Marketing—A New Measure of Corporate Wealth

Author: Ambler Tim
Publisher:
Publish Date: 2003-01-01
Features: So the database is ideally depicted as an iceberg of information, with 10% visible to the board as measurable metrics and the remaining 90% being existing diagnostics. This is a good analogy, but it's far from reality. Information is driven by problems, and if the problems are routine, the research reports become routine as well. For example, since the 1930s, Nielsen has had a good run mainly by providing sales diagnostics to marketers. A decline in sales performance can be fed back to the sales team to identify the problem, without needing internal statistics. Nielsen has increasingly provided more market information then and now, but its earlier success was due to the routine need to explain sales changes to senior management. Thus, the problem determines the type of information needed, and marketers will turn to market research firms that provide that specific type of information. Market research is a very small industry, but it offers a wide range of services: its total annual revenue of ￡500 million is only about 4% of overall advertising spending. Correspondingly, it has a high degree of specialization, with competition in each niche being relatively low rather than intense. Specialization is both vertical, based on industry sectors, and horizontal, based on the type of research techniques required. Examples of vertical specialization include research agencies—or their branches—that focus solely on automotive or pharmaceutical markets. Specialization can work beautifully. A little-known fact is that the world's second-largest market research firm after Nielsen is "IMS Health," which primarily focuses on the pharmaceutical industry and monitors global pharmaceutical sales. Other institutions are either fully or partially concentrated on media research, which has become a highly complex and technical field, especially in terms of measuring television audiences. In the U.S., "Nielsen Media Research" has now completely separated from its predecessor, a giant in its own right, Nielsen, and is becoming part of a larger group: the Dutch publisher VNU. In the UK, leading institutions like Taylor Nelson Sofres, which has for many years handled BARB (Broadcasting Audience Research Board) television contracts and similar national readership surveys for Ipsos-RSL, derive a significant portion of their revenue from their expertise in this area. Horizontal (technique) specialization again includes Taylor Nelson Sofres and Nielsen. The former has extensive experience in using consumer discussion groups to measure brand share in the market, while the latter is renowned for collecting and analyzing retail data, just like its formidable rival, "Information Resources." Some institutions, such as "Research International," pride themselves on the methods they have developed to assess the potential market size for new products. They have also invested in new ideas and models related to brand equity (understanding the elements that constitute brand equity and tracking it) and customer loyalty (what can build or erode customer retention). Others, such as Millward Brown and Hall