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Friday, 01 August 2014

Escaping the commoditisation trap

Two years ago, Volkswagen’s insights manager Steve Gatt summed up market research as “inadequate, reactive and out of touch”. A year later former GSK marketing director Tim Brooks said too many agencies were “too downstream” of the issues that really affect clients and were too focused on tools and methodology to provide companies with the help needed to make big business decisions.

It shouldn’t be like this. Market research can be beneficial to business leaders in many ways, so why are we hearing that the industry is out of touch with their needs?

To be sure, market research is facing a number of internal and external pressures that threaten to devalue our work. Technology has become both an enabler and a competitive pressure, giving rise to DIY survey tools that create an expanded, informal market for survey services. Internally, agencies have more methodologies than ever before, many untested for scientific legitimacy, but now there are more research companies, each competing for their share of work.

“It may be that some aspects of the market research industry have already been commoditised, and regaining some of that lost value is going to be hard”

It’s not hard to see why our industry’s blogs and journals are filled with calls for change to prevent research from becoming a commodity. The Autumn 2010 wave of the Greenbook Research Industry Trends study found weakening confidence in the value of market research. In an April 2011 piece James Verrinder summed up the feeling among agencies that “clients don’t appreciate the value of their work, that they put speed of delivery ahead of quality and cannot tell the difference between top-drawer and mediocre market research”.

But the fear of becoming commoditised isn’t a new concern for market research. Pouring over journal articles, I’ve found references to commoditisation since the 1990s (Crane, 1996), including concerns about researchers becoming “order takers” serving up data requests to a demanding and undiscerning clientele like short-order cooks in a diner.

A way out
So how do we maintain the strategic value of market research and prevent commoditisation? Various suggestions have been put forward. One is for researchers to be more social and network more, to spread the word about the value of market research to businesses. Some have called for an end to PowerPoint presentations – which wouldn’t be a bad thing in and of itself. Others have told researchers that they need to take a page from the management consultants’ handbook and do more research into the strategic discussions taking place at board-level. And some veterans have acknowledged that the researcher’s value isn’t in advertising our ability to write good survey questions. Instead, it involves innovating beyond surveys to include more modern, more “attractive” research methods, such as online communities, gamification and more besides.

These seem like helpful suggestions, at least on the surface. Twelve months ago I started researching how business leaders perceive market research and what value they place on market research data. It’s the beginning of a massive project but, early on, it’s clear that there are no simple solutions to the problem of commoditisation.

It may be that some aspects of the market research industry have already been commoditised, and regaining some of that lost value is going to be hard. Fortunately, market research has always had the authority of reflective insight. It’s hard to argue with strong data points based on a robust research methodology. And that will always be valuable to business leaders whether supporting decisions, confirming past decisions or looking for additional unknown opportunities.  

Over the coming months, I’ll be running a series of qualitative and quantitative research projects with directors and senior business leaders to examine what they think about market research. I’m deliberately focusing on business leaders who are in broad positions such as leading a product division, or writing strategy for branding initiatives. That way, I can uncover the views of people who might incorporate market research into their business activities. The goal is to understand what they value from the research community, what types of data help them and how they see market research developing to meet their needs.

I believe this will be the start of gaining additional direct insight into the issues impacting the value of market research, and shed light on the complexities driving commoditisation. My hope is that this insight will help us better leverage, as a community, the suggestions for improvement already mentioned as well as employ new ideas generated from the data. The ideal outcome is to avoid research becoming a commodity while also helping businesses to utilise market research in better ways.

Chris Dowsett is marketing intelligence and social platforms manager at Quantum. He’s studying a doctorate with USQ (Australia) that examines the value of research data to business leaders, how research is used in businesses and the value given to different types of data. 

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Readers' comments (14)

  • 'Some aspects of the market research industry have already been commoditised' <- this is the sad truth. It's good we're doing some research on research and not just talking about this. A lot of companies are innovating too as a way to avoid being a commodity.

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  • Thanks, (fingers crossed) the research looks to be promising in terms of getting more insight into businesses. I think it's not good enough to say they want it 'cheaper and quicker' because it's more complex than that. Innovation is definitely a good thing but there seems to a lot more needed.

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  • Question for you - which market, region or country are you basing this piece on? I had a quick look at the links you cited, too, and couldn't get a feel from them for which regions they covered.

    The reason I ask is that while the underlying points you make are oh so true (the easy availability of online quant tools and a growing shift towards online qual means that *anyone* can do research), there are differences between markets. And I've been thinking and talking about this quite a bit lately.

    To my mind, North America (as I've experienced it) is a good example of where we don't want the industry to go. Agencies churn out research and results decks, without ever really telling clients anything new. "Respondents said this", "our analysis showed that", but without ever really going into what it actually *means*. In addition, an alarming number of agencies I've worked with seem happy to just send over a powerpoint littered with typos with no discernible rhyme or reason to it, and consider that job done.

    In contrast, the UK to me provides a great example of how we would like the industry to be - and IMHO it's due at least in part to the dynamic middle of the agency marketplace: smallish boutique agencies that are small enough to take their time, but big enough to scale where necessary. There seems to be much more nimbleness and care taken, and a real focus on showing the value of the research done; even some of the larger agencies seem more innovative and genuinely curious - which generally results in much better research, IME.
    I could bang on for a while about this, so I'll leave it there for now!

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  • Maintaining the value of strategic research and witnessing a commoditisation process aren't necessarily a contradiction. Some areas of MR - low strategic impact - will likely commoditise, in all probabilty. Others - high importance, big impact - will continue to merit high degrees of willingness to "get the best thinking"

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  • It feels to me as though you are exploriing the wrong question here, Chris. I would suggest that the more fundamental question is whether corporate customer insight teams are delivering as much value as they could. In big businesses, it is the in-house customer insight experts whom business leaders should expect to deliver value for the organisation. If clientside teams are clear about what they need to do to deliver value, they will then demand the necessary of their market research suppliers (and market research is only ever one ingredient of the customer insight soup). So I would contend that it is clientside teams' performance that is at the root of the matter here.

    The 2009 study by the Boston Consulting Group called "The consumer's Voice - can your company hear it?" concluded that 90% of the 40 participating global companies fell well short of unlocking the value of customer insight. BCG's diagnosis is that two factors are responsible for this state of affairs 1) the performance of the insight team and 2) the engagement from senior management with customer insight (which is a cultural issue). There is no mention of market research agencies letting anyone down. You can read a copy of the BCG report at http://www.bcg.com/documents/file35167.pdf

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  • The majority of research at the moment from a budget point of view is the same story we have had for the last half a decade or so, lower budgets, less time, more expectation of delivery. I think agencies generally, especially the smaller ones as someone pointed out, go to extraordinary lengths to produce research to address the business questions and working within budgets they are given. Putting the boot on the other foot, how much value as an agency can you give on a £10k project? If you over deliver, are you setting up an unsustainable expectation from a financial point of view? Could the point be that agencies in fact, given the budget and time constraints, deliver exceptional value but rarely is the work when viewed from a board level looked at relative to the budget from which it was set?

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  • Jane: I agree that the role of the client-side researcher (I am one) is to deliver demonstrable value and impact. To the BCG study: to state baldly that it's "the client teams' performance" that is at the root of the matter to me doesn't reflect the complexity of the BCG study- levels of expenditure, investment in people, training, organisation, culture are areas focussed on. As far as I can detect, the BCG doesn't touch on the issue of MR agency performance at all - so niether positive nor negative mentions as I saw it. To suggest - publicly - that we have a one-side problem, namely the clientside, is to me not particularly helpful nor balanced.

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  • NickD: That's an interesting point about location and Geo. The article is based on UK, Aust. and US sources. The research has, so far, drawn mainly from US and UK businesses with similar results. Why do you think the US is more focused on churning out results? More impact by big research agencies taking most of the share?

    Anon: Thanks and a good question/point. Maybe the value (from a research view) is exceptional for the budget, but the business leader doesn't see it that way? Do we need to be better at showing business value and not research-centric value?

    Jane: if the client-side research team (full discl. I work client side but have been on the agency side too) owns the value, where does that leave the agency side? Fieldwork only? I see it as a more complex relationship.

    Ed: Agreed - there will be (and already are) some areas heading towards commoditisation, particularly in the process areas. Unfortunately, that's where we seem to be 'fighting it out' as an industry (agency compared to client-side, cannibalizing methodologies in industry articles) instead of looking to the strategic business value.

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  • Really interesting research Chris and good that Jane has mentioned the BCG report as it is so helpful in this area. BCG uncovered that on the clientside there are two key components required to unlock the value of insight - the Insight Team performance (as Jane mentioned) and also Business Engagement. The latter is essentially about culture and whether the organisation really listens to the voice of the customer and acts upon it.

    Both of these ingredients are critical for insight success and the way in which they work depends on the maturation of the insight team function - from Traditional MR to Strategic Foresight. At the risk of regurgitating the paper, what BCG showed was that the way agencies are engaged and worked with (master/servant vs full partner) depends on the style of the Insight Team and culture.

    I work with clients of all sectors to help this Insight Transformation journey and would be delighted to contribute to your project (www.incite2action.co.uk)

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  • Hi Pauline, Thanks - interesting you mention the style of the insight team because there is some work by an Australian research team that shows that the style of the company, experience of the key executives and market approach of the business impacts how market research is valued/used. This seems to link with the BCG paper that you and Jane mentioned.

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