INTERNATIONAL MARKET RESEARCH The New Horizons Warsaw October

INTERNATIONAL MARKET RESEARCH The New Horizons Warsaw, October 17, 2003

Market Research: ADDS VALUE TO BUSINESS AND SOCIETY • CONNECTS DEMAND & SUPPLY – TRANSPARENCY The Market Research Profession – EFFECTIVENESS – EFFICIENCY • CONTRIBUTES SOCIAL/OPINION INSIGHT TO QUALITY OF SOCIETY

SCIENTIFIC ROOTS …. . MARKETING RESEARCH BECAME AN INDUSTRY The Market Research Industry In 2002 • GROWTH OF WORLD MARKET TOWARDS USD 17 BILLION (EURO 18 ) • EUROPE : USD 6. 3 BILLION (EURO 7. 3) • POLAND : USD 81 MILLION (EURO 86 ) • EMERGING EXTERNAL CHALLENGES

EXTERNAL DYNAMICS DRIVE CHANGE • INTERNATIONALISATION • ICT/TECHNOLOGY • DIFFERENT REQUIREMENTS • NEW ENTRANTS/COMPETITORS • LEGISLATIVE PRESSURE The Market Research Industry

TRANSFORMATION WITHIN THE INDUSTRY • Changing hands : take overs /acquisitions (concentration) • Shifts within data collection methods (mail /phone – down; direct registration /online-up) • Widening scope: combination/ integration of information (re-packaging) • Increasing focus : data capture and decision making support • Growing opportunities: bundling/interpretation • Renaissance of the client side

Renaissance of the Client Side? …radical improvements will be increasingly demand driven (“demand pull”) • 1000 top clients already spend 80% • 65% of their budgets go to 25 companies • For “Best Solutions” they will not wait for a topprovider (in-house, outside, new entrants) …pressure to adapt current MR business model

Future Developments 5 – 10 years down the road Selection of up to 3 future developments out of 12 51 48 Clients will require far more creativity and business intelligence from providers 43 Market research will become more important because of greater incorporation in companies strategic planning 27 34 Market research data will be more integrated with CRM-data 24 27 Internet research will revolutionize the business 22 24 27 Respondent cooperation will dramatically decrease 22 Consulting companies will take over territory of market research providers, turning these providers into mere dataproviders 21 0 10 20 Providers (n=1099) 30 40 50 Clients (n=272) 60 %

A different type of Market Research emerging… From Risk-Aversive MR Go/No Go Type of research Monitoring Type of research To a more Strategic one Needs-driven Insightful Type of research

Can We Do It? What we say will happen in next 10 years 31 33 Division between data providers and market research consultancies 31 More partnerships between clients and providers 29 19 21 No change and same issues as today 14 11 Traditional market research will disappear 5 Don't know 7 0 10 Providers (n=1099 20 30 40 Clients (n=272) 50 60%

The Current Business Model…. . The Traditional Value Chain* Product / Assets/Core Inputs, Competences Raw material Service Offering Product/Service rapportage The Channels offering Customer onderzoek Traditional Phases of Development in MR (large and medium sized companies) build up research technology/ build data factory add local/ regional competence add domainspecific/ sector competence add marketing competence (pre-structured solutions/acc. mgt) Characteristics: • Huge investments in “data manufacturing” • Value based on data delivery (tracking, syndicated, simple ad hoc) • Focus on shareholder growth/profit * Source: The Profit Zone, Slywotzky & Morrison

Reputation vs. Margin The amount of reputation The amount of profit Business Insights Data Delivery Dominant Business model: • does not support “Best Solution”/ Consulting Services if they do not help sell data. • focuses on increasing factory load & coverage • Helps to sell products and syndicated services

…. change of rules of the game MR Industry to Innovate: § Improve value add …. and move to a much wider context: from data management to decision facilitation (using variety of sources…. . meeting demand for actionable insights) § Reverse value orientation: transform business model The Customer Channels Product / Service Offering Change in take-off phase Product/Service rapportage Inputs, Assets/Core offering onderzoek Raw material Competences

NEW HORIZONS • Re-Define the Market for MR • Develop New Business Models • Address Industry Issues Pro-actively

OPPORTUNITIES Re –define the market for MR

OPPORTUNITY Consumer Research Process Repackaging Distribution Re-define market · Explore new, wider horizons · Understand different needs · Be creative / re-position · Cooperate and/or join forces Companies

OPPORTUNITIES Develop new business models

FIERCE FIGHT FOR ADDED VALUE ACROSS THE BUSINESS SYSTEM Consumer Research Process Repackaging Distribution -Consumers get organized -Research providers re -define roles -Client companies on the move -New players focus on re-packaged insight DEVELOP NEW BUSINESS MODELS Companies

OPPORTUNITIES Address industry issues proactively

INDUSTRY ISSUES How to move successfully to the new era? · Relevancy? Legislative concerns? Representation public at large? · Concerted industry action? One message, one voice? · Standards of quality performance? Quality of research? A quality sample? A quality panel?

ADDRESSING INDUSTRY ISSUES? • There is a need to address external challenges, align main players within the industry and ensure adequate standards of performance. • Orchestration is vital: ESOMAR in the lead, close cooperation other MR organizations • ESOMAR: European origin, scale worldwide; individual membership; focus on representation, standards, professional development and industry initiatives.

INDUSTRY INITIATIVES? THE EXTERNAL CHALLENGE • EXTERNAL RELEVANCY/ REPRESENTATION? • CREATION OF THE ALLIANCE FOR RESEARCH (ESOMAR, Efamro – 2002) The Marketing Research Industry • OFFICE IN BRUSSELS: PROMOTING THE BENEFITS OF RESEARCH- / SELF REGULATION

INDUSTRY INITIATIVES? CONCERTED INDUSTRY EFFORT ONE INDUSTRY , ONE VOICE? The Marketing Research Industry Clients, Providers Associations ALIGNMENT OF LEADERS & ASSOCIATIONS IN WIN (2003) “WORLD INDUSTRY NETWORK” (Facilitators: ESOMAR, ARF) SET UP: -flexible platform, global scope -bi-annual schedule -agenda for action (key condition for success)

INDUSTRY INIATIVES? PERFORMANCE STANDARDS • STANDARDS OF PERFORMANCE ARE THE LIFEBLOOD OF AN INDUSTRY, HOW TO ENSURE CONTINUITY? The Marketing Research Industry • SET UP “QUO VADIS”” PROJECT (ESOMAR, IN CLOSE COOPERATION WITH INDUSTRY SPECIALISTS -2003) • AGREEMENT ON PRINCIPLES, RE-CONFIRMATION CODE, ADAPTATION OF GUIDELINES

HORIZONS/OPPORTUNITIES Address industry issues pro-actively Re-define the market for MR Develop new business models

Thank You !