Journal. [1966]

Marketing Research in the Philippines
By Noel J. Araneta
Vice-President, Muller & Phsipps
President, Drug Association of the Philippines
Imr mediat e Past Presidert, Philippine M(arketing A4ssociatliion.

T might be desireable to present the status of Philippine Market
Research with specific case histories. Unfortunately, I must admit
that it was impossible to clear many of the most interesting cases.
Of necessity, I shall avoid mentioning any brand, corporate, or professional names. However, it is possible that some classified material
can be made available at a later date, through a direct request from a
foreign client. Such requests can be coursed through the Philippine
Marketing Association, and you can be sure they will be given every
consideration.
In the Philippines, the use of market research has been limited
to some extent by the lack of understanding and confidence between
the businessmen who are end-users and the professional practitioners,
both consultants and researchers. To an even greater extent, market
research has been limited by over-all market conditions.
First, let's take a quick look at the area of misunderstandings:
What do the professionals say about the businessmen end-users?1. Businessmen are reluctant to spend money for professional
independent research or professional consultants;
2. They are smug, cynical, and overly suspicious;
3. They do not understand research techniques;
4. They don't know what to do with information when they get it.
What do the businessmen say of the professional marketing consultants?1. They lack practical experience;
2. They do not maintain research teams;
3. They do not have adequate professional staffs, but must also
rely on part-time professional consultants;
4. They may not be able to control classified information because
of the inter-locking nature of Philippine corporations, the use of part
time professionals drawn from outside their organizations, or through
leaks to friends, relatives, and kumpadres.
What do the businessmen and the marketing consultants say about
the independent professional researchers?
1. They are mere nose-counters;
2. They have no marketing background;
3. Their services are too costly.
As always, there is a little truth behind the adverse criticisms.
The fragment of truth builds rumors which in turn build attitudes
which are not helpful to the development of marketing research.
Now, what are the general market conditions which have delayed
the development of market research.
For almost twelve years the Philippines had exchange and import
controls. The Central Bank fixed the rate of exchange and then determined who should be quota holders and how much dollar exchange
should be allocated to each quota holder; New industrialists and importers, with little or no marketing experience, came into what was
virtually a sellers' market, limited only by the amount of dollar exchange made available. The major concern of most businessmen during
this period was getting more dollar exchang-, -not marketing. This
was not a ready field for market research.
Early in 1962, both the rate of exchange and the granting of exchange were completely decontrolled. The peso was allowed to find its
own level in terms of foreign currencies. This resulted in a decline of
the peso's value and the businessman's purchasing power. Imported
finished goods and raw materials rose in price. Despite cost increases
new importers and industrialists came into the market,-taking advantage of the free exchange situation. As prices climbed slowly, consumer resistance stiffened. Importers and manufacturers alike found
themselves squeezed by tough competition and consumer price-resistance. Advertising and promotion budgets had to be reduced, distribution costs cut, and profits paired down to keep sales levels up. Again,
this provided no ready field for market research,-9 times out of 10
research would just not have fitted into the marketing budget.
Despite the conflicts and the discouraging climate for market
research, every type of research from product development through
to depth studies on consumer motivation has been conducted in the last
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five years. Those of you who are from foreign countries can assure
your principals, or your clients, that the Philippines is prepared to
handle any kind of market research program.
In search of "case" material for this meeting. I called on the Publisher of Marketing Horizons. As always, he proved to be a good
source of information. He provided me with an unpublished article
entitled "Marketing Research Practices in the Philippines." The study
was prepared by Dr. George Saunders and Mlrs. Aurora Yap, M.A.
(Marketing) from data compiled from a direct-mail questionnaire.
Because of the limited number of firmns responding, the researchers
consider the study a "Pilot Test". Nevertheless, it produced some very
interesting information ---enough to encourage a full-scale test, with
better cooperation from respondents, in the future. The pilot test
showed that almost every type of market research has been practiced
to some degree. It also showed that many firms are doing their own
research work,-with and without the aid of consultants. Few availed
themselves of the services of professional, independent research organizations. The study pointed out that while in the United States
firms with gross sales of $5,000,000 per year, or less, do little or no
market research, most of the Philippine respondents had gross sales
under P20,000,000 (rate of exchange P3.9 to $1). Now even though
the percentage expended for research averaged out at about 1/ 2 of 1%~j,,
this is encouraging for it indicates that market research budgets should
increase substantially when business conditions warrant. Among the
responding firms there were no wholesalers or distributors. So just
to encourage the market researchers present let me add the distribution
organization that I work for placed seven, relatively small, market
research studies with independent researchers in 1963,-showing that
there is even a little research budgeting in the distribution area, too.
Both marketing and marketing research are faced with some
obvious practical problems. This is a country of hundreds of islands,
home to a wide variety of ethnic groups. These present transportation,
communication, and sociological factors which effect costs and research
techniques. In the area of communication, the many dialects and
languages create special problems,-particularly when there is not
even an accurate measure of the degree of literacy in any of the groups.
This is of course an area for market research, but unfortunately still
an unexplored area. Sociological factors are also relatively undefined.
In short, there are a number of basic things that must be worked with
that are inadequately understood. Transportation is fairly good, but
the islands make it costly. So there is real difficulty in communicating
nationally at the consumer level. Fortunately, the consumer is cooperative and fairly straightforward in expressing likes and dislikes
and this has helped the professionals to overcome some of the obstacles.
Unlike the consumer, retailers are not cooperative from the marketresearch point of view. They tend to be secretive, but even worse is
their disregard for proper sales and turnover records. They may not
be evading taxes, but they are certainly evading the collection of useful
marketing data. This means that the collection of marketing information at the retail level must be handled in special ways,-all expensive.
So the high cost of maintaining store panels has eliminated this source
of information for all but a few of the largest marketing organizations
in the country.
(In 1965, a few drug manufacturers and an independent research
organization decided to pioneer a National Retail Drug Panel. The
research organization provided services at cost while the drug firms
provided a limited budget to explore the feasability of getting accurate
"retail" sales indicators out of the maze of retail drug store sales, recorded and unrecorded, at both wholesale and retail. Despite the fact
that this national survey will, if feasible, indicate sales totals and turnover by brands, which should be of immense value to retailers as a
guide to stock maintenance levels and expected sales by brands, drug
retailers indicate little interest and no inclination to cooperate in terms
of either service or in financing the project.)
5 THE JOURNAL OF THE AMERICAN CHAMBER OF COMMERCE
6 April, 1966