Business of Market Research

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The Business of Market Research

Market Context


Introduction

There are many sources that cover Market Research (MR) industry trends, activities and happenings.

Here we are covering the Business of Market Research:

- What does the Market Research Ecosystem look like? - What Business Games are being played? - Where is the profit and how is it shifting? - Are there areas where there is no profit? - What does this all mean for your business today and in the

future?


Market Research Trends

Continued cost pressures on suppliers

Technology is disrupting MR

Rise of the mobile research process, analytics, big data and social media listening

Shift from face to face and telephone to online

Move toward faster (and cheaper) micro surveys using the internet and mobile technology as a platform for disrupting current market research methods

More interactive, respondent-centric market research environment that fully utilizes new technologies

Growth of entrepreneurial and innovative MR firms

Decrease cycle time from question to answerBlurring of market research and business

analytics

Value shifting across MR industry

The future for full service research suppliers will include transforming insight into business impact.

Increase in DIY market research by clientsCommoditization of data collectionThe future of research is about listening, co-

creating, measuring emotion, global knowledge, and mining the river of information

Value shift from question based research to observation and measurement/analytics

Decline in traditional quantitative research

Changing and shifting MR provider mix

Client side research team disintermediationRise and investment in insight functions at

client organizations and consultanciesThe future for savvy client research

departments is leveraging internal and external partnerships for business impact

MR Market consolidationEvolving MR industry boundaries

Changing output from MR

Moving beyond data and analysis towards synthesizing, story telling, consulting and business impact

Move from understanding to predictingMove from expensive occasional sampling to

low cost real time consumer dataMove away from what shoppers buy to

understanding how and why they shopLinking multiple data sets to create meaning

and consumer insight

Changing MR skills requirements

Increasing requirements from hands-on qualitative and quantitative research skills to creative and strategic big picture thinkersSource: ESOMAR 2012, GRIT 2013, Simon Chadwick: Winds of Change, multiple Internet sources, Interviews


Market Research Ecosystem

The Market Research Ecosystem consists of the data that is of interest to decision makers, the types of data, the organizations who transform the data into higher value products and services, the client applications that leverage the data, information, analysis and insights and finally the types of clients.

By creating pathways through the Ecosystem, Value Delivery Systems are defined in support of a multitude of use cases.

On the next slide, a visual representation of the Market Research Ecosystem pulls it together.


Market Research Ecosystem

MR ProvidersMR types

People

Corporations

Industries

People’s data (big data)

QuestionedObservedMeasured

Data types

Primary

Secondary

Social Media

Online CommunitiesSyndicated

Corporate Data

Government Data

Qualitative

Quantitative

Applications

Strategy

Innovation

Brand

Advertising

Marketing 4Ps & 5Cs

Total CustomerExperience

HardwareSoftwareService

BusinessMarketing

New/Other

ACOILUSD

Clients

Corporations

Consultants

MR Firms

Political Campaigns

Decision MakerMarketing Manager

Market Research

Other

Business Information Company

MR tool vendor

MR Firms

Consultancies

Corporations

InnovationStrategyCustomer

ExperienceBrand / Marketing

Techno-InsightCommunities

Big DataEmerging technologies

different data is acquired by for different goals

to the benefit of


Where is the money?

Within an Ecosystem, “value” tends to migrate in patterns over time and the Market Research Ecosystem is not immune to that effect. Some of the value migration drivers include commoditization of services, competitive intensity, shifting customer priorities, shifting Go-to-Market channels, technological advances, changes to the application value chain and Market Research’s position, Business Model shifts in other parts of the ecosystem, ... There are others but these are the major reasons for the MR value migration. What most companies observe when a shift impacts them, is that they need to work harder, deliver more revenue just to keep their margins flat. No matter how hard they work, they find it very difficult to grow their margins. This has led many in the Market Research field to search for higher margins by moving upstream to higher value activities such as Innovation.


Value migration in market research

Fixed

Mobile

Long cycle times

Shorter cycle times

Insight from single

data setInsight from

multiple data sets

Expensive occasiona

l sampling

Inexpensive real time

sampling

Data Collection

Data Analysis

Synthesis

Insight

Id data needs

Decision Making

Corporations

Consultancies

Large full service MR firm

Boutique MR firm

Big Data

Social

Market Researcher

Marketing Manager

Decision Maker

Little Data

Entrepreneurial MR firm


Market Research Value Chain

Many people are involved in the process of Market Research. The people and processes that delivered on the different use cases were stable over many years; recent technological advances and shifts in the Ecosystem have further accelerated the change to those people and processes. As technology advances enable new methods, processes, capabilities, … some of those people are becoming less relevant and in some cases, hinder the process.

This is leading to Value Chain disintermediation. Why is this important to Market Research firms? Go-to-Market strategies will need to evolve: Client relationships are likely to be changing, new relationships will need to be created and nurtured. An example of this are technologies that enable decision makers to reach out directly to a Market Research firm or even Decision Makers who reach out directly to the data. In those cases, several intermediary people are bypassed / disintermediated. Some use cases are represented in the next slide.


Market Research Value Chain Disintermediation

Use Cases

Traditional

MR Departmentresearch

MR departmentthought partner

MR department thought partner & executes researchDecision Maker hires consultancy that hires MR firm

Decision Maker hires consultancy with MR department

MR department dis-intermediated

End user direct MR

✗

✗✗

✗

✗ ✗

✗

✗✗✗✗✗

DecisionMaker

Marketing Manager

Market Research ManagerConsultancyMarket Research

FirmData

✗


Application value chains

Advertising

Brand

Strategy

Marketing 4Ps & 5Cs

Innovation

Customer Experience

Diagnose Hypothesize

Data Collection Synthesis Recommendatio

n

Research Ideation

Concept Definitio

nProof of Principle Alpha Beta Validatio

n Launch Post Launch

Product Backlog Build Product

IncrementDemo

Product Increment

Product Increment Feedback

Analyze feedback

Learn and update

Modify Product Backlog

Awareness Choosing Order Installatio

n Learning Use Support Dispose

Business Informatio

n Companies

MR Firm Consultancy

Marketing

ManagerMarketing Heads CMO

Context & Objective Research Select target

consumersMedia

selection & budget

Design Refine Execute Feedback

Brand Audit Messaging Visual

IdentityCommunicati

onImplemen-

tationMaintenance

and refinement

Actors Scenarios Use Cases Sequence of actions

Representation of service

Continuous improvement

Hardware

Software

Service

Market Research is used for different applications and understanding the client’s value chain and the role of MR in that value chain is critical. Market Research companies will choose to operate across all, some or one of these applications and will be part of their Business Model choices:


Strategy Chessboard

A Strategy Chessboard is a representation of all the possible strategies within an Ecosystem and provides the framework upon which we can identify the macro level Business Games and Business Models.

(A Business Game is a cluster of like strategies)

This is a critical step in helping companies understand where they are positioned in the Ecosystem, what Business Game they are currently playing and make visible other potential Business Games available to them.

The next slides represent the Market Research Strategy Chessboard - first the frame and then the frame with the 5 macro Business Games overlaid.


Strategy Chessboard

Inno

vatio

n

Source of % splits: ESOMAR GMR 2012

Application Value Chains

Verti

cals

Brand Audit Messaging Visual Identity Communication

Implementation

Maintenance & Refinement

FMCG (22%)

Media (17%)

Public (9%)

Pharma/Healthcare (9%)

Telecoms (6%)

Financial Services (5%)

Wholesale/Retail (5%)

Automotive (4%)

Durables & Electronics (3%)

Other (20%)

Appli

catio

ns

Business Information Companies

MR Firm Consultancy

MR Manager

Marketing Manager

Marketing Heads CMO

FMCG (22%)

Media (17%)

Public (9%)

Pharma/Healthcare (9%)

Telecoms (6%)

Financial Services (5%)Wholesale/Retail (5%)Automotive (4%)

Durables & Electronics (3%)

Other (20%)

Bran

d

Mar

ketin

g 4P

s & 5

Cs

Cust

omer

Exp

erie

nce

Othe

r

Adve

rtisin

gSt

rate

gy


Business Model Games

Vertical Specialization

Customer Specialization

Application Specialization

MarketResearch Platform

Virtual EthnographicEngine1

2

3

4

5


Business Games

We have identified 5 Business Games in the Market Research Ecosystem.

Each Business Game is a cluster of like strategies.

For example, if you are playing the Vertical Specialization game, your strategy could be to focus on FMCG firms or your strategy could be to focus on Media firms or … There are usually multiple strategies for each Business Game.

I will note that there is sixth Business Game not represented here as it is not ready for prime time but will become more apparent over time.


Business Games

Virtual Ethnographic Engine

Company uses a common engine across all verticals, applications and customers. Any customization is done at the time of engagement for the client and the unique situation.

Vertical Specialization

Company picks one or a small number of verticals to focus on

ApplicationSpecialization

Company picks one or a small number of applications to focus on

CustomerSpecialization Company picks one or a small number of

customers to focus on

Market Research Platform

Company uses a platform and develops individual products to serve specialized Market Research areas.

Client DrivenSpecialization

Company treats each customer as a unique situation and develops the capability to rapidly deliver for each unique situation.

Generalist

Specialist

Platform

Pure play games

1

2

3

4

5

2 3 4

Categories Business Games Description


Market Research Business Models

• Corporate client model– Full service MR department in a corporation e.g. Fortune 100– Leveraged MR department in a corporation e.g. many mid cap companies– Consultancy (innovation, strategy, TCE, …) department in a corporation e.g. many

• Consultancy model– Full service MR department in a corporation selling MR services e.g. Disney– Full service MR consultancy e.g. GfK– MR function in a consultancy e.g. McKinsey, Bain, Gravity Tank, IDEO– Boutique MR consultancy e.g. many

• Data syndicator

• Hybrid MR / Syndicator model– Research and advisory firm e.g. Ipsos

• MR tool vendor and/or platform– Stand alone e.g. "CompanyX"– MR Tool sold by MR firm e.g. dscout by Gravity Tank

• “Big data” data source & analysis e.g. Google


Consulting ContinuumIn the following graph, we can see that Market Research is positioned as a “Functional – Tactical” activity and as such is “Cost Based” and within clients those costs are very tightly controlled. As you move up the continuum to “Business – Strategic” activities (Business Strategy, Branding, M&A, …) the budgets become relatively more discretionary and “Value Based”. The conversation shifts away from how much does it cost to what are my returns.


What does it mean for you?

As you evaluate your business and financial results, there are some key questions to ask: - What is your Business Model? What Business Game are you playing?- Is that Business Model likely to continue creating value over the short to medium term?- If your margins are suffering, why?- What actions can you take to position yourself for the medium and long term?- Will market disruptions likely affect you? Where would those disruptions come from?- What actions do I need to take today to position for the future?


Conclusion

Understand where you are playing in the Market Research Ecosystem. You might glean some new opportunities or you might see some risks to your business.

Get ahead of market shifts before they impact your business or at a minimum, understand the shifts and react!

Can you identify needed changes to your business, new activities that need to put in place, new ways to define your business?

The only certainty is that the Business of Market Research is evolving – are you?

As always, input and comments are welcome.
