Market research firms diversify their services in response to growing demand
The days when businesss could produce without an understanding of who their customers are or what influences their buying habits are behind us, according to marketing industry sources, who say that over the last several years, market research firms have seen a dramatic increase in demand for their services.
While Ukrainian companies continue to rely much less on the services that market research firms provide than their Western competitors, industry sources say that more business executives are seeing the value in market research. Manufacturers, telecommunications firms and the mass media have shown much of the interest.
The country’s first homegrown market research companies, Socis (now known as TNS Ukraine) and the Kiev International Institute of Sociology, made their appearance in Ukraine in the late 1980s before the first foreign firms began penetrating the nation’s market of 50 million consumers.
As the Soviet Union had little use for public opinion research, the country’s pioneering firms were compelled to create the industry from scratch. Both Socis and KIIS recruited sociologists, psychologists, mathematicians, statisticians and programmers to work for them.
KIIS Director Volodymyr Paniotto said that his firm became the first research firm to fill an international order when it undertook work for Radio Liberty in 1991. Work for Procter & Gamble, the World Bank and Johns Hopkins University followed. Today, KIIS is a Ukrainian‑U.S. joint venture employing more than 35 persons.
Paniotto said that because research methods used in Soviet times differed from established international marketing and market re‑search methods, a new, more appropriate methodological approach needed to be developed. The company put its team of research specialists to work designing sophisticated research methods capable of functioning in a changed market climate.
Even the interview, a basic market research tool, was a completely different concept for Soviets from what it is in the West.
“For us, conducting an interview meant that a respondent would fill out a questionnaire by themselves, while for our American partner, it meant that the interviewer would personally ask the survey questions,” Paniotto said.
He said that together with its American partner, Michael Swafford, the firm developed special research tools and trained interviewers to bring its research methods up to international standards.
GfK‑USM, a market survey and research firm founded in 1995, said that their first orders for research came from foreign companies interested in selling their products here.
“Our job was to determine what would sell and who would buy it,” said Oleksandr Fedoryshyn, GfK‑USM’s director.
Fedoryshyn said that when the firm was launched, the bulk of its work consisted of conducting surveys for clients, since it was not familiar with more sophisticated market research ap‑proaches.
“Foreign professionals analyzed the data we generated and determined their strategy accordingly,” he said.
He attributed GfK’s position as the country’s largest homegrown market research company to its staff’s hard work and help from clients.
Now, he said, the firm offers more than just basic market research services, including product testing, telephone surveys and even television audience ratings using people‑meters.
Fast forward
Fedoryshyn said that large Ukrainian companies and foreign firms doing business here are making research a priority in a bid to penetrate the country’s growing consumer base.
“That means that many national businesses are staking their future on market research analyses,” Fedoryshyn said.
He said that a decade ago, when market research was still a largely unfamiliar notion in Ukraine, most businesses were unable to form a clear picture of how their markets would develop. Now, increasing demand for different types of research have spurred some firms to offer specialized services that integrate with others to provide a wider range of market research options tailored to specific needs.
“Helping a company solve its problems involves much more than research,” Fedoryshyn said.
He said that an increasing number of his firm’s clients are Ukrainian companies that realize they can use market research to create profits. He also said foreign firms seeking sophisticated market research account for the lion’s share of domestic research firms’ revenues.
KIIS’ Paniotto said that the nation’s three largest research firms, TNS Ukraine, GfK‑USM and KIIS, compete with more than 100 smaller companies for foreign clients.
The larger firms tend to have the ability to do more work, and offer more services than their smaller competitors, Paniotto said. Whereas large research firms can handle as many as 130 projects a year, small companies may only have the resources to handle one or two.
As might be expected, what clients pay is largely dependent on what they need. Depending on the scope of work and the methods used, a market survey can cost from as little as $1,000 to $50,000 or more.
“Prices range from $300 to $500 for desk research, to $12,000 and more for sampling 1,200 respondents,” Paniotto said.
This year, the domestic market research business has seen growth of 40 percent over last year and is now a $20‑million a year business, analysts said. Businesses are spending more on market and opinion research than ever before. As well as Ukraine’s homegrown firms are doing, they still lag behind market research companies elsewhere in Eastern Europe, where billings are treble what the largest Ukrainian firms report.
Niche‑picking work
Paniotto said that market research companies use many of the same techniques and offer similar services for their clients, but each of them has its own market niche.
Analysts said, for example, that the preponderance of GfK‑USM’s work is traditional market research, while KIIS carries out social and political research, and AGB Ukraine, another research company, is known for its broadcast media rating services.
Martin Nunn, co‑managing director of White’s Shandwick International, a public relations company, said that research work in Ukraine has reached a more professional level, particularly in the area of political research. He said that market research has become a valuable scientific tool that has allowed companies to more carefully target consumers, rather than promote products by simply placing ads with broadcast or print media.
“We have seen a considerable increase in the use of research to identify and establish real market positions, particularly in the fast‑moving consumer goods sector, which is now much more crowded than three years ago,” Nunn said.
He said that research is also used to ensure that a company actually achieves the goal that it has set for itself.
“In the PR business, you have to know where you are starting from to determine the strategy to be used to achieve your goal,” he said.
