In his latest Thursday Night Insight, Alaric Fairbanks gives us a glimpse into his life conducting market research in China.

Our permanent Beijing office has been up and running for about two and a half years now, and over this period I have been asked by both colleagues and clients outside the country about how working in market research here in China is different from in the west, and how it is similar. On a high level, there are obvious similarities: we have to win and design projects, identify respondents and sources of information, collect data and analyse data…the same as my colleagues elsewhere. This is pretty much as you may expect anywhere.

Things get slightly different, however, on the type of projects: For the first two years, the majority of projects were market analysis and market development, with less interest in more quantitative research projects like customer satisfaction. There is, though, more and more customer sat work happening, as clients become more established, and of course we become more established with existing companies. In our experience, market analysis demand tends to focus on both the factual (i.e. size, structure and trends) and the analytical (i.e. what this means for developing sales). These projects tend to feature more qualitative investigative techniques and, in some ways, are more akin to a jigsaw where you first have to find the pieces.

Clients have, in the main, been larger foreign companies and multinationals who already have a presence in China, but the projects are often commissioned abroad. Often this is because the market research function or strategic decision making unit is located in corporate headquarters, although we are seeing a lot more work commissioned from within China itself. Another reason for foreign-based commissions is the need for third party verification (or otherwise) of information coming from their China-based operations. On a practical level, having a large proportion of clients based in Europe and North America means that face-to-face meetings for commissioning and presentations are not so common, and telephone conferences and web presentations form a larger part of communications. This also means that interesting hours are often worked at commissioning and presentation meetings!

As I already mentioned, an increasing number of clients are from within China and other parts of Asia. Again, the overlying characteristics of working with them remain the same i.e. understanding their needs, proposing a suitable methodology, negotiating timescales and price, etc. Where differences occur, however, are in lead times (longer) and very often in the brief itself. We have seen an increase in the number of specific written briefs, but these are still very much in the minority. Another interesting characteristic is how these clients prefer to communicate. After initial contact, many prefer to rely on instant messaging over the internet, mainly qq or similar services, for day-to-day communication, rather than telephone or e-mail. This is also having an impact on research methodologies.

Methodologies for data collection here include all the usual suspects and, language aside, would be largely familiar to clients and colleagues in other countries. There are, though, some differences in application, for example focus groups tend to work better in smaller numbers, 6 to 8 being optimum. It is often argued that, especially in business, face-to-face interviews are necessary here. Very often this isn’t the case. We recently had a project looking at the market in the ‘biosolids’ industry, meaning we had to talk to respondents in Chinese sewerage works. Initially this seemed quite daunting, until it became clear that these people were extremely receptive; no pushy sales people come and call (for perhaps obvious reasons), and they are seldom asked about the intricacies of their work. Recruitment was aided by the incredible take-up of social networking and bulletin boards among Chinese professionals. As a country undergoing rapid change, it is perhaps no surprise that methodologies and attitudes to them are changing too. From a ‘consensus’ of f2f being the only acceptable technique just a few years ago, telephone and indeed online have increased in importance incredibly quickly, with instant messaging even being used for in-depth qualitative work. Whilst respondents are often very keen to work with different approaches, the market outside China and occasionally inside sometimes sticks to believing outdated truisms.

In this short space available, it is clear that although many principles and approaches are of course similar, there are nuances affecting all aspects of the process. Where this may be more complicated or even contentious is around how this is manifested in everyday work, for example the amount of time required on quality checks, and HR issues and administration. I’ll try to cover these in my next post.

To learn more about our work and our team in China, visit www.b2binternational.com/China

In the final installment of this article, Julia Cupman concludes her list of points to consider when assessing new market opportunities, and reiterates that the economic downturn still presents myriad opportunities to many companies:

7. What is the market structure?  A key to a market entry strategy is getting the channel to market right.  To do this, the research should explain what the market looks like, who the main players are and what channels to market they are using.  For example, substantial sales may be generated through distributors, agents or other types of intermediaries; this is important information that will suggest possible routes to market.

8. What are the market’s perceptions of the current suppliers?  A company cannot enter a market without understanding who their potential competitors are and the market’s views on these.  Hence, the research findings should document which suppliers of the product/service are known and used, the perceived strengths and weaknesses of these suppliers, and the nature of the relationship between the buyers and suppliers.

9. What is the competitive environment?  The degree of rivalry should be explored to provide an insight into the competitive environment.  Profiles of the major players should be included in the research, plus insights on how these players operate, how they position and promote themselves, and what their product/service looks like.

10. What are the incentives and barriers to entry?  The research should investigate how the incentives to entry can be maximized and how the barriers to entry can be overcome.

11. What is the market size?  No company should ever consider entering a market without a feel for market size.  It needs to know the current size of the market and the annual market growth rate in order to determine whether market expansion is feasible.

12. What is the opportunity for a new entrant?  The research should explain how a new entrant should enter the market and how it could steal market share, including an indication of potential market size.  It should also provide an overview of which market segments offer the most opportunities and what gaps there are in the market.

Market expansion may be a viable opportunity that offers a means for companies to sell more if their prospects domestically have been blackened by the economic downturn.  Market entry research can cost anything from $40,000 upwards, depending on the nature of the research.  This is a small cost to pay given the high return on investment.  Hence, companies that cut their marketing budgets during economically challenging times are potentially closing doors to new opportunities.

To find out about B2B International’s market assessment research, please click here.

Following on from yesterday’s blog post, the second part of Julia Cupman’s 3-part feature on increasing sales in challenging times continues by looking at some of the questions a market entry or market assessment study should help to answer:

There is an obvious requirement for market knowledge and market insight prior to devising a market expansion strategy.  Market research and intelligence should be used to determine the precise nature of the opportunity, the size of the opportunity, and the routes to market.  Many companies turn to market research providers to do this as they are independent and, therefore, unlikely to prejudice the findings.  They also have the expertise in conducting market assessment and market entry research.

Entering a new market is undoubtedly a daunting task.  The following list of questions should assist marketers and their colleagues to explore, scope and define the opportunity in expanding into a new market.

1.  What are the high-level factors surrounding the target market?  Factors such as the country’s GDP, compound annual growth rate and inflation rate should be noted as they could potentially affect demand.  Other factors, such as the industrial production growth rate, the state of the country’s infrastructure, the overall business climate and the cultural norms associated with business should also be covered in the research as they could affect the decision to enter the market and could influence the nature of the strategy.

2. What is the purchasing process surrounding the product/service concerned?  It is necessary to understand who is involved in the purchasing decision and how these decision-makers can best be reached.

3. What are the market’s requirements in purchasing the product/service concerned?  Understanding the market’s requirements is crucial in determining whether the company’s product/service is appropriate for the market.  Key factors influencing the decision should be explored so that the company’s offering can be tailored to suit local demand and to satisfy the market’s needs and wants.  The research should also uncover the market’s unmet needs, offering potential opportunities to be exploited.

4. What are the challenges?  An understanding of the main challenges faced by buyers and sellers will provide insight into problems and pressures faced in the market from both demand and supply perspectives.

5. What are the trends?  It is crucial to understand the nature of the demand for the product/service concerned in order to ascertain whether a company’s products are suited to this new market.  Current and future demand should be explored in terms of how demand is predicted to change in the short, medium and long terms.  The research should provide a clear indication of the trends per market segment, per type of product or service, and per geographical region, as well as trends in international collaboration, mergers and acquisitions.

6. What are the influences on the market?  The political, economic, socio-cultural, technological, legislative and environmental forces on the market should be examined in order to obtain a thorough understanding of the business environment, and to understand who is influencing the market and what power they have.

This article concludes tomorrow.