MARKET RESEARCH: The Business of Research - The UK’s market research sector garners respect for its intellectual weight, but is there any room for more growth? Andy Fry reports

The UK’s pounds 1 billion market research business has earned itself a strong reputation over the last two decades. However, in recent years, it has taken on an increasingly central role in the development of client marketing strategies.

The UK’s pounds 1 billion market research business has earned

itself a strong reputation over the last two decades. However, in recent

years, it has taken on an increasingly central role in the development

of client marketing strategies.



There are many reasons for this. Sally Ford-Hutchinson, the global

planning director for DMB&B, says that the research sector benefits from

the fact that ’everyone in marketing and advertising is getting more

sophisticated.



As a result they need more and more information to understand their

markets.’ This, she says, is allied to ’a clear growth in the need to

prove effectiveness to the finance director who requires evidence of the

value of investments.’



These basic observations about core business competence are reinforced

by the way in which major European and US corporations have expanded

overseas. ’Globalisation is very significant for the UK sector, which

handles more than its share of international research,’ Ford-Hutchinson

says. ’There might be a case for clients to use judgement and instinct

in their own back yard. But in alien territories around the world they

need clear and consistent data.’



This international dimension is one which Martin Sorrell, the chief

executive at WPP, has also emphasised as a critical factor in the growth

of research - it already forms a major part of his own group’s

activities. ’In the last five or six years, the biggest change I have

seen is the growth in complexity of the relationships that we have with

our clients in the market research industry. Many have gone from

(operating in) one or two countries to 30 or 40.’



Sorrell says that this has obvious implications for researchers. ’Every

CEO in a global company is promising analysts, investment bankers,

customer suppliers, people inside the company and the media that they

will grow by five to 15 per cent. Achieving that is about making sure

they exploit every opportunity on an international basis. This increases

the demand for knowledge.’



Sorrell’s observations, made in a recent speech delivered at Research

International’s 25th anniversary conference in London, carry particular

weight because of the part research plays in the WPP portfolio.

Currently, WPP owns reputable research brands such as Millward Brown,

BMRB, Research International and The Henley Centre. Sorrell estimates

that information and consultancy interests account for 25 per cent of

WPP’s annual dollars 3 billion revenues.



His interest in research is not limited to the desire for market

intelligence about new sectors. He also believes big businesses can

operate more efficiently by using research to ’make sure everyone in the

company is facing the same way at the same time’ and to improve

connections and co-operation among various corporate activities .



Sorrell also believes that the research sector is benefiting in another,

more subtle, way. He says: ’A lot of consumer and managerial behaviour

is punctuated by insecurity. I think a lot of managers are now looking

for external ways of justifying their decisions. There’s less intuitive

decision-making.’



While all of the above factors might have helped drive the market

research sector, it would be wrong to assume that there are no issues of

concern. Indeed, the very factors which have driven the growth of

research have also spawned the business’s most serious challenges.



For a start, clients may want more research but they don’t necessarily

know what to do with it when they get it. Increasingly, there are

grumbles that there is so much research that clients don’t know where to

begin.



Researchers claim to understand this point. John Wilkinson, the chairman

at Research International, says: ’Clients often want to go into

considerable detail - maybe more than they should. We try not to bother

them with more information than is necessary to make a decision. Our

role is to get actionable conclusions from large volumes of data.’



Tony Cowling, the chairman of multinational research group, Taylor

Nelson Sofres, has seen no evidence that there are ’too many numbers’.

He says: ’People always ask for more information, in more detail - and

they want it yesterday.’



But he does accept there is a need for clear interpretation. ’The data

we supply on television audiences or drug sales is virtually impossible

to cope with in its raw form. So we are developing software to help

clients access exactly what they want.’



There are also increasing numbers of sources of data which clients can

use to analyse consumer behaviour. This means there are a growing number

of companies which can provide an alternative insight for clients by

using databases built around retail information.



Concerns about the role of market research and its increasing complexity

do need to be kept in perspective, however. Michael Baulk, the chief

executive at Abbot Mead Vickers BBDO, warns that ’there is a real danger

in taking one or two specific issues and amplifying them.



The fact is that the best brand companies, such as BT and Sainsbury’s,

are unequivocal about using research as an integral and consistent part

of their strategy. The greatest false economy a company can make is

underinvestment in customer intelligence.’



Baulk gives short shrift to the notion that clients are increasingly

insecure. ’Some companies use research more emphatically in a downturn,’

he admits, ’but there is no evidence that there is a new generation of

decision makers which subordinates intuition to research. Research can

guide you to a good decision - but it can’t make it for you.’



One issue that Baulk identifies is ’an increasing emphasis on customer

retention’. He says: ’As customer loyalty becomes a more forceful part

of the mix, there is more focus on data. But I think data consultants

are natural partners for market researchers.’ Indeed, WPP also has a

finger in the data analysis pie with the ownership of a small company in

the US called Hyperparallel.



WPP’s strategy of acquiring research groups has not, so far, been

followed by any of the other major communications groups. Cowling, of

Taylor Nelson Sofres, believes this is because ’market information

companies are generally viewed as referees.’ He adds: ’When we are

responsible for telling agencies and clients about TV ratings or share

of retail it is good to be seen to be comparatively independent.’



That doesn’t preclude agencies from doing their own research, he says,

’but they are more likely to use their money tactically to get a

competitive edge through the use of special studies.’



Wilkinson, of Research International, which is part of the WPP set-up,

is quick to stress that ’RI is run as a separate business and competes

head on with other research companies within the group, such as Millward

Brown.’ The question of conflict of interests between internal and

external clients is one which Wilkinson says ’never really gets raised

as an issue by our (non-WPP) clients.’



The question of agency involvement in research does of course have

operational pros and cons. The advantage of using a company such as

Taylor Nelson, which has offices in 35 countries, is that, according to

Cowling, ’we have huge experience of local markets. We can handle

multi-country projects, deliver consistent data to head offices but also

have people in each market to talk to as back up.’



By contrast, a direct marketing specialist like WWAV Rapp Collins, which

has a substantial team of 12 in-house planners, may not have the

geographical spread, but it can claim to know how its clients’

communication and information needs interrelate.



Gavin Hilton, a senior planner at WWAV, says: ’We will work with

external research companies if that is what our clients want. But we

like doing our own research. We have account planners who run research

programmes which we can then link directly to the communication and

creative solution.’



Hilton says that WWAV is ’trying to think differently from traditional

market research companies by using a very rigorous scientific approach

to speak to specific elements of the database. We look at issues which

directly affect the client such as, ’Why do consumers say they are

negative about direct marketing when response rates are so high?’ or

’How do you leverage brands so they get response?’’



If WWAV is going to work with outside research it wants people who

understand the industry.



Hilton says: ’Working with a company which is still on a learning curve

is not financially viable for us. We are looking for strategic

partnerships with research companies so we can push the boundaries in

targeting consumers.’



This emphasis on partnerships is a trend which Ford-Hutchinson, of

DMB&B, underlines. ’It is possible to have so much data you can’t see

the wood for the trees,’ she says. ’So you have to choose a research

company carefully.



We have a preferred list of relationships but would not choose to form

exclusive partnerships. Different companies have different expertise and

sometimes you want a fresh perspective.’



John Kelly, the deputy chairman of the British Market Research

Association, emphasises the respect that British market research

companies still garner for their intellectual weight, but he also throws

doubt on any overestimation of how much room there is left for growth in

the industry.



Planned legislation may curtail the use of some sources of data, and

there are concerns over falling survey response rates from wary

interviewees. There is also pressure from outside the research sector,

where new information gatherers are yet to adopt the ethical and

interpretation guidelines set down over a number of years, which could

threaten the reputation of the business.



Sorrell, however, is one executive who evidently foresees growth in the

information sector, which has the added advantage of being

recession-proof.



’Like it or not, quantitative justification for what we do is going to

become more important because businesses rely increasingly on genuine,

coherent and strong advice.’



The one area where he warns of a shake-up is media research. ’It is of

growing concern to clients because of the ever increasing real cost of

advertising - particularly on network television. When the likes of

Unilever and P&G spend dollars 3 billion to dollars 4 billion a year on

advertising, with 90 per cent on television, there is no way this area

is not going to be looked at.’



Ford-Hutchinson sees the key trend being towards ’data that is

actionable’.



She is also convinced of an upward curve in the use of research. ’If

corporations are to achieve the growth they want, then they have to

develop their brands globally and that needs consistent and thorough

research.’



She warns, however, against being lulled into using research that is

driven by the wrong motives, which may include the post-rationalising of

managerial decision-making referred to by Sorrell.



’All too often, in the drive for quick management data, we don’t end up

with good research, we end up with simplistic figure conclusions,

comparable but not relevant,’ she says.



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