Monitoring The Mindset

IT may seem a paradox at first sight. With the retail market going through a dip over the past year, marketing companies went into fire-fighting mode. "Cut expenses," barked the big bosses. The first head in the guillotine was the ad budget. However, to the pleasant surprise of the market research industry, nothing drastic happened to it.

On the contrary, in fact. The MR industry has grown by 20 to 25 per cent in the past year to touch a total turnover of Rs 170 crore. Several smaller companies even grew by 60 to 80 per cent. Leading clients like Hindustan Lever and ITC retained MR budgets of Rs 10 crore each. So did Pepsi, Coca-Cola and SmithKline Beecham (SKB) with budgets ranging between Rs 4 to 5 crore.

Says Nehal Medh, general manager, ORGMARG, which accounts for nearly half the industry's business: "One major factor for the MR industry's steady footing is that leading clients are committed to continuous research." Though a part of the MR budgets of larger, professional companies are discretionary, the bulk, nearly 70 per cent, remains steady and generally unaffected by their sales and profits. Explains K.S. Srinivasa Murty, head, strategic services, Hindustan Lever: "Our MR budgets grow proportionately with our business as we see it as a marketing investment."

 With competition on the shop shelf on the increase of late, more and more marketers are subscribing to this look-before-you-leap philosophy. In these volatile days, brand success can't be taken for granted. "No longer can you be assured of selling all that you manufacture," says Rajesh Srivastava, vice-president, marketing, DCW Home Products, which owns the Captain Cook brand. This dictates a need for a continuous feedback from the market to know what the consumer is thinking, what makes him or her tick, what influences that final buying decision. Says Murty: "The need to feel the market pulse is more urgent if business is floundering in a recessionary time."

Competition has made the cost of brand failure very high. In the new market environment, therefore, product and brand testing has become very rigorous. The product is tested in home placement tests. Packaging is tested as an important tool for brand positioning and differentiation on crowded display shelves. Finally, the communication—the commercial, for instance, is checked out. Earlier, only the final film was tested. But media fragmentation—there are 1,700 TV ad spots every day—has added to the high rate of failure and so marketers now check the films at each stage. The script is tested, the conversion of the script to animatics is looked at and the film sampled. "You have to ensure that your communication is working for your brand and your company image," explains Srivastava.

Explains Debashis Pati, deputy marketing manager, Godrej Foods: "Advertising is expensive and not so productive in a short-term recession such as the one prevailing now. Thus ad budgets are slashed while MR spends stay." Cost of doing MR is relatively far lower. MR budgets range typically between 2 to 10 per cent of ad budgets. It therefore makes complete sense to invest even more in MR and reduce larger risks.

WHILE 80 per cent of the MR business is client-specific, the rest is accounted for by MR products that the different agencies offer. ORG-MARG has products like its Retail Audit inherited from ORG, and INTAM, its TV rating point (TRP) system. IMRB, which accounts for 40 per cent of industry business, has its Peoplemeter TRP system among others, while Pathfinders offers P-SNAP, its Study of the Nation's Attitudes and Perceptions. Over the last two years, smaller MR agencies have tied up with leading international companies, and inherited internationally recognised MR products. These gained them considerable headway with clients. MBL of Hyderabad tied the knot with RCG and offers its advertising tracking system, the Stochastic Reaction Monitor. MBA-Gallup offers Gallup's Customer Satisfaction Measurement system.

 Syndicated studies such as INTAM, People-meter and P-SNAP cover a wide gamut and are offered to clients at relatively low rates. The MR companies invest substantial sums on them but earn back even up to 100 per cent profit. P-SNAP, for instance, costs Pathfi-nders close to Rs 40 lakh but covers 40 cen-tres. Clients get to buy the data for about Rs 2.5 lakh for the year. INTAM and Peoplemeter cover five and four cities respectively and cost about as much. Srivastava endorses that such studies provide "actionable data" at low cost. TRP figures, for instance, are indispensable in tracking how a brand's advertising is working. Adds Pati: "MR data helps to share and, sometimes, pass on, the risk of making a marketing decision."

 The need for differentiators for brands is increasing. If Hindustan Lever's toothpaste brand Pepsodent has done well, it was because research helped it find a sharp USP of teeth being germ-free hours after brushing. Competition also caused established marketing firms like SKB and Marico to re-look at their brand portfolios. Marico underwent a brand rejuvenation exercise last year. SKB is polishing up its range for some time now. All this has resulted in larger MR budgets.

"The consumer's mind is changing with the plethora of products, resulting in significant trends in the marketplace," says Anand Varadarajan, president, Pathfinders. For instance, shampoos had about 18 per cent penetration across markets. In less than two years, this increased to nearly 27 per cent. Tracking such behaviourial changes is crucial. Marketers now research before and after launching products or re-launching older ones. Thus, MR studies like P-SNAP which reveal intricacies of consumer behaviour are finding more and more buyers.

Medh sees a distinct shift in the clients' understanding of what research can do for them. "They are making research work harder for them," he feels. MR studies are therefore yielding more focused and comprehensive data for the clients. Increasingly, MR is seen as investment, not expenditure.

Clients are showing a growing interest in more fundamental issues like understanding what their business barriers are. This has led to a considerable change from earlier sporadic studies to specifics like "who's competition". Qualitative research budgets are being plumped up. HLL now sets aside a third of its budgets for qualitative research.

Till now, companies were trying to understand urban India. But rural markets are now growing four times as fast as the urban. The need to figure out what the rural consumer wants is fast becoming the focus of all marketing firms. But not a single one is equipped to study the rural markets on its own. Even Hindustan Lever, which has among the largest rural distribution penetrations as well as a huge internal MR division and consumer panels which monitor 20,000 households countrywide, does not have access to the rural consumer's mindset.

 "Our markets have become so dynamic in the past few years that the need for primary data to understand their vagaries is acute," feels Varadarajan. This need will only grow for the next four to five years, he predicts, and the MR industry will grow alongside. Murty agrees. "The share of our time and money on strategic research is increasing."

To the further benefit of the MR business, new industries are looking at MR. Financial institutions, foreign, private equity investors are resorting to using MR to understand factors like brand equity, brand power, brand loyalty, distribution coverage, dealer goodwill in the Indian market. Says Srivastava: "Worldwide, these MNCs and the MBAs they hire prefer to use research to define and fine-tune their marketing strategy." They are doing so here too. Business has also been coming from unexpected quarters like the real estate industry. Recently CIDCO in Mumbai conducted studies to understand what kind of housing consumers want.

Is this growth a flash in the pan? Not quite. Says Murty: "MR is entirely driven by business and adds value and relevance to it." As long as dynamic markets exist, MR will enjoy its fair share of business.