B2B International
B2B International

December 20, 2010

Challenges and changes in the marketing research industry in 2010

It has always been assumed that marketing expenditure is one of the first things to be cut in the time of a recession and yet historically the market research industry has been spared. For the last 50 years the industry has been privileged to see year-on-year growth whatever the temperature of the wind that blew. However, in 2010 the party was over. Now that it is a mature member of the marketing services family, it has suffered along with the rest of the industry. And from now on it cannot be assumed that the market research sector will carry on growing at the pace it has done in the past, at least amongst its traditional audiences.

A recession can be a very useful time to force a change that has been a long time coming. Pressure on costs has caused the industry to think of more efficient ways of carrying out market research. Over the years the industry has been imaginative in finding more economical ways of capturing data, moving from face-to-face interviews used universally until the 1970s, then moving swiftly to telephone interviews and latterly embracing online research. These moves have sometimes been at the expense of depth but the result is that today a market research survey costs a third (in real money) of what it did 30 years ago. This means that market research is now much more affordable to a wide range of different sizes of companies and decision-makers.

The consumption of market research as a proportion of GDP is much higher in the US and the UK than it is in most other countries. In the same way as the world is catching up with the US in its consumption of cola drinks, so too the rest of the world will increase it’s spend on market research. We can see evidence of this in the rapid growth of market research throughout the developing world.

Coping with the new order in 2011

Coping with change is not always easy. The market research industry has been guilty of commoditising the services it sells by emphasising the price it charges per interview rather than focussing on the return that the investment it can deliver. This is understandable as agencies need to keep staff employed and most market research companies have a high breakeven point. They need volume through the door to make a profit at the end of the year.

And yet, this industry has within its grasp one of the most valuable assets that is needed by businesses today. The successful companies of the future will be those that have a deep understanding of the markets in which they operate – and it is the market research industry that can provide this intelligence.

In the past it has been the “suits” at advertising agencies that have provided ideas and strategies for eager consumption by leaders of businesses. That space is now wide open and available for market researchers as long as they have the skills and the authority to step up to the plate. In order to do this it will be necessary to charge the premium which the service deserves to pay for the quality of staff that can win the respect and attention of main boards everywhere.

It is a time for looking forward and for predicting the future. The UK market research industry in 2011 will have to continue to respond to the challenges of cost controls imposed on it by its clients. The public sector, historically one of the largest sponsors of market research in the country, will draw in its horns. The private sector has learned the lesson of beating up agencies to obtain lower prices and they will strongly resist price increases. Market research in 2011 will continue to be a buyers’ market and the companies that survive will have to be lean and fit and capable of showing a clean pair of heels in a competitive race.

The bright spots in the industry will be international market research because the world beyond the UK is showing reasonable growth, especially in the US and Asia-Pacific. Furthermore, agencies that can demonstrate that they can do the research, can recommend actions, and can take responsibility for delivering them, will be the ones that will be popping the corks in 12 months time.

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