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Industrial Market Research in India
Industrial Market Research in India
Sharad Sarin
This article summarizes the state of the art of industrial marketing research in India. It covers
the orientations of organizations toward marketing research, the dominant profile of the
current marketing research activities; and the experiences and efforts in information
collection. The article highlights the emerging trends that will accelerate the acceptance of
marketing research in India.
India is a developing country and agriculture is the mainstay of the economy. Yet, nearly
50% of the national income comes from goods and services that are exchanged among
organizations. At 1985 prices, India's national income was Rs. 1600 billion [approximately
$122 billion]. Thus, nearly Rs.800 billion worth of goods and services are managed through
the domain of industrial marketing. In spite of this, marketing has yet to find its rightful
place in this exchange. Experiences of developed countries show that integration of
industrial marketing research with the main marketing function is evolutionary. This
integration may lag behind by 10 to 20 years, These remarks may lead one to believe that if
the marketing function per se, has to find roots within industrial marketing then perhaps
marketing research may be an alien and unknown concept yet to be utilized. The picture,
however, is not so dismal and disappointing when compared to other countries.
This article is an attempt to summarize the state of the art of industrial marketing
research in India. The remarks, observations, facts, and conceptualizations are based on
the experiences of some 30 different studies conducted by the author over the last 15 years.
Exhibit 1 profiles the product-market situations for the observations and comments made
in this article.
Out of nearly 100,000 registered units, 30,000 are engineering units in India. Besides
these, there are around 1.2 million small scale units. Ignoring the small scale units,
approximately 50,000 units may be involved in industrial marketing. Depending upon the
use and orientation toward marketing research, these 50,000 organizations can be
categorized into one of the following four categories:
Source:
-----------------
Industrial Marketing Management, Vol. 16, 1987, pp 257-264. [This article was originally
titled "Industrial Marketing Research in India: A Critical Review".]
EXHIBIT L PRODUCT-MARKET SITUATIONS
1. Raw Materials
Bright bars
Unsupported PVC films and PVC leather cloth
Industrial and culture paper
Limestone and lime
2. Capital Equipment
3. Chemicals
. Synthetic pigments
. Phosphating chemicals
. Synthetic fertilizers
. Coal tar distillates
. Sulphuric acid
4. Components
HT fasteners
Control cables
Transmission chains
Conveyor chains
Link chains
Textile parts
Rubber components for automobiles
Steel forgings
Steel tubes
Hand tools
TV tubes
5. Consumables
HDPE barrels and drums
Industrial leather gloves
6. Office Equipment
Electric typewriter
Plain paper copier
7. Services
Residential housing complexes
In this category of companies, the marketing research has become an integral part
of the marketing function. The companies are convinced of the payoffs from regular
marketing research activities. Instead of the marketing research department trying to
justify its existence, it has to budget its time and efforts due to tremendous pressures from
the user departments. Market potential studies, image studies, product-position studies,
scanning of regulatory environment, maintenance, and updating of data bank, effectiveness
of advertisements, and so on are some of the regular activities of the research department.
Marketing research in this sense has become the hub of the entire business activity.
Creation of such a culture and concern for marketing research is essentially due to the firm
and continued support from the top management.
A minority but with indications of a positive outlook, marketing research has yet to
become a function of this organizational culture. Thus, the use or abuse of the marketing
research finds heavy correlation with the fluctuations of the marketplace. In these
organizations, top management has still to demonstrate faith in the research. Its lack of
confidence in the research is evident by frequent transfers of personnel from the marketing
research departments. Thus, when the going was bad, in spite of having a large marketing
research department, the company's marketing personnel confessed ignorance on the end-
uses and end-users of the products marketed by the company. But when the going became
good, the marketing research manager was left with hardly any staff members. Similarly, a
successful trading company could not resist the temptations of reaping short-term benefits
by transferring personnel from a marketing research and planning cell. This cell was
formed after constant persuasion of nearly five years. It was, however, demolished within
three months. This love-hate relationship will continue until the time top management fails
to change its outlook. The only positive aspect of these organizations is the creation of some
administrative arrangements.
The whole organization is divided into seven to eight business groups with each
group having a number of divisions. In all there may be around 1000 engineers and MBAs
working in this organization. In almost all of the product categories this organization
would rank among the top three. Yet when the corporate advertising manager approached
one of the individual managers for the dominant buying attributes to be incorporated into
a press advertising, the manager drew a blank. There was virtually no research in spite of
this division being the largest advertiser in the whole organization. Not surprisingly, the
division has no provision for regular marketing research. Such examples are not isolated to
this organization alone.
The incident described took place in early 1980. Even around 1985, the division has
failed to recognize the need for regular marketing research. In such organizations, the
emergence of the research culture may take another seven to ten years, i.e., until the time
competitive pressure is not severe.
With no administrative arrangements, the other half of the majority would fall into
this category. It is difficult to change the views of executives of such companies until their
organizations experience major upheavals and battering by external environments. They
are of the opinion that:
The orientation scale indicates the gap that exists between those who have realized
the effective and potential contribution of research and those who have not. This diffusion
and acceptance of marketing research in India seems to be similar to the experience of the
UK. Though Wilson does not discuss the acceptance pattern, in India at least, the adoption
may follow a skewed bell curve with a time gap between early adopters and early majority.
In short, there is a long way to go before marketing research could become an integral part
of marketing for the majority. This agrees with the views of Ames and Hlavacek.
Far too many industrial firms have not realized the strategic and tactical value of
the fact based market information. Many industrial firms do not even have a market
research unit. When an in- house marketing research staff does exist, it is typically the
most underpaid and underappreciated units in the firm.
It may also be worth mentioning that, even in the case of the small minority, the
acceptance of marketing research was due to the pressures of the external environment
such as government regulation, increased competition, and technological innovations. It
seldom emerged due to a proactive outlook of the management.
Ten years ago, Vora indicated that the proportion of various types of
research/studies being conducted in the field of industrial marketing research in India were
those shown in Table L
Until recently, the major preoccupation of the sponsoring Indian organizations used
to be restricted to the quantification of the demand and the demand-supply gap. A recent
development is their realization that the Indian customer is not averse to superior products
at higher prices. Because of this, the sponsoring organizations have started appreciating
the inclusion of competitive analysis, research on organizational buying behavior, gaps in
the service packages of the competitors, and so on. A few, of late, have also started
acknowledging that market share and success would be an outcome of an entrepreneurial
decision rather than mere opportunities as reflected through the demand-supply gaps. This
is a welcome change. It implies wider terms of reference for market demand studies. It will
help in better evaluation of the fit between opportunities and capabilities. It will also lead
to reduction in product or project failures.
Besides the market studies for market potential and opportunity analysis, some
organizations have also started conducting research on advertising effectiveness, media,
product-service attributes, image feedback studies, and so on. This is, however, limited to a
few organizations. The earlier discussions on the corporate culture and outlook can explain
the limited use of research in these areas.
Based on the authors' first-hand experience in data collection for the studies mentioned in
Exhibit L an attempt has been made to generalize the experiences.
Surprisingly and contrary to general belief: one can find secondary information if
one has patience and perseverance. Unlike the US situation, or maybe even in some other
developed countries, a call on the phone to a good library may provide the entire source or
even the secondary information; the collection in India would require some time, money,
perseverance, and patience. There may not be any shortcuts, but having once collected it, a
researcher would find an ocean of data. The problem, however, is in converting this mass
of data into meaningful information. This again is very time consuming and at times
frustrating due to nonstandardization of the data. Lack of availability of current data is
also a usual problem associated with any developing country. But some improvements are
visible here.
The best starting point of collecting secondary information is the annual trade
directories of leading publication houses and association of industries. Compendiums of
stock exchanges also provide sufficient information on various companies. Similarly, many
published reports are available on macro level studies sponsored by government and
industry associations. The annual issues of trade journals, too, provide excellent
perspective on different industries. Sarwate and later, Satya Narayan have made excellent
attempts to consolidate the secondary sources for such information.
In spite of the availability, the avoidance of field study for primary information will
still make the researcher very shaky. In short, any project on industrial marketing
research in India must have a provision for original field research. This may be a necessity
for another 10 to 15 years even for quick market studies.
As is well known, the response is directly related to the perceived benefit seen by the
respondents. This has been true in India also. Thus, a mail questionnaire survey seeking
reasons for low capacity utilization in HT Fastener Industry could create a response from
early 50% of the manufacturers. However, the attempts of a subgroup, appointed by the
Planning Commission [the Apex Body for the planning of Indian economy] to ascertain the
information from manufacturers of bulk material handling equipment required repeated
efforts before sufficient information could be collected through mail surveys. Business
prudence would normally imply a faster reaction and 10% cooperation by all the
respondents to the efforts of a research team formed by the national government. This did
not happen and this is not happening in large number of situations. Mailing of 100
questionnaires to collect information on a communication study by Sarin could provide
responses from only five organizations. In short, mail surveys, too, could not be substituted
for direct field studies. Absence of an economical and efficient national telephone system
[which can be used for followup] is also a handicap, getting in the way of improving the
response to the mail surveys.
Only a few days ago, a researcher returned from his trip to Delhi to collect
information on a project related to rubber products for automobiles. What was originally
thought to be a straightforward, fact-gathering exercise, turned out to be a nightmarish
experience for the researcher. Being a highly qualified professional, it shook his confidence
and forced him to doubt his competence to collect information for such projects in the field
of industrial marketing. The frustrations were due to resistance in sharing what seemingly
appeared to be straightforward and harmless information. It was felt that the status of the
researcher would help him to receive cooperation without much fuss and formalities. But
the reverse happened. The pitfalls included:
Not disclosing the main purpose of the study for the reasons of confidentiality.
No intimation to the respondents.
Inadequacy of respondents to provide desired information due to uncertainties of
their end.
Perceived fear among respondents that the study may prevent easy imports of the
rubber components.
These frustrations are frequent and widespread for a large number of field
researchers in India. Limitations of restricting the data collection to working days and
within office hours; time pressures on busy executives; inability of one respondent to
provide the complete information or react meaningfully to the questions; policies of some
organizations of not sharing or providing any information to outsiders unless the same is
cleared by the top management; long waiting time outside the offices; and the repeated
efforts to identify the right source or respondents are some of the factors that have made
the task of information collection very difficult. It is obvious that the art of information
collection is much more complicated than the science of developing measuring instruments.
Advance planning;listing of resource persons within responding organizations; advance
intimation of giving a feel of the information being sought and so on, are a few
fundamentals of this art. But following these requires time and effort that is seldom
available in a business research situation. Unlike the west, telephones and mailing system
have yet to become efficient enough to be effective in India.
The cost here refers to the cost of research by outside agencies. Though the
character and scope of the study would determine the final cost of the research, a tentative
idea may be indicative for comparative purposes. Thus, studies with census approach to
sampling at 1986 prices, may cost the organizations anywhere between Rs.I000 to Rs.2000
[$80-$160] per respondent. On the other hand, a comprehensive national market study
with a sample size of 80 to 100 responding organizations may cost Rs.30,000 to Rs.40,000
[$2400-$3200]. This would imply a cost of Rs.375 to Rs.500 [$30-$40] per responding
organization. Based on the experiences of a large number of agencies, a realistic estimate of
the total average cost per responding organization for a national comprehensive study at
1986 prices may be around Rs.500 [$40]. This may be the total cost, including professional
charges, secondary data collection and analysis, preliminary/pilot research, and main field
research. The time span of such studies may be 15 to 25 weeks.
CUSTOM MARKETING RESEARCH FIRMS
Over the last 15 years, there has been an increase in the availability of outside firms.
Besides the old marketing research organizations, mainly of some large advertising
agencies, a large number of smaller organizations formed by professionals is an emerging
trend in India for industrial marketing research. Sarwate has listed some 95 such
organizations. The actual number of 1986 may be many more. Their availability has filled
the gap that existed around the early 1970s. A very welcome development is the
improvement in the quality of research output of these organizations. Though these
organizations might have yet to reach the levels of agencies in the US and the UK, the
competence and background of the professionals of these organizations is encouraging. The
growth of professional market research firms appear to be the most outstanding positive
development in India in the last decade in the field of industrial marketing research.
Some emerging trends are now showing that the next 10-15 years will be full of
developments in industrial marketing research in India. These trends are: increasing
professionalization of industrial marketing function by recruiting more and more engineers
with MBAs; widespread use of computers even in the marketing function;
professionalization of materials functions and hence pressures for better and speedier
services; technological innovations and reducing product life cycles; and the use of mass
media and other promotional tools besides personal selling.
a] Identifying the barriers both attitudinal and operational which are coming in the
way of wider acceptance of research.
b] Capturing and conceptualizing the 'management of change' in creating climate,
administrative arrangements and systems for marketing research function in India.
c] The quality and quantity of human resources for marketing research for different
types of product-market situations.
d] The benefit-cost studies. These could be 'cases' and can also address to the issues in
measuring the benefits and costs as well as in minimizing the 'cost' of research.
2 Focus Two: 'The Information Related Issues.' Another focus of the research could be
to sophisticate and strengthen the databases both at macro [industry, association
level] as well as the micro level. The attempt of the research should be to highlight
the efficacies and inadequacies of the available information sources as well as 'cost'
of information.
3 Focus Three: 'The Empirical Studies.' A third focus of research could be the
empirical studies highlighting practices and problems of Indian marketers. Above
would require a close cooperation amongst 'business' and academics. The challenges
are to develop mechanisms to accelerate this cooperation for wider acceptance of
research for better performance. Wilson's suggestion maybe helpful: The research
should not only be interesting but profitable also.