Palanivel Kuppusamy Palanivel founded Dexterity in 1999 to provide technology and analytics solutions for Information savvy businesses. Over the years, he built strategies that established the company as a leader in Marketing and Customer Informatics space. Read the full biography here.

Market Research and the Musk Deer

OR.....meanwhile in another part of the forest

1st April, 2010

For decades, the market research industry has helped marketers to listen to the voice of customers, understand market perception and helped them in creating better communication, promotions and even products. Market research fed into marketing Intelligence and consumer Insights that influenced strategic and marketing decision making in enterprises. Have the fundamentals changed? No. marketers still need to understand the market and consumers, maybe even better than in the past and more closely than in the past. Have the means to listen and generate insights changed? Yes, considerably. And more changes are expected.

Almost all research buyers of Fortune 1000 companies agree that they have adequate or more than required MR suppliers in their vendor list. On the other hand, only 6% of the F1000 companies say that they have excellent knowledge of their customers. (Source: CMO council report 2008). Obviously there is a disconnect.

When so many MR firms are collecting so much information, why do companies still not get excellent knowledge on their customers?

Let’s go to the story of musk deer for a minute. The famous ‘musk’ comes from the body of male musk deer, prevalent in the Himalayas region. The musk deer are said to be going all over the forest in search of ‘where the nice fragrance comes from’, not realizing that it comes from its own body. Most enterprises have accumulated very rich information on their customers and market with a high potential to generate actionable insights, while continuing to go in search of new data. If the internal data has so much potential to contribute to market and consumer intelligence, then why don’t companies take advantage of this data?

The reasons that are quoted often are:
	1.	Data is owned by different business units / functions, often in different systems. It’s a hard sell building a business case to justify a holistic integration or even ‘borrowing’ data from another function / unit and spending extra efforts in cleaning, mapping and integrating them before they can be used meaningfully.
	2.	Internal analytics capabilities are limited to handle such large volume data and generate meaningful insights out of them. This often calls for advanced analytics capabilities and creation of a data environment for the analytical models to perform well. Their IT stops at providing technology and external MR/CI agencies are inclined towards providing more data.
	3.	There is no established budget for analytics. It has to be often borrowed from MR budgets or the likes. In hard / recession times, it’s very difficult to secure budget for a new initiative like this.

However, the good news is that most enterprises have spent millions in the last decade on data warehouses and BI platforms to create the basic infrastructure for data collection, storing trended data and building analytical solutions on top. The value of these huge investments can be unlocked by a small incremental spend on the analytics to generate market and consumer intelligence out of the data that have been accumulated in these warehouses. This is where a third party, who is neither end user nor a potential gatherer of more data, can take an overview of the existing material and create value for its owner.

As the strategy guru C.K. Prahalad puts it, ‘Winning in 21st century is not about owning assets, it’s about gaining access to assets’.

This approach is certainly not an alternative to the existing market research approaches. It is a very powerful supplement that aids in creating an ‘integrated view of customers’ by looking into the attitudinal, behavioral and demographic information in a holistic fashion.

Out of the 2000+ MR companies worldwide, ranging from 1 person to 30000 in size, there are only a handful of companies with a clear differentiation and value proposition. The vast majority does the same thing (data collection) the same way (online, CATI, F2F) and even from the same panels. They operate within self-defined boundaries and are at times too narrowly focused on one small piece rather than on the big picture.

Sure, there are reasons why this is the case. MR firms are measured and paid on CPC, size of the panels, incidence and response time. What gets measured gets done! Is capability a limiting factor for the small-medium MR companies to expand their offering / value to their clients beyond data collection? Not necessarily. As the strategy guru C.K. Prahalad puts it, ‘Winning in 21st century is not about owning assets, it’s about gaining access to assets’. Gaining access to analytical talents is becoming easier and even affordable through offshoring / outsourcing. There are mature firms providing high quality analytics expertise from low cost destinations.

Indeed several companies have tried and found outsourcing as a viable solution for two of the three challenges quoted above. It solves the ‘capability’ issue as one can find special players in marketing and customer Informatics offering these capabilities at high quality and broader solution expertise. It solves the ‘budget’ issue as some outsourcing destinations like India provide significant cost advantage, often in the range of 25% to 40% (on total cost of ownership) compared to local providers in USA / Europe.

The third challenge of ‘data readiness’ for analytics and insights can’t be solved by outsourcing alone. However there are a select few outsourcing service providers with platforms to provide targeted business solutions for marketing and customer Intelligence as for the case in discussion. Outsourcing maturity will push service providers to develop more such platforms, addressing the white spaces as they emerge. We have witnessed that in the classical IT outsourcing that has happened in the last two decades.

A few companies that have futuristic thinking and a holistic understanding of the marketplace have embraced newer approaches to widen the boundaries in market research, using outsourcing partners specializing in marketing and customer Informatics. Eventually, market research and consumer Insights would merge and analytics will be an established means to deliver superior insights. More so, since the social media is also changing the way we ‘listen’ to customers and these customers are generating billions of pages of contents per day, making ‘manual inference’ impossible. Someday sooner, analytics and mining will be a necessity; and outsourcing will be an enabler to this business, providing skill availability and cost advantage.

If MR firms can step-up to solve the musk deer problem for the enterprise clients, we will expand the horizon and scope for market research. It won’t be just incremental enhancements to the current market size of $25b but would add a considerable portion of the projected $80b business analytics market to the addressable market opportunity for the MR players.

Is that the new generation MR? In my opinion: “Very Likely”.

Palanivel Kuppusamy

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