business of market research
TRANSCRIPT
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The Business of Market Research
Market Context
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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?
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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
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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.
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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
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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.
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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
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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.
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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
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✗ ✗
✗
✗✗✗✗✗
DecisionMaker
Marketing Manager
Market Research ManagerConsultancyMarket Research
FirmData
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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:
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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.
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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
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Business Model Games
Vertical Specialization
Customer Specialization
Application Specialization
MarketResearch Platform
Virtual EthnographicEngine1
2
3
4
5
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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.
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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
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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
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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.
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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?
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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.
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