By Wale Omiyale, SVP of Market Research, Confirmit

Commercial Content/Advertorial 

With over 3.8 billion people online – that’s 50% of the world’s population – it’s no surprise that digital interactions are a normal way of life for many of us. For Market Researchers, what’s most interesting is how the connected population is actually using the internet. It spans every aspect of our lives from entertainment and shopping, to work, learning, and our day-to-day social activity.

by John Presutti

As we prepare for the 2017 MENAP forum, I was asked to write an article about the region that would pique interest, particularly from a researcher’s perspective.   I blithely accepted this task; after all, I have been involved in conducting research across MENAP for nearly 25 years – I have seen a lot. I have done a lot. The task, however, is formidable. Collapsing the region into a tidy five letter acronym belies its scale, complexity, diversity, and historical richness. The MENAP region unfurls into more than 20 countries, a population of more than 600 Million, a culture and history that boasts accomplishments such as the cradle of civilization, the birth of Abrahamic religions, the invention of Algebra, countless musical instruments, and yes, believe it or not, soap. So, in retrospect, what I have seen and done in the past quarter century is barely the proverbial tip of the sand dune. MENAP is a region filled with constant surprise, cultural diversity, political upheaval, and economic complexity. Attempting an exhaustive discussion is quixotic. As such, I would like share with you 5 observations I believe important for anyone conducting research within the region.

1.Look beyond the narrative of turmoil, violence, and ultra-conservatism perpetuated by mainstream media

Mainstream media coverage of the MENAP region is littered with words such as “violence”, “terror”, “radical Islam”, “extremism”, and countless other fear invoking adjectives that create a perception of mayhem and instability. Looking beyond this narrative reveals a vibrant region with a bourgeoning middle-class, with well-developed financial and retail infrastructure, with well-regulated legal and commercial environments providing protection for brand owners, businesses, and consumers alike. A UN study commissioned by the Economic and Social Commission for Western Asia, estimates the size of the Arab middle class at between 32%-43% of the population for less developed markets and between 55%-60% for more developed markets. In Pakistan, conservative estimates from the Pakistan Institute of Development Economics estimate the size of the middle-class at around 19% of the population.   Iran, long considered the seat of anti-western dogma and religious conservatism and until recently isolated by global economic sanctions is now capturing the attention of global brands from automotive to consumer electronics to luxury. While reliable current statistics on the size of the Iranian middle-class are not yet available various estimates place the size to be between 40%-50% of the population, nearly 40 million consumers.

The implication of these staggering statistics is a middle-class market of nearly 200 million consumers with discretionary spending power available for non-essential goods and services.   In other words, there is great opportunity for goods and service providers to address growing consumer demand within the MENAP region.

2.The countries of MENAP are highly diverse and cannot be treated similarly.

I am often asked by international clients concerned with budget and time constraints which countries should be included within a regional research program. However, the countries within MENAP, while predominantly Muslim are vastly different from each other and reflect unique cultural and societal journeys. This translates into differences in language to societal values & attitudes, collectively impacting a variety of topics from career and leisure to relationships and aspirations to savings and discretionary spending.

Within the countries themselves, there are stark regional differences. The Western region of Saudi Arabia is considered “culturally” different from the Central & Eastern region and in Pakistan the same is said of Lahore and Karachi, one being predominantly Punjabi and the other Sindhi. Even in the traditional Arab countries of the Arabian Peninsula, North Africa, and Levant, the Arabic language exhibits dialectic and idiomatic idiosyncrasies that can pose a challenge when developing research materials. The country of research will determine whether the Arabic used in Levantine, Khaleeji, Hijazi, Maghreb, or Egyptian.   In Pakistan, while the official languages are Urdu and English, there are widely spoken provincial languages of Punjabi, Sindhi, Pashtu, and Balochi.

While a singular bellwether country does not exist for understanding the MENAP region, we do tend to build research programs based on individual market priorities. Typical MENAP research programs will include Saudi Arabia, UAE, Kuwait, Egypt, Morocco, Turkey, and Pakistan. Having said this, however, there has been increasing interest in emerging markets such as Algeria, Iraq including the Kurdistan Regional Government.

3.The economic outlook across the region is varied

While unmistakably tapping into the spending power of MENAP’s middle-class represents a great opportunity, the current economic climate is inconsistent across the region.   GCC markets have been horribly affected by the drop of oil prices from a high of over $100 per barrel to around $50 per barrel today and as such were forced to adapt to the new harsh economic reality. These countries were accustomed to large fiscal budget surpluses driven by oil industry revenues but in the face of deficits have begun to implement harsh austerity programs to reduce budget deficits.   Saudi Arabia, the largest and perhaps most influential of the GCC economies ended 2016 with an estimated budget deficit of $87 billion. Across the GCC governments have either implemented or are planning austerity measures including the elimination of consumer subsidies on fuel, water, and electricity, the introduction of 5% VAT, reduction and scaling back of government contracts, and potentially the introduction of personal and corporate income tax.  In Egypt, the economic outlook is still dire but improving as it continues to grapple with the effects of fiscal reform implemented by the government to deal with the uncertainty and chaos following the Arab Spring. Egypt’s economy has suffered numerous shocks including soaring inflation, currency shortages, and a failing tourism sector. The government economic reform program has included initiatives such as the introduction of VAT, a free-floating currency, and reduction in consumer fuel subsidies.

The economic blowback from government austerity measures will mean both lower GDP growth and lower consumer discretionary spending in these countries.   From a consumer perspective, this means greater emphasis on value and affordability as consumers seek ways to stretch their decreasing disposable income.

Despite the somewhat glum economic outlook for some of the countries, there are bright spots across the region.   Iran is expected to enjoy economic growth as it comes in from the cold of years of economic sanctions. The forecast from the Iranian government as well as the financial community is that Iran will experience a surge in oil and non-oil exports as well as in foreign direct investment. Pakistan is also looking at a rosy economic picture as South Asia’s second largest economy is eyeing robust GDP growth driven by lower oil prices and heavy foreign direct investment in infrastructure, particularly from China. The economic growth of Pakistan and Iran combined represent expanding prosperity for a market of 260 million consumers.

4.Digital disruption has taken hold across the region

Any brand thinking about developing their strategies to connect and engage with consumers in the MENAP region must be willing to embrace digital technology. MENAP consumers are creating digitally enabled lives.  With smart phone penetration rapidly moving towards universal penetration, MENAP consumers are using their mobiles for just about everything imaginable.   According to the recently released annual report form We Are Social and Hootsuite, Digital in 2017 Global Overview, in the Middle East, there are 312 million mobile subscriptions, 93 million active social media users of which 90% are active mobile social media users. Furthermore, the Internet of Things (IoT) within the region is experiencing rapid growth with organizational spending expected to increase at a compound annual growth rate of over 21%, reaching $14.3 Billion by 2020. eCommerce and mCommerce are gaining rapid momentum as consumer acceptance to pay for goods and services online grows.   According to online payment service provider, Payfort, consumer acceptance of online payment within the Middle East stands at more than 50% with online purchases expected reach $69 Billion by 2020. Furthermore, according to Criteo, a global provider of digital performance advertising, more than one third of GCC online purchases was made via mobile. Businesses that successfully leverage the deepening relationship between MENAP consumers and digital technology to meaningfully connect and engage their target audiences will surely reap huge rewards.

 5.MENAP research is going digital

Rapid consumer adoption of digital technology has created exciting possibilities for engaging and researching consumers across MENAP.   Over the past 3 years, digital technology has put some spring back into the step of a region where the industry has plodded along slowly unable to keep pace with changes taking place in more developed research markets.

Until recently, most face-to-face surveys were conducted using paper and pencil. Today, web enabled geotagged CAPI is increasingly the norm. Online access panel providers were few and provided limited geographic coverage. Today, there has been a proliferation of panel providers and MENAP coverage is near universal. Furthermore, mobile market research triggered through SMS invitations has experienced meteoric growth offering clients fast, cheap, and high quality data collection. Permanent private online brand communities are also beginning to gain acceptance amongst clients who appreciate immediate access to a large base of customers that can be engaged in a candid dialog about brand and product experiences.  Digital technology within the quantitative research space is spelling an end to the dreaded face-to-face survey which has long been criticized for inconsistent data quality.

Digital technology is also influencing how qualitative research is conducted within the region. VVOIP platforms such as Skype are being used reach and interview respondents in less stable places such as Baghdad or Gaza.   Online focus groups whether organized as a live chat or a bulletin board discussion are also gaining acceptance as clients appreciate their speed, convenience, and cost effectiveness.   Within the ethnography space such as shop-alongs and in-home visits, mobile ethnography platforms are making their debut with such features as push to talk audio and live stream audio, allowing researchers and observers to virtually accompany respondents in a less intrusive manner, while saving considerably on cost and time.

Finally, as researchers find their sea legs in the ocean of digital technology, they are becoming more open to the avant-garde of technology driven methods including neuromarketing sciences and big data analytics. Neuromarketing research projects utilizing eye-tracking, EEG, and facial coding are becoming more commonplace.   Clients are also actively contemplating how to leverage the Big Kahuna of big data, particularly as they gain exposure to the power of social media listening. While this area of research is still early days for MENAP, the conversation is becoming louder amongst researchers and clients, perhaps a harbinger of things to come.   As the cost of neuromarketing and big data tools drops, this area will experience rapid growth as researchers seek out methods of increasing the predictive power of data.

In closing, my parting thought is that the MENAP region is huge, diverse, and full of surprise. Conducting, research within the region requires careful planning, a hands-on approach, and a great deal of cultural sensitivity and patience. While the region is currently experiencing economic and political difficulties, there is a massive thriving middle-class that should not be ignored. Finally, the rapid adoption of digital technology has provided researchers unprecedented access to consumers willing to engage them in a meaningful always connected always on dialog.

Join us at our upcoming MENAP forum for more regional insights and innovation!

John Presutti is CEO market-i research and consultancy and ESOMAR UAE representative

A look at the benefits of online communities as part of the innovation process.

By John Smurthwaite  

Many marketing and research professionals believe that the use of SES (socio economic status) as an issue should be dead and buried. With the growing number of segmentation models being generated via digital path to purchase, social media, analytics and more direct niche targeting through an array of smart digital mobile devices, many will say that SES may seem an anachronism from the analogue past. So why are we reviving this topic once more?

The reality is that as the concept of SES still has strong support from many marketing professionals in developing parts of Asia Pacific, the concept still deserves some respect.
SES was introduced as a useful segmentation tool of broad socio-economic status and in its early days was fairly simple to calculate and very useful as a marketing discriminator providing added direction to basic demographics. The base census data, from which most SES classifications are derived, allowed for broad quantification of these socio-economic groupings.

INCOME?

In the pre-digital/pre-mobile age, marketers needed more than basic demographics to help target consumers. Personal or household income was (and still is) a critical segmentation discriminator for targeting and choosing effective media channels. Income data collection through surveys has always been fraught. Under/over reporting and non-response on income have always been issues that have limited the effectiveness of this important element.

SES was seen as a way around income data collection issues as SES was seen as a good proxy for income segmentation. Two simple questions to collect “education levels” and “occupation levels” combined provided a range of usually socio-economic points which greatly assisted marketers in targeting geographically and in media buying – especially mainstream media (TV, radio and print).

But as we know, in many countries the traditional approach died some time ago as education levels improved and occupations not only moved towards the service industry but became more complicated to measure. This meant that SEC was no longer quite as predictive and therefore became less useful for media targeting.

Also responses from surveys endeavouring to measure income levels continued to fall, meaning that marketers had poorer quality targeting options available than previously. This meant that neither the Income nor SES classification was as useful as needed for targeting consumers adequately.

Obtaining better quality income data has not improved. Responses on income declined for a number of reasons but primarily for security concerns. SES classifications needed to be revisited to find more useful segmentation guides.

WHAT ELSE?

Across APAC, countries more or less divide into two groups on this issue. One group of countries claims to be classless and hence say that SES is of little use although they may contradict their argument by collecting income data! In this first group are Japan, Korea, New Zealand and Australia plus socialist countries such as China.

If you’re an ESOMAR member you can read the full article in MyESOMAR in the digital copy of Research World. If you are not a member of ESOMAR you can join and receive a free copy of Research World 6 times a year or alternatively you can sign up for a subscription of the magazine in our publications store.

While much of the talk about China is about slowing growth, WPP China CEO Bessie Lee highlights the increasing power of mobile in a market that’s still expanding.

By Jo Bowman

Bessie Lee is quick to set observers straight if they think the wheels have fallen off the China market. Yes, she concedes, the growth rate in the national economy has slowed to half what it was a decade ago. But with 6.5% GDP growth in 2015, that still puts most large economies in the shade, and makes China a huge powerhouse that’s still expanding.

When China’s GDP was making headlines in 2005 with a growth rate of 15%, it was from a much lower starting point; that growth amounted to US $340 billion. Last year, while growth was ‘only’ 6.5%, it equated to US $706 billion.

Bessie Lee is the China CEO of WPP, the global communications company with companies specialising in advertising, public relations and market research. It owns Kantar, TNS and Millward Brown.

She says media investment by advertisers has generally tracked the overall economy. “The double-digit growth in media spending stopped before 2014 or even 2013; we’ve seen single-digit growth since 2013, similar to GDP,” she says.

“The similarity between China and other markets is that an increasing amount of money is shifting to digital and that’s pretty much the same worldwide, but what’s different here we have a lot of money that shifted to social media, however, that money is not necessarily hard-core advertising investment.”

Advertising spend online has overtaken investment in television advertising in China; in 2015, TV adspend was 40.8% of total investment, compared to 41.8% spent online.

What top-line adspend figures fail to measure, she notes, is what’s becoming one of the strongest elements of brand communications in China, and one that’s uniquely Chinese.

“In China, the social media network is WeChat, which has 600 million active users on a monthly basis,” Lee says. “But WeChat is very protective of their user experience so they’re very cautious about accepting advertising … they’re very cautious about not overwhelming their users with lots of ads. Instead, they encourage brands to come onto WeChat and open a corporate account under the brand or under the company and use WeChat as a platform to engage with your consumers.”

WeChat is a mobile-only platform, and this is important in a market where mobile is fast becoming the primary screen for many consumers. “At the moment there are 1.2 billion mobile users and the number of mobile internet users is close to the total number of internet users. So I reckon by the end of this year or next year we’ll have more mobile internet users than PC or laptop internet users,” Lee says.

If you’re an ESOMAR member you can read the full article in MyESOMAR in the digital copy of Research World. If you are not a member of ESOMAR you can join and receive a free copy of Research World 6 times a year or alternatively you can sign up for a subscription of the magazine in our publications store.