In conjunction with our annual ethnic research issue, QMRR spoke with Felipe Korzenny for some thoughts on the current state of research in Mexico and how the roles of research in the U.S. and Mexico compare and contrast.
Korzenny, president of Hispanic & Asian Marketing Communication Research (H&AMCR), Belmont, Calif., is well-qualified for the task. Born in Mexico City, he earned an M.A. and Ph.D. in communication research from Michigan State University. He was a professor of communication research at Michigan State and at San Francisco State University before starting H&AMCR in 1984. The company now has 13 full-time and 150 part-time employees. It also jointly owns SuperDatos de Mexico, a Mexico City research firm, with Consumer Research Associates/Superooms, San Francisco. He was interviewed at H&AMCR's Belmont, Calif., offices in late November by QMRR's Lane Weiss.
QMRR: How has marketing research fared in Mexico during the past five years?
Felipe Korzenny: "At the end of 1994, marketing research in Mexico was doing quite well but it suffered a severe setback in 1995. However, it has started to recover in the past few months. The struggling Mexican economy has had an effect on marketing research because clearly companies tend to spend less money on research and other types of investments when resources are low or uncertainty is high. Exports have increased dramatically, which has helped the economy, but unemployment rates are high and foreign investment is down."
How has the devaluation of the peso affected research and the economy?
"It has had a dramatic effect on the economy in general and on research in specific. The Mexican peso has been devalued many times over the past 30 years but the most recent one was dramatic because it was not just an economic devaluation, it was joined by political instability. That has made this devaluation a serious one because when there is political instability and uncertainty people are less likely to risk investment and develop new markets.
"Devaluation has been particularly hard on companies like ours with offices in the U.S. and Mexico. We become less competitive when the peso is extremely low, until inflation catches up and then we become competitive again. The prices of some local competitors can be very low compared to what you would call international market prices for market research. However, there are some advantages that can affect market research in a reverse direction. Since exports have been increasing dramatically, then marketing research for products from Mexico has also increased because there is more interest in finding new markets in the affluent north."
What percentage of research in Mexico is quantitative and what percentage is qualitative?
"Approximately 25 percent is qualitative, 75 percent quantitative. It's hard to know for sure how much is spent on research because official figures are hard to come by. A Mexican association of research agencies has made some data available, but the figures are tentative. In 1994, [research revenues] were $80 million, an increase over 1993. We were expecting increases of about 15 percent per year in marketing research revenues. However, in 1995, because of the devaluation of the peso and the slowdown in the economy, only a few companies were able to keep up that pace. So it's estimated that the actual value of marketing research efforts in 1995 was half or less of what it was in 1994."
What percentage of quantitative research is personal interviewing, telephone, mail, etc.?
"The method that is used the most is door-to-door. Probably 75 percent of all quantitative research is done door-to-door, person-to-person. There is an increasing trend toward store and mall intercepts. I think that is going to increase more and more because door-to-door interviewing becomes onerous and difficult to control from a quality standpoint. That's why I think more and more companies are moving toward intercepts.
"There is very little mail research in Mexico. Regardless of whether the mail service is reliable, it is still not part of the culture to fill out a questionnaire that comes in the mail. Telephone interviewing is not very common but it will obviously increase as the telephone system improves and more and more people have access to telephones."
How about qualitative?
"Qualitative research in Mexico has grown substantially overthe past lOyears, though not as much as it has in the U.S. It's mostly focus group research that is done in Mexico, in addition to some one-on-one interviewing. There are about 20 companies that do qualitative research and about 30 that do quantitative."
Are most around Mexico City?
"Yes. There are a few in other places. Monterrey and Guadalajara are beginning to see more professional facilities but you could count them on one hand. Most of the research done outside of Mexico City is being done in hotels and other locations.
"The set-up in Mexico is a bit different than in the U.S. Up here, most research facilities are available for anyone to rent or use. In Mexico there is the beginning of that but it is still mostly the companies who own the facilities who do the research in them. So for example a full-service marketing research company that does both quantitative and qualitative may have a focus group facility but they use it for their own purposes. Whereas here in the United States clients are more likely to hire a facility almost anywhere according to their own needs."
Has the use of PCs had an impact on research in Mexico?
"Computers have made a difference in the marketing research industry in Mexico in the same way they have in the U.S., in terms of data entry, processing, distribution. Now there is a lot more electronic transmission of data. Mexicans are extremely proficient in the use of computers for statistical analysis. There is much more of that going on right now. And yes, computers have made a difference. Very large surveys are updated very quickly now and data can be obtained very promptly. I have seen firms in Mexico beginning to collect data on the streets using hand-held computers.
"Mexico tends to grab on to technology very fast. I read recently that a million Mexicans are already connected to the Internet. I think it's impressive for a less economically advantaged country to have that much interest in technology."
Who are the major users of market research information about Mexico?
"There is a large demand for public opinion research from the Mexican government. They are constantly taking the pulse of the people in terms of satisfaction with services and needs assessment. Then you have foreign firms, which, particularly with NAFTA, became more interested in conducting research. There are foreign firms that have been conducting business in Mexico for a long time - Kellogg's, Coca-Cola, Colgate-Palmolive - that have traditionally been collecting data. Procter & Gamble is an example of a very prosperous business in Mexico. They sell many of the same brands that they offer in the U.S. and they buy a large amount of research.
"There has been an increasing trend for foreign companies to collect fresh data to assess the potential of a particular product in Mexico. That has been happening more and more. Many more companies without a presence in Mexico want to know if there is a niche for them there."
Are most projects large-scale or do most companies tend to stay with small projects?
"That's a difficult question to answer because there are many projects of both sizes. You have situations where a company will do a few focus groups to find out a quick answer to some ad copy questions. Then there are large scale projects where thousands of people are interviewed. So it's hard to assess, but I would say that in general projects are smaller than in the U.S.
"That has to do with resources and the fact that Mexico is a less affluent country. Those who buy consumer products are a relatively small percentage of the population. It is estimated that only about 30 percent of the population earns more than $10,000 per year. Those are the people who will be buying consumer products in any large quantities. So that defines quite narrowly the type of constituency that you would talk to for consumer issues."
Do many companies in Mexico have marketing research departments or is research handled by the sales or marketing managers?
"A few of the larger companies in Mexico do have marketing research personnel. For example, the Leo Burnett ad agency has a strong presence in Mexico; they have their own research people in their offices in Mexico, and they buy their research from other suppliers. But other companies that are less geared to conducting research basically tend to delegate that to brand managers category managers."
What is the future of research in Mexico?
"I am very optimistic. I am used to the ups and downs of the Mexican economy, which tend to be somewhat cyclical. Mexico is a very robust country that has bounced back after many negative experiences so I am optimistic that it is going to again be extremely prosperous. It has to be. As one of the largest economies in the continent, it has to have the stamina to support its own population and to live in a coordinated prosperity with the United States. I think that's the key - being so close to the United States makes it particularly difficult for Mexico to allow itself to lag behind. It has to pick up and renew its energy and continue.
"I think in a few years marketing research in Mexico will be on the rise. With our SuperDatos de Mexico branch, we saw a pronounced increase from '92 to '94 in demand for research services. We saw that go down in' 95 but I think that in the next few years, as the economy stabilizes and people are more used to the new status quo, we will see again more marketers, national and international, entering the Mexican arena.
"NAFTA is the key reason to have optimism. It has some negatives but it also has strong positives for the U.S., Mexico and Canada. With the lowering of tariffs and with commerce made easier, marketing research in Mexico is likely to rebound and recover because manufacturers of consumer products in the U.S. are extremely interested in developing the Mexican market, which is 100 million consumers just south of the border."