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Following on from our post yesterday…

MR in general is becoming more production oriented, likewise qual.

A common currency of unit cost per group discussion now exists. This key evaluative metric applies to most qualitative practice. Standard qualitative measures are becoming a - albeit high-quality – commodity. As such, there are price and delivery time pressures.

MR, especially in the qualitative and innovations space, is blurring at the boundaries.

So, what is the definition of ‘research’? Increasingly money is being spent on research activities that are not ‘mainstream’; non-researchers are doing ‘researchy-type-things’ as part of a wider offer. Researchers are doing other things too, of course, but more competitors exist than those we’d normally call research agencies.
Different business models are co-existing uncomfortably.

We established there is no ‘single’ model in our sector. We are structured as a hybrid of ‘consulting’ and ‘manufacturing’. Buying patterns have traditionally reflected the latter: they are mainly driven by fixed price, units of product. In turn models that are appropriate to the buying of large scale data collection are being applied inappropriately to various types of consulting.

In fairness, buyers’ working patterns with agencies are changing too: witness increasing reference to ‘data providers’ and ‘insight providers’ in roster definitions.

So should data collection be seen as a commodity?

Yes. There is a measurable unit of production with associated quality controls, and that’s all there is to it.

Should group discussion, without any bells and whistles, is now treated very much like a basic unit of production.

Will the MR sector as a whole become commoditised? Yes and no. There is an entire sub-sector of activities and advisory services unrelated to the data machine that should be priced on time/value, not cost, but currently it’s insufficiently delineated.

It’s being treated as one: partly because agencies are selling these activities and clients are buying them as such. Also, partly because it’s clients, and suppliers work to a fixed price overall project model. Is this really appropriate for current work practices?

Maybe it’s time for a structural reorganisation within the MR industry, and a new narrative. Here businesses would be segmented into ‘makers’ and advisers’. In MR, the ‘makers’ would include most of the mainstream and might well redefine their core business(es) around ‘Volume’.

But at the ‘value’ and ‘vision’ end of our market, to avoid commoditisation, quallies can continue to fight their corner through relentless innovation. Luckily, this has always been one of their strengths. The best outcome is self renewal; a resurgence of new methods analogous to the original meteoric rise of ‘qual’ in the 1980’s. Clients are saying the this I exactly what they’d like and expect to see. Most importantly, it will be very good business for everybody.

from b2bsee * The Market Research Blog

Here at B2B International, we pride ourselves on being able to convert data into intelligence. We know that if we can get people, whose responsibility it will be to execute the actions, to own the data, we will achieve a positive outcome for getting action.

However, good research is not just about good interviewing and accurate reporting; it is also about communicating the findings to the research sponsors in such a way they can action the findings and achieve their goals. The B2B International team always work with our clients to develop actionable findings and communicate these in a way that allows strategic decisions and tactical action plans to be developed. From our experience we offer help and guidance in taking projects from initial concept through to implementation and completion; not just data delivery.

Here is an interesting extract taken from AQR’s (Association for Qualitative Research) www.aqr.org.uk ‘In Brief’ September edition by Andy Dexter, Truth. It argues the case that is it time to restructure the market research industry into volume agencies that concentrate on quantitative volume, qualitative specific agencies and consultancy advisers.

We are all in the business of market research. Agencies exist to make money. Clients buy research to make (or save) money. Clearly this works, or there would be no agencies, and precious few clients. But ‘how’ does it work?

At this years BIG, I examined the research industry from a ‘business’ perspective. In turn, this provoked questions about the economics and business models underpinning it and led to three main observations

We measure our industry as an ‘industry’ not a service.

Market research statistics have traditionally focussed on turnover: the amount charged by agencies to clients. It’s how manufacturing and retail industries benchmark themselves – by sales. Yet practitioners in sectors that researchers usually compare themselves to – advertising, PR, brand consultancy, etc. – are more interested in measuring fee income.

This focus on the top line means we tend to measure ourselves in a way that lends itself to industrialisation and commoditisation. This is a global phenomenon. And to reinforce this, we have designated ourselves and ‘industry!

The P&L account of our industry looks production rather than service oriented.

Looking at profitability or research agencies, and the underlying business models that drive them, there is clearly a dominant economic model in the research ‘market’. This is more analogous to production-oriented sectors than consultancy professions.

Similarly, it is clear that acquisitions, economics of scale and cost management – rather than true revenue growth – enables the larger players to maintain profits.

Distinct segments in our market reflect different financial dynamics at play.

In any sector there are three basic ways to make money on the supply side. Firstly, sell lots of stuff very competitively and make production and delivery highly economically efficient: ‘Volume’. Secondly, sell high value, high prestige stuff and ensure it is appreciated accordingly: ‘Value’. And thirdly, sell an idea; create demand for specialist new stuff that may not even exist yet: ‘Vision’.

Readers will have an immediate view on where particular agencies or agency types might sit. Thinking beyond our sector, under (1) we would typically find manufacturing, retail, and production businesses; product and volume-oriented; whose business is cost control and efficiency –led. Under (2)2 and (3) we would find advisory business, with a less pyramid-like structure. So, if there are two different markets, where is qual heading?

My initial instinct was to assume that, as a ‘sub sector’, qual would naturally fall under the heading of the advisory business model rather than the production-oriented ones. But this might not be the case…

This article continues tomorrow..

from b2bsee * The Market Research Blog

B2B marketing sector worth £10 billion yet still undervalued, says Cicero report.

Cicero has conducted and released a significant new study into the world of B2B marketing.

The major piece of market research, carried out in conjunction with industry publication B2B Marketing, gathered detailed data directly from senior practitioners in the field of B2B during 2006.

Cicero managing director Danny Turnbull says, “This is almost certainly the first, and definitely the most in-depth study of its kind ever to probe into the UK B2B landscape, which our data shows is an industry turning over just under £10 billion a year.

“It is long overdue, as B2B marketers have been keen for many years to demonstrate that we are a viable and distinct audience, and cannot simply be dismissed as an adjunct to the higher-profile consumer marketing sector.”

The report, which is now on sale, will prove invaluable to B2B marketers themselves as they seek to make sense of the various challenges confronting them in their daily roles, and to the service sector of agencies and suppliers, seeking to meet the needs and objectives of this audience.

Turnbull continues, “The report in places makes for disquieting reading, as it shows marketing to be undervalued in British businesses, with 37% of respondents even stating that marketing was seen as a cost rather than a value contributor within their business. This is very much at odds with the often-espoused view that marketing should be at the heart of every organization.

“But armed with the new knowledge gleaned from this research, I hope that as an industry we can meet the challenge to balance the need for short term, easy to measure response with a more holistic approach to building business brands and to put marketing where it belongs at the heart of organisation strategy.”

Summary and highlights of the research

It was agreed that one of the main problems the sector had was the low level of understanding and visibility in the wider marketing world. This was hindered by a lack of meaningful, thorough and reliable insight. Therefore the research set out to address this by producing the first comprehensive analysis of the UK B2B marketing industry, the practitioners within it and how it is evolving.

The objective was to help raise the profile of the industry by facilitating greater understanding of its size, scope and the issues that are shaping it, and to further shape and define the B2B community. It was aimed to provide a reliable document that practitioners from all areas of the B2B sector could use as a touchstone to help contextualise their activities, learn from trends in the wider community, and ultimately drive more success in their marketing.

What did we want to know?

There were a number of questions that we wanted to answer through this research.

1. How big is the B2B marketing sector? How many people does it encompass and how much money do they spend?

2. Who are B2B marketers? What are their backgrounds and how has this influenced their thinking going forward?

3. What are the current trends in B2B marketing? Which media are being used for which purposes?

4. How are they investing their budgets and selecting service providers?

5. How is the B2B marketing sector likely to evolve?

Target audience

In order to get an accurate picture of the B2B marketing space, we felt it was important that we only spoke to marketing decision makers; in other words marketing managers or above, but marketing directors wherever possible.

Methodology

Participants were recruited during September 2006 via a telemarketing campaign to a database of B2B marketers, and promised their choice of voucher (from a limited selection) in return for completing an online questionnaire. In all 147 people completed the questionnaire, from a wide range of different companies, in different industry sectors.

Size and scope of the market

The research produced a number of key insights into the B2B marketing sector. The first amongst these was the most accurate indication yet for its size and scale, both in terms of amount of annual spend and number of practitioners.

· Estimated expenditure on B2B marketing communications during 2005: £9.8 billion

· Estimated number of practitioners with marketing in their job title focusing purely on the B2B sector: 176,000

· Estimated number of practitioners with marketing in their job title for whom B2B is at least part of their remit (along with B2C): 272,000

(For more information on how these figures were attained, see the main report.)

These figures confirm that the B2B sector is a significant audience within its own right, and that it should not be seen as simply a subdivision of the overall marketing community. The ‘poor relation’ tag must finally be recognised as unwarranted, and should be discarded.

Key findings

The research also identified some important trends, issues and concerns underlying the B2B marketing sector, which will all have considerable impact on its future development.

1. B2B is a booming market.
Ninety three percent of respondents described themselves as ‘very’ or ‘fairly’ confident about the future economic climate for their organisation. Meanwhile, 90% expected their marketing budget to increase or remain constant in the next two years, and 56% saw it increase in the previous two years.

2. Beyond a website and basic email marketing, use of digital marketing techniques is limited.
Only 52% of companies are currently investing in search marketing, less than 10% have used viral and five percent podcasts/webinars. Despite the hype, actual exposure to and through these channels is very limited, and it is likely that companies are missing opportunities.

3. Email will be the single biggest growth channel in B2B.
This is despite warnings regarding spam, inbox overload and general erosion of response rates. 49% of respondents said they were expecting to invest more money in email during this period, against the next most popular medium, direct mail, on 33%. ‘Awareness raising’ is seen as the primary objective for emarketing.

4. Agencies are not seen as essential.
Over a quarter of B2B practitioners do not currently use any agencies for their marketing, although 40% use three or more. Only 20% of agencies are used in a strategic capacity.

5. B2B marketers are poorly educated.
Only around 50% of B2B marketers have any form of marketing qualification. Three quarters of respondents believe that existing courses are biased towards B2C activity, whilst over half of companies have no budget for training. Only 30% plan to undertake any further marketing-related studies.

6. There is a serious recruitment problem in B2B marketing.
Experienced B2B marketers are difficult to recruit, according to the overwhelming majority of practitioners who have any experience of doing so. Only 40% of B2B marketers followed a marketing career path; the majority transferred from other professions.

7. Trade bodies are failing B2B marketers.
Less than half of practitioners interviewed are members of any of the marketing trade bodies.

Conclusion
For the first time, we can see that B2B marketing is a distinct, sizeable and identifiable community, and one that it is both vibrant and buoyant. However, it faces its own set of challenges for the future, many of which relate to education and ensuring its practitioners are equipped for all possible eventualities.

from b2bsee * B2B Blog

What Can and Can’t Be Asked?

The subject of what can and cannot be researched in China is a contentious one, and – as with data collection methods – there is a tendency for the ‘uniqueness’ of China to be exaggerated in this respect.

In terms of subject matter, the truth is that there is very little difference between what can be researched in China and what can be researched in Western countries. Culturally, there is no great reticence in terms of providing information, and as the Chinese become increasingly aware of market research, obtaining their views is, if anything, becoming easier.

Most of the areas in which it is difficult to obtain information are similar to those that are difficult in the West. Company’s financial data, such as profit and loss information, is an obvious example, and this can be as much to do with lack of knowledge as lack of willing on the part of the respondent. It is true that certain areas of social research are closely monitored, as are attempts to seek details from Government on contentious issues. The Government is, however, seen as more of a help than a hindrance by most agencies, particularly due to its comprehensive documentation of regulations, policies and industry trends, all of which make environmental analysis of a market far easier than in most Western markets.

An area where there is a difference between Chinese and Western respondents is in the types of questions that can be asked. Chinese respondents are particularly honest about what they do and do not know, making them extremely reliable in market assessment projects where hard facts and statements are required. In contrast to respondents in many Western countries, Chinese respondents will not make up answers in order to avoid looking foolish. The flip side of this is when qualitative research is being conducted, and the researcher requires ideas rather than statements of fact. Projective questions such as, “in an ideal world, what would be the qualities of the perfect supplier?” tend to work far less well than in Western markets, as do speculative questions, such as, “by approximately how much do you think the market will grow over the next year?”. Whereas in Western markets these questions may result in the most comprehensive answers in the study, in China they would often be met with a curt “I have not thought about it” and “no-one can tell” respectively.

For more information on market research in China, visit the website for B2B International China.

from b2bsee * B2B Blog

We market researchers are in the business of facts and statistics and so it was quite shocking to read this article in today’s Financial Times explaining how the statistic on Gross Domestic Product is manipulated beyond belief. The basis of the article is the huge contribution made to the economy by the service industry (business services account for 40% of GDP today and manufacturing just 14%). However, the service element of our GDP is inflated by 8% by sleight of hand. Apparently a huge slug of £83 billion is put into the GDP as an adjustment for the rent we would pay if we were renting our houses that we own! All this to make sure that we don’t fall out of kilter with Germany where more people rent their houses; and to ensure that our GDP is on a like for like basis. Talk about kidding ourselves. That is nearly one fake £1 of earnings for every £10 that is shown in our GDP.

The message is always look deep into your statistics.

Lies, damn lies and befuddlement
By Chris Giles
July 27 2007

Alistair Darling says the output of the City of London is “absolutely critical”. The chancellor is spot on.

China’s economy inspires awe owing to its industrial muscle, but the British economy is still almost as large as China’s. Our strength comes from the services sector, enabling goods to be designed, built, financed, transported and sold. We are especially good at business services, whose growth since 1992 has been stunning. Then, the Office for National Statistics says, the sector accounted for just under a quarter of the economy. By 2004, it accounted for a third. The share of manufacturing dropped from 21 per cent to 14 per cent over the same period.
Even more impressive is the expectation that the share of business services will exceed 40 per cent of the economy by the end of the decade. Its contribution has risen by an average of 1 percentage point a year since 1997 and next year the ONS will include in the national accounts a proper estimate of the value of banking services. Alone, that will add roughly 1.7 per cent to gross domestic product.

But, for all the undoubted importance of lawyers, accountants, estate agents, architects, bankers and other employees of business services companies, we do not really know with any certainty what is going on.

The statistics on business services are rather like a cheap sausage; alluring on the outside, but the more you delve into the ingredients, the more queasy you feel. Start with the cash figures for output. A quarter of the recorded output of business services, 8 per cent of GDP, is “letting of dwellings”. Anyone thinking that this is a reflection of the buy-to-let phenomenon would be wrong. Most of the £83bn contribution to the UK economy in 2004 is the ONS’s estimate of how much it would cost property owners to rent their own homes.

The reason that notional rents are included in GDP is to stop international economic comparisons being distorted by patterns of home ownership. Without the adjustment, Germany would appear richer and more productive than the UK simply because most people there rent their homes from others with a recorded cash transaction. But in estimating this huge adjustment, the ONS has to guess the notional private sector rental value of every UK home using some heroic assumptions. The upshot is that if planning restrictions damage the UK economy and force rents up, measured GDP increases, improving Britain’s apparent productivity performance relative to other countries. Rental inflation also allows the government to borrow more, since one of its borrowing rules limits debt to 40 per cent of national income. This is perverse. And at 8 per cent of GDP, it matters.

New research by Professor Jonathan Haskel of Queen Mary College, London* casts further doubt on how far we should take the statistics at face value. International rules on what counts as business investment are outdated in a service economy, he argues. Correctly measuring things such as research and development or development of new financial products as investment - because the expenditure has a future value - would raise Britain’s GDP by 13 per cent, his research suggests.

If these two examples suggest the measurement of the output of business services is difficult, even bigger problems lie in differentiating real growth from changes in prices.

The soon-to-be-introduced better measurement of financial services is a huge step forward for the ONS. But it also has the worrying aspect that measured real GDP will often go up when interest rates rise. The reason: banks have traditionally used interest rate rises to improve margins by jacking up interest rates on loans by more than on deposits. This is clearly inflation, but the measurement of inflation-adjusted interest rate spreads are so difficult that under the ONS’s chosen methodology, it will be recorded as an increase in banking activity and productivity.
Or take lawyers. A survey in Legal Week recently found that law firms had increased their hourly rates by 6 to 10 per cent. That is inflation. But it will appear as increased output in the index of services, because data shortages force the ONS to adjust law firms’ turnover for inflation using an index of the wages of estate agents, among others. In other words, pay a lawyer 10 per cent more and Britain’s output and productivity rises. But pay a doctor 10 per cent more and it is inflation, because output in health services is measured by the amount doctors do.

I have no idea whether the real growth of business services is bigger or smaller than it appears in the national accounts. But I am sure it is not as it seems and, at 40 per cent of GDP, any errors in business services can paint a highly misleading picture of the economy. The ONS is aware of the problems and is working on improvements. We should give them enough money to do the job well. In the meantime, sensible people should not treat the national accounts as gospel. It is no wonder the Bank of England’s Monetary Policy Committee is increasingly falling out and its members form their views from impressionistic surveys of businesses as much as from the official data.

from b2bsee * B2B Blog