2009 Tough Year for Marketing Research Firms

2009 Tough Year for Marketing Research Firms

Last year was a tough one for marketing research firms, which posted a 3.5% decline in research revenue - a steeper drop than the 3.1% in 2008, according to the American Marketing Association.


It was the biggest drop in revenue for the commercial marketing/advertising/public opinion research services industry in two decades, according to AMA’s Marketing News magazine, which put out its annual Marketing Research Issue on the last day of June. The total industry analysis is based on 203 firms’ aggregate revenue of $8.6 billion in 2009.

A Serious Impact

“These numbers show just how seriously the research industry has been impacted by the current recession,” says Jack Honomichl, founder of the industry newsletter “Inside Research.”

The report also points to the higher number of firms showing revenue dips. Thirty of the top 50 firms profiled in 2009 had down revenues, whereas only 17 saw revenues fall in 2008. At the same time, employment levels fell as well. Over the past two years, the marketing research industry has seen an 11.4% decline in full-time employees. Conversely, nine of the top 50 firms - large database companies with long-term contracts - showed no change in revenue. One large firm, Westat, whose work comes almost exclusively from U.S. government agencies, saw a 7% boost in revenue.

Bigger is Better

Additional data from the Council of American Survey Research Organizations was provided for research firms not large enough to be included in the top 50. As a group, their revenue was down 8.5%, compared with an aggregate 7% for the 41 larger survey/qualitative research vendors included in the top 50.
“The smaller and more ad hoc a business is, the harder it was hit in this recession,” Honomichl says.

Ranking
The Nielsen Co., with just over $4.6 billion in research revenue, was at the top of the ranking. Kantar followed, with just over $2.8 billion. More than half of the revenue of each of the top three firms came from outside the U.S. - an indication of the increasingly global nature of the industry.

Top 10 Social Networking Websites & Forums - May 2010

IS RECESSION TIME AN OPPORTUNITY FOR YOUR BUSINESS?

YES IF YOU:

Protect Your Assets
Preserve Cash Flow
Focus on Core Customer Base
Adjust Pricing
Monitor Your Competitors
Adjust Media Strategy
Measure Results


PROTECT YOUR ASSETS

Separate business and personal finance Incorporate
Create Subchapter S or LLC
Do not co-mingle personal and business accounts
Use company credit, (with personal guarantee, if required)
Use OPM (other people’s money)
Leverage purchasing power to obtain supplier credit
Take advantage of government and community resources


PRESERVE YOUR CASH FLOW

Manage Receivables
Watch for changes in payment patterns
Manage Payables
Hold on to cash, but don’t lose credit privileges
Contain Costs
Convert fixed costs to variable costs
Conserve capital by outsourcing rather than investing
Adjust product portfolios to eliminate less profitable lines
Negotiate supply channel discounts, credit and other savings


FOCUS ON CORE CUSTOMER BASE

Up sell
Incentivize
Incremental spending
Reward referrals


ADJUST YOUR PRICING

Don’t cut prices, increase perceived value
Feature price promotions
Use to support new, up sold or incremental
business
Reduce thresholds for discounts


$ MONITOR YOUR COMPETITORS

Track their business
Stay up-to-date on their pricing and promotions
Know where and when they cut back on marketing


$ ADJUST MEDIA STRATEGY

Align brand (s) to market sentiment
Refine message to resonate with consumer concerns
Focus on benefits, value and ROI
Create a sense of urgency
Use direct response techniques – have a call to action
Increase your share of voice
Target narrowly
Select fewer media and go for domination
Hold or grow frequency
Stretch your dollar
Rethink ad size/length
Negotiate



$ MEASURE RESULTS

Gross sales and profitability are secondary
Goal is increased share of market


“When Times Are Good, You Should Advertise.

When Times Are Bad, You Must Advertise.”

Multicultural CPG Buying Trends

Multicultural CPG Buying Trends

When compared to the general population, on average…



Hispanic Shoppers
Tend to spend more on categories for babies and children. Hispanic households represent 11.8% of CPG total spending, but 16.6% of disposable diaper sales.
Tend to spend more in traditional mass merchandise and warehouse clubs.
Tend to spend more on food consumed at home.

African American Shoppers
Tend to spend more on health and beauty products, such as fragrance. African Americans represent 11% of CPG total spending, but 20.3% of dollars spent in beauty supply stores.
Tend to spend more in drug and dollar stores.
Tend to spend more on ingredients used to cook from scratch.
Tend to buy fewer items on deals or with coupons.
Tend to spend more on food consumed at home



Asian American Shoppers
Tend to spend more in club stores. Asian Americans represent 3% of CPG total spending, but 5.5% of dollars spent in warehouse clubs.
Tend to spend more on categories for babies and children.
Are more likely to eat outside of the home.




PATRICIA@POWERMEDIAGROUP.COM