Editor’s note: Ravi Iyer is president of Paradigm Technologies International, a Westwood, N.J. research firm.

The Indian marketing research industry has been growing by more than 30 percent for the past three years. The spending for marketing research activities is presently estimated at $35 million. There are about 200 firms that provide marketing research services, of which eight to 10 firms are large and have nationwide capabilities. The torrid pace of growth is expected to stabilize at around 20 percent per year. Since the total spending for research comprises only one percent of total spending on all marketing services (advertising, marketing research, public relations, etc.), researchers believe the market holds tremendous potential.

Growth areas

The growth has largely been in the category dubbed "fast-moving consumer goods." This category, which comprises over 100 consumer products sold at the retail level, constitutes 60 percent of the total spending for marketing research activities. Other growth areas have been the financial services and automotive sectors.

The Indian automobile market was, until a few years ago, closed to the global giants. Deregulation has resulted in a rush of the world’s major automobile manufacturers to India. Today, American, European, Japanese and Korean automobile companies manufacture vehicles in India. Demand for research in this area inevitably followed. Recognizing the need, several of the large marketing research companies have set up groups within their organizations to cater to this burgeoning market. The other major growth area has been in media services. While most research is conducted on consumer goods, business-to-business studies have been catching up. The main research interests of biz-to-biz studies have been in the office automation and industrial products areas.

Major players

The two giants in marketing research are the Indian Market Research Bureau (IMRB) and ORG-MARG. Founded in 1970, IMRB, the larger of the two firms, is also the largest marketing research organization in South Asia (India, Nepal, Sri Lanka and Bangladesh), and has a staff of 400. Several of the newer firms were founded by IMRB alumni. ORG-MARG was formed in 1995 by the merger of Operations Research Group (ORG) and Marketing and Research Group (MARG), and employs more than 900 people. The other large marketing research firms include Dun & Bradstreet Marketing Research, Protech India Limited, Indica Research, Marketing and Business Associates, MBL Research and Consultancy Group, MODE Research, Pathfinders: India, and Research International India. Several large U.S. and European firms have established a presence in India. They have accomplished this either through strategic alliances or partial ownership. Some well-known U.S. firms which have a presence include Dun & Bradstreet, Millward Brown, Gallup, and Yankelovich. European firms include Research International, Lintas Worldwide, MBL Group plc, MRB Group and VNU.

Almost all the large companies are headquartered in the city of Bombay, with branch offices in other large cities. Bombay is the business capital of the country. A few of the large firms are located in other cities such as New Delhi, Calcutta, Bangalore and Hyderabad. An average research study costs between $5,000 and $10,000.

Research methods

Quantitative research is the most commonly used approach, accounting for 80 percent of the research studies conducted by companies in India. Qualitative makes up the other 20 percent. Due to lack of a strong research infrastructure, several of the data collection methods commonly prevalent in the U.S. cannot be used. The most common data collection method for quantitative studies is in-person interviews. The response rate for this method is up to 60 percent in upscale markets and as high as 80 percent among other population segments.

Focus group facilities equipped with one-way mirrors and audio/video-recording devices are not available. Hence, focus groups are held mostly in hotel rooms with closed-circuit television monitoring facilities.

Telephone interviews and mail surveys are used on a very limited basis. The principal reasons are lack of adequate telephones and low literacy rates. Lack of scientific samples and databases are another major drawback. Companies usually rely on telephone books to compile lists. Telephone availability is mostly restricted to middle- to high-income families living in the large cities. Among this segment, as many as 50 percent of the households have telephones.

The low penetration of telephones is also compounded by rates for long-distance calls, which are comparatively high by Indian standards. While clients increasingly recognize the need for research, they balk at the high cost of telephone, and computer-assisted personal interviewing (CAPI) methods in collecting data.

The use of scanners and automated equipment at retail checkout counters in almost nonexistent. Nevertheless, there are companies that conduct retail audits and provide data on consumer product sales.

While syndicated studies are just beginning to gain recognition, researchers believe that the number of clients is not sufficient enough to justify them. For similar reasons, companies are hesitant to offer off-the-shelf reports similar to those being conducted in the U.S. and Europe.

National readership studies are conducted once every two years. Advertising agencies use these studies for their media planning activities. Political polling, while being a recent phenomenon, is also gaining increased attention.

An advertising study was initiated in 1987 by the consumer products giant, Hindustan Lever. Lever, India’s equivalent of Procter & Gamble in the U.S., is an affiliate of Unilever. This study, called PULSE, has been regularly tracking advertising since then. Recently, however, several other research firms have launched their own studies to track advertising.

The most interesting development has been in the area of measuring television ratings. The two largest firms, IMRB and ORG-MARG, both have their own ratings study and are locked in a race to be the winner. Both companies have invested heavily in people meters. Recently a joint industry group awarded the ratings contract to IMRB. A fallout may result in the future. Nevertheless, for now, the two competing systems are seemingly secure because clients continue to use both.

Most market research companies have staff who are experienced in analytical techniques, including sophisticated analysis. They use industry standard software such as SPSS and SAS, and custom software developed in-house. According to V. Ravi, executive director of Indica Research, research companies in India are modeled after companies in the U.K. and thus tend to use psychology in focus groups. Conducting nationwide studies poses a challenge to researchers because of multiple language skills required. However, researchers have developed a keen sense of understanding of the cross-cultural differences that exist among the various regions in India.

Growing pains

The rapid growth has not been without its problems. Researchers in India are hampered by a serious lack of supporting infrastructure. For example, only one percent of all households has telephones. Literacy rates are also low. Thus, telephone and mail surveys are almost nonexistent.

The lack of adequate support services such as list companies, and focus group facilities have prevented researchers from offering the quick turnaround that clients in the U.S. and Europe are accustomed to. Rapid growth has also led to a shortage of trained research staff, says Thomas Puliyel, country manager for Research International India, a member of the Research International, the U.K.-based giant.

Professional organizations

The Marketing Research Society of India (MRSI) is the professional body for India’s marketing researchers. The society, established in 1981, has 50 corporate and 110 individual members. While there are no government regulations on the research industry, the society has established a set of rules called the Contractors Code of Conduct for its members. It encourages its individual and corporate members to actively participate in industry seminars. Several members have presented papers at past meetings of the European Society for Opinion and Market Research (ESOMAR). MRSI is based in Bombay on the campus of Xavier Institute of Management, one of India’s best management schools. The society publishes a membership directory and is considering the publication of a regular newsletter or magazine.

Future outlook

While India’s marketing research industry will continue to grow, it faces some important challenges. The need for a well-established research infrastructure is paramount. As India deregulates further, the telecommunications industry is expected to grow rapidly. The lack of reliable list samples has to be addressed. Focus group facilities with one-way mirrors and equipment for audio and video recording are also needed, especially in the large cities.

The Indian market is not homogenized. In order to obtain data on a nationwide basis, researchers have to target several cities, each with its own set of challenges, such as a different language and culture. While researchers understand such complexities, they have to work hard to justify high costs of conducting national studies to clients. According to Indica Research’s V. Ravi, another critical task facing the industry researchers is the need to articulate the value that research adds to a client’s competitive efforts.

Challenges and opportunities

The Indian market offers plenty of challenges and opportunities. The rapid rise in the number of Indian research firms and increasing presence of U.S. and European firms is strong evidence of the opportunities. While it lacks the infrastructure available in developed countries, the growing number of companies reflect a sense of optimism that eventually, it will become a market that cannot be ignored.