Jo Bowman
Jayant Jain of Godfrey Phillips India on the business and research outlook.
Economic growth forecasts of over 5% for this year are the envy of most developed economies. But in a booming market like India, this counts as a slowdown – and one that’s having a hugely varied effect on home-grown businesses and foreign enterprises expanding there.
Jayant Jain, Vice-President and Head of Consumer Insights and Market Research with Godfrey Phillips India, part of Phillip Morris, says that, while the garment industry and outsourcing – largely dependent on foreign markets – have slowed significantly, the domestic market is still strong, with huge demand for mobile technology, for instance, and changes in taxes having a greater impact on tobacco sales than the general economic climate. More than three-quarters of the country’s GDP is fuelled by domestic consumption, he says, so while companies are being cautious about their investments, there are still plenty of consumers with vastly greater spending power than they had just a few years ago. Customers are expecting better value and smarter technology all the time, and Jain sees growth this year in most FMCG and durables categories.
“Given all the macro-economic indicators, [it seems] the worst is over and we have hit the bottom. We’re likely to see a sharp economic recovery this year if we have a good monsoon season,” Jain says. “The Indian industrial production figures and the service sector indicators, share market indices, as well as the financial results of the top 500 companies are all turning positive; I personally don’t think that recession is likely in 2013.”
What Jain does expect, however, is a heightened state of competition in those sectors that stand to do well. New legislative measures to allow foreign direct investment in multi-brand retail will ease the way for many international brands to enter the Indian market this year, and the existing players that fail to adapt quickly to the new competitive landscape are likely to suffer. In the tobacco sector, while there’s a lot of consumer turnover, between 6% and 7% of the population smoke. As the population grows, volumes are holding strong.
“Agility and flexibility are extremely important,” he says. Success will demand a long-term commitment to the market, a deep understanding of the market, and provision of the latest technology at competitive prices. “It demands specific understanding of the extreme diversity and peculiarities of the Indian market, along with the ability to identify and bring the best options from those available internationally.”
All change
With demand for consumer and cultural understanding on the rise, the Indian market research industry is growing apace, up by close to 20% last year and forecast to continue that rate of expansion in the coming few years. But research is changing, and not without some pain.
“The industry is seeing a bit of a churn, as many of the companies which earlier only provided back-end analytics and data acquisition services to overseas clients are now trying to enter the domestic market and are competing with the established players,” Jain notes. “Many of the agencies in advertising and research which are not already here but service these global corporations are now entering the Indian market. Therefore, I expect that they will bring in some of the latest methodologies and technology being used in the US and European markets. The existing players, who have a tremendous advantage of knowing the extremely diverse Indian markets better, will have to be flexible and agile in learning, adapting and offering better products and services.”
Already, the business of research has been transformed. Exit and political opinion polling, for instance, can now be done across more than 80% of constituencies. “The availability of secondary information at a macro level has increased. However, the reliability of these information sources leaves a lot to be desired,” Jain says. “At a primary information level, there has been extensive use of the latest technology: web-based, GPRS, GPS-enabled and mobile for speedier collection of data in many more locations.” Data collection for retail audits can make use of tablet computers and mobile data services to collate results quickly.
Jain says there’s much discussion within the research industry about the merits and disadvantages of traditional research methods compared to new alternatives. “I, personally, am not totally convinced about the utility of all the new methods, since these new methodologies will need to experiment and mature over a period of usage to provide really effective solutions,” he says. Godfrey Phillips India does, however, use I-TERA (Intelligent Technology-Enabled Research Audit), in which data collectors carry a GPS device which synchs with a mobile phone that uses geo-tagging to track movement in real time, and allows photos and data to be sent from the field.
War on attrition
The biggest challenges to the research industry right now, Jain says, is in developing infrastructure and tackling extremely high attrition rates. “The ability to provide usable insights and actionable research inputs requires in-depth understanding of the client’s business – something which new recruits take a fair amount of time to learn,” he explains. “Research organisations must find ways to partner with their clients over the long term, and be able to pro-actively provide business-enhancing insights.
“The Indian agencies will need to invest in improving technology, training of human resources, and building communications and analytics infrastructure,” Jain notes. “The data collection and processing ability is a bit outdated and will need immediate correction. Also, agencies will need to invest time and effort in improving the ability of their field and analytics personnel. The research and account management people need a lot of business exposure to be able to provide usable insights – a role which has been usurped by business consultants. The Indian agencies have very good human intellectual assets but lack infrastructure. That is where investment and input are needed.”
Jayant Jain is vice-president and head of consumer insights and market research with Godfrey Phillips India.
