Web-enabled technologies helping globalize marketing research

Expanding horizons

Editor’s note: Raymond Pettit is president of ERP Associates, a Ridgewood, N.J., research firm. Robert Monster is founder and CEO of Global Market Insite, an Issaquah, Wash., research firm.

A rapidly emerging trend affecting the market research industry today is globalization. Globalization is no longer an option but a strategic necessity for all but the most specialized or localized firms. Global mergers and acquisitions, International profit centers, worldwide marketing, global branding, and cross-border business models have put increasing demands on the market research profession to provide new and effective solutions. This globalization of the client sector has challenged the market research industry to follow a path already well worn by other professional services providers.

In the past 20 years, the pace of globalization has been accelerated by the growth of the Internet infrastructure and the rise of networked communications. Economic boundaries are blurring. The rules are changing. Increasingly, firms are expanding globally as opportunities abound to:

• reach more customers;
• increase economies of scale;
• adjust, control, or lengthen product life cycles;
• make use of less restrictive sourcing policies;
• redeploy work to markets with lower operating costs;
• take advantage of worldwide consumer demand for greater varieties of products at lower prices.

To realize these potential opportunities, however, requires infrastructure for communication, management, marketing, and research that enables global coverage, but also allows local involvement. While it is tempting to rely on software and technology to achieve this, for the market research industry the road to gathering customer knowledge and delivering insights to clients is still a combined effort of tried-and-true market research techniques and creative use of new tools and processes. The key to useful and actionable research still lies in combining the proper use of appropriate data collection methods and thoughtful, high-quality analytics.

Without question, the Internet has opened the door to entirely new ways to gather, analyze and deliver data. Researchers can now offer customized research, multi-method online, and multi-mode (online and offline) approaches using a platform designed and based on online enabling technologies. In the vast majority of cases - particularly in the emerging customer relationship management (CRM) analytics space - this serves to enrich the overall market research process and add needed value and business intelligence at key customer touch points along the market research value chain.

Why go global?

Students of globalization will know the familiar arguments for why companies go global. For the non-initiated, there are five main reasons why becoming global has ceased to be an option in most industries and has become a requirement for most medium- to large-sized corporations.

1. Pursuit of growth: In the quest for continued growth, many companies have no choice but to look abroad. Developed country markets are increasingly saturated within mature product and service sectors. Thus, growth requires a continuous effort to locate fresh opportunities in emerging markets, as well as rapidly expanding the global distribution of new products. As a result, the term “global market share” is increasingly present in modern business vocabulary.

2. Cost reduction: A company with global presence will have an advantage over a company that cannot leverage the relatively large differences in labor costs between world economies. Utilization of fixed assets is significantly enhanced vis-à-vis a domestically focused competitor. Similar models exist in data processing, e.g., the use of Indian or Eastern European data processing centers to serve U.S. and Western Europe.

3. Market responsiveness: When a company expands to other countries, it must often adapt at least some features of its products and/or processes to the local environment. This adaptation requires generating local knowledge. Some of this research may in turn be irrelevant outside the local market. Local market understanding on a global scale provides the basis for making targeted changes that can add value. For example, most consumer product companies will confirm that Japanese consumers have highly discriminating tastes and can be exceedingly articulate in communicating their unmet needs to researchers who ask using anonymous methods such as self-administered interviews (online or offline).

4. Globalization of customers: The phrase “globalization of customers” can actually refer to both “clients” (who are worldwide businesses) as well as “customers” - people who are internationally mobile (such as executives served by credit card companies or serviced by hotels around the world). Three main reasons dictate why a company may seek to serve individual global customers. First, customers may strongly prefer worldwide consistency and coordination in products and services. Second, for the sake of efficiencies, customers may favor dealing with a smaller number of partners or service providers on a regular basis. Third, allowing a customer to deal with different suppliers in other countries brings the risk that the customer may choose that competitor at home as well.

5. Competitive response: If a competitor starts to globalize, they can use their global presence to advantage vis-à-vis domestically focused firms. Initially, global companies can leverage this advantage by capturing new markets while pursuing efficiencies on a global scale. Soon, they can profit from knowledge exchange and development and begin to provide a coordinated source of supply to global customers. Finally, they can use multi-market presence to subsidize and wage a focused attack in a competitor’s home market. As a result, in today’s world, it is dangerous to be a late-mover to a global strategy.

Globalization, characterized by mega-mergers and foreign direct investment, is an accelerating trend. Even the current economic slow-down will not reverse this trend.

The 2001 Honomichl report confirmed that the pace of global consolidation also continues in market research, with approximately 60 percent of the industry represented by 25 top firms based on revenues. This global consolidation is occurring to some degree as a sub-component of the large media conglomerates such as VNU, WPP, IPG, and Omnicon. It is also happening among the more focused business intelligence firms such as IMS, TNS, IPSOS, GfK and Intage, nearly all of whom are global in their view.

Challenges to globalizing market research

A key driver of globalization is undeniably the pervasiveness of the Internet as an affordable means of communicating and gathering data over long distances. This has also created the framework for using the Internet, and particularly Web-based enabling technologies, to do, among other things, surveys among consumers across the world.

Following on the heels of the acceptance of online surveying in highly industrialized countries, there has been an increasing trend towards managing the entire research process using the Internet as the enabling platform. Although the difficulties of carrying out cross-border surveys are well known to the market research profession, a compelling need still exists for an integrated centrally-managed system for planning projects of this nature, executing them, and delivering results to the global client.

In fact, the first steps toward meeting this need are emerging in the form of Web-enabled systems that use Internet technologies to construct an integrated global market research infrastructure. Companies are moving rapidly to develop these enabling systems for use by market research companies. These solutions allow the development, deployment, collection, analysis and dissemination of a broad spectrum of research across the enterprise and around the world.

Solutions for globalizing market research

Given the demand on market research to deliver a single real-time view of global research data, the fundamental model for data aggregation must change. The historical model is inadequate for the demands of the end-client who must make global decisions in less time than ever before. Consider the comparison shown in the chart.

The difference in work processes can be illustrated in the following comparison.

Traditional model
The traditional model (Figure 1) is based on batch collection often collating data from a variety of data formats, and perhaps using a variety of different data collection vendors. The result is long lead-times and higher risk of errors due to batch data processing. Data delivery is managed entirely in batch, usually in non-electronic form such as printed or faxed tabulation reports. Analysis beyond the basics requires the additional step of a skilled quantitative researcher and possibly another loop back to the graphics department to turn results and recommendations into a report.

Updated Internet-centric model
The updated model (Figure 2) leverages net-centric technologies while working with traditional Web survey engines. The data is centrally collected into scalable relational databases that can be managed in real-time using Web-based tools, and which can be accessed securely by clients using online portals. Thus, data access/reports can be continuous, filtered through analytic experts, or published online and delivered directly to the client’s desktop.

The importance of panels

The restructuring of business processes is one key component to leveraging the efficiency gains made possible via the Internet. A further major structural change that is, in part, attributable to the Internet, is the expanded use of panels, particularly global access panels.

In an era of rapidly declining cooperation rates for CATI, there is almost no choice but to consider using panels for online research. One year ago, this was a subject of debate but the anti-panel sentiment is rapidly declining, particularly in markets where high-quality managed panels are available and online penetration levels are considerable.

For global research, the current pool of single-source respondent panels is surprisingly small. However, recent announcements in the industry suggest a growing interest in expanding and extending global panel operations. As of this writing, there are serious plans to either develop or purchase global panels going on throughout the industry. Such developments indicate just how important panels have become to any company that wants to provide online research services.

For the moment, the economics of panel access are also increasingly in favor of the research buyer. A year ago, the price per completed interview for panel usage in the USA was close to $10. Today, the price is closer to $5 and falling. This trend may eventually be repeated outside of the USA but in 2001, panels in most countries have not been commoditized and pricing is still sufficiently attractive for research suppliers to build global panels.

To illustrate the transformation in the architecture made possible by the Internet, consider the comparative case study shown in the chart of a global market research firm conducting a 10-country study requiring 1,000 15-minute quantitative interviews in each country.

Conclusion

The globalization of business is redefining what a client wants and expects from market research efforts. Challenges notwithstanding, at a fundamental level, global clients want:

• to be able to compare results between countries using consistent methods and assumptions;
• to achieve enterprise-wide understanding of geographically dispersed consumers;
• to develop work processes that enable faster global innovation.

The evolution of the market research industry, as driven by internal and external forces, continues to be played out on an emerging global landscape. Based on today’s unique convergence of trends and pressures, it is possible to fast-forward to a market research industry that displays the following characteristics:

• Internet-based market research will be the standard for managing and deploying quantitative multi-country consumer research;
• the analysis of multi-country results will be conducted via Web-based applications rather than desktop PCs;
• consumer research data will be closely integrated into global enterprise computing systems;
• large portions of custom, omnibus and tracking research, perhaps the majority, will be conducted using managed panels.

References

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