INS511: Perspective on Market Research

Sector
Section I
Assignment I: State of Market Research
Industry

Janki Solanki
AU1813051
Submitted to: Professor Ravi Miglani
Monsoon 2021
Porter’s Five Forces Model:
Porter's Five Forces is a model that characterizes and evaluates five competitive weights that
affect each industry and facilitates to establish an industry's weaknesses and strengths. Five
Forces study is often utilized to find an industry's formation to decide corporate strategy.
Porter's model can be used for any section of the economy to detect the degree of
competition within the industry and improve a company's long-term viability.

The five forces are:

1. Supplier power. An assessment of how easy it is for sellers to drive up prices. This is
determined by the: number of suppliers of each necessary input; exclusivity of their product
or service; comparative size and strength of the supplier; and expense of transferring from
one supplier to another.

2. Buyer power. An evaluation of how simple it is for buyers to drive prices down. This is
determined by the: total number of buyers in the market; significance of every individual
buyer to the business; as well as the expense to the purchaser of shifting from one supplier to
a new one. If a company has just a few potent buyers, they are often able to impose terms.

3. Competitive rivalry. The key driver is the number and ability of rivals in the market.
Many players, offering homogenous products and services, will decrease market
attractiveness.

4. Threat of substitution. Where close substitute products exist in a market, it raises the
possibility of consumers shifting to options in response to price rises. This decreases both the
power of suppliers and the desirability of the market.

5. Threat of new entry. Profitable industries appeal to new entrants, which wear down
profitability. Unless incumbents have robust and lasting barriers to entry, for instance,
patents, economies of scale, capital constraints or government regulations, then profitability
will decrease to a competitive rate.

Arguably, law, tax policy and trade policies make government a sixth force for several
industries.

1. Threat of new entrants:

Barriers to entry

• Economies of scale: existing firms benefits from lower average costs due to their size
such as, Nielsen, IQVIA, Kantar. Which reduces the market attractiveness for the new
entrants as the new players will have to compete on a lower price then the existing
 ones which could lead them to a loss comparing to the size of their acquired market as
a new entrant.
• Brand loyalty: buyers and customers are attached to existing products and suppliers in
the marker, as they preferably consider them a reliable source, companies like J.D
powers who occupy huge market in providing data, insights, conduct survey on
customer satisfaction, advisory services and data analytics on automotive industry,
having number of loyal and potent customers in India as well as worldwide. While for
TV and Radio Data customers are highly concentrated with Arbitron.
• Capital requirements: Capital mostly depends on the methodology of conducting the
research and collecting information, a professional survey usually starts from Rs.
85,000 and can go up to 1,00,000 or even more depending upon the size of chosen
geography and number of. The survey fees can range from Rs 1,500 to 2,500 per
application. While surveys conduct online and not face to face can be cheaper,
through social media platforms. But the insights gathered from in-depth surveys via
interviews and other implicit ways can be lot more reliable. Therefore, the capital
requirement in market industry is quite high.
• Cumulative experience: top companies in this industry have been working for more
than 50-60 years, which reduces the attractiveness of the industry as it becomes
difficult for the new players to compete with existing ones who have already acquired
most of the market and buyers.
• Government policies: various data protection polices are made by the government,
such as General Data Protection Regulation by ESOMAR, it has also built a global
compliance program under which a checklist is used to protect complex data, follow
the standards of conducting the research, safeguard community and public’s trust, and
confidence in one’s research, data and insights which do not include any fraudulent
activities.
• Access to distribution channels: the large key players in the industry already have
their hand on the sources and distribution channels, which makes it difficult for the
new players to access them, they can possibly invent their own distribution channel or
pay a higher price to the existing ones, which can reduce the attractiveness of the
industry for a new entrant.
• Switching costs: switching cost is high for market research industry as their intangible
assets such as software, digital space etc, can be time consuming and costly as
liquidating these assets as well as the company as a whole.
Overall, the threat of new entrant is low, as there is Not enough access to suppliers and
distribution channels, Powerful government policies also risk of retaliation from existing
competitors and Patented technology is required to be successful in this industry, as this
industry is growing at a very fast pace, with many key players already over most of the
market.

2. Competitive Rivalry:
• Number of competitors: low as there are number of competitors in this industry
 • Diversity of competitors: most of the competitors provide the same kind of service
and data, while there are major players in the market since past few decades who have
acquired proficiency in this field of work, and are diversified with their products, as
companies like Nielsen whose core services ranges from,
Measurement and data analytics - Consumer purchasing measurement & analytics;
media audience measurement & analytics while Kantar deals with Brand & marketing
communications research through quantitative studies and qualitative research - social
media monitoring, consumer and shopping behaviour, advertising effectiveness,
public opinion, some immerging market researchers who relies on social media
platform, where everything is digitalised, thus diversity is very much persistent in this
industry.
• Industry concentration: the industry is considered to be highly concentrated as the top
firms in market research are influencing the production, offered services and industry,
as they are prevalent since long time in the market with larger share as well.
• Industry growth: industry growth is high as the digitation and modern methodology
are far more convenient and useful than the traditional ones, The global big data and
corporate analytics market size was valued at $198.08 billion in 2020 and is expected
to reach $684.12 billion by year 2030.

Thus, competitive rivalry is high in this industry, considering the large number of firms in the
market, as it is evident through the pressure firms put on each other and compete through
both price and quality in the market, highly competitive rivalry for an industry decreases
profit potential for the existing firms, thus reduces the attractiveness of the industry for a new
entrant.

3. Buyer Power:
• Number of customers: large number of customers as now a days almost all business
depends upon the analytics and insights gathered about their field of work, whether it
be preferences of customers, most number of purchased products, to see how
consumers response to their products and services.
• Size of each customer order: size is usually large as a business cannot analyse
anything based on few data and insights.
• Differences between competitors: differences are more as some companies like
IPSOS have wide range of offerings, covering all market needs, including qualitative
and quantitative, while some smaller firms only deal in syndicated research, selling
same information to all their customers, also there are firm Nielsen who conduct
research particularly for their customers, and then there is digital social media
flatforms, like twitter, Facebook and Instagram, collecting information using their
algorithm.
• Price sensitivity: consumers in this industry would not pay more if there are options
with which information can be acquired at cheaper cost, as the emerging social media
platforms provide insights about the business’s wherein they can learn lot about their
followers and consumers, overall trends, also view insights for specific posts, Stories,
 videos, reels and Live videos that you've created to see how each one performed and
how people engaged with them, which does not even cost a penny, that is why price
elasticity is high, as the price increased the demand for the product will decrease.
• Switching costs: switching cost can be low as not all firms will have legit and
accurate information and data analysis, also the quality and time may differ from one
firm to another.
• Backward integration: possibility of backward integration of the buyers is high, as
most companies these days have began to conduct market research themselves instead
of purchasing the data from other firms, as the process of conducting research has
become lot easier than earlier, through social media platforms and various other
google tools.
Thus, the bargaining power in the industry is moderate, as some in depth interviews and legit
customer satisfaction analysis, and data is offered by topmost companies, while the general
data and insights are also available and can easily be fetched from other small firms at a
lower price, thus there is a little presence of influence on price by the buyers, who are
manufacturers, media companies, retailers, government, education institution.

4. Supplier Power:
• Number and size of suppliers: number of suppliers is large, such as data analytics,
researchers, data processors, fieldworkers, and various other research firms.
• Uniqueness of each supplier's product: different firms deal with different kind of data,
such as Information Resources Inc. who are in the field of Supermarket scanner data,
Gartner Group who prepare Information Technology Reports, while Prescription drug
data is handled by IMS Health, same way many other firms line differ, including the
kind of information they provide to their customer.
• Forward integration: suppliers of data and analysis, including processing and
gathering can forward integrate their business and get into consulting.

Thus, the bargaining power of the suppliers is high as particular kind of information is
required by buyers, the specialised and customised information allow them to influence their
price in the market.

5. Threat of Substitution:
• Number of substitute products available: various substitutes are emerging for data,
mobile apps and software are available now, google and Meta also providing the users
a platform to gather data, with their specialised tools making It easier to understand,
align and integrate their future strategies through the help of these social media
platform.
• Relative price performance of substitute Perceived level of product differentiation: the
relative price of the substitute is much lesser.
• Switch costs: switching cost is low, digital transformation is taking over the industry
and many companies are themselves performing the survey, gathering information
 and creating strategies on the basis of their data, the shift from offline to online is very
evident along with lesser overhead costs.
Threat of substitute is high in the industry of market research, as companies are performing
DIT research, becoming marketers and engaging with the customers, collecting great volume
of data then ever before.

The overall attractiveness of the industry according to the porter’s five forces analysis, is
moderate to low, as there are major key players in the market, giving best of the services and
providing legit and up to date information, a new entry shall have to compete with the already
existing firms. Digital transformation in this industry with data has refined the unified tools,
data strategy, data management, process and analytics to enabling accurate data insight –
aligning and refining on and offline data to support intelligently informed decision-making
across the business.

Trends in market research industry:

• Video-first thriving : With remote operating at a record high in 2020, Zoom saw
1.7m users at its highest. Benefits of video-led research in terms of ‘any-time,
anywhere’ is in the treand to not only assist further diversify research experiments but
also open up an entire new world of prospect for market-researchers in terms of
outcomes and the types of projects that are being undertaken.
• A boom in automation and AI adoption: Companies are progressively considering
taking their research task in-house. The aim of these teams is to manage and analyse
vast quantities of primary research that will allow them to make informed choices and
judgments about their products and offerings. In order to do this, many firms are
getting their hands on automation and AI to assist them be more efficient at their jobs.
• Agility – as a result of digitization: The advantages of being able to perform and
analyse market research remotely, extend far beyond the capability to continue to
work during a pandemic. The technology available and the ability to be able to reach
research samples anywhere, at any time, allows companies to gain access to people
with more precise and varied opinions, and improve engagement and devotion.
Businesses are also connecting with people in environments that are most comfortable
to them – leading to much more organic and genuine answers as a result.