Competition grows with Scangroup’s entry into research

The Sh2 billion research sector is set to become more competitive with the entry of marketing services giant, Scangroup.

Scangroup’s move is informed by the growing need by Kenyan companies for comprehensive market intelligence solutions and changing social trends that have seen a new class of consumer gain dominance.

Scangroup announced its partnership with South African-based, Smollan Group, last week, amidst the dramatic shifts in the Kenyan consumer market due to the sluggish economy.

In a bid to grow revenues in the increasing competitive retail market, several Kenyan companies are investing in market data in order to position themselves in the rapidly changing environment.

“Scangroup’s entry into this market is a signal that the industry is growing and will mean increased competition within the industry. This is being driven by the emergence of a strong middle class in Kenya that calls for more insight and product development,” said a representative of Consumer Insight.

According to the latest data from the industry watchdog, the Marketing and Social Research Association (MSRA), 2009 was marked by outstanding growth in the East Africa’s research industry with members of the association recording increased revenues.

Income rose from Sh1.4 million in 2007 to Sh1.7 million during 2008 representing growth of over 27 per cent.

Whilst MSRA members represent the majority of researchers in East Africa, an estimate for non-member revenue can be added to give an overall research spend for East Africa of around Sh2 billion.

According to Jane Delorie, Kenyan-based research players continue to dominate the region with only 58 per cent of that revenue earned in Kenya.

These companies have extended their reach with most having offices in Tanzania and Uganda while a few also have offices in other countries such as Nigeria and Mozambique.

Rich experience

Overall, 62 per cent of research commissioned is for domestic clients within the country in which it is commissioned which means the balance is for foreign clients (38 per cent).

“Although research spend is increasing in Africa, there is still a long way to go to bring us up to speed with other markets,” said Ms Delorie.

Scangroup’s new unit, which will be known as Smollan East Africa, will rely on a regional footprint to challenge market incumbents such as Synovate, Consumer Insight and AC Neilsen, who already provide market intelligence solutions.

Analysts said Scangroup’s move was likely to also leverage Smollan’s rich experience in field marketing and brand activation as well, rivalling services currently offered.