Archive for the ‘Industrial Research’ Category
Thursday, September 6th, 2007
By Paul Hague – Director, B2B International Ltd
The Role Of The Logo
Logos are the marks by which companies are recognized. Their origins were the hot seared marks burned on to the rumps of cattle when they roamed freely on the plains of the US. Each mark distinguished the owner of the cattle just as a logo distinguishes a company today.
Logos provide the vital service of helping us recognize, in an instant, the product or service which is being offered. In a world which is becoming ever more confusing because of the plethora of choice, brands help us home-in on products which are familiar and in which we have confidence. They assist us in making supplier choice with the best logos and brands being attached to the best companies.
This means that any change to a logo should be made with considerable caution. Once a logo has become established, it takes on a life of its own. It becomes so familiar to customers, it is owned by them. Indeed, any change to the logo may create an adverse reaction. “What are you doing messing around with my logo?�.
As a result, companies change their logos relatively infrequently and often quite subtly. The illustration below shows how the Shell logo, the ICI logo, and the IBM logo have all changed over decades. In the ICI logo, for example, the original founding company of Nobel was changed to ICI at an early juncture and many years later the underscoring waves were simplified and reduced in amplitude. The logo still has a recognizable DNA even after 50 years.
As a general principle, logos only have a radical makeover if a company is in dire trouble as occurred with Ratners.
Occasionally a logo is changed to signify a major change in direction for the company, as has recently been the case with BP which has “gone green�.
When companies have changed the logo for no real reason, it usually has mixed receptions. This was certainly the case with British Airways.
Using Market Research To Test Logo Changes
Market research has an important role to play in the testing of all marketing communications. It provides an independent and scientific understanding of customers and potential customers’ views.
Market researchers have a number of options available to them in this type of work.
Qualitative research enables us to dig deep and obtain a full understanding of people’s views on logos, brands and other communication devices. There are two important types of qualitative research
 Focus groups
 Depth interviews
Focus groups
A small number of people (usually around eight) are specially recruited to debate a subject. They may be customers or potential customers. Under the guidance of a moderator they discuss their attitudes and feelings to a subject.
Focus groups work extremely well in generating ideas and therefore are usually used for concept testing.
In communications research they are useful for generating ideas for adverts and working out messages which resonate. The do sometimes suffer from a bias which may result from an outspoken and articulate respondent who carries the rest with him/her.
Focus groups can be used to check out an existing logo and to find out its current strengths and weaknesses. However, they are not the vehicle for testing radical changes to logos as they tend to yield an over critical response to the proposal.
Depth interviews
Depth interviews can be carried out face-to-face or by telephone and are an excellent means of getting under the skin of a subject. Although they lack the brainstorm affect of the focus group, they provide uncontaminated responses as each participant is unaware of what the other has said.
This is a favoured method for carrying out research into a changed logo. Interviews with around 30 respondents would give a well considered view of any changes.
Face-to-face depth interviews are expensive to set up and administer and, except in exceptional circumstances, they do not offer as good value for money as depth interviews carried out by telephone. The telephone in combination with the internet allows researchers to show examples of logos and other communications and at the same time ask for a reaction.
Quantitative research
Qualitative research gives us a deep understanding but does not provide the measures that we sometimes need to see what different groups of people think about changes to a logo or some other communication device.
We have therefore to turn to quantitative research for these measurements.
Quantitative research requires upwards of 100 interviews and more typically 200 plus interviews. It is therefore an expensive tool.
It sometimes follows on after a preliminary qualitative phase.
In logo research we would use quantitative research if we wanted to test awareness and attitudes to logos across a broad population. It probably would not be appropriate in any project which was considering a change to the logo.
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Wednesday, August 15th, 2007
An article from the Financial Times.
We Must Count The True Cost Of Cheap China
Richard McGregor, FT
Monday, August 06, 2007
When An erstwhile colleague tried to illuminate the controversy over cheap imports from China, he positioned himself outside a Wal-Mart store in Illinois, asking shoppers if they should thank poorly paid Chinese workers for providing such low-cost goods. In response, as James Kynge records in his recent book on China’s global impact, most shoppers gave him puzzled looks or simply scurried away.
That was two years ago. In the wake of the multiple scandals over tainted Chinese food and drug exports in recent months, such an exercise might now provoke outright hostility rather than uneasy indifference. The scandals have ensured that Chinese goods now have an indelible image of being not just cheap, but life-threatening as well.
As with many bilateral conflicts between the US and China, perverse ironies abound. The current wave of outrage was set off earlier this year when pet food tainted by deliberately mislabelled Chinese-made additives began poisoning thousands of cats and dogs in the US.
The fact that wrongly labelled foods, liquor and pharmaceuticals – usually by entrepreneurs looking to make a quick buck or just to survive in a cut-throat market – have routinely sickened and even killed people en masse in China has been largely overlooked.
In this respect, powerless consumers in China should be thankful for pampered pets in the west. Without the outrage generated on the animals’ behalf, the Chinese authorities would not have acted with such alacrity to promise stricter regulation of the industries.
The increased regulation itself may have some perverse consequences. The west has generally cheered on the growth of entrepreneurs in China. But regulation, by raising industry standards and barriers to entry, tends initially to reduce competition by squeezing out smaller operators, which in China are synonymous with the private sector. The beneficiaries may be big state companies, whose close ties to the ruling Communist party will help mould any regulations to suit their interests.
The greatest, and most welcome, impact of the food and drug scandals, however, might be to shake up the cognitive disconnect that bedevils the debate about the fallout from China’s economic surge.
The huge windfalls for western consumers have been paralleled by wailing about how cheap Chinese goods are destroying local jobs, to the unambiguous benefit of China.
This crude dichotomy misses the nub of the issue: that the benefits of growth have been unevenly, and often unfairly, spread around. This has been a point that Beijing has been at pains to acknowledge in recent years, even if its policies to address the issue have been largely ineffective thus far.
Ordinary Chinese, especially city dwellers, are much better off than they were before the country’s transformative market reforms nearly 30 years ago. But proportionately, their share of national income has declined. An International Monetary Fund paper found that the fall in the wage share of national income since the mid-1980s had been pronounced, from 67 per cent of gross domestic product to 56 per cent now. The World Bank found an even sharper drop, of 9 per cent, in the wage share from 1998.
Chinese leaders publicly stress the priority of employment creation, but economic incentives continue to favour capital intensive industries, not the job-generating service sector. The huge profits these industries have made in recent years have flowed back to state investors and officials, not the workforce. The other winners have been foreign multinationals, often in local joint ventures, using China as an export base.
Labour costs have been rising in China for years but remain low because of countervailing rises in productivity and the inability of workers to organise to win quantum improvements in their conditions.
But the much-feared “China price� has always been about much more than cheap labour. The phenomenon has been underwritten by lax or non-existent enforcement of environmental rules, cheap finance and multiple incentives offered by regions competing for investment.
For companies making low value-added goods, the cheap finance and investment incentives are being wound back by a central government that wants companies to focus on developing indigenous technologies.
The enforcement of environmental rules and the establishment of a genuine regulatory regime promise to be much thornier tasks. Local autonomy, and the desire of every city, town and village in China to enjoy the fruits of economic growth, make effective regulation all but impossible any time soon.
Many foreign commentators argue that Chinese pollution is already a global problem. They are doubtless correct. China’s emergence this year as the world’s biggest emitter of greenhouse gases is ample evidence for that.
But if Chinese pollution is the
price of keeping Wal-Mart stocked with cheap goods and American consumers happy, then perhaps the costs should be shared. For starters, some of the greenhouse gases emitted in China could be counted on the ledger of the countries whose consumers buy the goods.
It is an idea that would startle, and maybe even anger, shoppers in Illinois, but it might be a healthy reminder of where the low prices they enjoy really come from. One way or another, the cost of China to the world is going to rise.
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Wednesday, July 25th, 2007
Which industries are being researched?
In consumer research, the FMCG sector is the area of the Chinese economy that is most commonly researched, followed by the automotive sector. When the business-to-business sector is looked at, however, the picture is rather different, and constantly changing.
It is noticeable that the business research conducted in China is relatively evenly spread across sectors. The leading sector (over a fifth of all research is conducted in this area) is the diverse area of engineering and machinery, with valves, pumps and automation devices amongst the many product areas researched. Clients in this sector come from the US, Germany and Italy in particular, most of them wanting to know how to differentiate themselves enough to charge higher prices than the local competition.
The pharmaceutical and medical sector is the second biggest sector, accounting for just less than a fifth of the market. Significantly, this is an area that is growing rapidly, due to China’s increase in focus on international pharmaceutical standards, as well as the Government’s decision to develop China as a hub for bioscience research and production. Much of the research conducted has a strong ‘bio’ flavour, and companies at the core and the periphery of the industry are commissioning more and more research. Distribution networks, production machinery and standards and documentation are all common topics being researched, above all by foreign companies seeking to enter what they feel is starting to become a lucrative Chinese market.
As in most business-to-business research markets worldwide, the petrochemical industry continues to commission large volumes of research. As in Western markets, the requirements vary widely, although lubrication and fuels for the transport market are areas of particular interest. As many Western companies in this industry already have some kind of presence in China, projects tend to revolve around building an existing presence (for example through segmentation research) rather than pure market entry work.
Research is commissioned in more or less equal measure in three more sectors – IT and telecoms, manufacturing and automotive. Of these, automotive research is the most ‘mature’ and its share of the business research market is expected to decline over time. Similarly in the IT and telecoms market, much research is consumer- rather than business-oriented and growth in the foreseeable future is likely to be limited in comparison with other sectors. (This situation will however change drastically if significant deregulation of the telecoms sector occurs.) In contrast, manufacturing research will grow steadily. Financial deregulation and widespread dissatisfaction with China’s financial sector mean that research into the business banking sector is likely to increase rapidly over the coming years.
Figure 3 – Business-to-Business Research In China – Activity Breakdown
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Tuesday, July 24th, 2007
Finding A Company To Conduct Business-to-Business Research In China
To any Western company seeking research on Chinese markets, by far the best source of suppliers is ESOMAR, a European organisation whose website boasts a directory of market research providers across the world. This directory is searchable by country, and all agencies are vetted for quality. Furthermore, ESOMAR’s Western focus means that companies registered as providing market research in China generally have a Western focus, in terms of the linguistic capabilities of their staff, the quality standards adhered to, and the way in which information is presented.
A good half of the 53 ESOMAR-registered agencies based in China are Western-owned, almost all of these having English-speaking (and often German- and French-speaking) expatriates in management positions. The ESOMAR directory can be found on http://directory.esomar.org/, and the first page of results for agencies in China is illustrated in Figure 2 below. Each agency can be clicked on for details of specialisms, locations, capacity and team members.
Figure 2 – ESOMAR Directory, China search
A comprehensive list of the 1,200 plus market research companies, of all sizes, locations and specialities, can be found on the website of the Chinese Market Research Association (www.cmra.org.cn). All details are in Chinese. Any company wishing to use smaller Chinese agencies should beware of the high levels of market exit that characterise this part of the industry, as well as the reduced level of business-to-business expertise and quality controls.
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Friday, July 20th, 2007
By Matthew Harrison, Director of B2B International
Introduction
The growing importance of the Chinese economy is no secret. This huge country of over 1.3 billion people (one fifth of the world’s population) has an economy that is now the fourth largest and has recorded an average growth rate of around 10% for the last two decades, making China a leading economic power on the world stage.
The huge importance of China has had an impact across industries, and the market research industry is no different. Market assessment research briefs which 10 or even 5 years ago might have ignored Asia completely, or perhaps asked for a passing glance at Japan, are now routinely including China as a country where opportunities must be assessed. Medium-sized companies are beginning to establish a presence in China, whilst the multinationals, many of whom still have a limited sales presence rather than a meaningful penetration in the country, are asking how their rep offices and loose distribution networks can be turned into a more entrenched presence.
The message for market research companies is therefore clear – there is now a serious and extensive requirement for information on Chinese business-to-business markets, and this requirement is certain to grow.
This white paper seeks to provide the reader with a picture of how business-to-business research is conducted in China, and the issues that should be borne in mind when commissioning projects in the country. We also seek to dispel some of the half-truths and urban myths that have built up around the Chinese and Asian research industries.
Note: For the purposes of this paper, we will define business-to-business research as market research in which the views of businesspeople are sought, in order to facilitate a business decision. We include not only ‘businesspeople’ in the traditional sense, but also anyone else who contributes to a study in the context of their employment. We therefore include, for example, projects in which the views of Government officials are sought (of which there are many), and medical or pharmaceutical projects in which organisations seek the views of physicians or surgeons.
Who Is Conducting Market Research In China?
The value of ‘pure’ business-to-business research in China is estimated at around $USD50 million, a figure which is more than doubled when projects exploring the views of doctors, Government officials and other non-consumer research is included. This figure of $USD50 million is growing at around 25% per annum, meaning that it will double within 4 years. As a point of comparison, the Chinese market for consumer research is estimated to be growing at 17%-18% per annum. The huge growth in business-to-business research reflects the facts that Chinese companies are increasingly open to the idea of obtaining the views of businesspeople, and Western companies more and more hungry for Chinese business opinion.
In such a young and evolving industry, it is perhaps not surprising that the providers in the market are extremely different in their origins and business models:
Medium-sized and large Chinese market research agencies
Medium- and large-sized Chinese agencies (those with a turnover of over $US1.5 million, most of whom are members of ESOMAR) have many years’ experience of conducting market research in China. Most of these companies’ clients are Chinese businesses, or foreign businesses with an established presence in China. The individuals purchasing the research are almost exclusively Chinese. When it comes to Western clients based outside China, Chinese research agencies’ activities are largely limited to interviews and desk research - they are conducting almost no ‘added value’ services such as analysis, statistics and presentation development. Hence, most foreign clients outside China are foreign market research agencies.
These Chinese research agencies also conduct a small amount of international work, mainly by subcontracting to foreign agencies. However, the price of conducting research in the West is prohibitive to most Chinese clients; therefore this type of project takes place very infrequently.
It is worth noting that these medium- to large-sized agencies are relatively few in number – in fact there are no more than 20, and this number may well decrease as industry consolidation continues to occur.
Small Chinese research agencies
Smaller Chinese research agencies, that is those that turn over less than USD$1.5m, are almost exclusively fieldwork-only agencies, carrying out data collection for the larger agencies in China. These companies number around 1,200 and are an invaluable base for the industry as a whole, in that they are geographically dispersed and can gain information from the remotest areas of the country.
At present, most requests for business-to-business research are focused on China’s first- and second-tier cities, meaning that most business-to-business work is conducted by the big city agencies. Concerns by business-to-business agencies about quality, coupled with businesspeople’s increasing willingness to provide information over the telephone, mean that in-depth telephone interviews (rather than local agencies) are increasingly used to gain information from businesspeople in relatively remote areas.
Foreign research agencies
Foreign research agencies have operated in China for almost 2 decades, following the arrival of AC Nielsen in the 1980s. In fact, around half of all full service agencies are subsidiaries and joint ventures of foreign companies. This can be a real advantage to Western clients, who want not only Western style information delivery, but also client liaison capability within the same time zone as them. Hence projects conducted jointly between the ‘Chinese’ and ‘home’ offices are common. Foreign agencies conduct a great deal of work for foreign businesses outside of China, and also compete with the higher quality local agencies when it comes to working for Chinese branches of foreign companies.
Over the past 3 years foreign business-to-business research specialists (such as Psyma Business Research and B2B International) have started to arrive in China, whilst larger, more general agencies, such as Synovate have increased their business-to-business focus. These players have positioned themselves at the high end of the market; indeed both Synovate and B2B International position (and staff) themselves to a large extent as consultants. This reflects the fact that so much business research in China is market entry and market assessment focused, requiring action-oriented conclusions, firm recommendations, and ultimately access to lawyers and accountants who will guide companies through the market entry/expansion process.
Over 90% of the business of foreign business-to-business agencies is from Western clients, be they located in China or abroad. However a small number of Chinese clients now have the budgets to commission Western agencies to conduct export studies in Western countries, and this trend is expected to increase over time.
Foreign consultancies
So much work from Europe and the US is market-entry based, and therefore strategic in its nature, that management consultancies offering a high value added service have added some market research to their portfolio. Conversely, foreign research agencies (such as Synovate Business Consulting and B2B International) have focused on recruiting consultant-researchers who can focus on adding value and advising on market entry at the end of a project.
Market entry specialists
Companies and organisations focusing on the legal and transactional aspects of market entry have positioned themselves as providers of market research to new entrants, albeit much of the market research is sourced through the market research agencies and consultancies. A good example of an organisation offering access to market research in the context of more general market entry services is CBBC (China-Britain Business Council) – see www.cbbc.org and click on ‘Market Intelligence’.
What does this mean for Western research buyers?
It is clear that there is a good range of organisations capable of providing information and intelligence in relation to Chinese markets. It is equally clear that different types of organisation are set up for different client bases. Our advice to the Western buyer - unless your company already has a strong understanding of the Chinese market and a Chinese-speaking in-house manager – would be to target the Western-owned market research companies located in China. Such companies have experience not only of Chinese markets, but just as importantly experience at examining those markets through the eyes of a Western business. They also have the linguistic capabilities and understanding of Western clients’ requirements that makes them easy to use as information providers.
A summary of the market for business-to-business market research in China is provided below:
Figure 1 – Which agency to use, and when
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