The good, the bad and the ugly of market research in India

16 Aug 12 The good, the bad and the ugly of market research in India

SONY DSC A famous quote from a Clint Eastwood movie – “There are two kinds of people in the world, my friend: Those with a rope around the neck, and the people who have the job of doing the cutting” – reminds me that it’s always the industry that has a rope around their neck, and the market/business research firm that does the cutting. The industry is fine till the research hits bull’s eye. The day research misses a shot, the whole industry goes berserk.

This was witnessed in a recent incident when NDTV filed a law suit against Neilsen for publishing incorrect data. People have been arguing on whether there should be a monopoly in market research, but the true issue lies on the research methodology adopted by the research companies.

I recently interviewed the India sales head of a multinational company for a research project that I was working on. He asked me whether I trusted the figures/data published by associations and syndicated reports. He believed that their figures were highly skewed. Being a research analyst myself, he wanted my opinion. To this I had only one answer, “I can use these figures as a reference point, but cannot blindly rely on them. I need to build my own figures because I need to be clear on the scope and the methodology used to build the figures.”

Now for example, TAM (Neilsen & Kantar) India has installed 8,000 people metres in a nation of 150 million TV homes, a ratio of 1/18,750. If we look at United States, there are around 50,000 people metres installed in a nation of 120 million TV households, a ratio of 1/2,400. In India, nearly 6,000 of the installed metres are concentrated in metros. This could be one of the reasons why Doordarshan never gets high TRPs (television rating points). The data collected from such a small sample, concentrated only in metros is most likely to be misleading.

So is all such widely pDo managers trust figures published by Syndicated Reports and Industry Association?ublished data wrong? And do the research methodologies applied in other countries hold true for such a vast and diversified market like India? I believe India research needs a different approach. And one method cannot hold true for every research project. During a recent research assignment I got in touch with 30 India heads of marketing and sales, of whom only 20% had faith in the figures published by syndicated reports and associations.

The reasons why they didn’t trust these published figures were: firDo you trust figures published by Syndicated Reports and Industry Association?st, the scope and the methodology were not clear in these reports; second, they believed these numbers were tweaked to represent high growth to benefit the industry; and last, they felt the data was not in sync with what was actually happening on ground.

Maybe in a well documented market like United States, a syndicated report is adequate. The challenge lies in the less documented and highly fragmented markets like India, where survey findings with a sample size of even 8,000+ could be misleading. Since India is such a diversified market, there needs to be a custom solution designed to address the complexities of our country.

Haril Joshi

Haril was a senior research analyst at ValueNotes.

8 Comments
  • Market research in downturn: Opportunity beckons
    Posted at 14:05h, 16 March Reply

    […] few months ago, I had a discussion with a COO of a SME steel pipe manufacturing company, for a business research project I was working on, for an industrial machine. After completing my set of questions […]

  • learnmile
    Posted at 08:33h, 11 September Reply

    Wow!! This is one of the best post i have read so far.

  • JYOTI GAURAV
    Posted at 18:59h, 09 September Reply

    Hi, Haril Congrts & thanks for writing such a masterpiece of data & research implementation & moreover faith on it.
    Though i am the feeble person to comment on such a high justified & light thrown topic on source of Data and the matching tanzent from the Prevailing market flow, but i will be adding out here one question that rather than the methodology of research it is the variants u have kept in Research process & the effect of those variants on the findings of Research Topic for which we have collected data should be well defined and have shown atleast couple of path to step out.
    For example :- If data for the preference level of 100 customer bought TV in the month of AUG 2012 has x result trend than what variants or cause has forced that preference level building & what factors can impact a lot on preference switch will serve the purpose of all player in TV industry, so that will help all businesss players to take their business return on next level. That is the reason of their existence.

  • Anjali Grover
    Posted at 19:32h, 02 September Reply

    Well written piece…Yes numbers r indicative to give a direction to thoughts and to be implemented with apt proxies n valid assumptions !!

    Regards,

  • Usman Shaik
    Posted at 12:20h, 27 August Reply

    Hi

    You have raised a very interesting discussion in your blog focusing on the pitfalls and hurdles arising while undergoing research especially in a geography like India with limited data availability (as compared to much better data documentation across developed nations) and the extent of fragmentation in the Domestic Market among various industries.

    I agree that diversifying demography and population parameters create more problems for undergoing research in our country. Having said that, I would like to share some of my views on what can be the potential measures that can be taken to address these concerns.

    1. Addressing the complexity in obtaining the data, especially if industry is fragmented:
    a. Arriving at proper and relevant sources for the study and analysis. Example: ICIS, Risiinfo etc. depending on the industry
    b. Primary research and expert interaction can give a fair idea on the specific industry
    c. Expert blogs – Again, Expert Validation must be a home work before considering their views

    2. Data Validation using multiple authentic reports:
    d. Annual Reports – Though the industry is fragmented there can be certain big listed players existing in the market. Reviewing their reports can be quite useful for understanding the trends and figures
    e. Publications of the relevant industries – For example, “Papermart” for Indian Paper Industry, “Chemical Weekly” for Basic and Specialty Chemicals etc.
    f. Government reports: Tracking reports released by Central Government bodies. Example: Report released by Ministry of Trade and Commerce

    3. Following the studies and reports of Credit Rating Agencies:
    g. Credit Rating Information Services of India Limited (CRISIL)
    h. Investment Information and Credit Rating Agency of India (ICRA)
    i. Credit Analysis & Research Limited (CARE)

    By triangulating the data obtained from the above said primary and secondary sources, an analyst can have a logical confidence over his/her own analysis.

    Connecting the dots and making a constructive analysis, makes the difference between a search and a re-search.

    Regards!

  • Gaurav
    Posted at 06:48h, 23 August Reply

    Hi,
    a justified piece.

    Different projects may call for different approaches without which the methodology would lead to misleading results. We need systematic approach instead of rigid approach for research projects for a better outcome. A single method would not work for every industry and thus we should learn not to get stuck with a methodology which have been worked wonder for a particular market. Be flexible be productive.

    Thanks for nice sharing 🙂

  • Jaspal Rekhi
    Posted at 18:01h, 17 August Reply

    Excellent article on the research dynamics. With quite a simple example, a major point is scored.

    Thank you Haril.

  • Nitin
    Posted at 09:55h, 16 August Reply

    Haril.Totally agree with your views here. In my conversation with a large consulting company they mentioned that they never use Nielsen data for India as they have less than 15% coverage. This is not the first time that they screwed up.

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