POLL TO POLL

The British market research industry is still booming and, with a growing number of companies using research in new product development, brand planning and promotion, the future looks even rosier.

Although she may not realise it, three-year-old Ella Cox has played a small but important role in continuing the exceptional growth of the market research industry.

In August, she became the last little girl to be crowned Miss Pears because the soap’s manufacturer Elida Fabergé has scrapped the famous toddler photographic competition after consumer research revealed that the brand had grown up.

The company invested in market research to find out why sales of its Pears Original Soap had become static. Qualitative studies involving four discussion groups revealed that Pears was no longer considered a soap for all the family but a style item bought by an increasing number of people in their 20s and 30s. As a result – and after 40 years – cute kids have been replaced by new packaging and a bulging press ad budget to entice the readers of Vanity Fair, Elle Decoration and Vogue.

That any company should take such a radical decision with a famous brand in response to consumer polling will not surprise anyone working in the UK research industry, which is enjoying buoyant business at home and abroad. Brand managers are aware of the benefits of effective polling to ensure they remain in touch with core customers and do not invest huge sums in launches for which there is no demand.

The research industry is delighted that its services, and usually confidential findings, are considered by many as a useful marketing insurance policy. In 1996, the combined turnover for all UK research agencies was about 750m, according to industry estimates. Joint sales for members of the Association of Market Survey Organisations (AMSO) and the Association of British Market Research Companies (two organisations that will merge next January, see first report) was estimated at 600m, with turnover for AMSO companies alone rising 11.6 per cent to 446.4m.

While AMSO reports that domestic business for its members was up 7.9 per cent at 317m it was in the international market where the most significant growth was reported, with earnings jumping 21.9 per cent to 129m.

Sister trade body the Market Research Society (MRS) claims the UK has one of the world’s strongest research industries, accounting for ten per cent of the estimated 7bn worldwide business, and 22 per cent of the total European market. The trade has grown about ten per cent at home and more than 20 per cent internationally every year since 1991, at a time when the UK economy as a whole has expanded by an average of two per cent a year.

MRS director general David Barr says: “One of the reasons why British companies are doing so well around the world is that we have an established industry with well-respected companies and many small operators that can offer a flexible service.”

AMSO chairman and Taylor Nelson AGB director Bill Blyth says the strength of the UK economy has convinced many clients to research new and potentially lucrative overseas markets. “The polling business is becoming increasingly international, both in structure and perspective. In Europe alone, the enlargement of the EU can only help us, but we must not be complacent.”

BMRB International director and head of international research Gerry Hahlo says new technology, such as its Quicktrack computer polling system, has made the creation of a pan-European research operation a cost-effective option for clients. “Results from different countries are directly comparable because exactly the same methodology has been used and we can turn around results as quickly for a number of countries as we can for one,” he says.

Yet, as a rule, most investment in market research is governed not by a client’s corporate profitability but by the levels of consumer expenditure in a particular market. However, the windfall payments from UK building society conversions have not led to a rush in extra research spending by companies because the initial evidence is that the large sums being awarded to savers are not being spent in the areas where research is traditionally prolific, such as retail, media or financial services.

The industry is, nevertheless, aware that the wider effect of the windfall payments could result in a tightening of economic policy in Britain, which does ultimately result in research budgets being cut.

Should this happen, researchers are confident the international opportunities currently available should cushion the effect of any downturn in the UK until the economy picks up. Sue Fox, joint managing director of IT research specialist Warner Fox and chairman of the MRS Business & Industrial Special Interest Group, says there is evidence that the two recessions experienced by UK companies in the early Eighties and early Nineties ultimately strengthened the position of many research organisations.

“During these recessions we saw a lot of people leave the industry and set up consultancies. As soon as the business climate improved, it was market research and advertising that benefited because brand managers had lost sight of their product’s market share and its position within its target sector,” she says.

Despite the current strength of the research trade, few executives within the business believe the sector has peaked. Industry studies reveal that the sector has still to fully exploit a vast improvement in its credibility rating with big business bolstered by the accuracy of the General Election polling results in May. These results came as a huge relief to many researchers who had been ridiculed for five years after they got the 1992 result so badly wrong.

In fact, MORI’s latest survey of business leaders reveals that bosses have a more favourable attitude towards market research (52 per cent) than they do of advertising (39 per cent), management consultancy (27 per cent) or PR (21 per cent).

Convincing the general public of the benefits of taking part in research is not so easy. The Research Development Foundation (RDF) published its two-year study into the public’s perception of market research at the end of last year which demonstrated that, although 75 per cent of respondents felt research served a useful purpose, 28 per cent claimed they would usually not take part in any survey. The industry accepts that much of this reluctance stems from a misunderstanding many consumers have about the difference between legitimate polling and direct mail campaigns, which are often sold under the guise of market research.

However, 55 per cent said they usually take part in telephone interviews which is a finding that research companies have already reacted to. Gallup, for example, has moved away from face-to-face interviewing in favour of telephone polling, which it says relies on an underlying probability-based theory that provides a better representation of the population. It claims this method is more cost-effective, eliminates clustering and means a traditional sample size of about 1,000 is more widely dispersed geographically.

There had been concern that an EU directive designed to crack down on unsolicited phone calls would affect market research, although this threat has now receded, and Blyth says that last year was the first time there was more telephone polling than face-to-face research. “There are a number of advantages to using the telephone to get more accurate results, but the subject matter must be something people want to talk about, social issues rather than financial, while the questions must be kept short,” he says.

Other findings that bode well for the future growth of research is the greater willingness among 16 to 24-year-olds to take part in polling. Respondents were also more prepared to contribute if an incentive was offered or if they could see obvious personal benefits.

This attitude has helped the large grocery chains successfully carry out extensive consumer polling to find new ways to retain their customers’ loyalty. David Seaman, market research and business information manager for the Co-operative Wholesale Society, says market research is essential in such a competitive market. “Retailers possibly find it easier to get people to take part because their customers have a relationship with the shop and can see the benefits of new product research or a new store layout,” he says.

New product development is one of the most important market research areas and BJM Research & Consultancy works closely with retailers and manufacturers on planned launches. Director Ian Brace says there has been a dramatic shift away from test-marketing and towards computerised forecasting models over the past 20 years.

Companies can spend up to 100,000 a year on researching a new line, and a forecasting programme can predict the size of the potential market, project volumes and repeat purchase levels – even illustrate what impact different packaging will have on the shelf.

“These systems are vital because there is pressure to get products to the market as soon as possible. If you try to test a product regionally first and it is successful your rivals will beat you to a national launch,” says Brace.

He adds that about 85 per cent of the ideas he is presented with never come to the market. He also cites examples of products where market research has identified potentially embarrassing problems before launch. These include the ball air freshener, which leaked and stripped the polish off tables, facial wipes that came out of the container in a continuous stream because there were no perforations and a fruit juice that had been expected to perform well in research but did not. Investigations revealed that the production team had not followed the specific recipe and had supplied something which they thought was near enough.

“We try to be objective throughout the research but sometimes we can have a difference of opinion with a client, especially if there is someone in-house who has spent a great deal of emotional energy on a project. Often companies will take our observations on board and research a product again at a later date,” he says.

Brands desperate for domestic and international sales success are aware of the importance of research in determining the potential market for their products and how best to promote them. It sometimes needs an outside eye to tell a marketing team they have a turkey or, as Elida Fabergé discovered with its Pears soap brand, a product that must change with its consumers if the manufacturer is to clean up.

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