※This document is a translation of the report in the "Shijo Chosa Hakusho, 2002", "2002 White Paper on Marketing Research" published by the JapanMarketing Research Association in January 2002.
Problems Confronting Japanese
Marketing Research Industry
- Report of Attitude Study Findings
from Research Agency's Top Management -
by Kazuo Kobayashi
Advisor, Research International Japan Inc.
・Introduction
This document reports the results of a study entitled "Problems confronting Japanese marketing research industry", conducted in September 2001 among top management of official members of the Japan Market Research Association (JMRA). Preceding the report, I will give a brief introduction on how the Research Leadership Summit, who has a common view over the target problems in this study, is tackling various problems surrounding the research industry.
1. REsearch LEAdership Summit (RELEAS)
In the journal from the JMRA "Marketing Researcher" (No. 88, 2001), I contributed an article "Challenge to Marketing Industry Problems in the 21st Century - Report of the 1st Global Research Summit". This is a report on the ESOMAR/ARF co-ordinated first conference held in Geneva, Switzerland, on the 15th and 16th of January 2001. Here is a summary of the outcome of the conference.
The official name of the conference is Research Leadership Summit, called also by an abbreviated name of RELEAS. The first conference saw 50 participants from 10 countries, mainly those from the USA, UK and European countries. Participants included not only research agencies, but also research users. Dialogues in discussions for the workshop sessions were summarised into action plans as below:
| ・ |
To redefine the research industry, based upon a newly expanded vision; |
| ・ |
To combine forces from all over the world in order to eliminate research-related stringent legislation and to safeguard freedom of data collection and its disclosure. We also need to establish a global group to proactively work on these issues and to formulate plans to procure financial resources; |
| ・ |
To formulate omnipresent privacy protection policies in the conduct of research that makes reference also to non-despatch of SPAM mails and to promptly start preparing a globally accepted "quality assurance seal"; |
| ・ |
To enhance dialogue between research users, i.e. clients, and research providers, i.e. research organisations. We will carry out the outcomes of and suggestions in the conference by 2003 and draw up financial resources procurement plans needed to accelerate our actions. |
RELEAS is expected to take place annually and the second conference is scheduled in January 2002. Taking the ESOMAR Annual Congress in Rome in September 2001 as an opportunity to present the midterm report/update, a series of panel discussions was held by RELEAS-1 participants focussing on the following three subjects:
| (1) |
Redefinition of research (24 September); |
| (2) |
Co-operation between clients and suppliers (25 September); |
| (3) |
Data privacy (25 September). |
The above action guidelines were formulated out of concerns of risks raised by the fact that we have no evident measures to keep pace with numerous transitions effecting our industry. Specifically, major relevant issues are as follows:
| (1) |
We saw increasing number of new competitors, who collect consumer-related data using information technology such as the Internet, call centre for telemarketing, data warehouse, etc. Their emergence in the market presents our industry a major threat. |
| (2) |
Less and less consumers are co-operative in the conduct of research to achieve the objective, whereas more and more people are concerned about privacy protection issues owing to the diffusion of the Internet. These tendencies may evoke legislation unfavourable to the research industry. |
| (3) |
Researchers aim at providing interpretations and conclusions useful to client's decision-making, but as a matter of fact, what they are doing is nothing more than merely providing a large quantity of data. The research industry fails to play a key role in providing clients with useful insight for their corporate decision-making. |
2. Outline of the Research Method
In view of the aforementioned movements of research industryﾕs leaders of the world, the objective of this study was set to identify how the future of marketing research is envisaged by the top management of the JMRA member companies.
The survey is conducted by mail to the representative(s) of all member companies of the JMRA in September 2001. The questionnaire consisted of 7 questions including one to identify respondentﾕs characteristic through sales by research business which was classified into three different categories as below. For the purpose of maintaining confidentiality, the completed questionnaire was returned anonymously. Respondents were asked to send back completed questionnaire in a special envelope for this survey marked "Questionnaire Enclosed", and also to send separately a postcard to inform that the questionnaire was already sent back. In total 78 questionnaire were sent out and 65 of them were returned, which means that the response rate was 83%.
The number of the contributing companies by research business sales volume and its constituent percentages are shown below. These are consistent with the figures from "Marketing Research Business Status Survey" conducted annually by the JMRA.
| ・ |
Less than 300 million yen: |
19 companies (29%) |
| ・ |
300 million yen to 1 billion yen: |
22 companies (34%) |
| ・ |
1 billion yen and over: |
24 companies (37%) |
Findings are presented as below on per-question basis:
3. Type of marketing research business around year 2010
Q1 asks about the type of business of marketing research around year 2010 and the respondents were given 3 alternatives to respond: "scale-down", "current situation maintained" or "radical change". Wording of those responses for each alternative is rather long as below:
| ・ |
"Scale-down": majority of functions required in conventional style of research "collecting data from a large number of consumers and delivering tabulated/analysed data to client" will be unnecessary because of the advance of information technology, therefore, the scope of work to be executed by research agencies will be narrowed. |
| ・ |
"Current situation maintained": Marketing research agencies maintain the same position/type of business as present. There will be no big changes in conditions relevant to research industry and information services that research agencies can offer to clients. |
| ・ |
"Radical change": Marketing research industry will have experienced a great change. The scope of research will be expanded, and industrial structure and information services that agencies offer to clients will be "redefined". |
Results of responses are shown in Table 1. 42 companies, two-third of the whole, are expecting a "radical change". This tendency is apparent in particular among big companies: 19 out of 24 are predicting a "radical change".
4. Data collection methods in years 2005 and 2010
Needless to say, change in the type of marketing research business relates closely with data collection methods. In this survey we asked a question in a way responses can be correlated with the data obtained from "Marketing Research Business Status Survey". The wording of the question (Q5) is as follows:
"According to the "Marketing Research Business Status Survey", conducted annually by our organisation, transition of the structure of the sales volume by research method is shown in the table below. Please fill in the expected percentage (%) of ado-hoc research sales volume for each category in years 2005 and 2010."
The result marked a tendency of the decline in-home/face-to-face interviewing and a steep rise in Internet surveys. The share of Internet surveys was 3% in 2000, but is expected to hit 12% in 2005 and 19% in 2010. In particular, medium-sized and big companies are expecting a big change (by 23% and 20% respectively), which presents a stark contrast to the forecast of small-sized companies (by 14%).
Changes in shares for telephone surveys, halls, qualitative research are expected to be trivial. That is, the 6% share of telephone surveys (CATI) in 2000 will become 8% in 2005 and 2010, 8% for halls in 2000 is expected to remain the same in 2010, and the share for mail surveys, which may well be cannibalised by the Internet surveys, shows merely slight decrease from 15% (in 2000) to 12% (in 2010). Besides, the share of qualitative studies indicates a slight increase from 15% (in 2000) to 17% (in 2010).
In fact, this question was given to enable us to compare the result with the reference used by Mr. J. Forsyth from McKinsey, one of the keynote speakers at RELEAS-1. Table 3 shows his data forecasting an expansion in shares of online surveys and direct observation (including scanning) and a drop in interviewing, mail and telephone surveys.
5. Threat to Research Industry
Four potential threats (described below) to marketing research industry were presented as Q2 and the respondents were asked to give orders in terms of seriousness by rank/order method.
| ・ |
(Legislation) Stringent laws to be enforced against research data collection in the name of consumer's privacy protection; |
| ・ |
(Competition on other consumer information) Competition on consumer information collected and used in other means than marketing research (e.g. competition on consumer information and client information used for database marketing); |
| ・ |
(New entrants) "New" research suppliers to enter the market, armed with Internet know-how.; |
| ・ |
(Other information providers) Information providers offering services to clients by adding values to marketing research data (e.g. management consultants, think tanks, ad agencies, etc.). |
The whole respondents and medium-sized companies ranked their views on the seriousness of those threats as: (Competition on other consumer information)→(Legislation)→(New entrants)→(Other information providers). However, in medium-sized companies, no difference between (Legislation) and (New entrants) was observed.
In case of big companies, the order was: (Competition on other consumer information)→(Legislation)→(Other information providers)→(New entrants). Between (Competition on other consumer information) and (Legislation) hardly any difference is observed.
Meanwhile, small-sized companies consider seriousness of the threats as follows: (Competition on other consumer information)→(New entrants)→ (Legislation)→(Other information providers). However, hardly any difference is observed among three threats other than (Other information providers).
6. Issues to consider for the development of research
16 issues to be considered by the JMRA and its member companies were presented as Q3 to the respondents who were asked to respond by selecting 5 most significant issues in the order of importance.
Table 5 shows how many company representatives voted for each attribute in terms of their first three choices and all five. It also indicates weighted scores in order of importance, i.e. 5 points for the most important attribute, 4 for the second, etc. This means that each participating company is given 15 points which are allocated to any of the 16 attributes, therefore, the mean score for each attribute is 15/16 = 0.94. The most voted attribute out of 16 pre-indicated issues with the highest score is:
"Understand client needs and make recommendations on the basis of appropriate research design and result (voted by 31 companies, score 1.80)"
Followed by the attributes below:
"Ensure control over research process and improve research quality (voted by 30 companies, score 1.44)"
"Ensure protection of respondent's privacy (voted by 29 companies, score 1.34)"
"Further enhance researcher's knowledge and comprehension of marketing research (voted by 25 companies, score 1.20)"
"Improve management efficiency and profit rates (voted by 25 companies, score 1.17)"
"Attract promising youngsters to the research industry (voted by 25 companies, score 1.16)"
Next to the above 6 attributes was:
"Deal appropriately with further internationalisation and globalisation of the research industry (voted by 22 companies, score 1.06)
But this is equally ranked at No.2 as "Improve profit rates", in terms of the votes by big companies only.
"Prevent excessively stringent regulations by means of laws and administrative directives (voted by 18 companies, score 0.70)"
which is considered an extremely big issue in Europe and America, was an attribute much less important in Japan, with a below-average score.
In relation to Q3, Q4 was asked to give respondents an opportunity to give free answer on any other issues that were not mentioned in the 16 attributes of Q3. Eye-catching issues among free answers given were: "Severe price competition", "Concerns over Internet surveys", "Sharing management resources of each company", "Differentiation of research agencies from non-research companies", etc.
・Conclusion
Based upon the results of the attitude survey that was conducted in September 2001, we reviewed how JMRA member companies' top management envisaged the current and future status of the marketing research industry.
Following is the summary of our findings:
| (1) |
Many people expect a significant change in the type of business of the research industry. |
| (2) |
As for data collection method, long-term and continuous decrease is envisaged for in-home/face-to-face interviews, while rapid growth in the share is expected for Internet surveys although not at the equal level as Mr. Forsyth's prediction. Little change may be recognised for the shares of telephone survey and CLT, and CATI may not enjoy any healthy growth. Besides, only slight decline in the share may be observed for postal survey and no significant change is envisaged for qualitative research. |
| (3) |
The order of the four threats presented was: "Competition on other consumer information", followed by "Legislation" and "New entrants" both of which had almost no gap in percentage, and "Other information providers" which had even less gap in percentage. |
| (4) |
Highly voted issues to consider for the development of research are:
"Understand client needs and make recommendations on the basis of appropriate research design and result";
"Ensure control over research process and improve research quality";
"Ensure protection of respondent's privacy";
"Further enhance researcher's knowledge and comprehension of marketing research";
"Improve management efficiency and profit rates";
"Attract promising youngsters to the research industry";
"Deal appropriately with further internationalisation and globalisation of the research industry".
However, "Prevent excessively stringent regulations by means of laws and administrative directives", an extremely big issue in Europe and America, was an attribute ranked much lower (below-average) in Japan.
|
In the journal of JMRA "Marketing Researcher" which published a report on RELEAS, whose function was briefed at the beginning of this report, I wrote the following in terms of the impact of RELEAS on the Japanese research industry.
Comparing attitude toward issues of the research industry in Europe and America with that in Japan, we can see that there are some gaps between their perception and ours.
Certainly, we share some of their views, thus we also:
| (1) |
feel that rapid development and diffusion of ICT and Internet are major threats to the research industry; |
| (2) |
realise importance of issues regarding privacy protection and is actively involved in the "Privacy Mark" scheme established in Japan as well as conforming our code of research conduct to that of ICC/ESOMAR; |
| (3) |
fully realise the need to maintain and improve quality, therefore decided to adopt and enforce JMRA MRQS and Research Management Guideline. |
However, on the following points, there are some gaps between their views and ours:
| (1) |
Careful consideration over research failing in playing a key role in providing something useful for client's decision-making; |
| (2) |
Importance in the dialogue between research users and providers; |
| (3) |
Sense of threat and vigilance toward competitors from information providers other than research providers; |
| (4) |
Sense of vigilance toward legal restrictions and administrative directives. Profound awareness of self-imposed regulations to be adopted as the solid foundation for freedom of research activities; |
| (5) |
Sense of vigilance toward direct marketing; |
| (6) |
Sense of crisis toward low response rate and high refusal rate; |
| (7) |
Awareness of the importance in establishing and encouraging good relationship with respondents. |
Some of the above perception gaps are rather inevitable, thus they are not necessarily be filled, but most of them exist due to immaturity of the Japanese research industry, therefore, active and specific action plans are anticipated.
I perceive the outcome of this "survey on the attitude of research agency's representative(s)" in regard to the "problems confronting Japanese marketing research industry" as one of precious responses to my understanding of various issues. The results demonstrated that top management of research agencies were aware, on the whole, of the rapidly-changing research environment and measures against it.
To conclude this report, I thank everyone who participated in the survey to respond. Special thanks go to the JMRA administrative office who prepared the questionnaire and conducted fieldwork/tabulation and especially to Ms. Naoko Shimada.
References:
| (1) |
Kazuo Kobayashi (2001): "Challenge to Marketing Industry Problems in the 21st Century - Report of the 1st Global Research Summit" from "Marketing Researcher" (No. 88, pp. 48-53);
|
| (2) |
ESOMAR & ARF (2001): Releas-1, Research Leadership Summit : A global process : summary of kickoff for debate, follow up and action |
・Attachments
Table 1: Type of Business of Marketing Research around 2010
| |
Total |
Big |
Medium |
Small |
| Total |
65 companies |
24 companies |
22 companies |
19 companies |
| Smaller-scaled |
8 |
1 |
4 |
3 |
| Current situation maintained |
13 |
3 |
5 |
5 |
| Radical transition |
42 |
19 |
13 |
10 |
| Don't know |
2 |
1 |
0 |
1 |
Table 2: Structure of Sales Volume by Research Method (Ad-hoc)
- Actual Trend and Forecast (%) -
| |
|
|
|
|
|
2010 |
| |
1985 |
1990 |
1995 |
2000 |
2005 |
Total |
Big |
Medium |
Small |
| In-home/Face-to-face |
57 |
45 |
39 |
26 |
21 |
17 |
16 |
16 |
18 |
| Telephone (non-CATI) |
7 |
7 |
7 |
9 |
7 |
6 |
6 |
6 |
7 |
| Telephone (CATI) |
- |
- |
- |
6 |
8 |
8 |
8 |
9 |
9 |
| Hall |
9 |
9 |
12 |
18 |
19 |
18 |
17 |
16 |
21 |
| Mail |
8 |
14 |
19 |
15 |
14 |
12 |
13 |
12 |
11 |
| Online |
- |
- |
- |
3 |
12 |
19 |
20 |
23 |
14 |
| Qualitative |
9 |
19 |
13 |
15 |
15 |
17 |
16 |
16 |
17 |
| Others |
10 |
6 |
10 |
8 |
4 |
3 |
4 |
2 |
3 |
| Total Ad-hoc Expenditures |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
100 |
Note: 1985 to 2000 figures are based on actual sales reports by by JMRA members.
Chart 1: Structure of Sales Volume by Research Method (Ad-hoc)
- Actual and Forecast (%) -
Table 3: Forecast of Structure of Sales Volume by Research Method (%)
| (%) |
2000 |
2005 |
2010 |
| Interview |
45 |
35 |
20 |
| Telephone |
20 |
20 |
15 |
| Direct observation+ |
25 |
30 |
35 |
| Postal |
5 |
0 |
0 |
| Online |
5 |
15 |
30 |
| Total |
100 |
100 |
100 |
Note: +Including data collection by scanning, etc.
Reference: ESOMAR ＆ ARF (2001), Research Leaders Summit,
A Global Process: summary of kick off ford ebate, follow up and action
Table 4: Seriousness of Threats to Marketing Research Industry
| Seriousness (real number) |
Competition on other consumer information |
Legislation |
New Entrants |
Other Information Providers |
| Total |
65 companies |
65 companies |
65 companies |
65 companies |
| No. 1 |
20 |
20 |
15 |
10 |
| No. 2 |
20 |
15 |
17 |
13 |
| No. 3 |
19 |
13 |
16 |
17 |
| No. 4 |
6 |
17 |
17 |
25 |
| Score |
Competition on other consumer information |
Legislation |
New Entrants |
Other Information Providers |
| Total |
2.8 |
2.6 |
2.5 |
2.1 |
| Big |
2.7 |
2.6 |
2.3 |
2.5 |
| Medium |
2.8 |
2.6 |
2.5 |
2.0 |
| Small |
2.8 |
2.6 |
2.6 |
1.9 |
Note: Scores calculated by giving 4 points to the highest ranked threat, 3 to the second, 2 to the third and 1 to the fourth.
The mean score is 2.5.
Table 5: Issues to consider for the development of Research
| Issues to consider |
No. of Votes |
Scores |
| 1st-3rd |
All |
Total |
Big |
Medium |
Small |
| A. |
Understand client needs and make recommendations on the basis of appropriate research design and result |
26 |
31 |
1.80 |
1.79 |
1.81 |
1.79 |
| B. |
Ensure control over research process and improve research quality |
19 |
30 |
1.44 |
1.25 |
1.71 |
1.37 |
| C. |
Ensure protection of respondent's privacy |
16 |
29 |
1.34 |
1.54 |
1.33 |
1.11 |
| D. |
Further enhance researcher's knowledge and comprehension of marketing |
14 |
25 |
1.20 |
1.04 |
1.38 |
1.21 |
| E. |
Improve management efficiency and profit rates |
16 |
25 |
1.17 |
1.58 |
0.67 |
1.21 |
| F. |
Attract promising youngsters to the research industry |
14 |
25 |
1.16 |
1.38 |
1.33 |
0.68 |
| G. |
Deal appropriately with further internationalisation and globalisation of the research industry |
15 |
22 |
1.06 |
1.58 |
0.86 |
0.63 |
| H. |
Broadly promote marketing research as an effective tool for client's decision-making |
13 |
18 |
0.97 |
1.00 |
0.67 |
1.26 |
| I. |
Encourage respondents participation and prevent decline in the response rate |
10 |
19 |
0.84 |
0.42 |
0.90 |
1.32 |
| J. |
Enhance researcher's research-related knowledge and skills |
10 |
17 |
0.80 |
0.83 |
1.05 |
0.47 |
| K. |
Prevent excessively stringent regulations by means of laws and administrative directives |
7 |
18 |
0.70 |
0.67 |
0.52 |
0.95 |
| L. |
Develop appropriate methods for respondent selection and sampling, to deal with difficulties |
9 |
15 |
0.67 |
0.92 |
0.67 |
0.37 |
| M. |
Ensure maintenance of solid interviewer force and proper training scheme |
7 |
13 |
0.53 |
0.25 |
0.67 |
0.74 |
| N. |
Develop more effective analytical methods |
6 |
11 |
0.48 |
0.17 |
0.48 |
1.21 |
| O. |
Enhance researcher's IT-related knowledge and skills |
4 |
13 |
0.45 |
0.29 |
0.48 |
0.63 |
| P. |
Establish communication network with scholars and researchers of marketing research, social research and marketing |
6 |
10 |
0.38 |
0.29 |
0.48 |
0.37 |
| Number of companies responded (n) |
64 |
64 |
64 |
24 |
21 |
19 |
| Note: |
| Points gained were: |
5 points for the 1st choice |
|
4 points for the 2nd choice |
|
3 points for the 3rd choice |
|
2 points for the 4th choice |
|
1 point for the 5th choice |
| The mean score was 09.4 |
|
