Research firms bolster operations through international alliances
Demoskop (http://www.demoskop.com.pl), founded 12 years ago as one of the first private research institutes in the country, is among a growing number of Polish research firms forming international alliances to keep pace in an increasingly competitive market.
"We are just starting talks with a strategic partner to make Demoskop part of an international research institute," said the company's president, Slawomir Nowotny. To help fund its expansion, last year Demoskop landed an investor, TISE venture capital fund, which now holds a 33.3% stake in the company.
"It's better to function in an international research network," he said. Nowotny said that an international network provides the best source for industry know-how and information about branded products because the majority of market research companies' clients are firms with foreign capital. "International corporations (clients) want research methods that are being used to research their products abroad," he added.
According to Nowotny, finding a financial investor and joining an international research group is a good way to compete on the market.
Last year, the research services sector saw revenue of zl. 305.8 million ($69.5 million), a 20.6% hike over 1999, according to the Organization of Market Research Cos. (OFBOR) (http://www.ofbor.pl).
"The market grew rapidly until 1998," said Krzysztof Kruszewski, president of SMG/KRC Poland-Media (http://www.smgkrc.pl). "And then it finally stabilized." Presently the No. 1 research company with 18% of the market, SMG/KRC Poland-Media saw its revenue surge 36% to zl. 55.8 million ($12.68 million) last year.
Although the sector's results for 2000 weren't as impressive as in previous years, Kruszewski said market researchers have no reason to complain. "If we compare the research sector to other sectors such as advertising or human resources, we're in a much better situation," he said.
Kruszewski added, though, that increasing competitiveness among market research companies wasn't the only reason for the sector's continued robust growth. "Clients had problems, so they had research done," he said. "For the most part, it was (typical) crisis research."
The market for research hasn't always been rosy. "(The sector) is now genuinely competitive because the most important players are here," said Eugeniusz Smilowski, president of Pentor Research Group (http://www.pentor.com.pl).
But as the competition increases, so does the demand for more sophisticated research. "When we started in 1989, our knowledge of research techniques was zero," Nowotny said. For example, "A few years ago it was popular to use focus groups," he said. "When a problem appeared, people used to say, 'Let's do some groups.'"
Today, the trend is to base methods on the latest IT technologies, like CATI (Consumer Assisted Telephone Interviewing) or CAPI (Consumer Aided Personal Computer Interviewing). International research institutes have also helped raise the quality bar.
But as Demoskop gears up to join an international research institute, other market players have already passed that milestone. SMG/KRC did it two years ago when it became part of the largest worldwide consumer market research network, Kantar, through the sale of a 47% stake. International research network Taylor Nelson Sofres holds 60% in another local market researcher, OBOP (http://www.obop.com.pl).
And Pentor, which is wholly owned by Pentor Communication International, is affiliated with Research International.
In addition to becoming the industry norm, international research methods are improving competitiveness.
Smilowski said that while several dozen market research companies are on the market, only about 15 count. He added that the top five have about 70% of all sales.
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According to OFBOR, the biggest players include SMG/KRC, GFK Polonia (http://www.gfk.pl), Pentor, TNS OBOP, IQS & Quant Group, AGB Polska and CASE. ACNielsen Polska (http://www.acnielsen.com) and MEMBR International Poland are also prominent in Poland, though they wouldn't agree to OFBOR publishing their audited financial results.
As for those firms that account for the remaining 30%, Smilowski said that though small they are far from negligible.
"The market needs those companies," he said. Smilowski added, however, that more worrisome is the declining number of potential clients. "This is due to mergers in which the biggest clients are involved," he said, referring to the recent deal between pharmaceutical giants SmithKline Beetcham and Glaxo Welcome.
According to Nowotny, the pool of market players is huge, but there is still plenty of demand for their services and not only in Warsaw.
Generally, market watchers are optimistic about the industry's potential for 2001. "I can't see any reason to say that this year will be worse than last year," Kruszewski said. "And the level of growth will be comparable."
