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Best Practices, LLC Strategic Benchmarking Research

MARKET RESEARCH EFFICIENCY BENCHMARK:

Using External Personnel and Automation To

Maximize Market Research Effectiveness

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Table of Contents

Executive Summary

Research Overview

Benchmark Participants

Key Findings & Insights

I. Market Research Group Structure & Staffing Levels

II. Using Outsourced Personnel

III. Reasons for Outsourcing

IV. Contractor Selection & Management

V. Assessing the Value of Outsourced Market Research Labor

VI. Using Automation to Enhance Market Research Performance

Appendix A: Outsourcing Models Observed in this Study

Appendix B: Executive Quotes from the Field

Appendix C: Outsourcing Competitive Intelligence

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1. Explore Successful Industry Examples of the Use of Outsourced

Market Research Labor

2. Highlight the Prevalence, Strengths, and

Weaknesses of Automated Market Research Systems

Research Objectives & Methodology

Objectives:

• Examine how leading market research groups:

– Use external personnel (especially for secondary research) to maximize efficiency

and maintain a lean internal headcount in the face of increased workload

– Automate market research processes for efficient report generation and better

knowledge management

– Implement and manage those automated systems

In order to provide maximum value to internal clients, market research teams must find a way to

regularly generate a significant number of secondary reports while also continuing to provide more

strategic insights. Faced with headcount constraints and new products to support, companies can

gain critical efficiencies through the shrewd use of outsourced personnel and system automation.

Field Research & Insight Development:

Engaged 22 market research executives and

managers from 19 companies in a field survey

Analyzed qualitative findings and insights from

seven deep-dive interviews with industry veterans

Objective:

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Companies Participating in Study

Participating Companies Include:

This research emerges from survey data gathered from 22 participants representing 19 leading

biopharmaceutical companies. Best Practices, LLC analysts also conducted deep-dive interviews

with seven participating executives to gather additional insights.

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Most Participants Serve at Director Level

• Global Head, Strategic Sourcing -

Market Research

• Head, Procurement

• Senior Director, Market Planning (MR)

• Senior Director, Market Research

• Director, Business Analytics &

Insights

• Director, Business Intelligence

• Director, Global Market Research

Research Participant Job Titles Include:

• Director, Market Research

• Director, Marketing

• Coordinator, Sales & Marketing

• Associate Director, Market Research

• Senior Manager, Market Research

• Manager, Business Intelligence

• Manager, Global Sourcing

• Manager, Market Research

• Manager, Marketing

A majority of study participants serve at the director level, mainly in Market Research. Some

respondents who work in Business Intelligence, Strategic Sourcing, and Marketing also participated.

Interviewed executives are highlighted in red italics below.

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Key Findings & Insights: Using Outsourced Personnel

Most Companies Use Outsourced MR Personnel, But Not Systematically: Overall, 73% of

surveyed companies use outsourced personnel for some type of market research. However, the

labor outsourcing models used in the industry vary widely among companies – and few

organizations use multiple external personnel for any given market research function

Outsourcing Types Used: Externally contracted personnel “wear different hats” at different

companies. Outsourcing personnel for primary research (63% of companies) is slightly more

common than for secondary report preparation (56%) or secondary analytics (44%).

Drivers: Internal FTE constraints drive almost all (82%) moves to personnel outsourcing: Most

participating market research groups are faced with static headcounts. It is this aversion to invest

in more staff – the costliest resource for any company – that drives the widespread use of external

contract personnel observed in this study.

Market research teams often contract external personnel during “busy” periods when

workloads ramp up, especially in support of new products

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The following key findings and insights emerged from this study around the use of external contract personnel.

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(n=22)

Q. How is your market research group currently structured?

(Choose the best option.)

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36%

23%

18%

5%

18%

De-centralized reporting with some employees

serving specific therapeutic areas or business unit

levels

De-centralized reporting with some employees

serving specific brands

Centralized reporting with some employees serving

specific therapeutic areas or business unit levels

Centralized reporting with some employees serving

specific brands

Completely centralized reporting

Market Research Group Structure:

More than three-quarters of participating market research groups use some form of centralized reporting

structures. There is a close correlation between company size and market research structure: the larger

the company, the greater degree of decentralization.

Most MR Groups Are Centralized, Especially MidCaps

* (All MidCaps)

** (All Large Pharma)

Research Note:

None of the participating companies structure themselves strictly by geography or market.

Centralized Models

Decentralized Models

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Internal FTE

constraints (i.e.,

static

headcount),

82%

Other,

18%

FTE Constraints Drive Almost All Moves to Outsourcing

(n=15)

Q. Which factor plays the greatest role in motivating your market research group’s outsourcing effort?

(Choose the best option.)

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“Other” Factors

Cited:

• “Competence” (i.e.,

Finding a competent

contractor)

• “Balancing short-term

need vs. current

staffing level”

Note: No participant selected an option

of “Internal budgetary constraints.”

Impetus for Outsourcing:

Most participating market research groups are faced with static headcounts. It is this aversion to invest in more staff – the costliest resource for any company – that drives the widespread use of external contract personnel observed in this study.

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Maintaining Low Headcount Is Chief Outsourcing Goal

200

240

253

307

400

0 50 100 150 200 250 300 350 400 450 500

More innovative analysis/insight

Cost efficiency

Faster turnaround times

Greater work efficiency (i.e., through process

familiarity)

Keep MR headcount low / free up internal

resources & FTEs

(n=14)

Q. What are your company's primary goals in outsourcing market research? (Please rank the following goals 1 – 5, where 1 is the "most important objective," 2 is the "second-most important objective," etc.)

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Note: A weighted average index was used to analyze these responses, assigning a value of 5 to the most important ranking items and a value of 1 to the least

important ranking items. The total weighted average score for each service is calculated and then multiplied by 100 to standardize the index for comparison

across segments.

Top Outsourcing Objectives:

Most Important Objective

Least Important Objective

Keeping internal headcount low (while simultaneously freeing up internal resources to do more strategic work) was clearly rated by the benchmark class as the most important goal in moving to an outsourcing model. It is perhaps not surprising that “producing more innovative insights” was rated as a less important goal, since most companies contract externally to meet upswings in particular types of studies - and not necessarily to conduct high-level primary research.

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Outsourcing of Report Preparation May Increase

Q. To what extent do you expect labor for the following market research functions to be outsourced in the next

2 – 3 years? (Choose the best option for each activity.)

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Change in Outsourcing Levels:

Many study participants (59%) were bullish on the use of outsourcing in secondary report preparation, predicting it will increase in the future. None predicted a drop-off from current usage levels. For outsourced primary research, on the other hand, a majority of participants predicted no growth in usage (56%) or even an outright reduction (6%).

47%

59%

38%

56%

41%47%

0%6% 6%

Day-to-day primary

research

management

Secondary report

preparation

Secondary analytics

Same as NowMore than Now

(n = 16) (n = 17)

Less than Now

(n = 17)

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System Maintenance Is Internal– via IT or Even MR Group ItselfManagement for technical aspects and processes of automated work systems are frequently kept in-house, with IT tasked at 57% of companies and the market research group itself in charge at 29%. Once a system has been put in place, external vendors or consultants are rarely involved in ongoing management.

Technical aspects

managed by IT

Dept,

57%

Technical aspects

managed by

the Market

Research Team

itself,

29%

Technical aspects

managed by

an External

Vendor,

14%

(n=14)

Q. Which of the following options best describes how your automated system is currently managed?

(Choose the best option.)

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Automated System Management:

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Model A: “All Monthly Secondary Reporting in a Day”

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Outsourcing Profile:

Type: Outsourced personnel for secondary report

preparation

Contractor: Former colleague, now freelancer

Location: Onsite - all secondary reporting for month

completed in 1-2 days

Reason for Use: Competency, industry experience

Strengths: Faster turnaround time, low cost

Weaknesses: Short-term solution

Key Tactic(s): Outsourced contractor also puts Excel-

based data on intranet

Representative Quote:

"The intention long-term would be that the

company would be able to buy or produce a

front end and the warehouse would produce all

of this reporting in an automated way”

-Market Research Manager

External Contract

Employee

Primary Care Brands

Specialty Care Brand

Specialty Care Brand

External Contractor Model:

In this model, the market research contractor (or external contract employee) produces one secondary report for each of the supported brands on a monthly basis. This model works well when reports are routine and data-specific, and involve no ad-hoc projects.

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Outsourcing Quantitative CI = Greatest Opportunity for SomeIn order to efficiently outsource competitive intelligence, companies must safeguard strategic insight

and only contract work requiring the least amount of specialized skills and knowledge. As a

result, companies willing to (or needing to!) outsource CI demonstrated a greater inclination to

outsource secondary research and quantitative activities.

Outsourcing Competitive Intelligence: Differentiating By Function and Activity

Greatest Opportunity for CI

Outsourcing: • Minimal loss of strategic insight and

confidentiality

• Not utilizing special skills

Keep Work In-House:• Highest level of strategic insight

• Specialized skills and training

more advantageous

Primary Research

Qu

an

tita

tive

Ac

tivit

ies

Opportunity for Outsourcing:• More likely to outsource than

quantitative activities under primary

research

Minor Opportunity for

Outsourcing:• Less specialized skills but still

precarious position because of

sensitivity

Secondary Research

Qu

ali

tati

ve

Ac

tivit

ies

Lower Value Outsourcing Greater Value Outsourcing

Greater

Value

Out-

sourcing

Lower

Value

Out-

sourcing

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Best Practices, LLC is a research and consulting firm that conducts work

based on the simple yet profound principle that organizations can chart a

course to superior economic performance by studying the best business

practices, operating tactics and winning strategies of world-class

companies.

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Link for Report: Market Research Efficiency Benchmarking Report