Annual Report 2006
GfK Group: www.gfk.com
Market research sector: changing for the future
Globally, the market research sector is in the middle of a fast process of change. Previously it was the product that was the focus of attention, but now the spotlight is increasingly on the consumer. The change is dominated by an ever-increasing refinement of data based on high quality surveys. Clients require not only pure data, but also complete concrete interpretations and recommended courses of action.
Market research companies are responding to these requirements by expanding capacity in favor of consultancy services and system integration. With the extension of its service offering, the sector is developing new and profitable markets. At the same time, standard market research tools are being upgraded with ever more complex and sophisticated analysis and forecasting models. Extensive trend-watching and other innovative methods for the networked evaluation of different databases provide clients with completely new perspectives.
As in practically all industrial sectors, a significant process of concentration is also taking place in the market research industry. The 25 leading market research companies from the USA, the UK, Germany, France and the Netherlands already account for 62% of sector sales and 80% of global market research spend.
2005 alone saw 88 takeovers in the sector, the biggest of which was the acquisition of NOP World by the GfK Group, and the coming years are expected to see a further rise in the market power of leading companies. The mergers of big market research organizations are in line with the needs of a global market and the global major clients in the sector. These global market research networks are just what clients have been seeking – a like-minded partner to support and take care of their international brands.
In general, the market research industry benefitted considerably from the positive trend in the macro-economies. The average growth rate over the past four years amounted to 5% a year with average net growth of 3%. Experts forecast that growth of between 4% and 5% will be reported for 2006, which is outstanding compared to other industrial sectors. Knowledge is always needed and even in times when the economy is not performing well, clients do not want to dispense with the ongoing services of consumer, retail and media reach research as the basis for their corporate decision-making. Moreover, the market research sector appears to be considerably less dependent on economic cycles than other industries, especially the volatile media and advertising industry, which has improved significantly on the back of the overall economy.
Experts estimate that growth in the sector was 6.1% in 2006, around one percentage point higher than in the previous year.
As in previous years, developments in the sector varied widely in global regions and individual countries. The sector continued to expand sharply in Asia and the Pacific, Latin America and Central and Eastern Europe, in particular, while the growth rate in North America was more moderate at around 6.0%. In the European Union, sector sales rose from USD 9,429 million in 2004 to USD 9,842 million in 2005 and experts estimate sales in this region to exceed this figure in 2006, partly as a result of the sustained double digit growth rates in the new EU Member States.
Again in 2005, the United States was the biggest national market research market, followed by the UK, France, Germany and Japan. Alongside the USA, as in other sectors, China is again the fastest growing of the top ten countries in terms of sales, which together account for over 80% of the global business volume of the industry.
The most important and fastest-growing market research client segment in 2005 was again the consumer goods industry with a share of 48% (2004: 46%), far ahead of media and the public sector which together had a market share of around 23%.
As a leading market research organization whose global operations are driven by innovation, the GfK Group will benefit in particular from the favorable framework conditions. In 2006, GfK improved its ranking in the top 10 of the market research sector and now stands at number four.
GfK Annual Report 2006