting. A multinational FMCG company would go to such companies for consulting on how to build a better brand. .

Till date, market research firms were thought to be very good at collecting data and doing surveys, which gives you a very good indication of the past, but based on the data analysis they were not able to offer any predictions or trends for the future. Increasingly, companies are looking at insights, predictions or future trends.

Market research firms are expanding their set-up and upgrading their skills to be able to go up the value chain.

Interestingly, we are also seeing changes in their senior leadership. Market research companies are hiring leaders from the client side or from consultants or from the technology side.

This fresh guidance will definitely boost the image of these firms and equip them with better skills. In order to shed the image that they are merely a data collection outfit, market research firms prefer to offload non-core functions of the research cycle. This in turn will have a positive impact on outsourcing and is good for players like us.

In what direction is the Indian market research industry growing? What are the factors propelling this?

The India market grew at 16 per cent and last year; we crossed the $100-million mark. Out of the total market of $23 billion worldwide, $100 million is in India. But the point worth noticing is that India is growing at 16 per cent, whereas the average worldwide growth is only 5 per cent, and this is significant.

India being a different market compared to global markets, MNCs want to study and understand the market before they set up facilities in India. This is further propelling the growth of market research in India.

Even with Indian companies, market research has become an integral part of the marketing budgets. In any country, increasing competition is one of the most important factors that drives market research. The one who understands the consumer the most is able to offer the latest products — better, cheaper and faster.

Market research is one of the ways which can help you get better customer understanding. It is required not just for foreign companies wanting to enter into India but also Indian companies that are fighting for market share in India.

In 2002, the amount spent on market research in India was around $50 million, and today it is $100 million. We have doubled in size in four years, which shows the tremendous pace of growth in India.

Per capita spend is also a good way to assess the maturity of the market. The average worldwide per capita spend is about $3.6. Per person spend on market research in the UK is $39, in France it's $36, in North America it is $25, in Europe it's $13, and in APAC it is $0.9.

Coming to India, the amount spent on research per person is as low as $0.09. The world average is pulled down because of regions like APAC, Central America, West Asia and Africa which have higher population but have low research spends on a per capita basis.

What are the new avenues where market research is being used and can be used in India?

In India, what may happen, which may be different from the rest of the world, is: while other countries are moving from face-to-face to other methods like telephonic and online, in India we might just jump the telephone phase and go directly to online, SMS research and other new-age methods. Worldwide, it is typically the FMCG and medicine sector that are using market research extensively. India by far mirrors what is happening in other parts of the world, as a lot of MNCs are getting into India. All industries, from telecommunications and media to infrastructure and IT, can draw on such services.

To give you an example, market research can do wonders for the growing retail sector in India. The retail sector in India has come a long way from small family-owned retail outlets to organised retailing businesses. Large business houses including the Reliance, Tata, and RPG are setting up retail stores across the country.

Serious investments by such giants have made the retail business very competitive. Companies now need to conduct customer satisfaction surveys, demand analysis, brand research and a host of other market research activities relating to advertising and market segmentation.

Exposure to global clients and research involves handling multi-country, large, complex data and far more complex research.

And as partners serving them we have to significantly upgrade our skills. As this talent did not already exist in India we were forced to train and significantly upgrade the kind of skills available in the market.

What can India do to stay ahead?

Globalisation has increased pressure on market research firms. They now feel the need to have global delivery centres for their MNC clientele. The increasing pressure on market research agencies to provide more value has made them outsource non-core operations.

Apart from the work like data collection and processing, project management is also being outsourced to us. Our clients want us to take complete charge of the back-end processes. We mostly compete with South American countries like Costa Rica, Dominican Republic and the Philippines for the CATI (Computer Aided Telephone Interviewing) market and Europe for data processing work.

We specialise in non-customer facing, that is data processing and analytics, processes. In the coming years, countries like the Philippines and other Asian countries might take that away from us. Indian companies have to be prepared for this and work on building their comparative advantage.

Where do you feel the market will be in the next 10 years? What are you basing your predictions on?

The market research industry has a size of $23 billion. About 58 per cent of this comes from the top 25 companies, and 66 per cent from the top five countries in market research - the US, the UK, France, Germany and Japan.

The industry has grown by 5 per cent in the past four years. But if you look closely, clearly there are some countries that have grown rapidly, and all APAC countries can be accounted in this. China grew by 27 per cent last year, India by 16 per cent and certain other East European countries have also shown rapid growth.

The $23-billion figure consists of the revenues of all market research firms put together.

There could be research that is done by companies directly, (e.g. market research done by P&G directly is not be accounted here). While the developed countries are dominating, growth is also taking place in the developing countries.

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