BISAM Presentation at the ESOMAR Congress
On the 59th Annual ESOMAR Congress held on September 17-21 2006 in London BISAM successfully demonstrated the presentation on Deep Dive Research in Kazakhstan
Phenomenon of the post-soviet business elite
40,1% of the owners in cities of Kazakhstan and top-managers of the small-scaled and middle businesses came into this sphere feeling that they are talented for this.
FOCUS ON CENTRAL ASIA: CONDUCTING RESEARCH IN THE POST-SOVIET ERA
Leonid Gurevich is a General Director Of Center of Business Information, Sociological and Marketing Research BISAM Central Asia
"Qiurk's", december, 2002ã.
FOCUS ON CENTRAL ASIA:
CONDUCTING RESEARCH IN THE POST-SOVIET ERA
Until the tragedy of the 11th of September, 2001, the Central Asian region had been far less familiar to the western public than any other parts of the Asian continent - South Asia, South-East Asia, the Middle East, and even Siberia. Having become a crucial prospective battle front with international terrorism, Central Asia has naturally drawn increased attention from the world community. However, there has also emerged a serious danger that Central Asia may become associated with terrorism, drugs and instability, thus inhibiting the open use of the regions rich economic potentials and human resources in world markets.
In reality, however, the only zone of instability in Central Asia is Afghanistan. The other states of Kazakhstan, Kyrgizstan, Tajikistan, Turkmenistan and Uzbekistan, all former Republics of the Soviet Union, have preserved and strengthened state control over their territories, and so maintained a high standard of civil peace, despite their unfavourable proximity to Afghanistan.
Kazakhstan, Kyrgizstan, Tajikistan, Turkmenistan and Uzbekistan unanimously demonstrated their readiness to actively participate in the antiterrorism coalition, while Uzbekistan, Tajikistan and Kyrgizstan offered their territories for US military bases. This will promote the existing orientation of Central Asian states to the west, and enhance their integration into world markets.
Social, Economic and Political Features of Region States
The total territory covered by Kazakhstan, Kyrgizstan, Tajikistan, Turkmenistan and Uzbekistan is almost 4 mln. sq. km, with a combined population of more than 55 mln. people.
These countries are well known for their natural resources. Kazakhstan and Turkmenistan possess huge oil and gas reserves. Perhaps these countries would have already been among the world's largest hydro-carbon exporters if transportation problems had been completely solved. Yet transportation issues are currently being solved, resulting in large-scale competition among American, British, French, Italian, Russian and Chinese companies in the oil and gas markets of Central Asia.
There are also extremely rich mineral deposits throughout all Central Asian states. Kazakhstan, for instance, is a world leader in the extraction of chromium, copper, zinc, bauxite, phosphate and cadmium. Uzbekistan is a world leader in gold extraction.
All the Central Asian states played a significant role in the economy of the former USSR. In these countries, mainly in Kazakhstan and Uzbekistan, and to a lesser degree in Kyrgizstan, large metallurgical plants and up-to-date military and industrial complexes were built. Nowadays many of these enterprises do not function since they were unable to find or keep a sufficient market for their products in new economic conditions. However in Kazakhstan a significant number of these plants resumed functioning after being transferred to foreign ownership or being placed under foreign management. Virtually the whole of Kazakhstan's heavy industry is currently controlled by international companies, or companies with significant foreign involvement and accountability. Persistent attempts were made in Uzbekistan and Turkmenistan to preserve the production structures left by the Soviet system. However in recent times the governments of these states have accelerated market reforms and instituted far-reaching policies of attracting foreign investors.
The Central Asian market of mass consumer goods is mostly saturated by imported products, especially in Kyrgizstan. However the domestic food industry shows a tendency towards persistent growth, especially in Kazakhstan. This poses serious problems for western companies supplying Central Asian markets with confectioneries, tobacco products, juices and soft drinks. Large-scale marketing studies have been initiated in response. However with increased production, local food industries have increased their demand for imported technologies.
In the second half of 1998 to the first half of 1999, all the Central Asian states of the former Soviet Union fell victims to the world financial crises, though to different extents. Yet, in the second half of 1999, they all officially declared economic improvements, and these were confirmed in their respective GDP statistics. However the relational dynamics of GDP, in directly comparable USD equivalents, turned out to be more complex.
Income levels and purchasing power in Central Asian states, as in all other former Soviet Republics, are not high. Indeed, some of these countries can be regarded as the poorest countries in the world. For instance, the average monthly salary in Tajikistan is less than 10 USD, whereas in Kyrgizstan it is only about 20 USD. Yet at the same time, Kazakhstan has the highest average salary levels among CIS countries with about 110 USD per month. Uzbekistan, with an average monthly salary of 60 USD, is behind Russia and Kazakhstan. The average monthly income per head in Central Asian states is shown hereafter.
Income calculation is based on real rates of local currencies to the US dollar (In Kazakhstan, Kirgizstan and Tajikistan the real rate does not significantly differ from the official rate, while in Uzbekistan it is 2-3 times higher than the official rate, and in Turkmenistan it is 4-5 times higher than the official rate).
However the real incomes in Central Asian states are higher than those indicated in the official statistics. Many residents are occupied in so-called "shuttle" businesses, in street trading, and in black market intermediary transactions. The often quite large incomes of local political elites are not entered into state statistics. Their purchasing power in local markets, and the high demand for expensive and prestigious goods, often surprises foreigners who begin working in Kazakhstan and Uzbekistan.
After the collapse of the Soviet Union, Central Asian states entered into different programmes of political development. The greatest adherence to western standards of democracy was demonstrated by Kyrgizstan. However the patriarchal mentality of the major part of the population had stayed intact throughout the Soviet era, when trends towards tribalism actually intensified after gaining state independence. These mentalities and trends led to the elevation of authoritative tendencies and political destabilization.
In Kazakhstan, however, political and interethnic stability has been preserved and even strengthened during the years of independence. Presidential authority exists in balance with an established multiparty system and a high level of independent mass media.
There is certainly an authoritarian regime in Uzbekistan. However its power was insufficient to prevent the rise of a religious extremism that was manifested in military and terrorist actions. The elimination of Islamic fundamentalism is the highest priority task of the Uzbek government at present. While on the one hand this situation hampers the development of democratic tendencies, on the other hand it encourages further Uzbekistan orientation toward economic, military and political cooperation with the West.
Tajikistan succeeded in stopping the tribal civil war that began after its declaration of independence. Today its authoritarian presidency, supported by military help from Russia, is able to suppress new conflicts.
Turkmenistan is a country with a totalitarian regime based on the cult of presidential personality. In August 2002 President Niazov was declared to be President for life.
However, despite all their existing political differences, the Central Asian states are similar in their aspiration to maximise foreign investment.
It must be emphasised that the populations of Central Asian states are highly educated and qualified. These states can be regarded as typical developing countries, based on indicators of life qualities, and, to some degree, production levels and technologies. However, if judgement is based on the level and the quality of education, and on the networked development of secondary schools, universities and scientific bodies, then these countries, and particularly Kazakhstan, are directly comparable with the developed world. This opens opportunities for implementing different marketing research types and strategies, developing appropriate personnel recruitment for these situations, and using modern research technologies.
Conducting marketing research in Central Asia
1. Choosing the company and determining its capacities.
Ten years ago, when market economies were just emerging from the ruins of the Soviet Union, western companies conducted marketing research in the region exclusively thorough mediators. The mediation stages were normally at least double, or even triple. Western companies assigned research projects to international (American or western European) research companies, which were themselves establishing partnerships with Russian or Turkish research companies, which in turn were searching for executors in the Central Asian states. The responsibilities in such cases were appointed in a standard scheme. The western company usually elaborated research strategies and tools, analysed data and made the final report and presentation. The local executor normally organised fieldwork and entered data, mainly into databases such as the SPSS program, while Russian or Turkish mediatory companies only checked the entered data.
With the development of a local research industry, western clients have frequently excluded the Russian or Turkish mediator stage. Yet there was a degree of hesitation over entrusting the whole research cycle to local companies. As a result, the cost of marketing information from Central Asia was between 5 and 10 times more expensive than if local companies had carried out this research and data handling internally.
The experiences of western companies that have entrusted both the fieldwork and the analytical part of the projects to local companies have been positive. The benefits and reduced costs are quite apparent. The reports compiled by local researchers correspond with internationally accepted standards. Yet the contents of such reports benefit from local researchers being better informed of the specifics of their region, and not omitting any important information.
Before 1998, the Coca-Cola Company considered it possible to utilise local companies only in the field works and data entry aspects of its tracking projects in Kazakhstan, and even that limited aspect was under Russian supervision. Beginning from 1998, our company, then known as BILESIM International Kazakhstan, became an executor of Coca-Cola projects in Kazakhstan. We collected information for Coca-Cola projects and sent it to the American A&V firm that was concurrently developing research tools and strategies.
At the beginning of 2002, the Coca-Cola Company considered it possible to assign the whole research cycle, from the elaboration of research tools, to the preparation of final report and its presentation to BISAM. BISAM successfully completed this project in summer, 2002.
BISAM has also fulfilled complex research for Samsung. This research involved the integration of quantitative and qualitative methods.
Currently there are several local professional research organisations capable of conducting projects to internationally accepted levels. The majority of these companies are concentrated in Kazakhstan.
Those companies with international levels of research capability and experience are members of a professional body, KAPIOR - the Kazakhstani Association of Professional Researchers of Public Opinion and the Market.
Current KAPIOR members consist of BRIF Central Asia, the previously mentioned BISAM Central Asia, the Research Group "Central Asian Project", the Centre of Public Opinion Research CIOM, and the Market Consult Group. The first three organisations mentioned above are members of ESOMAR. The heads and specialists of these companies frequently participate at ESOMAR congresses and seminars. Each of the KAPIOR members is capable of conducting complex qualitative and quantitative research projects for different types of goods and markets. BISAM and BFIF companies have research networks throughout all the Central Asian region.
2. Statistical data. Capacities of Desk Research
The quality of demographic statistics is variable in Central Asian states. The first census since independence in Kazakhstan and Kyrgizstan was conducted in 1999. Numerous publications, based on census data, feature detailed analyses of regions and settlements, and include cross-tabulations of major demographic indicators. The indicators that have not been included in publications may be ordered from statistics agencies of the mentioned countries.
In Tajikistan, the census was conducted in January, 2002. However, when using the materials of the census, a generally low level of statistical registration in this country should be taken into account. The latest census in Turkmenistan took place in January, 1995. There are plans of conducting a selective (5 %) census in 2004.
The most unreliable demographic category, of all the Central Asian state statistics, is income. Collecting information about income through direct questions is ineffective in the post soviet region, due to a significant share of family income being derived from unofficial processes outside the taxation systems. This includes incomes from black market transactions, street trading, wages from tax avoiding funds, and bribery. For these reasons, statistics agencies in Central Asian states began recalculating income levels based on actual expenditures on selected items that had been suggested by the respondents of representative surveys. However, such an approach considerably undervalues the real incomes of wealthy and middle classes, since there are no accounts of the postponed purchases, or savings.
Since 2002 attempts had been made by Kazakhstani statistics agencies to estimate undeclared incomes. However such estimation does not present accurate figures.
In Uzbekistan, and particularly in Turkmenistan, official income and expenditure statistics, and any other monetary indicators, are significantly distorted by the great difference between the official and the real rates of national currencies.
The quality of production, finance, and commerce statistics in different Central Asian states is also variable. In Kazakhstan and Kyrgizstan numerous special collections have been published of monthly analytical reports concerning the social and economic development of these countries. Accurate data of imports, exports, macroeconomic, and sector development can be obtained. However the reliability of official statistics is uneven for different goods and products. For beer and alcohol beverages, for instance, there is a significant share of unregistered production and smuggled products.
Obtaining even minimal data about production, exports, or imports in Uzbekistan, Tajikistan and Turkmenistan demands huge efforts that often involve dealing with unofficial channels and confidential connections.
3. The possibilities and peculiarities of consumer research
Consumer research in Central Asia may be conducted through diverse methods of data collection from traditional face-to-face interviews, to mystery shopping strategies. However door-to-door interviews proved to be the most effective method.
Due to high educational levels it is possible to use questionnaires with structurally complicated questions, transference instructions, and filter questions.
To determine life styles or consumption habits, it is possible to combine questionnaire survey with observations. BISAM, for instance, has conducted home visits with interviewers observing and video-taping the washing procedures, and photographing the house interior.
The acceptable interview length is one hour, though the most efficient interviews are thought to last 30-35 minutes.
The focus group method is popular and very effective. Both urban and rural residents participate readily in focus groups, though the compensation rate is not high - from 1-2 dollars in rural areas, up to 15 dollars in elite districts of large cities.
The recruitment of focus group participants does not have substantial national and local differences. Yet it is important to be aware that, across Uzbekistan, Turkmenistan, Tajikistan, and in south regions of Kyrgizstan, men and women should not be present in the same focus group. In Kazakhstan there are no such restrictions in either urban or rural areas. Telephone surveys are possible in large cities where 70-80% of households are connected. In small cities and rural areas the telephone connection level is extremely low.
Internet communication is growing rapidly in all Central Asian countries. In the cities of Kazakhstan and Kyrgizstan, 8% of families use the Internet, compared with only 2 % in 1999. According to existing projections, approximately 30% of households will be using the Internet in the urban areas of the mentioned countries by 2010. Internet access will be enabled not only through computers, but also through mobile phones. In Kazakhstan mobile phone usage almost doubles each year. Currently, however, online surveys in Kazakhstan and Kyrgizstan are biased in favour of elite consumers or a minority of Internet users.
In general, there are no life style or traditional factors in Central Asia that might hamper market research.
4. Competitive environments and corporate market potential.
Central Asian companies are significantly more experienced in consumer research than in business-to-business, non-consumer, or corporate consumer research. Yet these types of research projects are growing rapidly in number, and corporate market investigations have become an important field of expertise for BISAM.
Problems in the development of these research directions are attributable to the initial phase of uncertainty and inexperience of Central Asian businesses in the post-Soviet era. Not so long ago the initial post-Soviet markets were dominated by a wide variety of crime, including organised racketeering. For this reason, local companies are still very suspicious of any kinds of inquiries about them. Since this tendency is exacerbated by the Soviet legacy of habitually restricting information from the public, it becomes clear why Central Asian enterprises and firms often perceive as confidential even such information as might be beneficial for advertising purposes.
It is very difficult to obtain information on production and sales volume, and on the introduction of new technologies, even though the disclosure of such information has clearly apparent, demonstrable benefits, for the companies concerned.
Despite such systemic problems, BISAM has managed to gain credibility among business circles, and has developed efficient methods of studying corporate entities, producers and sellers. These include interviews of the standardised, semi-structured, and deep dive types. These methods also include the study of enterprises using focus groups at a managerial level. In our study of the bank services available to legal entities, for example, financial directors, and the accountants of transportation and trade companies, interacted successfully in focus groups.
Ñontacts
Membership
BISAM Central Asia
Office 236 221 Bogenbay St. 050026 Almaty Republic of Kazakhstan Phone: 7 (727) 3780523 / 3780551 / 3780583 Fax: 7 (727) 3780531
