2.

CHAPTER II: INDUSTRY/ SECTOR PROFILE

2.1 Overview of the industry/ sector

Companies that sell products and services learn more about their current customers and target
audiences through market research. They also use market research to learn more about their
business reputation, brands, and other aspects of their organization. The definition of market
research, according to Entrepreneur.com is: “The process of gathering, analyzing, and
interpreting information about a market, about a product or service to be offered for sale in
that market, and about the past, present, and potential customers for the product or service;
research into the characteristics, spending habits, location, and needs of your business’s
target market, the industry as a whole, and the particular competitors you face.”

Among the first steps in the business planning process is market research. Companies use it
to help tackle such challenges as market segmentation, which is the identification of specific
groups within a market, or product differentiation, the creation of an identity for a service or
product to distinguish it from that of competitors. Market research companies gather, record,
tabulate, and present data on marketing and public opinions. The services that market
research companies offer include sampling and statistical services, broadcast media rating
services, market analysis services, and political polling. Market research is conducted by
telephone, e-mail, social media, snail-mail, and face-to-face research (such as focus groups).

Jobs in the market research industry are found in market research agencies and at advertising
agencies with market research capabilities. Many organizations also have their own
marketing departments. The types of jobs in the field include research director or manager,
research analyst, operations director, fieldwork manager, and statistician/data processing
workers. The Bureau of Labor Statistics reports that 681,900 market research analysts were
employed in the United States in 2018. They worked for management, scientific, and
technical consulting services; wholesale trade companies; finance and insurance companies,
among others. Most people who work in market research work in a team and collaborate on
projects for clients.
According to the research group IBISWorld, the U.S. market research industry generates $23
billion in revenue annually. There was more than 2 percent annual growth in the industry
between 2014 and 2019. The industry has experienced strong growth the past few years, and
growth is expected to continue in the coming years due to the increase in research and
development and Internet advertising spending. There are approximately 44,164 market
research businesses in the United States.

Companies that sell products and services learn more about their current customers and target
audiences through market research. They also use market research to learn more about their
business reputation, brands, and other aspects of their organization. The definition of market
research, according to Entrepreneur.com is: “The process of gathering, analyzing, and
interpreting information about a market, about a product or service to be offered for sale in
that market, and about the past, present, and potential customers for the product or service;
research into the characteristics, spending habits, location, and needs of your business’s
target market, the industry as a whole, and the particular competitors you face.”

Among the first steps in the business planning process is market research. Companies use it
to help tackle such challenges as market segmentation, which is the identification of specific
groups within a market, or product differentiation, the creation of an identity for a service or
product to distinguish it from that of competitors. Market research companies gather, record,
tabulate, and present data on marketing and public opinions. The services that market
research companies offer include sampling and statistical services, broadcast media rating
services, market analysis services, and political polling. Market research is conducted by
telephone, e-mail, social media, snail-mail, and face-to-face research (such as focus groups).

Jobs in the market research industry are found in market research agencies and at advertising
agencies with market research capabilities. Many organizations also have their own
marketing departments. The types of jobs in the field include research director or manager,
research analyst, operations director, fieldwork manager, and statistician/data processing
workers. The Bureau of Labor Statistics reports that 681,900 market research analysts were
employed in the United States in 2018. They worked for management, scientific, and
technical consulting services; wholesale trade companies; finance and insurance companies,
among others. Most people who work in market research work in a team and collaborate on
projects for clients.
According to the research group IBISWorld, the U.S. market research industry generates $23
billion in revenue annually. There was more than 2 percent annual growth in the industry
between 2014 and 2019. The industry has experienced strong growth the past few years, and
growth is expected to continue in the coming years due to the increase in research and
development and Internet advertising spending. There are approximately 44,164 market
research businesses in the United States.

2.2 Contribution of the sector towards GDP

The market research industry is on course to grow 12-14% annually till FY26 to cross the $4-
billion mark, according to a report. As per the report by the Market Research Society of India
the industry was $2.1 billion in FY21 and is on course to double to $4.2 billion by FY26,
driven by the fact that the country is the global analytics hub.

https://economictimes.indiatimes.com/news/company/corporate-trends/fmcg/articleshow/
88321591.cms

In FY21, marketing analytics services accounted for 52 percent of the total industry revenue,
while traditional market research and syndicated/publishing services brought 32 percent and
16 percent, respectively. The report expects by FY26, analytics services to account for 59
percent, while market research and syndicated/ publishing services will account for 27
percent and 14 percent, respectively.

https://economictimes.indiatimes.com/news/company/corporate-trends/fmcg/articleshow/
88321591.cms

The FMCG and retail sectors are the largest consumers for market research and insights with
a share of 27 percent, followed by information, communications, and telecom (16 percent),
and banking, financial services, and insurance (15 percent). According to the report, the
availability of talent, coupled with proven expertise in data handling, technology,
infrastructure, and cost competitiveness will lead to an orbital shift in the industry by 2030,
when it is expected to scale past the $10-billion mark. The report is based on inputs from
over 198 companies.

Source:https://economictimes.indiatimes.com/news/company/corporate-trends/fmcg/
articleshow/88321591.cms\
2.3. Major players

 NielsenIQ

Nielsen, an S&P 500 company, offers measurement and data analytics services on a
global scale. It claims to cover more than 90 percent of the world’s GDP and
population through its services.

The services delivered include marketing and media information, analytics, and
retailer and manufacturer expertise related to what and where consumers buy and
what consumers read, watch, and listen to. The Company caters to clients primarily
from the CPG, media, and advertising industries.
 IQVIA

IQVIA, formed through the merger of IMS Health and Quintiles, is a Human Data
Science Company serving the life sciences industry. The company has been able to
integrate information, analytics, domain expertise, and technology through its IQVIA
CORE solution, thereby enabling its clients to tap into a deeper understanding of
human behaviors, diseases, and scientific advances.
 Kantar
 Kantar, a part of WPP, is a data, insights, and consulting company. The company
offers its services across the entire lifecycle of sales and marketing with research
solutions ranging from in-depth qualitative research expertise to the latest AI-based
technology.

In April 2019, Kantar unified all its legacy brands, including Kantar Consulting,
Kantar IMRB, Kantar Health, Kantar Media, Kantar Public, Kantar Millward Brown,
Kantar Worldpanel, Kantar TNS, Lightspeed, all country-specific brands into Kantar.
Further, WPP sold Kantar’s 60% stake to Bain Capital in Dec 2019 and hence shown
as discontinued operations by the WPP group as of Dec 31, 2019.
 Gartner

As a member of the S&P 500, the company is engaged in providing research and
analysis solutions to the computer software, hardware, communications, and related
information technology industries.

The company research services are offered through a subscription-based model that
includes on-demand access to published research content, direct access to a network
of approximately 2,300 research experts located globally, and data and benchmarks.
2.4. Regulatory framework

Regulation is the control and restriction of business, corporate and industry and its
operations, investment, other expenditures, and market activities. Regulation is commonly
exercised by legal authorities such as governmental (executive) agencies, although self-
regulation is also present in many companies and industries and is guided by trade and
industry association policies, guidelines, and individual business conduct policies. Regulation
is drafted and enforced to prevent business and market failures, realize societal desires,
uphold and protect the common good and welfare by mitigating or preventing economic
disruptions or environmental damage.

Regulatory compliance is a pertinent issue to business development, legal compliance,

investment strategies, mergers and acquisitions (M&A), profit, and income for numerous
companies in heavy industry, manufacturing, construction, utilities and the energy sector.

ENTRY OPTIONS

An appropriate entry strategy is a must for every foreign investor seeking to do business in
India or with counterparties based in India. Entry strategy would usually vary depending
upon the nature of business, the concerned sector, scale of operations and costs and other
commercial objectives. Broadly, foreign investors can set up either a company, branch/liaison
office or a limited liability partnership (LLP) in India. Indian companies are governed by the
new company law, the Companies Act, 2013. LLPs are governed by a separate legislation,
the Limited Liability Partnership Act, 2008. It may be pointed out that the Indian government
has launched a series of initiatives aimed at enhancing the ease of doing business in India.

FOREIGN INVESTMENT POLICY

Foreign investments into India are governed by a comprehensive foreign direct investment
(FDI) policy issued annually by the Department of Industrial Policy and Promotion, which
works under the aegis of the Ministry of Commerce and Industry, Government of India. The
FDI policy is supplemented by various press notes that are issued throughout the year as and
when a policy change is announced. This policy framework is operationalised by rules,
regulations and circulars issued by India’s Central Bank, the Reserve Bank of India.
Most investment sectors are under the automatic route (i.e. no prior approval is required for
investment); only a few sectors such as insurance, real estate, non-banking financial
corporations are regulated. FDI into LLPs is also permitted, subject to certain conditions. The
new Indian Government has announced its commitment to further liberalise India’s FDI
policy, with a view to attracting greater foreign capital.

TAXATION

Income tax in India is governed by a Central legislation, the (Indian) Income tax Act, 1961,
while indirect taxes such as value added tax, customs and excise duty are subject to both
Central and State laws. Currently the corporate tax rate stands at 30% (excluding surcharge
and cess), however, the Government has announced that this would be progressively reduced
to 25% over the next 4 years. India also has transfer pricing rules that apply to related party
transactions. On the indirect taxes front, a comprehensive Goods and Services Tax (GST) is
likely to be introduced in India in 2016. This will go a long way in reducing complexity and
eliminating multiple taxation.

EXIT STRATEGY AND DISPUTE SETTLEMENT IN INDIA

Since entering a new market is a major commitment for every investor, the exit strategy
should also be planned in advance as the cost and barriers to exit can often determine the
entry strategy. Maintaining a comprehensive exit strategy is important for the following
reasons:

 Changes in business conditions or regulatory environment

 Cashing out on a venture that is successful
 If the goals and objectives of the company/partners involved change with time
 If one of the partners involved in an agreement is acquired or gets into financial trouble
 For settlement of disputes when a partnership isn’t working out

SETTLEMENT OF DISPUTES IN INDIA

India follows the common law and has a single court system to administer both Central and
State laws. The court system is broadly three tiered, comprising the lower District courts, the
High Courts and the apex court – the Supreme Court of India. Court litigation in India is
generally subject to delays, and owing to a backlog of cases before Indian courts, commercial
disputes are being subject to alternative modes of dispute resolution, such as arbitration.

The choice of dispute resolution mechanism can have significant commercial, financial and
legal consequences and investors should consider the advantages and disadvantages of each
mode of dispute resolution, be it litigation before Indian courts or arbitration.

EMPLOYMENT LAWS

An investor should familiarise themself with Indian labour laws at the time of commencing
operations in India. Though several labour laws are formulated by the Centre, there are State
specific rules that the investor should take note of, and these would vary depending on the
State where the investor commences operations. The investor should ensure that appropriate
registrations are obtained and all HR records, files, documents and correspondences are
maintained according to the requirements under Indian labour laws.

It is advisable to seek professional advice in areas such as drafting compliant policies and
practice manuals, handling potential labour law issues, structuring of employment contracts
and reducing risks of co-employment issues. Half-yearly or yearly audits of internal HR
compliance policies may also be conducted to ensure compliance with all necessary statutory
requirements. It may be pointed out that the Government plans to introduce several reforms
with respect to labour and employment laws in order to make these laws industry friendly
and reduce the burden of compliance for the private sector.

ANTI-TRUST REGULATION IN INDIA

India’s Competition Act, 2002 (the Act) is the principal legislation dealing with anti-trust
issues. The Act prohibits or regulates (a) anti-competitive agreements (b) abuse of a
dominant position and (c) combinations.

Anti-competitive agreements are broadly defined as any agreement in respect of ‘production,

supply, distribution, storage, acquisition or control of goods or provision of services, which
causes or is likely to cause an appreciable adverse effect on competition within India’.
Certain agreements such as tie-in arrangements or bid-rigging are presumed to cause an
appreciable adverse effect on competition.
Further, the Act prohibits any enterprise or group from abusing its ‘dominant position’; an
enterprise will be considered ‘dominant’ in a relevant market, in India, where it is able to
operate independently of competitive forces prevailing in the relevant market or can affect
competitors, consumers or the relevant market in its favour. Also, in terms of the Act,
combinations (mergers, acquisitions, de-mergers) exceeding certain specified asset/turnover
thresholds would require approval of the Competition Commission of India to ensure that
they do not cause an appreciable adverse effect on competition within the relevant markets in
India.