MARKET RESEARCH: Tailoring data to get the real story - Market research firms face competition as the intelligence industry grows up

According to WPP’s Martin Sorrell, market research is the future.

According to WPP’s Martin Sorrell, market research is the

future.



Research companies already bring in 25% of WPP’s revenue, which goes

some way to explaining why Sorrell told Research International’s 25th

anniversary conference last year that: ’If you ask me strategically what

I would like to do with WPP, and what’s the area that I would really

like to build our capabilities in over the coming years, it would be in

the information consultancy industry.’



It’s revealing that Sorrell uses the phrase ’information consultancy’.

Businesses today are commissioning research and gathering information

from a broad spectrum of companies within the marketing services

industry.



Loyalty leads to intelligence



Buyers of research now have a wide choice of suppliers, from traditional

market research agencies to management consultants, advertising

agencies, media planners, direct marketing agencies, field marketing

companies, database specialists and universities. At the same time, many

companies are investing more in their own databases and in-house

expertise.



Tesco, like all retailers with customer databases built from loyalty

programmes, gathers much of its market intelligence itself. Chief

executive Terry Leahy told the Chartered Institute of Marketing at its

annual lecture in May: ’We have found Clubcard of great value in our

business. It has provided a breakthrough in terms of giving real

information about real behaviour.’



Market research firms, it seems, no longer have the monopoly on

research.



’There has been quite a lot of boundary blurring in marketing services

generally, not just in research,’ admits Research International’s

marketing director, Dave Phillips.



’Clients today need more time and resources to cope with the enormous

range of choices in front of them and to benefit from them. For many

it’s just bewildering.’



Judy Taylor, joint chief executive of Leapfrog Research, agrees: ’There

has always been quite a lot of competition from people who don’t call

themselves market researchers,’ she says. ’The lines between qualitative

research and planning have blurred.’ Indeed, Leapfrog works alongside

database companies, planners and management consultants and its clients

include advertising agencies M&C Saatchi and WCRS as well as Tesco and

Cadbury Schweppes.



Both Taylor and Phillips make the point that many non-specialist

companies that offer research then come to market research agencies to

fulfil some of the work. Research International, for example, works with

many of the top management consultants, such as McKinsey.



’We spend much more time co-operating with management consultants than

we do bidding against them,’ says Phillips.



Finding consumer niches



Meanwhile, the fast-growing database sector is enticing research buyers

with in-depth lifestyle and geodemographic data and access to large

numbers of consumers. Experian, for example, allows companies such as

Procter & Gamble, Coca-Cola and Tetley Tea to pose questions to hundreds

of thousands of consumers through its quarterly Canvasse Lifestyle

survey.



’It’s a cost-effective way to locate niche consumer groups,’ says head

of data acquisition at Experian, Martin Kiersnowski. ’With market

research, you may have to approach ten people to find one who fits the

profile.



We get responses from hundreds of thousands so we can create a pretty

representative sample of the UK population. We also have a big advantage

over pure market research because we can deliver the audience. Market

research people are not happy because they have a code of practice that

says research has to be confidential. But if people are happy to give

their details, why shouldn’t they?’



The Market Research Society (MRS) code of conduct is staunchly defended

by market researchers who say that it protects consumers and also

prevents response rates from falling any faster than they already are.

’We have to be extremely careful about looking after the people who give

us their time,’ says Phillips from Research International. ’Otherwise,

they won’t want to play anymore and we’ll just be left with respondents

at the extremes.’



Nevertheless, many companies are entering the research arena that are

not bound by the MRS code of conduct, including a range of marketing

services agencies. Direct marketing agency FFwd Precision Marketing set

up a research division earlier this year, headed by research

psychologist Dr Tamsin Addison, and has already provided research for

clients such as Novotel, Sun Valley and Auto Lease.



’The reason research is such a jewel in the crown is that it often sets

the strategic and targeting agenda,’ explains FFwd managing director,

James Davies. ’If you have influence over the research then you’re

really starting to get beneath the skin of the project. And in hard

business terms, offering research helps develop relationships with

clients and locks them in. If you are master of the research, that’s the

best way to drive a project strategically in the right direction.’



Consumer ’mindsets’



FFwd is concentrating on psychographic research to gather attitudinal

consumer data. It sets up focus groups to establish the type of

’mindsets’ among consumers about an issue and then uses telephone

research to identify more people in each mindset so that it can target

large groups. ’Most people stop at the focus groups, but for us focus

groups are just stage one,’ says Davies. ’One of the problems for the

traditional market research companies is that they have been slow to see

opportunities presented by data, particularly used with qualitative

research. But the smarter ones are cottoning on to the fact that data is

their friend.’



Direct marketing agency IMP has also been offering research to clients

for the past year. ’We run a rolling research programme to investigate

what’s around the corner in order to help drive the business and we also

do research on behalf of clients,’ says Ian Milner, New Business

Director at IMP. Methods include everything from questionnaires and

in-depth interviews to filming in-store, accompanied shopping trips and

deep cover research.



Topics covered by the rolling research have included impulse buying,

branding on the internet and the future of shopping.



Tracking market response



Other marketing agencies that offer research include field marketing

agencies which have a significant number of staff at their disposal to

undertake both mystery shopping and announced retailer visits to track

positioning, pricing and promotion of brands on the shelf. FDS, for

example, can deploy a large field force quickly to gather information at

the distribution end of the chain and feed it back to clients.



On the media side, Carat Insight is the research arm of media planning

agency, Carat. Companies such as Bird’s Eye Walls, Abbey National, Bass

and Virgin Records have been coming to Carat Insight for both

quantitative and qualitative research, some of which is contracted out

to market research agencies.



’Research helps us in two key ways,’ says managing director of Carat

Insight, Phil Gullen. ’It enables us to understand our client’s

customers and to evaluate advertising effectiveness.



’The advantage of doing our own research into consumer attitudes is that

the research can be linked to actionable data on the media side. We can

identify key segments of the market and then ask them about their use of

media and that helps us put together media plans.’



Several media companies have found that the best way to get the research

they need at a price they can afford is to collaborate. ROAR (Right of

Admission Reserved) is an ongoing survey of 15- to 24-year-olds.

Launched in 1995, ROAR is a joint initiative funded by six companies -

Emap, Channel 4, Carlton Screen Advertising, The Guardian, ad agency BMP

OMD and Kiss FM.



Operating as a club, about 1500 young people complete regular

questionnaires which allows the consortium to track and evaluate trends

over a period of time.



Pooling resources



Similarly, Viper (Very Important People Exclusive Research), which was

launched last month, is backed by Channel 4, Classic FM, Conde Nast,

Times Newspapers and media agency Mediapolis. Viper will provide both

quantitative and qualitative research into the affluent AB market.



’We are pooling both our financial and intellectual resources,’ says

Peter Bowman, Viper research director. ’It’s a way of generating more

expensive research of a higher quality and we feel we all give

credibility to each other. The fact that it is ongoing is also very

important.’



Before the launch, the group undertook research into consumers’

attitudes to the whole research process in order to maximise response

rates. ’Membership of the Viper panel should be seen as something

worthwhile,’ says Bowman.



Another route for companies shopping for research are academic

centres.



Cranfield School of Management, for instance, undertakes both

qualitative and quantitative research and offers extremely sophisticated

statistical analysis. ’Cranfield has long had a track record of doing

collaborative research with different industries,’ says research fellow

Lynette Ryals, who is currently working on a project for CSC (Computer

Science Corporation).



’What unites the companies that we work for is that they are all

interested in the notion of the learning organisation and that’s why an

academic institution appeals to them. Our style is usually a longer-term

partnership, but we can also fulfil demands for quick-fix, short-term

projects.’



Cranfield is also working with several ’clubs’ of companies where

information is shared but is kept confidential. ’The participants know

how they perform compared to the best, worst and average but they don’t

know who the best, worst and average companies are,’ says Ryals.



Such growth in the number of institutions and companies offering a

research service has prompted the classic market research agency to

develop its service. According to Phillips, market research agencies are

much more customer-focused than they used to be. ’The research industry

has typically focused on doing the job and then walking away,’ he says.

’The trend now is to offer more consultation, analysis and insight. You

can still buy yourself half a yard of research and do a swift 200

questionnaires but now the research industry is making big efforts to

understand how companies work and find out what action needs to be

taken.’



The way findings are presented has been revolutionised at Research

International, with researchers no longer laboriously going through

every finding. ’Now we look at the issues facing the business,’ says

Phillips. ’We present our key thoughts and ask our clients to tell us

what their main current business issues are and then we respond with

relevant information from the research. It’s a more intelligent way of

working.’



This approach recognises that research - however in-depth and exact -

has to be usable in a business context to be of value. ’Information is

no longer power,’ says Martin Sorrell. ’We all have as much information

as we need. We can, through the internet, get access to information that

would have taken us a long time to get before. So it’s not information

that is power, it’s the ability to use that information effectively that

is power.’



THE CLIENT VIEW



Philip Talmage is market research manager at CGU and also secretary of

the Association for Users of Research Agencies (AURA).



CGU, he says, typically uses as many as a dozen research agencies in a

year, as well as conducting some research in-house. ’We shop about quite

a bit and use a number of different agencies, from big companies to

independent consultants. Most large agencies will tell you that they do

everything, but the reality is that each agency does some things better

than others.



’For ad hoc research, we often use smaller agencies which offer a better

deal and more flexibility. We tend to go to recognised market research

agencies and don’t often use peripheral information providers.’



Important background intelligence is provided by reports. CGU

scrutinises information from Datamonitor and Mintel and also uses

surveys such as Target Group Index, the MORI Financial Survey and NOP’s

Financial Research Survey.



’This forms the quantitative backbone of our customer information

resource,’ says Talmage. ’We also subscribe to a syndicated survey of

insurance brokers from Opinion Research Corporation. Syndicated surveys

are good because, as well as being cheaper, they are objective in a way

that can be difficult when you commission the research yourself.’ Other

useful syndicated surveys cover claims handling, motor and domestic

insurance and advertising tracking. ’Between them, the syndicated

studies provide an ongoing background to important trends in the

market,’ says Talmage.



’Most of our ad hoc research tends to be either qualitative or

small-scale quantitative,’ he says. ’Qualitative research is valuable

because it helps us to develop our ideas rather than just count heads.

An important element is customer satisfaction measurement and we do some

postal surveys to customers. We do these ourselves but contract out the

data entry and increasingly we are contracting out dispatch as

well.’



Top 10 consultancies

Consultancy                     Turnover 97

                                   (pounds)

1. Taylor Nelson SofrZes         87,316,000

2. NOP Research Group            67,427,000

3. Research International        52,314,000

4. Millward Brown                47,910,000

5. BMRB International            29,091,000

6. IPSOS-RSL                     25,572,000

7. The Research Business Int.    18,688,000

8. MORI                          18,194,000

9. The MBL Group                 15,084,000

10. Infratest Burke Group        14,017,000

Source: Marketing’s Market Research Table - Sept 98



SOURCES OF MARKET RESEARCH



Market research agencies The Market Research Society has over 500 member

organisations offering the full range of research and data collection

methods.



Database companies



Database companies offer lifestyle, geodemographic and other profiling

information about all UK households and millions of UK consumers.



Management consultants



Research is an important part of the service provided by management

consultants, although it is often contracted to market research

agencies.



Academic institutions



Universities offer research facilities to companies, often for long-term

projects and the chance to do confidential work with other

companies.



Joint initiatives



Collaboration allows companies to do research in more depth and to fund

it on an ongoing basis, providing a continuous stream of results.



Field marketing companies



Large field forces are used to conduct mystery shopping investigations

and retail audits which provide information on pricing, product

positioning in-store and effectiveness of promotions.



Marketing services agencies Some direct marketing, field marketing,

advertising, media planning and PR agencies offer research. These

agencies tend to produce specific, actionable data that they can then

use to implement the marketing strategy.



In-house



Sectors such as retail, financial services, charities and mail order

operations are exploiting their extensive databases to find out more

about their own customers.



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