State of the Market Research Industry by vei53664

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									State of the
Market Research
Industry
Research Professionals’ Survey – Wave Eight
For the last seven years RSM’s Research
Professionals’ Survey has taken the pulse of the UK
Market Research Industry, anticipating key trends
and measuring confidence in the commercial health
of the sector.
Last year’s wave revealed clear concerns over the
impact of the financial crisis on the research
industry. This year’s study suggests that the impact
has already been severe and is expected to remain
so for at least the next six months – and many feel
the impact will be felt for the next two to three years.
The industry also continues to have concerns that its
public image is declining, at least partly due to cheap
and poor quality online solutions.
The positive news is that the perceived value of
research and its importance in informing business
decisions continues to be recognised amongst both
clients and suppliers.




    The clear message is that during these difficult
    times the research industry needs, more than ever,
    to provide value, quality and a clear focus on the
    needs and priorities of client organisations.

    It is also vital that online research must be handled
    responsibly – poor implementation can reduce
    response rates and produce poor quality data and
    therefore damage the reputation of the research
    industry as a whole.
Executive Summary

Recession bites
• Six out of ten research professionals have seen their budgets
    decline in the past six months and only one in twenty have
    experienced an increase.
•   This decline is expected to slow down over the next six months
    but a third still expect budgets to drop. The proportion expecting
    an increase is static at one in twenty.
•   Even with this slightly more optimistic outlook budgets are
    expected to shrink by 3.5% over the next six months (indicating a
    year on year decline of at least 7%.
•   Research activity in most sectors is expected to experience a net
    decline - most significantly in the automotive and media sectors.
•   Most research methods will feel the impact of recession, with face
    to face hit hardest (48% expect to spend less on face to face
    research and only 6% expect to spend more).
•   Half of research professionals think the impact of the economic
    turndown will continue to be felt over the next two to three years.

The impact of technology
• Research professionals see technology as key to the way the
    industry will do business in the future, particularly driving down
    costs and increasing efficiency at all stages of the research
    process. However:
          - Poor implementation of online surveys is seen as one of
            the key reasons for a decline in the image of market
            research.
          - Web 2.0 technologies are seen as being important for the
            industry’s future, but there is a distinct lack of detail about
            how these technologies will be used and what specific
            impact they may have.

The competitive edge
• There remains room for improving the quality of pitches to clients.
    36% of clients state the overall standard of pitches they received
    was good or very good (compared to 60% in 2008).
    Dissatisfaction with pitches is mostly due to agencies failing to
    provide innovative research solutions that are tailored to the
    client.
•   Against a back drop of continued budget restrictions and reduced
    volume the industry needs to provide value, innovation and a
    streamlined and focussed approach to client needs.
•   Reassuringly for the best practitioners, the intrinsic value of
    market research to business is not in doubt - a quarter of clients
    state that research will maintain or increase its importance for
    informing business decisions.
Past budgets:
recession bites
The past six months have been tough for the research
industry. Six out of ten research professionals have
experienced budget decreases and only one in twenty
have enjoyed an increase.

The net proportion experiencing a decrease (i.e. the
percentage saying ‘budgets have been lower’ minus the
percentage saying ‘budgets have been higher’) is 55%.
This is the highest proportion in the eight year history of
the survey (the previous record being 22% in 2002).


Q. Just in general, have the budgets for UK market
research you are involved with, either as a client or as
a supplier, been higher, lower or about the same over
the past six months compared with the same period
last year?




              -80%    -60%   -40%          -20%      0%     20%   40%   60%   80%


                                                                                    Increase
Client (2008)                                 -24%    11%
                                                                                    Decrease



Client (2009)                  -67%                   10%




 All (2008)                                   -26%    7%




 All (2009)                         -61%              6%




All             345
Clients         39
Future budgets: tough trading
conditions expected to continue
for the next six months
The industry anticipates another difficult six months ahead –
a third expect budgets to decline and just over one in ten
expect an increase.

The net proportion expecting a decrease in budgets (i.e. the
percentage saying ‘budgets will be lower’ minus the
percentage saying ‘budgets will be higher’ in the next six
months) is 22% - again, this is the highest proportion in the
eight year history of the survey.

The average decline in budgets expected across the whole
sample is 3.5%.


Q. Do you expect budgets to increase, decrease, or
remain about the same over the next six months
compared with the past six months?



               -40%   -20%             0%         20%           40%

                                                                      Decrease

                                -16%        11%
                                                                      Increase
Client (2008)



Client (2009)            -31%               10%




  All (2008)                    -18%        10%




  All (2009)            -34%            6%




All             345
Clients         39
 Face-to-face research
 hit the hardest
 The industry anticipates a net decline in most methods - face
 to face, focus groups, UK and international telephone - with
 face-to-face expected to fare the worst. Even in difficult
 times the industry consensus is that web-based data
 collection will continue to increase (albeit at a reduced rate
 compared to previous years).


 Q. Please indicate whether you expect an increase or
 decrease in your use of the following methods in the
 next six months:

 • UK telephone
 • International telephone
 • Face to face
 • Web based data collection




100%                                                                                                                W4 (Sep 04)
                                                                                                    78%             W5 (Apr 05)
80%                                                                                                    77%
                                                                                                                    W6 (Jul 06)
                                                                                                              63%
                                                                                                                    W7 (Dec 07/
60%
           50%
                                                                                                                    W8 (May 09/
        43%                   40%
40%                              35%                                    34%
                                                   29%
                16%                                     17%                                    15%
20%          13%                                                                                  13%
                                                                          11%


 0%
                                                                                    -1%
                                                                              -5%
                                      -9%
-20%              -14%            -14%                       -16%
                                                          -21%
                                            -26%                                        -28%
-40%
                                                                 -42%

-60%

        Focus Groups           UK Telephone               F2F                 Int Tel                   Web




  Bases                  W4            W5          W6           W7      W8
  All                    306           299         323          335     345
  Clients                46            40          40           38      39
  Research activity is expected to experience a net decrease
  in most sectors. The most significant net decline is expected
  in automotive and media research.

  A modest net increase is expected in public services and
  social research, although this is at a lower rate than
  projected in previous waves.


  Q. Please indicate whether you expect an increase or
  decrease in research for the following industry sectors
  in the next six months:

  • Automotive
  • Energy/ Utilities
  • IT/ Telecoms
  • Finance
  • Media
  • FMCG
  • Public services/ Social Research




50%                                                                                                                               W4 (Sep 04)
                                                                                                                                  W5 (Apr 05)
                                                     30%
                                                                   25%                         27% 27%
30%                           22%                      26%       22% 24%
                                                                               24%                                                W6 (Jul 06)
                            21%                                                                                        23%
         19%                    18%            18%             20%                                                 17%
                                                 14%
                                                                             18% 18%18%                         16% 15%           W7 (Dec 07/Jan 08)
                                  15%
           7%                                                                                        8%                    7%     W8 (May 09/Jun 09)
10%              6%                                                                                    5%



-10%           -3%
                                       -5%              -6%
                                                                                                         -10%
                                                                      -15%

-30%
                                                                                        -32%


-50%                 -44%

          Automotive        Energy/Utilities    IT/Telecoms     Finance         Media             FMCG              Public
                                                                                                                  Research
                                                                                                                Services/Social




   Bases                       W4              W5        W6         W7         W8
   All                         306             299       323        335        345
   Clients                     46              40        40         38         39
  Technology: a driver
  for reducing cost
  Research professionals see the Internet and online panels as
  a key influence on the way the industry does business in the
  future. Technology is seen as a way of driving down costs and
  increasing efficiency at all stages of the research process –
  fieldwork, delivery of data and reporting for end clients.

  Technologies including social networking sites, blogs, SMS
  text surveying and mobile data collection are mentioned as
  being potentially important for the industry, although there is
  a distinct lack of detail about how these technologies will be
  used and what specific impact they may have.


  Q. How will technology change how the Market Research
  Industry does business in the next few years?



                                             0%         10%   20%     30%   40%   50%   60%




  Increased usage of online research/
                                                                    53%
             online panels



    Cost of research will reduce/cost
                                                    17%
                efficiency



Interest in research via social networking          16%
         platforms/blogs/Web 2.0



 Clients will have better access to data/          14%
      improved analysis/reporting




   Faster results through technology              12%




  Less formal interviewing/f2f/personal           10%
               interaction



 Increased usage of data collection via       8%
     mobile technology/text surveys




  All           345
  Clients       39
 The industry’s image

 As in 2008, there is a net perception that the industry’s
 reputation is deteriorating. Professionals with the most
 experience are more concerned than any other segment:


 Q. In general, do you think the public image of market
 research is getting worse..?



                        -50%   -40%   -30%   -20%      -10%   0%         10%    20%     30%   40%   50%

                                                                                                          Getting worse
     Wave 8 - All                                                                                         Getting better
                                                       -18%        10%
respondents: Base 345



     Wave 7 - All
                                                    -29%            15%
respondents: Base 335




       1 to 6 years                                 -27%                          48%




       7 to 10 years                          -36%                        23%




       11 plus years                         -39%                    19%




 All            345
 Clients        39
The most common reasons for perceived deterioration of the
image of the Market Research industry include:

• “Sugging”, where sales companies to use market research
    as a guise for selling (23%),
•   A perceived proliferation of cheap and poor quality panel
    and online solutions (17%)
•   Saturation of research aimed at the same key target
    audiences (12%)
•   Concerns over the quality of results obtained generally (9%).


Q. Why do you think the public image of market research is...?




                                    0%          10%             20%         30%


        Confused with sales/PR                                        23%



        “Cheap” online surveys/
                                                               17%
            internet panels

              Too many
                                                         12%
     surveys/Saturation/Overload

       Concerns regarding quality
                                                    9%
            results/Biases

         General deterioation/
        Negative media reports                 7%


       Low awareness of market
                                               7%
          research benefits

          Research driven by
                                          2%
        improving technologies

     Poor/Inaccurate sampling for         2%
               surveys


       Poor image of call centres        1%




Base                  96
Getting better        34
Getting worse         62



“[There are] too many poor quality "surveys"
around on the web and continued use of “sugging”
from non MRS organisations”
“Too many cowboy Internet panel companies
coming on stream”
“Too many database building marketing companies
calling and saying they are doing research”
“People have research fatigue: it is not valued.
Many associate it with being hassled or sold too.”
 Sales pitches: room for
 improvement
 Clients received an average of approximately seven pitches from
 market research agencies in the past year, a slight drop from
 nine in 2008.

 Fewer clients consider the pitches they received to be anything
 other than satisfactory, so there is clearly room for improvement.


 Q. Overall, what was the standard of the pitches you received?




                                                                   Don’t know/refuse
                                                                   Poor
                                                                   Satisfactory

Wave 7    3% 10%            27%               57%         3%
                                                                   Good
                                                                   Very good




Wave 8    7%    13%               43%               33%   3%




         0%           20%         40%   60%         80%   100%




Clients        39



 Amongst those that give ‘good’ scores the key reason is that
 suppliers were creative in their approach and had taken time to
 research the client…:

 “Agencies are listening, more focused on our needs,
 taking longer term views, innovating more and doing
 more research off their own bat as a way of having a
 story to tell”.

 …and ‘poor’ scores are primarily given because the
 agency did not take this approach:

 “Too generic and not tailored sufficiently to us as a
 company and to our needs. Too interested in selling
 their "black box" products rather than tailored
 solutions”.
Commissioning projects:
value and reliability key
Adding value, a proven track record, methodological expertise
and ROI all remain the most important factors influencing
commissioning decisions.

‘A well known brand name’ and ‘large company’ are least
important, particularly for clients.


Q. Looking at the list below, please indicate how important
you think each attribute is when you/clients are
commissioning a research agency? Please use a 5-point
scale where 1 is 'very unimportant' and 5 is 'very important'




                                Not at all                                            Very
                                important                                           important

                                    1        2            3         4                  5

                                                                                                All
   Research findings that                                                     4.5
                                                                                                Client
  provide insight/add value                                                   4.5


                                                                          4.4
       Proven track record
                                                                      4.3



  Methodological expertise                                          4.2
                                                                      4.3


                                                                4
Research that can provide ROI
                                                                    4.2


                                                                    4.2
      Market sector expertise
                                                                4.1


                                                                        4.3
        A competitive price
                                                                4.1


                                                                    4.2
 Access to senior personnel
                                                                4


                                                          3.3
       A wee-known name
                                                    2.7


                                                   2.6
         A large company                     2.2




All            345
Clients        39
 Looking ahead

 Budget restrictions are expected for the research industry over
 the next two or three years - importantly clients are more likely to
 expect cuts than suppliers.

 Clients are also more likely than suppliers to expect their
 research needs to be streamlined, and to expect a decrease in
 the volume of work commissioned.

 The results suggest that the value of research is not in doubt - a
 quarter of clients state that research will maintain or increase its
 importance for informing business decisions - suggesting any
 decreases in research activity will be driven by focussing on what
 is important and ensuring the effective and efficient use of
 suppliers.


 Q. Finally, what impact do you think the current difficult
 global economic conditions will have on the market research
 industry’s prospects in the next two or three years?



                                          0%              10%      20%    30%   40%

                                                                                      All
      Budget restrictions/Reduced                                 21%
                                                                          33%         Client
            client budgets

    Decreased volume of work/                               14%
   Decreases in industry (general)                                  23%


Increased/Maintained importance for                         15%
   researching business decisions                                  23%


 Importance of effective data usage/                      12%
collection/Focus on what is important                               23%


  Pressure to add value/Focus on/                          14%
      Maintain quality offering                      10%


 Recovery/Growth in the long-term/                     12%
     After 1 year/18 months                          10%


Need to utilise/offer low-cost research                   13%
   methods/Competitive offering                     8%


                                               5%
  Efficiency/Cost efficient methods                 8%


 Companies going out of business/                    9%
                                                    8%
 Number of suppliers will decrease

      Companies will consolidate               6%
         into larger groups                      8%




All            345
Clients        39
Who we
interviewed
Wave 8, 2009: A total of 345 on-line interviews were completed in
May and June 2009 with clients and suppliers with an average of
14 years market research experience.




Contact
If you have any questions or comments please contact
John Madden or Rick Dent.
E-mail: john@rsm1.com or rick@rsm1.com
Tel: +44 20 7403 332




RSM would like to thank all respondents who gave
their time and opinions.




RSM, Baden Place, Crosby Row, London SE1 1YW Phone +44 (0) 20 7403 3322 Email enquiries@rsm1.com

								
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