business to business marketing in india and the asian region. evolution of te

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Business to business marketing in India and the Asian region.Evolution of techniques for universe estimation, stratificationand sampling in a rapidly changing environmentBhupendra Mathur and T.S. Mohan Krishnan

ESOMAR

Business-to-Business Marketing, Vienna, April 1997


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Business to business marketing in India and the Asian region.Evolution of techniques for universe estimation, stratification

and sampling in a rapidly changing environment

Krishnan Mohan, and Bhupendra Mathur,

T.S. (IMRB), India

STATISTICS AND INDIA

A statistical critique once said that statistics is like the bikini it reveals the obvious but hides the important. India is a case in

point. Take a look at these basic statistics on the country. Spread over 3.3 million square kilometers, the peninsula of India is

the second most populated country in the world after China. Seventytwo percent of its people live in villages where theprimary occupation is agriculture. The 28% urbanites live in 3700 towns spread over the entire expanse of the countryan

apparent distribution nightmare for a marketer targeting at the urban population. India's per capita GDP is a mere 1280 US,

one seventeenth of Singapore or Hong Kong, or eighth of Korea or Malaysia, or half of China. Of the 50 billion US paid up

capital of joint stock companies, 50% comes from state controlled companiesso much so for privatisation.

Now take another look at the same statistics: While 257 million Indians live in 3700 towns nearly 70% of them live in 300

towns, each with a population of over 100,000. Further over half of these, that is nearly 80 million live in the top 23 cities of the

countryequivalent to the population of Mexico or Germany, or twice the population of Korea or thirty times Singapore. In other

words less than 1% of urban towns in India house over 33% of the urban population, and nearly 10% of the total population.

India's GDP of 300 billion USD is ranked sixteenth in the world, and over 99% of its 400,000 registered joint stock companiesare not state controlled.

UNLEASHING THE ASIAN TIGER

The map of Asia is dominated by China and India two large masses of land approximately 13 million square kilometers in

area, and housing nearly 40% of the world's population. Then there are smaller pockets of land, as small as a 1000 square

kilometers which boast of a per capita GDP nearly as high as USA, Germany or France. These high performing Asian

countries such as Singapore, Hong Kong and Korea, are vastly different from India and China not only in terms of economic

indicators, but also in the manner in which business has been allowed to grow.

Title: Business to business marketing in India and the Asian region. Evolution oftechniques for universe estimation, stratification and sampling in a rapidly changingenvironment

Author(s): Bhupendra Mathur and T.S. Mohan Krishnan

Source: ESOMAR

Issue: Business-to-Business Marketing, Vienna, April 1997

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TABLE 1: ASIAN TIGERS A SNAPSHOT

One of the primary drivers of the manner in which business has grown in the Asian region, is the extent of export orientation.

Economies such as Hong Kong, Singapore and Taiwan have for long been trade oriented. Hence documentation of statistics

and controls thereof have been of a high order, further facilitated by the limited size and spread of these countries. China, on

the other hand, remained a closed economy for a considerable length of time, during which it concentrated on internally

gearing itself for the export market. Hence when the market did open up, the areas both in terms of activity and location, that

were allowed to be free were clearly demarcated. Therefore, while China is spread over a large area, the growth in business

in the recent past has been predominantly in three coastal towns with most of the hinterland remaining protected and

unexposed.

The international press, in the recent past, has been alive with stories about India vividly described as the 'unleashing of the

Asian tiger'. A series of actions in the last five years or so, broadly referred to as India's liberalisation program, have been a

catalystto the unleashing ceremony:

l limiting controls leading to simplifying the procedures for registering companies and setting up businesses;

l acceptance of private sector participation in hitherto state controlled sectors such as steel, copper, power, roads, ports

and so on;

l attracting direct foreign investment in greater number of sectors with provision for higher equity participation and hencehigher share of profits;

l reducing the 'fat' content of state controlled corporations to increase efficiency and thereby enhance the 'returns on

resource deployed' to the state;

l reducing taxes to allow businesses to increase their profitability;

l reducing import duties of products and components in industries where higher levels of economies of scale have been

achieved overseas and the high import duties were stifling domestic growth, at the same time, losing the opportunity for

exports through value addition.

The impact of these is apparent:

India Singapore HK Korea Malaysia Thailand Indonesia China

GDP $ BN US 294 69 132 377 71 143 175 522

Exports $ BN 25 97 151 96 59 45 40 121

Imports 27 103 162 102 60 55 32 116

Foreigninvestment inflowUS $ BN

1 8 2 0.8 4.5 2.7 3.0 34

Competitiveness* 38 2 3 27 23 30 41 26

* Based on the world competitiveness report 1996, prepared by the World Economic Forum.

Competitiveness is defined as the ability of a country to create added value and thus increase national wealth bymanaging assets and processes, attractiveness and aggressiveness, globality and proximity and by integrating these

relationships into an economic an social model.

USA = 1 Switzerland = 9 UK = 19

Japan = 4 Germany = 10 France = 20


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l communication in the last five years has grown by leaps and bounds with the wide spread induction of electronic

exchanges, and more recently with the decision to extend usage ofwireless technology through V-SATs, cellular and

pager networks, and access to services such as the Internet and e-mail;

l induction of technology to the transportation sector. Today, India ranks first in global capacity for bus building, and by2001, its annual sales of four million motorised twowheelers, will rank India second in the world. Most of the automobile

giants of the world are setting up shop in a big way in India;

l PC sales have grown exponentially in the last few years, and its one million target for 19971998 would be tripled by

2001 at an estimated 51% compounded annual growth rate during this period;

l in industriessuch as photocopiers, where the duty reduction did not fall as in some of the other product categories, sales

grew at a much lower rate.

The projections for India in 2001 are summarised in Table 2.

TABLE 2: INDIA IN 2001

India will rank second in the world in twowheeler production, fourth in refrigerators, and fifth in televisions. India will spend

USD 100 billion in infrastructure, nearly half of it in telecom.

IMPLICATIONS FOR THE BUSINESS MARKETER

The promises of accelerated growth, also promise to unleash challenges in marketing, distribution, and reach, which are

subjects for the market researcher to imbibe in order to cater to the needs of the businesstobusiness marketer.

To begin with, the layout and concentration of pockets of demand for industrial and business products, have implications on

the abilityto service, and hence need to research, these markets.

While urban agglomerates have attractedmigrants from rural India for employment and a perceived higher standard of living,

through conscious effort of the government in the form of incentives and sops, new industries continue to be located in

Sales (millions) % of Sales World

Product 1991 1995 World 2001 Rank

Television 4.0 6.0 5 14.0 5

Refrigerators 1.0 1.3 9 3.0 4

Twowheelers(motorised)

1.4 2.2 16 4.0 2

l GDP on PPP basis projected at $ 3000 billion, fourth in world

l Infrastructure spends of over $ 100 billions by 2001.

Telecom: $ 48 billion to add 12 million lines

Power: $ 27 billion

Roads: $ 10 billion


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backward and remote areas of the country. Further, increasing awareness towards environment protection is slowly driving

atlas the medium and heavy industries out of urban agglomerates. Those left behind, are attracted by the burgeoning real

estate prices, and find it profitable to move out to cheaper locations viz. satellite towns, leaving the urban concentration to the

service and trade sector.

The marketers of business and industrial products need to organise their sales and distribution networks to cater to the distinct

markets for industrial raw material & consumables, semifinished goods and equipment as opposed to office automation

equipment and consumables. The former has a market spread across the country, largely outside urban agglomerates, with

some localised concentrations as a result of raw material sources or local expertise/traditional industry. The latter has a city

specific market theoretically in all the 3700 urban towns, though most national players concentrate on the top 300 cities with

most focus on the top twenty-three cities.

Other issues of concern include the spread of usage, viz. number of organisations, and number of establishments within each,

that are potential users for the product under study, specificity of application i.e. whether the product finds application in

specific industries or has general purpose application in a variety of industries, and, the extent of involvement in the purchasedecision which has implications on whether the DMU (Decision Making Unit) would be centralised or decentralised.

Depending on the above parameters the business marketer's need for research gets established, leading on tothe operational

implications of meeting such research needs in the Indian environment.

ISSUES FACING BUSINESSTOBUSINESS MARKETERS IN INDIA

Let us consider two situations which illustrate typical issues facing businesstobusiness marketers in India.

Situation 1: A large Indian company in collaboration with an MNC has had a significant presence in the Earth moving

equipment market for over a decade. Business prospered mainly on the inherent strength of the product offering. It was alsoaided by the fact that its only competitor had a weak product offering. Lack of interest in the earth moving equipment business

by the parent company of the competitor helped it only further.

This is, however likely to change with the imminent entry of the top two tothree MNC brands in the Indian market. Given these

threats, the options available to the company included modification/improvement of its existing models to help it align more

closely with its customers needs and/or development of a range of new generation machines to match increasing expectations

of its top end customers.

The company undertook a country wide customer satisfaction survey to identify potential areas for improving its product. This

resulted in the launch of a variant of its successful model with enhanced cabin comfort and more reliable hydraulic mechanism.

The company also undertook a market potential exercise to assess acceptance of the new generation machines with existing

and potential customer segments.

Situation 2: A well established Office Automation company in India launched its range of fax machines in the early nineties

soon after the government liberalised import of these machines. Since then sales has steadily grown at a rate over 20% per

annum. The competition has also grown at this rate with several Indian and MNC brands coexisting in the market. Little

documented information was available about the competition as several small players were either importing or smuggling kits

of reputed international brands, assembling them locally and selling directly to customers.


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In these intervening years, the customer market profile has also undergone drastic changes with the emergence of several

new segments like small exporters, small offices and home offices at the lower end of the market.

In such a scenario, the company had little information available at its disposal to allow even an educated guess on the product

penetration levels, market size, market share, customer profile and so on. Consequently, its market planning was seen to be

reactive and ineffective.

These cases bring forth two distinct marketing issues facing businesstobusiness marketers in emerging markets like India:

l Market development related issues;

l Market mapping related issues.

Market development related issues

One would expect that this would be the core issues facing marketers in this part of the world. Two broad questions arise:

a. What does the market need?

Are customers satisfied with existing offerings? If not, what benefits are the customers looking for?

What could meet this need? Do I develop a new product or will a modified version of the existing product suffice?

What features, price and service level need to be bundled together? And to which segment of the market?

b. What is the future market potential for my product?

Who will be the buyers of my product?

How many will sell and what is the growth potential? And where will the buyers be located?

Who will be my future competitors/partners?

What will be the state of the environment (Political, social, economical and cultural) in which I operate in and how will it

impact my product?

These issues could typically be associated with new markets like networking products where there are no past behaviour to

predict the future or with traditional industries likes Electric Motors industry and so on. experiencing drastic changes in market

conditions forcing them to selectalternate technologies from developed countries to more closely match the needs and

expectations of the customers.

More often, marketers restrict themselves to issue (b) and that too to estimating the quantum of future demand to evaluate the

feasibility of a new project. Issue (a) is rarely raised and if does, it usually gets limited to knowing about Feature vs Price

bundle preferred by customers to help decide on product and pricing strategies.

Marketers undertaking market development exercises usually get bogged down by nonavailability of details on the product

market (even substitutes) being researched. This leads them to spend considerable amount of time mapping the market in

terms of spread, profile, size of buyer and so on, before arriving at the main issues relating to market development (Concept

acceptance and so on). Thus, market development exercises in their absolute sense do not happen often enough in India.

Market mapping related issues

In the light of what was stated above, market mapping issues become pertinent not only for product categories which have

been around for some time (PCs, Copiers and so on) and have been experiencing a steady growth but also for those that are


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likely to be introduced in future. The basic questions that usually arise in the minds of businesstobusiness marketers are:

a. How do we define our current market?

Who are our current customers? How many? Where? (Govt. Vs Private sector, by geographical regions, by strata i.e.

turnover, employee size and so on)

Who are our competitors? How do they operate?

Who are the intermediaries? How do they function?

b. What is the current size of the market we cater to?

What is the annual market size?

What is the penetration (Installed/user base) level?

c. What is the performance level of my brand visvis others?

What is my relative market share by region, by customer groups (large, medium, small or government vs private), by

product subgroups (colour vs monochrome copiers)? How did my brand perform on aspects like awareness,

consideration levels, brand image/loyalty and so on?

There are several reasons as to why a market mapping study gains importance. for both the existing product and new product

marketer. Some are more obvious while others are not:

l high level of opportunities with new segments developing rapidly;

l intense and volatile competition leading to an acute need for information on competitive action;

l lack of organised data collection effort by industry associations and government or independent bodies;

l proliferation of unorganised, grey or black market, introduced by imperfections in state policies, which are difficult to

monitor.

Table 3 below illustrates issues facing businesstobusiness marketers in India with a few examples.

TABLE 3: EXAMPLES OF ISSUES FACING BUSINESS-TO-BUSINESS MARKETERS IN INDIA

Issues Examples of marketing situations in India

Market development related issues:

a) What does the market need? Rarely used, but are issues in traditional or moreestablished industries experienced decline (and morein the nature of choosing technology from developedcountries):

l Development of new Excavatorsl Price to feature tradeoff for High end copiers.

b) What is the future market potential for my product? This is an area of concern in growth sectors wherenew avenues have suddenly opened up:

l Steel;l Telecom services (Cellphones).


a) How do we define our market? This remains the most dominant need in the Indianmarket> Examples include:

l Market for PC servers (Who is buying/can


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The issues discussed here for India remain constant across other less developed countries in the Asian region but vary in

flavour depending on the market structure and development level. Table 4 below summaries the issues in a comparative

framework for three regions in Asia.

TABLE 4: COMPARISON OF ISSUES FACING BUSINESS-TO-BUSINESS MARKETERS IN THE ASIAN

REGION

afford)?l Brominated water treatment chemicals (How

many cooling towers & who are using it?)

b) What is the current size of the market we cater to? Again, a dominant need among marketers in amature market as well as in a nascent one:

l What is the market for Networking products?l How many printers were sold last year?

c) What i the performance level of my brand visavisothers?

Less dominant, but has become increasinglyimportant in markets which are envolving to be highlycompetitive:

l Copier/fax marketl PC market

Issues India China Singapore / Hong Kong

Market development related issues:

a) What does the marketneed?

Not so important.Large variation indevelopment from bigcities to rural areas evenly

accross the country withcapacity to absorb mostproducts. Therefore, needto identify segmentwiseneeds.Need to customise manyproducts to meet localrequirements.

Increasingly important.Large variation indevelopment from coastalareas to interiors with

capacity to absorb mostproducts.Therefore, need to identifysegmentwise needs.Some need to customiseproducts to meet localrequirements

High importance.Need for researches on aregular basis tounderstand needs of end

users, intermediaries interms of reasons forpreference, feature pricetrade offs (logit models) tosegment customers forproduct positioning.

b) What is the futuremarket potential for myproduct?

Key issue.Most MNC playersentering with long termsplans and need forecaststo decide on capacities,production level..Profile of likely buyers nota major concern area

Key issue.Concerns similar to Indiabut more focus onaddressable market.

Generally available at aproduct category level.Need is more to assessshort term demand moreaccurately for a specificproduct offerings and atsegment level.


a) How do we define ourmarket?

A key issue is mostresearches as there ishardly documentedinformation on mostmarkets.

More often tend to coverintermediaries andinfluencers rather than finalcustomers as most JV'shave restricted access tocustomers and need todeal with domesticdistribution channels.

An important issues asdue to high level ofcompetition there ismarginal differentiationbetween products andtherefore the need tosegments and profilecurrent buyers.

b) What is the current sizeof the market we cater to?

Again a key issue asinformation on even.National lmarket size isnot readily available

Key issue but need moreon addressable marketsize (coastal vshinterlands).

Not so much of an issueas most information arereadily documented andaccessible.


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ISSUES FACING BUSINESSTOBUSINESS MARKET RESEARCHERS IN INDIA

A researcher in an emerging market like India has to deal with several complexities. On the one hand, there is a dearth of

information relating to the state of the market in terms of players, spread of customer base, nature of distribution etc. and on

the other, there is no reliable universe framework from which the researcher can draw out samples to validate results. Quite

often researchers end up reinventing the wheel and answering similar questions on size, spread and profile of market through

a painfully convoluted sampling methodology.

Quite often, such arcane methodologies force the disillusioned businesstobusiness marketer to work in vacuum with littleknowledge on the current and future market state. This results in suboptimal performance with most decisions being reactive,

ephemeral and ineffective.

As necessity is the mother of all inventions, the business-to-business research fraternity in India has evolved several

standardised methodologies depending on the nature of research problems and the status of the target market.

For the sake of convenience, we shall discuss these methodology using a framework which has been developed with the

following factors:

l Nature of the product or service;

l Size and spread of the target market studied.

These factors are explained in detail below:

Nature of product or service

A product/service can be defined as generic to specific depending on its utility to the users:

l A generic product or services is one that facilitate general business activity but is not an important ingredient in the

process flow of the business. Examples include PCs, copiers, fax machines, travel cards, financial software, business

news clipping service and so on.

l A specific products or services is one whose need get determined by the activity of buyer/user. Examples include oil well

cements, industrial lubricants, piston rings, engineering contracts, studio graphics package an so on.

Size and spread of the target market

Again, depending on the product category, the target market can be distinct, small and concentrated (for example oil well

cement buyers) or diverse, large and wide spread (for example customers of copier machines).

Table 5 depicts the ProductTarget Market Grid with the two variables forming the XY axes. A few illustration of target

markets which fall in the four quadrants are also shown.

More documented supportavailable on sales and soon.

c) What i the performancelevel of my brand visavis others?

Increasingly important incompetitive marketswhere established Indianbrands are facing threatsfrom foreign brands.

Increasingly important butmainly for competitionbetween foreign brands.

Very important as severalestablished brands wouldlike to evaluate theirmarketing programmes ontheir brand share.


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The ProductTarget Market Grid has been found to be a useful framework for designing research studies as itallows

researchers to formulate approaches depending on the position occupied (in the grid) by the product under study.

TABLE 5: PRODUCT - TARGET MARKET GRID

We shall discuss research design issues that pertain to products that fall within each of the four quadrants depicted in the grid

to explain our case.

Quadrant I: specific few

This is perhaps one area where the marketer and the researcher are more often one and the same individual. In several

companies, there are specific functions called 'ccount managers' who look after a set of customers. It is their specific task to

identify needs, feed back to R & D for product development, test product acceptance and assess future potential. Often, it is

advisable that business-to-business marketers themselves carry out the research requirements falling in this quadrant as there

is need to possess adequate technical knowledge and insights on the product field researched.

To illustrate typical research situations in this quadrant, take the case of research on usage of Oil Well cement in India. There

are only two large companies who would be buying, namely, Oil & Natural Gas Corporation and Oil India Limited. As both the

companies are state owned, there is plenty of data available from the government on their operational aspects. If adequate

information (of the nature sought by the researcher) is not available from secondary sources, these companies can be

contacted for personal in-depth interviews. Thus aspects like need, consumption, preference, future intention and so on, can

be obtained directly by the researcher.

Therefore, it is seen that issues relating to universe definition and sampling are none too complex in quadrant I of the Product-

target market grid. In most emerging markets, there are information available on target market from sources like Government

departments, Industry association, trade journals, business publications etc. This facilitates a reasonably accurate definition of

universe by the researcher.

Where the universe size is small, it is prudent to undertake a census exercise as each case could possess unique

characteristics. However, it may not always be feasible to undertake a census either due to wide geographical dispersion of

cases or due to anticipated refusal/nonavailability of some cases. In such situations, sampling may be the only option

available with the researcher. However, the researcher would need to identify appropriate surrogate variables that could be

used as the basis for extrapolation prior to the sampling exercise.

In the case of usage of water treatment chemicals, for example, it would be advisable to cover a few buyers to assess the

need and the extent of use. One can then use that information to extrapolateto other buyers using their plant capacities (called

Specific use QIBuyers of oil well cement, Ferrochrome alloys

QIIBuyers of industrial lubricants,hermetically sealed compressorbuyers, Diesel generators (mid-highrange)

Generic use QIIIBuyers of VSATs, Networkingproducts, central ACs

QIVBuyers of copiers, PCs, EPABX,security services

Few Large


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cooling tower where water treatment chemicals are used) as surrogate variable. Other variables like turnover, no. of

employees and so on can also be looked at as alternate surrogate variables depending on the extent of availability of such

secondary information.

Quadrant II: specific large

Typical studies in this area involve products which find application in several user segments. These studies usually evolve in

two stages with the first stageinvolving identification of application segments and the second stage involving location of

directories/lists of companies to help develop universe definition and size in each application segment.

Take the case of a product like hermetically sealed compressors which are the core of any airconditioning or refrigeration

system. Application segment in India for such a product would include:

l Domestic Refrigerators;

l Airconditioners;

l Bottle coolers (Storage of Soft drink and so on);

l Deep freezers (Storage of meat and so on);

l Others (Display cabinets used in ice cream parlours and so on).

While detailed list of companies are available for domestic refrigerator manufacturers (as there are only four or five

companies), there is no complete list of AC, bottle cooler, Deep freezer manufacturers as these are more often undertaken in

the small scale (unorganised) industry.

However, one can cover them significantly by allocating samples after stratifying the market into several classes. For example,

among AC manufacturers there are about eleven national players who would account for nearly 5055% of the market (such

data are available with the All India AC & Refrigeration Mfrs. Association ). The rest of the market of compressor buyers (maybe 9001000 in nos.) will be spread across the country. Again, a large percentage of them will be concentrated in the top 810

cities and some activity specific zones (Bombay, Delhi, Calcutta, Madras, Ahmedabad, Hyderabad, Pune, Bangalore,

Aurangabad etc.). Even in these cities, only a handful would account for most of the sales. Thus, a pareto analysis based on

contribution by customer segments should lead to better efficiency of sampling.

Within each application segment, a sampling list can thus be developed in one of the following ways:

l on the basis of advertisements in yellow pages in each city covered;

l by meeting local dealers/distributors of compressors;

l by meeting a few buyers and snow balling responses to identify other large manufacturers;

l by geographical sampling methods (similar to consumer retail audit methods).

The geographic sampling method comes in handy when any of the methods described above are likely to be ineffective. Take

the case of the Photocopier shops in big cities in India. There are no directory/yellow page listings of photocopy shops in a

given city. Snowballing exercise will be ineffective as there is no cohesion among these shops.

A geographic sampling exercise involves the following steps:

l segregation of the city/area to be covered into several geographical blocks of near equal sizes (after excluding


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uninhabited pockets like sanctuaries, parks, lakes and so on) and numbering them in a spiral order on the map;

l isolation of area which would have a higher concentration of businesses being studied. Thus, photocopy shops would be

found more in business blocks, commercial centres and educational institution zones. In our experience, such dense

blocks are usually below 58% of the total area covered;

l undertaking a census operation in all the denser areas;l selecting a subsample (usually 2025% of total geographical areas covered) of blocks from the less dense sections

using a systematic sampling procedure. Again, a census will be undertaken in the blocks selectedrandomly through this

process;

l the census estimates obtained from the sampled blocks can be extrapolated to the other blocks using the sampling ratio

as the multiplier. The overall estimate of establishments can be obtained by summing this with the census estimate for

denser areas.

This methodology has been successfully validated for estimating Photocopier shops and Public telephone calling offices in

India by relating to installs data of manufacturing organisations and government statistics.

Once the universe is defined through any of the methods discussed above, the sample selection procedure can resemble the

steps recommended for Quadrant I. One can follow a census exercise in sub-segments which are small and manageable or

sample on the basis of surrogate variables identified.

Quadrant III: generic few

The product/service usually researched in this area have restricted application, despite their generic role as facilitators in

business, owing to one or more of the following reasons:

l High price of product/service: An example would be the case of companies which have need for leased lines with high

bandwidth to transfer large data between two locations. Such companies usually have an annual turnover above a

particular level.

l Largeness/spread of company. For example, VSATs might find application with companies that have critical locations (like

factories) in remote areas.

l Specific activity of business: The nature of business activity in certain segments might also determine the need for certain

products (as in Quadrant I & II). For example, Financial companies have greater need for networking solutions than do

Distribution oriented companies.

Universe definition and sampling methods will be similar to those adopted in Quadrant II except that application segment

identification will be a lot more difficult here due to the generic nature of the product. Also, the surrogate variables used to

define a universe will be more generic and might include:

l activity segments;

l size turnover or employee size;

l geographical location;

l governance multinational, private or government.

In a recent study undertaken to assess the market for VSATs in India, the target segments were identified on the basis of:

l ctivity segments;


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l size (annual turnover); and

l governance.

For example, the segments chosen could include

l manufacturing companies classified into multinationals, Indian private concerns and government undertakings,

l banks & financial institutions

l infotech/telecom companies

l other financial services

l media and publishing

l and so on. . .

Qualifying criteria in terms of size (annual turnover) varied in each segment depending on the nature of business. For

instance, the turnover cutoff for a Media and Publishing company was far lower than the cutoff for a manufacturing

company.

Ideally, lists of companies in each activity segments should be available from the Registrar of Companies in the respective

countries. However, due to the geographic spread and lack of computerisation, there is no central source for accessing such a

data. Thus, one ends up generating lists of companies in each activity segment by contacting industry associations,

government bodies, Stock Exchanges and so on. For example, there are lists of top 3000 manufacturing companies classified

by annual turnover available from stock market sources. Similarly, the Indian Bankers Association provides a list of Banks and

Financial Institutions classified by asset base. Details of Infotech hardware and software companies, can be obtained from

their respective associations.

More recently several database companies like Kompass, Dun & Bradstreet have entered the Indian market and commenced

compiling lists of companies by activity level of businesses. These are however, in their nascent stage and have limited scope

for use by a market researcher due to the nonexhaustive nature of the data collected.

Quadrant IV: generic large

This is the most complex of the four quadrants as it is usually an establishment that becomes a base for sampling (unlike

Quadrant III where it is usually the head office or the organisation as a whole which is the sampling base).

Where the universe of target market is very large and diverse in nature, ownership of telephone is found to be a useful

surrogate to demarcate the universe:

l establishments with telephones;

l establishments without telephone.1

There are a number of arguments for and against the use of telephone ownership criteria:

Some of the advantages include:

l Most products/services which need to be researched are medium to high valued and therefore penetrate establishments

that have atleast a telephone. Also, many office equipments depend on telephones: EPABX, Fax, WAN and so on;

l Telephone service is usually provided by a single entity (state owned in most cases). This facilitates access to a central


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database.

While disadvantages include:

l dated publication (some telephone directories/lists made public can be as old as 23 years);

l nondemarcation of business vs. individual (residential) entries

l individual (residential) entries which in reality are business establishments operating from homes;

l nonavailability of directory information on magnetic medium to allow researchers to segregate and count relevant

universe;

l long waiting lists for telephone connections resulting in several establishments sharing a telephone.

While these disadvantages exists, they can be mitigated to an extent by careful design of research. Moreover, the telephone

directory is perhaps the only sampling base in many emerging markets. Alternate sources like the Commercial Yellow Pages,

Trade directories and so on usually have major shortcomings:

l nonexhaustive;

l list organisations instead of establishments.

While a number of competing directories may be available for a given region of coverage, their integration can also prove to be

nightmare owing to variation in:

l criteria for including organisations in the directory;

l information collected on organisations for example, employee size, turnover may be collected by some directories which

others may not have;

l classification of organisation under standardised activity groupings.

Also, as the Yellow pages market is in a nascent stage, there is resistance among database marketers to allow access to

researchers.

Thus, telephone directory may be the only alternative left with the researcher. Several studies have been undertaken in the

past using this as the sampling base and validating the results with the installs figures from manufacturers.

Despite these advantages, there are several procedural problems in using the telephonic directory as it is usually not available

on magnetic media in India. Thus, a sampling procedure needs to be designed to enable counting of establishments from the

directory. The steps involved in sampling of directories are:

a. Selection of a few pages of telephone directory using systematic sampling procedure. This is a more dependable methodas it takes into account the varying frequency of alphabetic listings in the directory. In our experience, a sampling of 45%

of directory pages (or 3035 pages whichever is lower) should allow estimating within + 2% error level.

b. Counting of selected pages to isolate establishment sounding names (ABC & Company, XYZ Bros. and so on).

c. Stratifying the counted establishments on the basis of the no. of telephone entries in the directory against each

establishment.

d. Extrapolating the count of no. of establishments from the sample pages to the total pages in the directory 2.

In undertaking the counting exercise, care has to be taken to ensure that duplicate entries are removed. Usually, the address


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of the establishment mentioned can be used to identify distinct establishment location.

Another important issue that gains importance in Quadrant IV (unlike Quadrant II and III where researcher's uses his/her

discretion to adopt procedures according to the nature of product under study) is the issue of stratification. This is mainly

because of greater efficiency afforded by a stratified sampling procedure. Here again, the telephone line can be a useful

starting point for stratifying establishments in most cases. For instance, quotas can be set on establishments by no. of

telephone lines listed against each establishment in the telephone directory. Stratas could be: 1 line, 2 lines, 3 lines, 4-7 lines

8 and 8+ lines establishment. It has been found that there is a high correlation between telephone line ownership and

penetration level of various products. Table 6 below shows the results of a telephonic interview of establishments to assess

penetration of basic office products by telephone line entries (in directory) per establishment:

TABLE 6: PENETRATION OF COPIERS/FAX IN THE CITY OF MUMBAI (BOMBAY) NOVEMBER 1992

Such stratification are equally applicable for premium business products as well. For example, in a study conducted to

understand acceptability of high end EPABX systems, the market was restricted to cover the 3 or more line establishments.

However, such prehoc stratification methods in the case of products falling in Quadrant IV are relatively inflexible and have

their share of the problems. For instance:

l the proliferation of hunting lines3 in establishments where a single line entry against the establishment in the telephone

directory could actually mean a large establishment with 8 or more lines;

l Lack of activity wise classification leading to the fact that a highly service oriented company will tend to have a greater

proportion of telephone lines per person than a manufacturing company would ordinarily have.

This necessitated the development of reliable surrogates for stratifying businesses. It is felt that a classification system basedon the number of employee and the nature of activity of businesses should allow for a stable classification system. While there

are alternatives to size indicators like turnover, profits, capitalisation etc. (as discussed in sampling methods on Quadrant III),

these are not entirely inflation proof and are amenable to comparison over time.

The real problem in such stratification methods is the nonavailability of universe framework in the intended form. For

example, in India there are Government of India surveys which collect information on the employee profile and activity of

manufacturing units (not organisations). Similar information are however, not available for the nonmanufacturing sector.

proprietory databases like Kompass provide details on activity and employee size but fail to cover an establishment sampling

frame.

All 1 2 3 47 8 & above

Sample size3702 2043 924 410 231 94

Estimateduniverse 121570 105780 9800 2600 2530 870

% owning:

Photocopiers9% 5% 18% 42% 63% 80%

Faxmachines 15% 12% 26% 57% 66% 78%


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In such a scenario, a twostage sampling procedure is warranted whereby the first stage involves selection of random

samples from the telephone directory followed by a telephonic interview to stratify business establishments on employee size

and activity. Table 7 below shows the result of a recent sample survey to stratify establishments on the basis of these two

variables.

TABLE 7: SPREAD OF ESTABLISHMENTS IN MUMBAI BY ACTIVITY AND EMPLOYEE SIZE MARCH 1997

Once such stratification has been achieved, quota can be set in each of the cells to increase the efficiency of sampling.

Extrapolation of results at the country level

TABLE 8: COMPARISON OF ISSUES AFFECTING BUSINESSTOBUSINESS RESEARCHERS IN THE ASIAN REGION

Activity of establishment

No. of employee Factory location Office location Service outlet*

1 7% 14% 16%

25 26% 30% 53%

610 26% 23% 14%

1125 13% 15% 7%

2650 5% 5% 4%

51100 4% 4% 1%

101500 9% 2% 1%

500 and above 4% 1% 0%

Not specified 7% 5% 4%

Total sample size 82 332 188

(Accross %) (14%) (55%) (31%)

* Service outlets include banks, restaurant, shops etc

Quadrant India China Singapore / HK

Quadrant I Industry associations arereasonably strong for mostsectors either becausethese are state owned orthey have existed forlobbing with govt.Thus, industry lists, dataare reasonably strong

Access to state controlledinformation lends easily tomany informationpertaining to such units.

State and associationsfocus on disseminatingcommon informationaccross to all concernedto enable decisionmaking.

Quadrant II Industry sources exist forthe organised end of themarket. However, there islittle support on universe

Same as above exceptthat one needs to collectdetailed inputs at theprovincial level.

Adequate informationavalaible at associationlevel due to compactnature of country.


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Another issue related to directory sampling procedures In a country like India is the level of coverage that is feasible within the

cost constraints of the client. A true national level study would probably involve coverage of at least 300 towns, in which case

the telephone directory sampling method would proves to be both costly and time consuming. Such method can be applied at

best to a few cities only. This necessitates extrapolate of results from a few sample cities to the country level.

This can be achieved after establishing a relationship of the relevant variable studied with some surrogate variable (usually

the total telephone lines). For instance, in a study to assess yearly demand for photocopiers, the demand for photocopiers,

predicted in 18 cities spread across various population strata, was regressed with the telephone line penetration in each city.

This enabled one to develop an equation that related demand for photocopiers to the telephone lines in the city. Demand for

Photocopiers across the country can thus be estimated by inserting the total telephone lines available in the top 5060 cities

(where photocopiers can be safely stated to have penetrated) in the equation:

Demand for photocopiers in a city telephone lines in that city

Demand for photocopiers = a x (telephone line) + constant

Thus, in a way, there is a requirement for usage of surrogate variable in each of the quadrants discussed above. This is an

issues that is likely to vary from product to product and region to region and requires the creative involvement of the

researcher.

A comparative study of methodologies across countries in the Asian region indicate that there are only minor variations in

methodologies which are usually brought by differences in state of common interest data bases available with the researchers.

Table 8 below provides a comparison of core issues that lead to variation in methodologies in each of the countries.

WHAT THE STARS FORETELL

Business to Business marketing & research in India is developing and maturing at a rapid pace to say the least. With growing

competition from international players, the well entrenched traditional Indian companies too are feeling the need to understand

and approach the market in a far more scientific fashion than through conventional approaches based primarily on gut feel or

the undocumented learnings of a few experienced individuals. The fact that these few key individuals are being poached by

new entrants at more attractive remuneration packages, is making the transition to scientific based methods more rapid.

Market development issues, which in the current scenario are largely limited to market potential assessment exercises, will

continue to grow in importance driven both by the increasing cost of error and increasing competition from players who are

sizes, spread, profile andso on for the market wherehybrid techniques have tobe adopted.

Quadrant III No single source ofclassifying establishment.Combination of industrydatabases cutting accrossindustries.

Rely on Govt. lists byactivity.

Proprietory databases incompeuterised form areavalaible to allowstratification & samplingby activity, size and so on.

Quadrant IV Most complex and sinceestablishment levelsampling requiredrefinement of a universalroute like telephonedirectories required.

Reasonably complex.However, as mostorganisations areprovincial based the needfor establishment levelsample does not exist.

Even simpler than abovesince need forstratification is furtherlimited.


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used to operating in markets with limited imperfections. Increasingly these would include inter alia market mapping issues

concentrating on profiling customers, intermediaries, and competitors. With product offering getting more complex, newer

segments emerging in the market place, and fierce competitive action, these studies are threatening to dominate the business

research scenario in the years to come.

The industry, however, is demanding quicker, cheaper and more efficient methods for addressing these issues. The critical

bottleneck continues to be the absence of an appropriate sampling frame. International data base companies are active in

developingindustry wise data bases that would build in demographics that lend themselves to focused research. Once these

emerge they would take care of most research problems in the first three quadrants of our matrix.

The fourth quadrantviz. generic use over a large customer base, would grow in importance as newer business efficiency

products are launched in the market. Further, with the growth markets in India predicted to be the small and medium

enterprises today specially for IT, communication, and business efficiency products, the need for a reliable estimate of

universe size would be paramount. Given the dynamic nature of this end of the market, the sampling frame would need to be

updated periodically unlike the industry data bases which could do with lower response times. The solution really lies in theperiodic generation of survey based estimates on the size and profile of business establishments in the leading cities of the

country. The IT communication and office automation industries, where the need has been realized, have initiated a study this

year which has been syndicated and which would profile business establishments in the top 23 cities of the country, down to

lowest end, with the only criteria being the existence of a telephone line. This study titled ITOPS '97, adopts the two stage

telephones sampling route discussed under quadrant IV in the main body of this paper. The study would in addition to

addressing the issues of penetration, market size and brand share of quadrant fourbusiness products, would provide a basic

demographic profile of businesses in the top 23 cities in India. Once more and more studies of this nature, providing company

or establishment data bases, are developed and syndicated, the marketers of business products will be able to update their

knowledge base at a low cost and periodically. This would probably lead to more fierce competition since knowledge alone

would no longer be a differentiator. In fact with basic knowledge on the market easily available, what would differentiate one

marketer from the other would be the ability to utilize the available knowledge to build workableand effective strategies to

succeed in the market place. This would lead to increasing demand on the researcher for more 'cerebral' work and less and

less of determining historyreinventing the wheel!

We would like to end this paper on this optimistic note. Developing countries such as India desperately need current data for

effective marketing of business products. The role of the government, to whatever extentit existed in the past, has further

diminished in this era of liberalization. Industry players along with research companies have to jointly implement systems that

generate basic statistics on the market for all to share and absorb. While this necessitates a sea change in the thinking and

approach of businessmen this change iscoming about, driven by increasing costs of inputs and professional competition.

Exciting times are in store for the business marketer and researcher in the region.

In India, if nontelephone owning establishment also need to be met for some low value individual use business products (like

the use of cellphone by traders), it is preferable to contact customers using a household sampling methods. In this case, one

meets a sample of businessmen/professionals /shop owners etc. who run establishments without telephones at their homes.

The household route allows projections of sample results as the database is pretty strong in India with some 15 years of

trends available on individual's occupation and income profile.

RERERENCES


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ITOPS'97, a syndicated study on IT and office automation products in the top 23 cities of India, by the Business and Industrial

Research Division of IMRB, India, 1997.

Telefacts, a syndicated study on communication products in the top 8 cities of India, by IMRB, India, 1989.

Various studies on copiers and faxes conducted by the Business and Industrial Research Division, IMRB, India, between

1985-1996.

Experience through various assignment in China and other Far East countries by Sofres Consulting Asia Pacific Ltd., Hong

Kong.

ENDNOTES

1In India, in nontelephone owning establishment also need to be met for some low value individual use business products

(like the use of cellphone by traders), it is preferable to contact customers using a household sampling methods. In this case,

one meets a sample of businessmen / professionals / shop owners and so on who run establishments without telephones attheir homes. The household route allows projections of sample results as the database is pretty strong in India with some 15

years of trends available on individual's occupation and income profile.

Copyright ESOMAR 1997ESOMAR

Eurocenter 2, 11th floor, Barbara Strozzilaan 384, 1083 HN Amsterdam, The Netherlands

Tel: +31 20 664 2141, Fax: +31 20 664 2922

www.warc.com

All rights reserved including database rights. This electronic file is for the personal use of authorised users based at the subscribing company's office location. It may not be reproduced, posted on intranets, extranets

or the internet, e-mailed, archived or shared electronically either within the purchaser s organisation or externally without express written permission from Warc.


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