We Choose, We Are Chosen,
Only Marketing Helps Us

Any company that is entering a new market or launching a new product should estimate the capacity of the market, adopt a pricing policy and define ways of positioning and communication channels of influencing the customer. Without objective information, the company risks making mistakes in its actions and, as a result, risks losses and a drop in the company’s market capitalisation. One of the instruments used to solve this problem successfully is market research.

Market research is to study the market. According to Philip Kotler, it is the systematic analysis of data necessary to solve the marketing problems faced by the firm, as well as the collection and analysis of these data and reporting on the results. In other words, research helps to gain a sense of and estimate the market in order to navigate through it. The first market studies were conducted in the USA in the early 20^th century, but only in the 1940s did the results start to be applied directly in business operations. The first market research structures in Kazakhstan appeared in the early 1990s and their clients, as a rule, were multinational companies and international organisations. Moreover, orders were mainly placed through Russian or Turkish companies, whereas Kazakh organisations were entrusted only with fieldwork. Nevertheless, that period made it possible for local specialists to master advanced research technologies and Western standards of market research in practice. By the mid-1990s, local marketing agencies slowly started to receive orders for full cycles of research – from developing methodologies to comprehensive analytical reports and recommendations. The economic boom that marked the beginning of the 21^st century in Kazakhstan has encouraged the strengthening domestic companies to turn to market research too.

The BRIF social and market research agency initiated the establishment of the Kazakh Association of Public Opinion and Market Researchers in 2002. The association includes professional research organisations specialising in marketing and sociology, the media, economics, business and studying public opinion, as well as companies that set up their own marketing departments.

In terms of the development of infrastructure and the organisation of market research, Kazakhstan, along with Russia and Ukraine, is in the top 3 leaders in the CIS. However, Kazakhstan is not doing that well in terms of the share of this market in the country’s GDP. For example, this figure reached 0.01% of GDP ($100m a year) in Russia, whereas it does not exceed 0.006% ($5m) in Kazakhstan. The president of BISAM Central Asia, Leonid Gurevich, believes that this, above all, means that Kazakhstan has great potential that has not yet been tapped fully. Aleksandr Ruzanov, the president of BRIF, thinks that this market will grow by at least 15% per year over the next three years.

Despite the fact that there are several dozen research centres operating in Kazakhstan, only seven or eight of them can be described as major players that have adopted international standards, for example BRIF, BISAM Central Asia, the Centre for Studying Public Opinion, the Comcon-2 Eurasia polling company, GFK Kazakhstan, SANGE and others. These companies account for the lion’s share of the market.

The current ratio of local and foreign clients in the total portfolio of these research organisations is about 70 to 30. Traditionally, FMCG companies, which work directly with the population, selling consumer goods such as beverages, clothes, home appliances and so on, create the greatest demand for market research. This sector was the first to come to the understanding that it is vitally important to assess the market while advancing a product. The financial sector has also been active in recent years because banks have started to pay greater attention to retailing, having faced growing competition. The booming telecommunications sector is also fighting fiercely for customers. Advertising agencies and media outlets are also turning more frequently to research companies. For example, media outlets order research to establish their popularity ratings, while advertising agencies use opinion polls to assess their efficiencies. The demand for research into industrial and technical goods has been growing strongly in recent years, as has the demand for assessing the construction and property market.

If we try to classify market research by types of tasks, we can single out three main groups. The first group includes one-off actions that are carried out when companies enter new markets or test new goods, services or commercials. The second group is made up of studies that are carried out once in three to five years to correct companies’ strategies. Using the results of these studies, companies segment consumers, search for additional new niches, reposition and diversify their businesses. Finally, the third group is the so-called monitoring or tracking studies, which are conducted quarterly or annually. Tracking down the market shares of rivals and the purchasing powers of consumers in regard to certain goods or services, companies can correct their actions on the market. However, Natalya Ospanova, the director of Alvin Market, says that market research for medium-sized Kazakh companies is, as a rule, a one-off, spontaneous action. Local managers often make decisions based on their intuitions or arbitrary, unsystematic information. At the same time, Western clients regularly conduct tracking or monitoring studies to enable them to have their finger on the pulse of our economy.

The main factor that limits the development of the sector is the absence of solvent demand because comprehensive research for small and medium-sized businesses is a very expensive treat. For example, the cost of a comprehensive marketing project, including defining the main market parameters and the qualities of the marketing environment, and studying consumers and rivals (using a combination of qualitative and quantitative methods of collecting secondary data and expert evaluations), ranges between 2 to 5 million tenge. Mr Gurevich believes that state authorities responsible for supporting small and medium-sized enterprises could play a role here, for example by paying part of the cost of the research these enterprises order marketing agencies to conduct.

The second limiting point is the low professional level of the client companies’ marketing specialists. While talking to research agencies, representatives of clients often cannot clearly describe the reason for and aim of the research, leading to problems in applying the results in the future. In this case, the agency also has to play the role of a consultant, which, in general, it should not do. In addition, the turnover of staff has an indirect impact on the scale of research. Usually, market researchers do not work more than a year or two for one company. In this situation, marketing departments are entrusted only with solving tactical tasks and there can be no talk of the strategic component of the job, Mr Ruzanov believes.

Often, because of the lack of understanding of the aims of marketing research, the client is suspicious of its results. Moreover, this suspicion does not depend on the method according to which the research is conducted: be it collecting information from secondary sources or “field” research. Mrs Ospanova says that in order to increase the level of trust, the agency has to indirectly involve the client in its project. The client takes part in the stages of drafting and endorsing questionnaires and in instruction sessions held for staff members if there is the need to work in the field, and tracks down the process of conducting an opinion poll. Finally, the client gets actively involved in processing data and preparing the report.

The key issue that has to be resolved, market players believe, is to make information transparent and increase trust in market research companies. When dealing with the market research agency, the client is often not ready to provide complete information about the company and its product, citing confidentiality and fearing the leakage of information to rivals. As a result, the agency has to draft the project without seeing the entire picture and without fully understanding the client’s aims. Another aspect of the problem is the confidentiality or absence of reliable statistical data about markets, which are collected and used as secondary data. In contrast to Kazakhstan, this sort of information is widely accessible and open in the West.

Regardless of all the development diseases, our research companies are looking ahead quite optimistically. Mr Gurevich notes that the share of market research should account for at least 3% of advert spending in developed market economies and that Kazakhstan has significant growth potential since its share does not reach even 1% now.

Mrs Ospanova believes that the further growth of the sector will also be based on the growing interest of foreign companies in Kazakhstan in light of its membership of the WTO.

Another important stage in its development, Mr Ruzanov says, will be the emergence of demand by leading local companies for studying foreign markets: “Companies that will soon need to study not the Kazakh, but foreign markets are growing in Kazakhstan at the moment and they will get stronger over the next three to five years. They will at least aim at the markets of China and Russia.”

Generally, the common trend will be a move away from a comprehensive approach to narrow specialisation of research agencies in methods and types of research.

How to Choose a Marketing Agency

Do you need to order a market study, but do not know which agency to choose? How not to make a mistake, and to distinguish a professional from an amateur? We will present you with several selection criteria.

You need to talk to five or six major and quite well-known companies and ask them to draft a proposal to conduct market research for you. As a rule, drafting the proposal costs 5-10% of the project itself. After this, choose the proposal that best suits your tasks. 

You also need to ask the research company you choose about their regular clients and request to see its previous projects. You should definitely ask for references; by talking to them you will receive useful first-hand information about a potential contractor.

Another means is to collect information about the company and find out who works for it. Usually, the heads of major research companies are well-known people in professional circles. They take part in international conferences, hold memberships of professional associations and publish articles and books. This enables you to assess the level of their work.

You should not forget about the website of the agency either, as it is the company’s face. Check how often it is updated and whether its information is complete and accessible.

Meet the project manager and key experts who will take part in it. You need to fully realise the extent of the tasks you set for them. It is important that they sincerely try to achieve a full understanding with you, show flexibility in solving emerging issues and understand the essence of the problem.