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Titoo Ahluwalia,

Chairman, ACN-ORG-

MARG:For critical mass

1960

ORG, an audit researcher, set up in India

1983

MARG, a custom researcher, set up in India

1997

ORG merges with MARG

2000

Netherlands-based VNU takes over ORG-

MARG

2001

VNU takes ov er audit-maj or AC Nielsen

worldwide

AC Nielsen and ORG-MARG s tart integrating

in India

SYNERGIES

Audi t and customised products together offe rfull-spectrum services

Retail a udit, techni cally upg raded, serves asbasis for custom work

AC Niel sen an d ORG-MARG stayindepend ent, for conflicting b usiness

PITFALLS

Market may see ACN and ORG-MARG asone and the same

Culture clash may m ake actual integration

AUGUST 18, 2002

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Durable DefianceThe Indian consumer market

for durables has defied the

direst predictions of market

cassandras. Category afte r

category, from CTVs to

refrigerators, is showin g

buoyancy in a n otherwise

gloomy scenario. Is this a

market trend-or just the resultof some smart marketing by a

few players? An investigation.

Question OfReliabilityForeign tour operators are fed

up with India, and are fast

deleting 'India'-specific pages

from their websites and

brochures. Could this be

happenin g? Well, passenger

traffic is down, and could fal l

further. The reasons are

many. Among them, what's

seen as an uninviting stance

Numerical AdvantageThe coming together of ORG-MARG and AC Nielsen India has created the country's first real re search

giant. That doesn't mean it's all-smile s down the aisle, though.

By Shail esh Dobhal

Statistically, it takes two to tango, but three to plot a trend. Dots, that is.Let's count. In 1997, ORG merged with MARG, to gain leaders hip of the

Indian m arket research (MR) industry. One. This year, ORG-MARG, now

owned by the Dutch group VNU, is tying the slow knot with ac Nielsen

India, also VNU-owned, to create an MR behemoth in an industry worth

Rs 310 crore in billings. Two. The pharma tracker IMS Health could be

next. Three?

"Well," says Kanwal Mohan Singh 'Titoo' Ahluwal ia, Chairman of the Rs

122-crore ac Nielsen ORG-MARG, "the two companies have talked toeach other, but nothing, absolutely nothing is on the cards yet."

The casual observer may join the three dots to read 'consolidation'. But

this is not about tonnage capacity, it's about information. Which is

perhaps why Ahluwalia never fails to earmark the pluralism that

continues to characterise the market. "In India," he says, "the top two account for well over 60

per cent of the entire MR cake." The other player being the WPP Group's Rs 71-crore IMRB-

which he helped start in 1971, incidentally. The two are rivals, for most practical purposes, and

no single player has an overwhelming share of the Indian MR market (See The Indian

Landscape).

Still, there's no obscuring the fact that ACN-ORG-MARG is India's sole supplier of retail audit

data (ORG's original core). It has also got a strong hold over TV ratings, with its half-owned

INTAM peoplem eter system now a data-provider to tam, ever since India's two rival ratingsystems started operating together, to enlarge the sample size and sel l cohesive ratings to

media planners. Ownership of the infrastructure remains separate, but as far as marketers are

concerned, its now a s ingle-window data shop.

Even in heal th audits , ACN-ORG-MARG has over two-

thirds of the domestic busines s (this even without

IMS Health, the global segment leader). Where the

firm faces competition (mostly from IMRB and NFO-

MBL), is in customised MR projects for clients

(MARG's original forte), which account for nearly half

the market and Rs 59 crore of Ahluwalia's topline.

AC Niels en gives the whole set-up a fillip, spelling

not just technology infusion, but numerical advantageas well. "Once the economy started opening in the

early 1990s," says Ahluwalia, "it was clear that even

India would also go the way of other markets, where

critical mass would play a crucial role."

Multiple Sampling

A wider sample-spread amounts to having that many

more tentacles in the market. The more tentacles,

the better the firm's ability to take the market's pulse.

As s imple as that. The other thing assured by the

quasi-merger, is size. As in any business , the bigger

the better.
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rather thorny

May face attack for monopoli stic clout i nsome research fields

"We have not heard

anything new that the

merger w ill bring to the

market"

Jenny Abraham,

Managi ng Director, NFO-

MBL

"A full-time large field-force does not

necessairly mean good

of the Indian authorities.

More Net Specials

End of story, then? Not qui te. It may just be the

beginning. What about focus, for instance? Isn't ACN-

ORG-MARG turning into alphabet soup-or will ac

Niels en overshadow ORG-MARG? Or are these to

function as separate brands? What about client-conflict?

Good ques tions. Ideal ly, ACN-ORG-MARG would like to have it both ways. That is, retain the

competing clients of ac Nielsen and ORG-MARG, with the two doing separate custom work-

while also gaining from the synergies of both, which lie mainly in audit work.

The overall idea is to offer a full-spectrum s uite of services, with audit data being used as a

basis for higher-order jobs, custom-des igned to solve specific problems. In other words, itwants its menu card to resemble a three-in-one gatefold, with basic pulse-reading services as

the convergent centre-card, flanked by ac Niels en and ORG-MARG's rival offerings (for

conflicting clients).

Sounds well-arched on paper. But are things really going by plan?

Market insiders say that two entities have not really been competing for

custom bus iness , at least in Delhi, for about a year now. So, is the

separation rather too subtle to attract rival customers? And what about

overlaps? Surely, the top management would want to pare these down

for the sake of efficiency.

"We believe the dual-brand s trategy will work very well," says Partha

Rakshit, Managing Director, ac Nielsen India Research Services, and

member of the integration committee. Still, there are signs that VNU istoying with the idea of having jus t one brand in India, eventually.

How long this would take is anybody's guess. Which brand VNU might

opt for, though, is less of a wonder, given that ORG-MARG already

seems to be getting eclisped as an audit brand, with its FMCGs retail

audit rechristened ac Nielsen Retail Audit.

Ahluwalia, however, doesn't want too much to be read into this, saying

that ACN is strong in FMCGs, while ORG-MARG is big in financial, pharma and automobile

research. It all adds up to a complementary co-existence, in his view.

Then, there's internal integration to worry about, an iss ue that still lingers from the 1997 m erger.

In fact, employees stil l mostly identify themselves as being 'ORG', 'MARG' or 'ac Nielsen'people. "Yes," admits Ahluwalia, "historical baggage has not been completely shed and cultural

differences are sometimes still an issue."

Some old-timers, for example, remain rather grumpy. "The ACN protocol is being thrust down

across the product spectrum," groans a s enior manager who decided to quit recently.

As for focus, ACN-ORG-MARG is looking at audit and customised, both. The unifying element?

Well, MR is MR, an information business where credibility is the biggest asset and bias the

biggest danger. The mission is to guard the integrity of the discipline, by presenting clients with

the closest possible approximation of market reality (if not reality itself).

Market Reading

The rest of the industry has its own take on the quasi-merger. AlokShanker, Chief Executive of the Rs 15-crore Blackstone Market Facts

India, expects ACN-ORG-MARG to concentrate on retail, "with

investments in new technology et al", as it does worldwide.

"That's not true," reacts Rajiv Inamdar, Pres ident, ACN-ORG-MARG,

chief of customised business, "In the Asia-Pacific region, ACN is No 1

in customised research, and its customised business is as big as

syndicated retail."

Maybe, but will it reshape the industry's dynamics? Not significantly,

feels Jenny Abraham, Managing Director of the Rs 27-crore NFO-MBL.

"Both companies have been here for a long time, and we have not

heard of anything new or different that the merger will bring to the
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quality data"

Thomas Puliyel,

President, IMRB

market," she says.

If anything, some al lied services will be spun-off into loosely

independent units (for parent VNU), just as TV ratings are now part of Nielsen Media Research

(NMR) in India, which prompted the exit of old media research hand Ashok Das last year from

ORG-MARG.

The firm shut down its rural consumer panel in March 2001, and quit the Indian Readership

Survey (IRS) in late 2001, partly because ACN was involved in the rival National Readership

Survey (NRS) and partly because it was losing money.

Better to do what one's good at, better. This explains the money being pumped intomodernis ing its retail audit, which will now use handheld scanners and the like, and will track

new metrics too.

Marketers are demanding electronic real-time data feed, and going by Western standards,

Indian market data continues to be slow and s ketchy. This must change.

Modernisation has its costs. The firm has some 1,700 employees, nearly three times IMRB's,

thanks to the manual retail operations. "Well," says Thomas Puliyel, President, IMRB "this is the

cross that he (Titoo) has to bear, for a full-time large field-force does not necessarily mean

good-qual ity data."

Safety In Numbers

On efficiency, ACN-ORG-MARG still has to get itself into shape. That's another reason, perhaps,why ACN-ORG-MARG's dominance doesn't seem to worry rivals much. "Our real supplier is the

respondent, and it doesn't matter to him if one company is bigger then the other," says B.

Narayanaswam y, Executive Director of Rs 16-crore Indica Res earch.

Also, it's not as if ACN-ORG-MARG has everything wrapped up. It doesn't have a household

panel, for example, which is IMRB's monopoly here, despite ACN being a big player in this

arena globally.

But how are clients responding to ACN-ORG-MARG's growing clout? "It is not an issue with the

indus try that they alone control retail audit data," says Anand Bhardwaj, Executive Vice Pres ident

(Marketing & Marketing Services), Electrolux Kelvinator. Well, to the firm 's credit, even marketers

such as LG Electronics, which were disputing ORG-GFK retail data, have come round to

become customers.

Also, the Indian market is forever sprouting MR hotshops. This acts as a guarantee agains t

monpolis tic pricing tendencies, if any. If ACN-ORG-MARG charges a premium, it's for quality

and value addition.

Don't take that las t part lightly. Sure, MR can't detect an asteroid on coll is ion cours e with the

Earth. But there's a lot that somebody like Ahluwalia, a man who has already been at the helm

of four of the country's top MR firms, s tores in his head-analysed and dis tilled. With some 12

exabytes of data being gurgitated by the world every year, what clients value m ost is the man's

abili ty to see through the haze.

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