DIY Market Research Part One: Field Observation

Field observation is an essential component of any serious market research project, particularly in emerging markets, but it’s usually overlooked by agencies. Now, you may not have a budget for field work but if you can squeak in a trip to an emerging market I want to give you a DIY tool set you can use to get some basic understandings of the market you're interested in.

Why do market research at all? Because you don’t live there, and it’s a big, big world. If you want to connect with talent in places you don’t know in languages you don’t speak and navigate local issues you don’t understand, you have two choices:

  • Throw money at your agency (they’ll take it) and ask them to figure it out (they’ll fake it);
  • Do market research (Don’t worry, your agency doesn’t need nearly as much for media as they insist they do. Remember: they’re faking it.)
If you can afford to, hire a firm that gathers market insight. If you can’t, but you can get budget to visit the markets you’re interested in, you can tell a lot from a little if you know where to look.

So what do I look at? I look at three things: civic infrastructure; individual expenditure; private investment. (I’ll talk about how to conduct great focus groups in a later post.)

Here’s what I look for in each category:

I. Infrastructure. While it’s everywhere, infrastructure can be deceptive, because what catches your eye may not be terribly important, and unless your budget is huge, you’ll need to make observations that are fast and meaningful. So, I look at power supply, road stock, and light rail systems:

  • Power supply is the first thing I look at because without power, economic growth can’t happen. Often developing countries struggle to keep power supply growing at the same rate as the private economy. And if they can, they struggle with the physical demands of routing wires to ever more
    locations from a fixed power grid. The reason for this is simple: as more and more buildings
    electrify, they tap into a grid built before homes—and businesses—were rich
    enough to require electricity. In Vietnam, for example, virtually every
    telephone pole in downtown Ho Chi Minh City (Saigon) is topped off with a
    crows-nest of wires. And though Bangkok is superficially much farther along the
    development curve, you’ll see an extremely overburdened power grid with power
    lines everywhere and often, a chaos of wiring at individual poles. Eventually, the development will peak. Eventually that peak
    will be followed by the orderly replacement of the haphazard wiring. Until
    then, it’s a good indicator that the location is still on the upward side of
    the growth curve.
  • Road quality follows a predictable progression from dirt to gravel to either asphalt or concrete as cities grow. However, the demands of growth—heavy traffic, excessive trucking carrying heavy loads—often degrades roads faster than they can be developed, particularly when there is limited
    capital for government investment. In city centers, the quality of
    roads—including curbs and sidewalks—tells you far more than the number of new
    buildings you see. Taken together with the moped index (I’ll post about this
    later), road quality is a great indicator of the health of the public and
    private sector.
  • Capital investments in transportation such as rail lines are important because they’re a sign of arrival. Only when a population is large enough, fixed enough in location, and regular enough in migration patterns does it make sense to alleviate the strain on roads by investing in light rail
    systems. Similarly, even if there’s no light rail in place, investment in
    second level (i.e., raised or below-ground) pedestrian walkways can be a good
    sign that the local economy is maturing.
II. Individual Expenditure. This is often the easiest to assess. I look to see how people spend their discretionary income, also in three variable areas. Climbing the development ladder these are: shoe stock, owned transportation, and women's
accessories. The key things to look at include:

  • Shoe stock can tell you a lot because good shoes are durable, expensive, and, because of their durability, they can tell you a lot through wear and tear about the wearer’s underlying economics. In the areas my target talent works, I look carefully at the average quality of shoe stock and
    how new (or “well heeled”) the average shoes are. This is not about assessing
    whether people are wearing cheap or expensive shoes—it’s about whether they’re
    wearing newer, rather than older, and higher quality, rather than lower quality
  • Owned transportation can vary from bicycle to Benz, and from very new to very old. And it can tell you a great deal about how far talent can travel to find work--not nearly so far on bicycle as in a car. Second to housing, which you probably can’t observe without knowing more about your
    talent’s migration patterns than you’ll have access to, transportation is the
    largest area of investment you’ll see. (Sending children to a good school may
    cost more, but it’s impossible to observe indirectly.) Again, I’ll write about
    the moped index in a later post, but for now, suffice it to say the more cars
    there are, the newer the cars are, the higher the relative cost of talent
    (i.e., wages) and local level of development.
  • Women’s accessories are often the trickiest to assess and it’s not really worth it in most markets without good evidence of robust owned transportation. (If everyone’s on bicycles, the inventory of accessories isn’t very telling.) But if the transportation stock is fairly good, women in
    many developing markets wear significant family wealth in their accessories and
    jewelry and this is an important marker of a variety of things ranging from
    safety and social order (higher if there’s significant jewelry present) to
    trust in the formal economy (lower if families believe they must keep
    significant wealth in gold in case of economic instability).

III. Private Investment. This is tricky. Not only is most of what you see private investment, but it’s hard to see, for example, whether the shiny new building you’re looking at is brand new or just a re-skinned brick building that’s about to fall down. But there are a few key elements of private investment I’ve learned
to look for. In order of development, these are bike shops, 5&10 stores,
and billboards.

  • Bike shops (here I mean places that repair motorcycles and mopeds) tend to exist at high concentration where there are a high number of people getting around on two wheels. So lots of bike shops tend to be inversely correlated with high development. Similarly, they’ll range from street-corner
    operations through tented areas to real mini-garages. Each tells you something
    important about the degree of local development. And they’re ubiquitous enough
    (because bikes break down often) to be impossible to miss if your eyes are
  • 5&10s, the mom-and-pop shops carrying everything from chicken wire and tin to dental floss and plungers are all displaced quickly when more efficient stores that bulk-buy come to town. But as long as the general income level is low, volume wholesalers can’t generate the revenue they
    need to offset their fixed operating and inventory costs. So if you see
    frequent five and dime stores, you’re looking at a market on the lower side of
    the development curve.
  • Billboards may sound like a no-brainer: they’re everywhere, right? Yes, and no. Remember, billboards are constrained by the same market dynamics as wholesalers: they need a mass market ready and able to spend discretionary income on mass-produced product. So question one is “how many do
    you see?” Question two should be “what are they selling?” Billboards seem to
    climb a predictable ladder from beverages (Coke, for example, and local beers)
    to consumer electronics, then phone minutes/plans, then cosmetics, then
    lifestyle products, then designer brands. What you see will tell you a lot
    about where the local market is.

Great. Now what? Okay, you’ve made it this far and you’re ready to go visit your target market to develop an inventory of infrastructure, expenditure and private investment. But first you need to understand why these are important for the talent market. Not to put too fine a point on it, but why should you care? And why should you bother?

First, because taken together, these details comprise a mosaic illustrating many important things about the fixed cost of the local economy and the local quality of living. As a general rule, the better each of these areas is, the more costly local talent will be.*

That obviously has important implications for pay expectations. And keep in mind that the developing world is...developing. That means you might end up with a very different mosaic in two similarly-sized cities. And because migration patterns in developing economies are often driven
by kinship and family ties, citizens of city one and city two may have
exceptionally low awareness that the state of their local economic environment
isn’t universal to the country as a whole.

But there’s a finer point to be had here, one that has everything to do with advertising and speaks to why it’s so important not to let your agency fake their way: the less developed the economy, the more important basic job elements will be to your
core talent; the more developed the economy, the more likely talent is to seek
self-individuation through work.

In plain English, if you’re try to use marketing messages about “a career of your dreams” in a marketplace where people dream about predictable income, you’ve missed your mark. But promise “stable work” in a marketplace where the talent wants development and advancement and you might as
well sell nail clippers to penguins.

What Else? I’ll talk about how to conduct talent research in a later post. In the meanwhile, shoot me a note if you have questions and I’ll answer them if I can. And if you have suggestions about what else to look for in emerging markets, I’d love to hear

* Cost of talent sometimes correlates positively with education level, but because quality is generally predicated on suitability for a given task, that’s often not the case. The universal ranking of universities offering specialized programs are typically a better indicator.

This series provided by Evviva Brands, the worlds brand shop for people brands.

Views: 158

Comment by Megan Burkett on June 4, 2013 at 11:17pm

Thank you for sharing your insights. This post highlights something I think needs more attention during the hiring process- market research. It makes me wonder if organization already do or should begin to adjust job descriptions posted on job board based on the geographic location of the role? I would love to hear others' thouhgts on this idea and the post as a whole.


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