Business in Ukraine

Kishor H. Sridhar is head of international business at the German IFAK Institute, which has been in Kyiv since 2007. The company evaluates cultural mentalities and their impact on consumer behavior. Before joining IFAK, Sridhar worked for the American Gallup Institute. Sridhar says Ukrainian businesses are slowly adopting modern market research techniques and still rely on old­fashioned approaches.

 

 Kishor H. Sridhar is head of international business at the German IFAK Institute, which has been in Kyiv since 2007.

KP: Please tell us briefly about the major trends currently driving Ukraine’s market research sector?

KS: The Ukrainian market is fast­moving and quickly adapts new approaches and technologies. We are overwhelmed on how well perceived innovative technologies are. Modern online shopping­shelf simulations are in demand as well as the new eye­tracking method that measures what people look at while they move along the street, at the shop or when reading a newspaper. This has definitely changed compared to a few years ago.

On the other hand, Ukrainian customer research still applies some rather old­fashioned approaches. We still do a lot of our work in classical ways, for example, person­to­person and telephone interviewing.

In Western European countries, the latter method holds a small share of the market research market but in Ukraine, it will remain a major source of data gathering for years to come.

 

KP: What are the major factors that are driving the market growth?

KS: The major factors are stronger competition in the consumer goods sector and a greater product diversification. It’s only natural that when competition increases and growth is harder to gain, companies turn to market research.

Knowledge and information are the keys to success and many Ukrainian companies know it. Companies without a detailed knowledge of their market or customers get left behind. This is a natural development. This also works for advertisement. With customers being flooded by advertisements, you need to make sure that yours stand out. We have seen a major growth in campaign testing in Ukraine over the past years.

 

KP: What are the main challenges that market researchers face today?

KS: The main challenge for all market research players is the lack of willingness of their potential client’s decision makers to hear the truth. It is difficult to hear straight facts about what your customers think of your product, and what your market chances are, if the findings are negative. When you are ill, you don’t treat yourself, you go to a doctor for an honest evaluation. The same should be true for market research, but it isn’t. Many corporate decision makers prefer to use their own people for market research, but most lack modern know­how. Naturally, many base their findings on their bosses’ views. This is called alibi research.

If executives want to be successful, they need independent market research and consulting on which they can base their decisions. Good market researchers are comfortable telling the truth, and the findings are highly confidential, like any good doctor’s medical opinions. But this open­mindedness among the country’s executives still needs to develop. That is why only 15 percent of market research in Ukraine is done by independent market research companies. We are very sure that this will change quickly but this is something we as independent market research companies actively need to work on.

 

KP: So the demand for market research in Ukraine is underdeveloped?

KS: No it is not sufficiently developed. There are many international market research companies expanding into the Ukrainian market but opening offices does not guarantee the real demand is met. The Ukrainian market is a very dynamic yet special market. Demands are different in Ukraine so the main challenge for international market research companies is to adapt their approach to the country’s unique market and clients.

 

KP: What are the main differences in the research you do in Ukraine and Western companies?

KS: There are three major differences. First, it is the clients: Ukrainians are very dynamic, fast thinking and move quickly. In the West, in Germany for example, market research clients will plan weeks ahead. Projects in Ukraine come on short notice and require a quick turn­around.

The other difference is the way participants are interviewed. Cell phone usage rates in the Ukraine are on a very high level and landline penetration in the major cities is too. That is why telephone interviewing works well here. In the regions it is better to conduct market research in person. This communication mix will last for the next years to come. Last but not least are the challenges Ukrainian clients face and thus the fields of research. For example real estate research is very big in Ukraine, meaning the detailed evaluation of a location where a retailer plans his store, the evaluation of the area, the demographics around the store, family structure, income, mobility, etc. In Germany their meta­surveys continuously monitor customer behavior. In Ukraine data is gathered more on an individual, case­driven basis.

 

KP: What is your forecast for the development of the market research sector in Ukraine?

KS: The annual 30 percent growth rate will continue for the next 3 years.

Among the most areas in demand of market research will be in real estate, mobile communication, banks and retail.

In terms of technology we first have to fully develop telephone interviewing and the transition to internet data gathering will take another three to five years. The internet offers possibilities still beyond anything we have seen so far in market research. I am quite sure that online market research will catch on even faster in Ukraine than it did in the UK, Germany or France.

Tags: Opportunities //