Figures released at the end of April by the British Market Research Association (BMRA) indicate that UK market research expenditure grew by 2.6 per cent, to &£1.18bn, in 2002. This is ahead of inflation, but well below the 7.1 per cent growth for 2001, and is the first sign the industry is slowing down.
Even so, market research is still one of the marketing disciplines least-affected by the ongoing downturn – after all, last year advertising spend fell by three per cent and the public relations industry saw a decline of about 11 per cent. Market research is no longer seen as a luxury item, but an essential part of any company’s strategy.
This rise in profile may suggest that research agencies have a reasonably firm foothold in an otherwise faltering economy, but, with a growth rate just above inflation and the BMRA not predicting an upturn before the middle of next year, there is little room for complacency. Agencies are having to take a long, hard look at the way they operate, and are becoming more focused.
Stick to your roots
BMRA chairman Peter Jackling believes research agencies will benefit from being more business-focused. “I don’t think we should move too far from our roots,” he says. “An understanding of good representative sampling, and proper questionnaire design principles, for instance, is part of our value. We must not forget the aspects of research that make it a valuable profession.”
This is something which hasn’t escaped Link Communications managing director Louise Southcott: “We are witnessing a return to basics, looking beyond a brand and going in more closely with consumers, getting to know their emotions about a brand. This is a far more focused approach.”
Most in the industry acknowledge that clients are looking for more affordable research, but nonetheless demand a professional service, high quality and a prompt turnaround on projects. Cost-effectiveness is the watchword.
Southcott continues: “Research is being used more frequently to enhance loyalty. This is in recognition of the fact that it is more cost-effective and it does make more economic sense to keep customers rather than to go out and find new ones.”
Today’s clients are more educated about research, according to Jackling. “Companies are increasingly aware of market research, and industry statistics show that expenditure on market research has grown dramatically over the past ten years,” he says. “Organisations recognise that they increasingly need to measure satisfaction among customers and all stakeholders, and to gain insight into changing demands. Market research is the best way of doing these things.”
This increased awareness means that clients are realising they need to make the most of the data they already have. BMRB research director Richard Windle explains: “Most companies with an existing research function subscribe to some form of syndicated research, whether it be a measurement vehicle for a particular market or a more generalpurpose tool such as TGI, which collects data on product and media consumption. It is important that these companies ensure they are utilising this information to the full. Although the surveys may have been used to track specific market trends or patterns, there is often other information in them that can be used to provide greater insight.”
He continues: “When budgets are tight and there is a requirement for information, companies should turn to these studies to find out whether they can answer at least some of their questions without commissioning fresh research.”
If companies need to gain more information, but haven’t the budget to commission a full survey, then buying into an omnibus (a shared research vehicle where clients can buy blocks of questions) is a good option. The omnibus may not be have the depth of syndicated research, but such surveys offer companies specific information at an affordable rate. According to Windle, omnibus research represents an area of the industry that, although not booming, is certainly holding firm in the current economic climate.
He says: “The fact that survey overheads are shared means that the omnibus is a cost-effective way of collecting information. When larger studies have to be cancelled, clients can obtain some information using lower-cost vehicles. The net effect is a downshifting in the type of work carried out. Rather than doing nothing at all, cost-conscious clients should seek to carry out smaller studies or use shared resources, of the type provided by an omnibus.”
To get more from their research, some clients are taking a hybrid approach to their data, combining qualitative and quantitative information. Dipsticks Research partner John Raglan says: “In hall-test environments [where research is conducted in a venue instead of on the street. Interviews here are longer, allowing the client to get a higher quality of feedback, both qualitative and quantitative], this hybrid approach is evident. It gives the client broader feedback, and arguably greater value for money.”
Nunwood Consulting managing director Clare Bruce takes a similar view of clients’ desire to work their research harder within a confined budget: “Rather than commissioning eight standard group discussions, clients are willing to use the same budget to undertake in-home observations or to mix methods to tease out as much depth as possible.”
A close relationship
With increasing budgetary restrictions, agencies would do well to ensure they are working as closely as possible with their clients. If lack of cash dictates that the ideal research solution is out of reach, the best alternatives have to be found.
“This is where sensible compromises need to be made – often the client is the first to acknowledge this,” says Bruce. “We try to advise clients on the options which remain open to them. Having an open dialogue enables us to fully understand their needs and the wider context.”
This close working relationship is one area in which research agencies need to keep their eye on the ball. Client focus is something that Gus Desbarats, chairman of product designer Alloy, feels is integral to an agency’s success: “Most of the bad research we have seen has arisen because the client feels the need to go through the motions of research, and the agency doesn’t have a clear idea of what the client needs to know.
“Good research is essential for the creative process, but companies using research need to think very carefully about what decisions will be informed by the exercise, and how realistic the feedback will be given the stimulus available. In this, research agencies could provide better guidance.”
The combination of research-savvy clients and low economic growth is forcing the industry to consider carefully the ways in which it adds value for its clients. As Raglan points out: “The research sector is definitely changing. Globally, research budgets are tightening, which is prompting research professionals to be more creative in their approach. This is increasingly necessary when trying to provide value-for-money research.”
But trying to be too creative can lead to trouble if it takes you too far away from your clients’ needs, and it is here that Desbarats sounds a warning note to the research industry: “There’s a lot of information around, questioning established techniques and proposing new ones. A lot of agencies are using technique rather than quality as their unique selling-points.
“Research agencies might consider spending less time on selling ‘inward-looking’ activities such as clever segmentation models or confusing branded statistical processes, and focus more attention on how their input can be more closely tailored to the learning needs of their clients.”
If it’s true that 80 per cent of new products fail, then in times of economic slowdown there is even more of a need to invest in market research. Having said that, it is important for agencies to concentrate on their core business rather than trying to reinvent the wheel – a bad company will fare poorly even in good times.