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Developments in the Global Market Research Industry by Ted Vonk Budapest, 11 November 2004

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

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

  2. 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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

  20. 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

  21. 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

  22. 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

  23. And will this happen…..?Vision 2010 study

  24. 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

  25. Expected changes MetamorphosisConsumer Trends in Time and Space

  26. Changes in Industry composition in 2010 MetamorphosisConsumer Trends in Time and Space

  27. Research Process related changes in 2010 MetamorphosisConsumer Trends in Time and Space

  28. Trends with impact on ways of working MetamorphosisConsumer Trends in Time and Space

  29. Trends with impact on ways of working MetamorphosisConsumer Trends in Time and Space

  30. Most likely to happen situation next 10 years MetamorphosisConsumer Trends in Time and Space

  31. Most serious threats for MR industry MetamorphosisConsumer Trends in Time and Space

  32. Potential success factors MetamorphosisConsumer Trends in Time and Space

  33. Global Industry Study

  34. 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

  35. 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

  36. 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

  37. 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

  38. 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

  39. 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

  40. 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

  41. 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

  42. 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

  43. 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

  44. 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

  45. 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

  46. 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

  47. 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

  48. 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

  49. 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

  50. 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

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