Market Research is becoming more and more USA dominated. The ESOMAR revenue figures for market research show that in 2006 the USA accounted for 34% of all market research. By 2015, the USA accounted for 45%. By contrast, many other key countries have declined in terms of their share of the global total: France from 8% to 5%, Germany from 8% to 7%, Japan from 5% to 4%, and Brazil from 2% to 1%.
Does this shift, from the rest of the world to the USA, indicate that the USA model is better? Should aspiring research companies, ones that want to expand internationally, become more like USA companies?
In my opinion, there is some merit in the benefits of the USA model, but (as I will explain in this post), I think there are also benefits in what is sometimes called the ‘mid-Atlantic model’ – something that lives part way between Europe and North America.
Why has the USA done so well?
First, let’s look at why the USA has grown so strongly, in terms of market research. Key reasons include:
- The USA economy has grown, which facilitates growth in MR.
- The dollar has gone up in value – making the dollar value of USA MR higher (from 2006 to 2015 the value of the US dollar increased by about 10%, compared with the basket of major currencies).
- The USA has added many new forms of market research to the mix, in particular analytics. In 2015, 14% of the USA market research total was accounted for by this ‘new’ market research.
Other trends could also account for some of the growth, for example the growth of customer-centricity, evidence-based decision making, and the increased use of KPIs/metrics/dashboards in the USA.
Who are the successful MR companies?
Although the USA is by far the largest market for market research (nearly 50% of global MR spending happens in North America), this does not mean that all of the most successful companies are from the USA.
The top six MR companies account for 43% of global research. Note, this probably means about half the people employed in market research work for these six, or supply services to these companies, or have major dealings with them. These companies (and their share of MR) are:
- Nielsen 14% (USA)
- Kantar 7% (British)
- IMS Health 7% (USA)
- Ipsos 6% (French)
- GfK 5% (German)
- Gartner (USA)
From this table, we see the major influence the USA has, but also the strength of Europe. The top company from outside North America/Europe is the Japanese company Intage at number 10. We can also see that the key USA strength is in having a relatively narrow, data-led speciality. The three European agencies are more general purpose in their market research approach. I believe this difference in focus reflects cultural differences and has lessons for the market research industry.
Key Strengths of the American Approach
There are some factors that I believe benefit North American companies when dealing internationally. When I say benefit, I mean commercially, not necessarily emotionally or culturally. In doing this analysis and the next element, I am going to draw heavily on Erin Meyers The Culture Map (see my review here).
- Low Context Communication. Cultures vary in terms of whether they spell everything out or whether they infer things. The USA is a low context communication culture. Between people from different cultures, low context communication (clear minutes, clear action points, little ambiguity) is more effective. Within a culture high context is as good as low context. Within Japan, Japanese high context communication is every bit as successful as USA low context communication is within the USA. But when dealing between two cultures, low context is more effective.
- Linear Time. The USA culture values things being done to a specified schedule, it tends to see ‘flexible’ countries as being chaotic or unreliable. Like low context, linear tends to work well between cultures – because flexible requires a similarity of terms of reference and a joint understanding of what is truly important.
- Contracts not Relationships. The USA culture is task focused and will work with partners and suppliers who can demonstrate objective reasons why something will be done the right way (e.g. contracts or project specifications), the alternative is trust, based on relationships. In the context of international market research, where the key issue is often to ensure that a technical process is conducted in a specific way, to a specified price, within a short timeline – being more task based than relationship based is usually more successful.
Many European countries share these cultural values, for example UK, Germany, Netherland, and Sweden.
Possible Weaknesses in the Pure USA Model
If we look at USA characteristics, we can see many strengths, but there are also some suggestions of why many USA market research companies have struggled to establish themselves in the global general market research space.
The USA is an outlier in two interesting and interacting areas. The USA has a very applications approach to progress (action rather than theory) and a very top-down decision-making process (most cultures have more consensual decision making than the USA). In a market that the ‘top person’ understands, this top-down, moving quickly approach can be very successful. However, when working in markets where the ‘top person’ does not understand the culture or the problems, these two elements will often conspire to create frustrations and breakdowns. This problem is often exacerbated by the USA culture of people aligning themselves with the decision of the top person, whereas many other cultures have a strong belief that doubts should be aired and discussed.
These two interacting cultural features, the desire for action over discussion, and top-down decision-making often reduce the effectiveness of American companies overseas – especially if they have little personal experience of the local markets.
Matching actions with client needs
A key factor determining how market research should be done is the needs and expectations of the client. USA owned companies are by far the largest buyers of market research. These companies (and international companies like Unilever) expect low context communication, linear time (at least as far as the supplier’s commitments are concerned), and will be task-based not relationship-based (e.g. they mostly won’t buy from you if they like/respect you more, but your rival have a better offering). In matching the needs of the client, the USA approach tends to be very strong.
Matching research with customers
The flipside of the client relationship (which is very Western) is the relationship with the people being researched. It is not reasonable or possible to ask buyers of washing powder in Jakarta to adapt to an American or European way of thinking or communicating. The people at the sharp-end of the market research process (the people designing research and interpreting results) need to have two modes when dealing with international research – they need to deal with Western requirements of their client and overseas research colleagues, but they also need to work locally, which may mean being time-flexible, relationship-based, and utilising high-context communication). The top-down, applications-first model of USA companies often fails during this part of the process.
My recommendation for companies aspiring to international growth
Here are my top tips, some of them I will expand on in other posts. Note, these tips relate to working internationally. They are largely irrelevant if you intend to work only in your home market. I would call these mid-Atlantic – they are heavily shaped by the USA, but they have key elements of the European way blended in.
- Operate across borders in a low context way, and choose American English as the medium for low context communications (British English is more high context and has a wider range of rules and features). When talking within your ‘in-group’ (especially when talking about non-work things) avoid American English unless that is your native tongue – put on ‘American English’ in the same way a worker puts on a helmet and boots before entering the building site. When communicating in American English, write notes like Americans and detail actions points like Americans, Note, these are written down not because we do not trust each other, not because we can’t remember what was meant, we do it because that is the system.
- Be ‘linear time’ focused. Flexible can be great, as many Chinese companies show, but when working across borders, and for clients who want linear time, that is the way to easier success.
- Balance top-down and consensual decision-making. Top-down, quick decision-making should only be done by people operating within their own sphere of knowledge – when working across cultural boarders, aim for consensus (even if that is only with the local ‘top-down team’). Try to explain why something is being asked, rather than just describing what people should do. People closer to the action might be able to tell you a much better way to get what you want, rather than via the action you are requesting. But, you will want to be more top-down than consensual – there are time pressures and there is an end client – so there are some non-negotiables.
- Balance task-based trust and relationships. Mostly, work on the basis of contract and agreed metrics, but when reaching across cultures you need create trust too – because the details will let you down sometimes and it is relationships that will save your ass (or not).
- Be an echo, not a mirror. A mirror reflects back everything it sees, while an echo is scaled back to your context. For example, if your host puts on a 3-hour dinner for you when you make a business visit, attend and thank them. The echo response is to ensure you at least feed them or take them for a drink when they come to you.
So, there are my thoughts about how to increase the chances of working successfully in international market research. I would love to hear:
- Which of theses points express things you are familiar with?
- Which points/ideas are unclear?
- Where have you had a different experience?
- Where am I just plain wrong?
And, as a bonus question, who recognises where the photo at the top of this post was taken from?