Where Opportunity Awaits

By ESOMAR LATAM Representatives

The Latin America region may have seen a slight decline in collective turnover for market research in 2014, however, certain countries in the region did well and a number of markets have improved significantly. In a region where each country has its own peculiarities, history and political and economical situation, conducting research in such a varied place can prove challenging. We asked the ESOMAR representatives in some LATAM countries (Brazil, Uruguay, Peru, Guatemala, Argentina, Central America and the Caribbean Islands), about the challenges, opportunities and trends in their markets.

Going Online

Challenges and opportunities are both apparent when it comes to online. With the overall poverty rate declining, more opportunities are becoming available for the people of LATAM. Urpi Torrado, CEO of Datum Internacional S.A, tells of a 46% smartphone penetration in Peru – creating a growing opportunity for brands. The same can be said for Internet penetration – with an infiltration of 82% in the LATAM region, creating a great opportunity to offer online research, both quantitative and qualitative, comments Alain Mizrahi, Director of Grupo RADAR.

In Brazil, Suzana Pamplona, Market Research Director at Johnson & Johnson Consumer, observes the shift towards ‘digital natives’ in Brazil. “It is fundamental that we understand how access to the internet and increased smartphone penetration are impacting the way we connect with consumers.” She notes, “Media investments are in digital and so impacting the way we run research using digital channels. For those ‘digital natives’ their new mindset makes no distinction between screens – we need to bring this mindset to research as well.”

But, it’s not all plain sailing for the region when it comes mobile and internet penetration. Susana Marquis, Consultant of Susana Marquis La Investigación, comments that many of the FMCG and Tech companies are asking for research to be gathered online or through mobiles, but the technology is not quite there yet in Argentina. Technology disparities are an issue that has not been resolved and a lot of the research is done in a way which more developed markets would find ‘old’ – such as PAPI or CATI, Marquis adds.  Similarly, in Peru the infiltration of online research and advertisement is still low, comments Torrado. Yet, she does observe that consumers are indeed online – a whole area waiting to be researched.

The challenge is much the same in Central America and the Caribbean Islands, Jorge Martín Frech, Managing Director at Mercaplan Central America & Caribbean, comments on the slow adoption of online data collection. “This is keeping prices high in low-income markets and alienating research budgets – leading clients to take their money elsewhere,” he observes.

Keeping Pace

For the fastest growing LATAM market of 2014 (according to the ESOMAR 2015 Global Market Research report), Uruguay, challenges lie with multinational companies not buying market research locally, says Alain Mizrahi. “The main studies like brand health tracking or brand positioning surveys are usually hired from their regional head offices in Argentina or Brazil.” As major market research companies do not have local branches in Uruguay, observes Mizrahi, local agencies become subcontractors and only do the fieldwork. This means full-service is only required by local firms for small jobs, he comments.

In Guatemala, they also face increased competition against the major market research firms. Christian Fabrizzio Andrés, Research Manager of Client Service, Mercaplan, notes that for Guatemala researchers, there is little chance to try and keep pace with global competitors – and no time to experiment with new market research techniques. This makes it harder to maintain client contracts, as clients continue to seek the latest research methods. “There is in some cases a lack of confidence in new methodological approaches [in Guatemala],” he says.

For Brazil, the third fastest growing market in the region, a deceleration in the economy is having an impact on companies having to do more with the same or less resources. Suzana Pamplona comments, “The average growth in the region is slowed,  especially Brazil. Inflation and unemployment rates are increasing and affecting consumer habits and thus impacting businesses.”

Research Culture?

In some of the smaller LATAM countries additional challenges come in the form of attracting talent into the industry. In Central America and the Caribbean Islands, where tourism is the main economic gain, there is scarce senior talent within market research – and so talent has to be found from other countries, increasing costs. Andrés comments on the need for building together with media, advertisers and agencies a better curricula in conjunction with major universities to improve this situation.

A somewhat lack of research culture in the smaller LATAM countries also filters down to confusion from clients as to what market research can do for them. In Uruguay it’s difficult to sell non-traditional research methods, comments Mizrahi. For many marketing directors, research equals PAPI surveys, so researchers have to spend a lot of time and effort to ‘evangelise’ the market.  “The professionalisation in management positions encourages us to believe that in a few more years clients will be more aware of the importance of market research in the strategic decision process,” observes Mizrahi.

The other side of the story looks at the credibility of the industry, Mizrahi observes. “As in many other countries in the last few years, the changes in the voting decision process have impacted on public opinion research methods. Several research firms made mistakes in their polls, which has affected the credibility of our activity.”

Moving On Up

Although LATAM has its challenges, market research opportunities are rife in the region.

For Brazil, the new trend companies need to consider is women empowerment, comments Pamplona, this new cutting edge trending societal movement opens up a wealth of new opportunities. “They decide for almost 80% of total household consumption and there is even anecdotal research showing that 71% of husbands prefer to change their mind to avoid conflict with their wives.” It is paramount that research addresses the underlying needs and desires of women in Brazil, not only because of their consumer power and driving force in the economy – but because of their leading role in families and their evolving protagonist role in the working force, explains Pamplona.

In Uruguay, opportunities lie with the local currency, which has devalued more than 30% in the last few months – meaning there is a great opportunity to export services like CATI, fieldwork or data processing to clients abroad, comments Mizrahi.

Things have also become a lot easier for foreign investors in Argentina since December 2015, making way for new opportunities, comments Marquis. “The currency disparity used to be as high as 50%, this has now been corrected and we’ve had a 40% real currency devaluation,” this coupled with less restrictions overall for foreign investors makes it a flourishing country for outside investment.  According to Marquis, the time to do business in Argentina has never been better. “Argentina is also looking at transforming its infrastructure and systems, so any technological solution or infrastructure will probably be attractive.”

As economies grow, so does the landscape. Evident in Peru, where Torrado comments, “In the last 15 years, Peru grew from 10 to 78 malls, changing people’s lifestyle.” This change happened quickly, so these markets are crying out to be researched. The same can be said in Guatemala, where there are more and more brands for consumers to choose from. “Although educational indicators would tell us that we are still submerged in rampant under-development, the small purchasing power that consumers have, has granted them access to technology,” remarks Andrés. “There are more means of interaction, both physical and virtual, amongst family, friends, co-workers, strangers…a consumer is no longer limited to his or her neighborhood or office to take part in the conversations of business, and society in general.”

The Land of Opportunity

Want to do business here? The overall message – LATAM is a diverse region where no country is the same – treat each country as an individual.

Understanding the local culture is paramount for brand success in Guatemala. “Define what a brand stands for, take into account local traits and culture, this will set you apart from other brands in the future,” comments Andrés. “Given the influx of new brands into all categories and the changing idiosyncrasies exhibited by consumers (more empowered, more digitised), companies are caught on their heels when assessing how to best position themselves as meaningfully different to their target groups,” he observes. “These questions are constant with new brands, but more established brands also need this evaluation to give them new competitive context.”

Equally, the same can be said for Uruguay, where there are often comparisons made between Argentina, “Do not think Uruguayan consumers behave like Argentinians – we speak with a very similar accent, but we are quite different in our behaviour as consumers,” comments Mizrahi. “Many companies fail in doing business in Uruguay when they think that a model which works in Argentina will necessarily work in Uruguay.”

However, with diversity come complications. Urpi Torrado, comments, “Peru is a country with a population of 30 million with a complex geography of coast, highlands and jungle that drives difference in behaviour, language, development and culture.” 30% of the population live in Lima, which contributes to over half of the economy. “Any nationwide project needs to consider this”, she says, “it means that sometimes we need Quechua speaking interviews or need to consider it will take as long as two or three days to reach rural areas.” This is also the case in Central America and the Caribbean Islands, where the languages spoken include Spanish, English, French, Dutch and Creole, comments Frech, meaning a low scalability with national boundaries and language barriers.

And, don’t forget the smaller markets such as Central America and the Caribbean, says Frech. They may not be the most mature of markets, however, there are opportunities here that are not as obvious to the international or inexperienced eye. There is a need to understand the new entrants into the middle class, who now possess a lot of purchasing power, he comments.

For some countries in LATAM, reaching participants can be somewhat easer due to their size. Take Uruguay, where Mizrahi observes more than 50% of the population is concentrated in the capital city of Montevideo and its surroundings, and 10 other cities concentrate another 20%. Yet, act with caution in these smaller populated countries, comments Mizrahi, “Uruguay is a small country with only three million people, this means that when doing business, everyone knows each other – and so personal contact is highly important.”

One final recommendation – look for local partners when conducting market research in LATAM, a real local presence and expertise will bring you the results you need from this varied region.

So, the time to invest has never been better, comments Pamplona, “Under crises, the ocean is less crowded. Besides, the robust and adaptable ones tend to be the ones with most chance of success under a changing environment. “

Many thanks to the authors:

Urpi Torrado, CEO of Datum Internacional S.A

Alain Mizrahi, Director of Grupo RADAR

Christian Fabrizzio Andrés, Research Manager of Client Service, Mercaplan

Suzana Pamplona, Market Research Director at Johnson & Johnson Consumer

Susana Marquis, Consultant of Susana Marquis La Investigación

Jorge Martín Frech, Managing Director at Mercaplan Central America & Caribbean