2011 CEO Outlook Report Final

Panel Report
Global CEO Business Outlook Survey 20112012
Reference code: ICDR1250 Published: August 2011
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TABLE OF CONTENTS
TABLE OF CONTENTS
1 Introduction .................................................................................................................................6
1.1 What is this report about? ............................................................................................................. 6 1.2 Methodology ................................................................................................................................ 6 1.3 Profile of survey respondents........................................................................................................ 8
2 3
Executive Summary ...................................................................................................................9 Industry Dynamics ...................................................................................................................11

3.1 Revenue growth expectations ..................................................................................................... 11
3.1.1 3.1.2 Revenue growth expectations by region ............................................................................................... 13 Revenue growth expectations by turnover............................................................................................ 14
3.2 Future developments in business structure.................................................................................. 16 3.3 Merger and acquisition activity predictions................................................................................... 17
3.3.1 3.3.2 Merger and acquisition activity predictions by region ............................................................................ 18 Merger and acquisition activity predictions by company turnover .......................................................... 19
Market Growth Outlook............................................................................................................20

4.1 Demand in emerging markets ..................................................................................................... 21
4.1.1 4.1.2 4.2.1 4.2.2 Demand in emerging markets by region ............................................................................................... 23 Demand in emerging markets by company turnover ............................................................................. 24 Growth expectations in developed countries by region ......................................................................... 26 Growth expectations in developed countries by company turnover ....................................................... 27
4.2 Growth expectations in developed countries ................................................................................ 25
Threats and Opportunities ......................................................................................................28

5.1 Leading business concerns for 20112012.................................................................................. 28
5.1.1 5.1.2 5.2.1 5.2.2 Leading business concerns for 20112012 by region ........................................................................... 30 Leading business concerns for 20112012 by company turnover ......................................................... 30 Actions to maintain and secure buyer business by region ..................................................................... 32 Actions to maintain and secure buyer business by turnover.................................................................. 33
5.2 Key supplier actions to maintain and secure buyer business ........................................................ 31
Procurement Dynamics ...........................................................................................................34

6.1 Annual procurement budgets ...................................................................................................... 35
6.1.1 6.1.2 6.2.1 6.2.2 Annual procurement budgets by region ................................................................................................ 36 Annual procurement budgets by company turnover .............................................................................. 37 Planned change in procurement expenditure by region ........................................................................ 39 Planned change in procurement expenditure by company turnover ...................................................... 40
6.2 Planned change in procurement expenditure ............................................................................... 38
6.3 Variations in regional supplier prices ........................................................................................... 41
Global CEO Business Outlook Survey 20112012 ICD Research. This product is licensed and is not to be photocopied
Page 2 Published: August 2011
TABLE OF CONTENTS
6.3.1 6.3.2
Variations in regional supplier prices by region ..................................................................................... 42 Variations in regional supplier prices by company turnover................................................................... 43
Procurement Behaviors and Strategies ................................................................................44

7.1 Critical success factors for supplier selection ............................................................................... 45 7.2 E-procurement ........................................................................................................................... 46
7.2.1 7.2.2 E-procurement by region ..................................................................................................................... 48 E-procurement by company turnover ................................................................................................... 49
Marketing Spend Activity ........................................................................................................50

8.1 Annual marketing budgets .......................................................................................................... 51
8.1.1 8.1.2 8.2.1 8.2.2 8.2.3 8.3.1 8.3.2 Annual marketing budgets by region .................................................................................................... 52 Annual marketing budgets by company turnover .................................................................................. 53 Planned change in marketing expenditure levels by region................................................................... 55 Planned change in marketing expenditure levels by company turnover ................................................ 57 Planned change in marketing expenditure levels vs. revenue growth expectations ............................... 58 Planned investment in marketing and sales technologies by region ...................................................... 60 Planned investment in marketing and sales technologies by company turnover .................................... 61
8.2 Planned change in marketing expenditure levels ......................................................................... 54
8.3 Future investment in marketing and sales technology .................................................................. 59
Marketing and Sales Strategies .............................................................................................. 62

9.1 Future investment by media channel ........................................................................................... 62
9.1.1 9.1.2 9.2.1 9.2.2 Future investment by media channel by region .................................................................................... 64 Planned change in marketing spend by company turnover ................................................................... 65 Marketing agency selection criteria by region ....................................................................................... 67 Marketing agency selection criteria by company turnover ..................................................................... 68
9.2 Marketing agency selection criteria ............................................................................................. 66
10 Appendix....................................................................................................................................69
10.1 Methodology .............................................................................................................................. 69 10.2 Contact us ................................................................................................................................. 69 10.3 About ICD Research .................................................................................................................. 69 10.4 Disclaimer .................................................................................................................................. 69
TABLE OF CONTENTS
LIST OF FIGURES
Figure 1: Revenue Growth Optimism (%), 2011 .......................................................................................................................................................... 12 Figure 2: Revenue Growth Optimism by Region (%), 2011 ......................................................................................................................................... 13 Figure 3: Revenue Growth Optimism by Turnover (%), 2011...................................................................................................................................... 14 Figure 4: Company Revenue Growth Optimism: Cross-Industry Comparisons (%), 2011......................................................................................... 15 Figure 5: Key Expected Changes in Business Structure (%), 2011 ............................................................................................................................ 16 Figure 6: Merger and Acquisition Activity Expectations by Region (%), 2011 ............................................................................................................ 18 Figure 7: Merger and Acquisition Activity Expectations by Company Turnover (%), 2011 ........................................................................................ 19 Figure 8: Top Ten Growth Regions (%), 2011 ............................................................................................................................................................. 20 Figure 9: Demand in Emerging Markets (%), 2011 ...................................................................................................................................................... 22 Figure 10: Demand in Emerging Markets by Region (%), 2011 .................................................................................................................................. 23 Figure 11: Demand in Emerging Markets by Company Turnover (%), 2011 .............................................................................................................. 24 Figure 12: Growth Expectations in Developed Countries by Region (% Increase Responses), 2011 ..................................................................... 26 Figure 13: Growth Expectations in Developed Countries by Company Turnover (% Increase), 2011..................................................................... 27 Figure 14: Leading Business Concerns (%), 20112012 ............................................................................................................................................ 29 Figure 15: Actions to Maintain and Secure Buyer Business (%), 2011 ....................................................................................................................... 31 Figure 16: Actions to Maintain and Secure Buyer Business by Company Turnover (%), 2011 ................................................................................. 33 Figure 17: Annual Procurement Budgets in US$ (%), 2011 ........................................................................................................................................ 35 Figure 18: Annual Procurement Budgets in US$ by Region (%), 2011....................................................................................................................... 36 Figure 19: Annual Procurement Budgets in US$ by Company Turnover (%), 2011..................................................................................................... 37 Figure 20: Expected Change in Total Procurement Expenditure by Region (%), 2011 ............................................................................................. 39 Figure 21: Expected Change in Total Procurement Expenditure by Company Turnover (%), 2011 .......................................................................... 40 Figure 22: Variations in Regional Supplier Prices (%), 2011 ....................................................................................................................................... 42 Figure 23: Variations in Regional Supplier Prices by Company Turnover (%), 2011 ................................................................................................. 43 Figure 24: Critical Success Factors for Supplier Selection, 2011................................................................................................................................ 45 Figure 25: EProcurement: Level of Implementation (%), 2011 .................................................................................................................................. 47 Figure 26: EProcurement: Level of Implementation by Region (%), 2011 ................................................................................................................ 48 Figure 27: EProcurement: Level of Implementation by Company Turnover (%), 2011 ............................................................................................ 49 Figure 28: Annual Marketing Budgets: Airports Industry Suppliers (%), 20092011.................................................................................................. 51 Figure 29: Annual Marketing Budgets by Region (%), 2011........................................................................................................................................ 52 Figure 30: Annual Marketing Budgets by Company Turnover (%), 2011 .................................................................................................................... 53 Figure 31: Planned Change in Marketing Expenditure (%), 2011 ............................................................................................................................... 55 Figure 32: Planned Change in Marketing Expenditure Levels by Region (%), 2011 .................................................................................................. 56 Figure 33: Planned Change in Marketing Expenditure Levels by Company Turnover (%), 2011 .............................................................................. 57 Figure 34: Change in Marketing Expenditure Levels by Revenue Growth Expectations (%), 2011 ............................................................................ 58 Figure 35: Planned Investment in Marketing and Sales Technologies by Region (%), 2011.................................................................................... 60 Figure 36: Planned Investment in Marketing and Sales Technologies by Company Turnover (%), 2011................................................................. 61 Figure 37: Future Investment by Media Channels (%), 2011 ...................................................................................................................................... 63 Figure 38: Future Investment by Media Channels by Region (% Increase Responses), 2011 .................................................................................. 64 Figure 39: Future Investment by Media Channel by Company Turnover (% Increase Responses), 2011 ................................................................ 65 Figure 40: Marketing Agency Selection Criteria (%), 2011 .......................................................................................................................................... 66 Figure 41: Marketing Agency Selection Criteria by Region (%), 2011 ........................................................................................................................ 67 Figure 42: Marketing Agency Selection Criteria by Company Turnover (% ), 2011 ................................................................................................... 68
TABLE OF CONTENTS
LIST OF TABLES
Table 1: Total Industry Survey Respondents by Industry, 2011 .................................................................................................................................... 8 Table 2: Respondents by Global Company Turnover (%), 2011 ................................................................................................................................... 8 Table 3: Respondents by Region (%), 2011................................................................................................................................................................... 8 Table 4: Revenue Growth Optimism (%), 2011............................................................................................................................................................ 12 Table 5: Revenue Growth Optimism (%), 2011............................................................................................................................................................ 13 Table 6: Revenue Growth Optimism by Turnover (%), 2011 ....................................................................................................................................... 14 Table 7: Merger and Acquisition Activity Expectations (%), 2011 ............................................................................................................................... 17 Table 8: Merger and Acquisition Activity Expectations by Region (%), 2011.............................................................................................................. 18 Table 9: Merger and Acquisition Activity Expectations by Company Turnover (%), 2011.......................................................................................... 19 Table 10: Demand in Emerging Markets (%), 2011 ..................................................................................................................................................... 22 Table 11: Growth Expectations in Developed Countries (%), 2011 ............................................................................................................................ 25 Table 12: Leading Business Concerns (%), 20112012.............................................................................................................................................. 29 Table 13: Leading Business Concerns by Region (%), 20112012 ............................................................................................................................ 30 Table 14: Leading Business Concerns by Company Turnover (%), 20112012 ........................................................................................................ 30 Table 15: Actions to Maintain and Secure Buyer Business by Region (%), 2011 ...................................................................................................... 32 Table 16: Annual Procurement Budgets in US$ (%), 2011.......................................................................................................................................... 35 Table 17: Annual Procurement Budgets in US$ by Company Turnover (%), 2011 .................................................................................................... 37 Table 18: Expected Change in Total Procurement Expenditure (%), 2011 ................................................................................................................ 38 Table 19: Variations in Regional Supplier Prices (%), 2011 ........................................................................................................................................ 41 Table 20: Variations in Regional Supplier Prices by Region (%), 2011 ...................................................................................................................... 42 Table 21: Variations in Regional Supplier Prices by Company Turnover (%), 2011 .................................................................................................. 43 Table 22: EProcurement: Level of Implementation (%), 2011 ................................................................................................................................... 46 Table 23: Procurement Budget Increase vs E-Procurement (%), 2011 ...................................................................................................................... 47 Table 24: EProcurement: Level of Implementation by Company Turnover (%), 2011 ............................................................................................. 49 Table 25: Annual Marketing Budgets (%), 2011........................................................................................................................................................... 51 Table 26: Annual Marketing Budgets by Region (%), 2011 ......................................................................................................................................... 52 Table 27: Annual Marketing Budgets by Company Turnover (%), 2011 ..................................................................................................................... 53 Table 28: Planned Change in Marketing Expenditure (%), 2011 ................................................................................................................................ 54 Table 29: Planned Change in Marketing Expenditure Levels by Region (%), 2011 ................................................................................................... 56 Table 30: Planned Change in Marketing Expenditure Levels by Company Turnover (%), 2011 ............................................................................... 57 Table 31: Planned Investment in Marketing and Sales Technologies (%), 2011....................................................................................................... 59
INTRODUCTION
1 Introduction
1.1 What is this report about?
This report is the result of an extensive survey drawn from ICD Researchs exclusive panel of C-level respondents consisting of CEOs and other senior level respondents such as managing directors and board members from leading companies. As countries emerge from the effects of recession, this report provides the reader with a definitive analysis of the industry outlook and explores how opportunities and demand are set to change in 20112012. This report not only grants access to the opinions and strategies of business decision makers and competitors, but also examines their actions surrounding business priorities. The report also provides access to information categorized by region and turnover. The report also examines: Revenue growth expectations: projects the revenue growth expectations of major industry stakeholders Market-specific growth opportunities: identifies top growth regions to enable companies to allocate their marketing activities and budgets effectively Mergers and acquisitions: analyzes expectations surrounding merger and acquisition (M&A) activity and core influencing factors Leading business concerns: identifies leading business concerns and subsequent efforts to manage them Procurement expenditure trends: tracks companies procurement budgets and forecasts possible changes in spend Factors for supplier selection: outlines critical factors influencing supplier selection Marketing expenditure trends: tracks the marketing budgets of supplier companies and forecasts possible changes in expenditure Key factors for marketing agency selection: provides insights into the marketing needs of supplier company competitors
1.2
Methodology
All ICD reports are rigorously sourced and created according to a comprehensive three-stage methodology: 1) Online Survey The research source in this report is based on the surveyed opinions and forward-looking expectations of CEOs, board members and other C-level respondents. ICD Research conducted an extensive online survey during March 2011 taken by 1,285 CEOs, board members and other C-level respondents. These respondents are drawn from the ICD Research Industry Insight Panel, an exclusive industry panel covering over 2 million business professionals worldwide. Respondents represent a dedicated professional community where participants are surveyed in context, drawn from ICD Researchs industry magazine and media communities, and delegate relationships across our global industry conference and forum events. These business communities are made up of highly engaged, qualified professionals, who rely on ICD
INTRODUCTION Researchs flagship media brands in their respective markets, enabling ICD Research to access knowledgeable and informed industry opinion. 2) Secondary Research Collection of the latest market-specific data from a wide variety of respected third-party industry sources: Government statistics Industry associations Company filings Broker reports International organizations Industry news websites Industry reports 3) Data Analysis and Report Writing The results of this research have been analyzed and evaluated by ICD Researchs in-house industry-specific analysts. The analysts research and analysis expertise, marketing pedigrees, market research and consulting backgrounds, and ongoing continuous education on leading macro-economic and industry news and events have shaped their analytical judgments and conclusions of the industry opinions gathered. 4) Quality Control A) Templates Detailed process manuals Standardized report templates and accompanying style guides Advanced data analysis and survey programming tools QC checklists B) QC Process Randomized spot checks on data integrity Peer review Senior-level QC
INTRODUCTION
1.3
Profile of survey respondents
Our in-depth industry survey was completed by 1,285 C-level respondents containing CEOs and other senior level respondents such as managing directors and board level respondents from industries shown in the table below: Table 1: Total Industry Survey Respondents by Industry, 2011
Industry type Transport Pharmaceutical Power Interior Design Mining Medical Device Airports Hotel and Cruise Food and Beverage Packaging Aerospace Construction IT Overall N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research % respondents 14% 13% 10% 10% 9% 7% 6% 6% 6% 5% 5% 5% 4% 100%
Table 2: Respondents by Global Company Turnover (%), 2011

Company turnover Less than US$100 million US$100 millionUS$1 billion More than US$1 billion Overall Source: ICD Research Industry Survey 2011 Percentage of respondents 91% 7% 2% 100% ICD Research
Table 3: Respondents by Region (%), 2011

Region North America Europe Asia-Pacific Rest of the World Overall Source: ICD Research Industry Survey 2011 Percentage of respondents 23% 41% 21% 15% 100% ICD Research
EXECUTIVE SUMMARY
2 Executive Summary
The global industry is confident about revenue growth in 2011 Overall, 63% of C-level respondents are more optimistic about revenue growth for their company over the next 12 months than the previous 12 months. Strong growth in emerging markets such as Eastern Europe has contributed to an increase in revenue optimism. The need to expand customer base and invest in innovative technologies are cited as the major factors behind the rise in revenue growth optimism. The top three key expected changes for 2011 are to expand in current market, introduction of new products and services and expand abroad. Mergers and acquisitions are expected to increase in 2011 Global industry executives expect to see increased levels of consolidation, with 61% of respondents predicting that there will be either a significant increase or an increase in M&A activity over the next 12 months. Improving operational efficiency to attain economies of scale, increases in geographical presence and business competence, and increases to customer bases for better return on investment (ROI) are the key drivers for M&A activity. A high proportion of respondents expect that, due to market uncertainty, small companies may have found it difficult to sustain credit lines and will look to larger companies for support. For instance, a C-level respondent an airport operator company based in North America states: Repeated losses due to the economy have made consolidation and mergers the only sensible business solution for many industries. At this point, it is not so much a matter of business success that is key, but having a revenue source that is stable. China, India and Brazil are the most important emerging markets Respondents identify China to be the most important region for growth among emerging markets, along with India and Brazil. Chinas growth is expected to increase in 2011 due to strong market potential, strong economic growth and sufficient labor resources. For example, CSR Zhuzhou Electric Locomotive Research Institute Co., Ltd., a subsidiary of CSR Corporation Ltd. (CSR), signed an agreement with Wabtec Corporation, which is based in the US, in May 2011. Under the agreement, the company will manufacture braking systems for rail cars. The US, Singapore, Taiwan and Hong Kong, Australia, Germany and the UK are identified as the most important regions for growth among developed regions. Singapore acts as a significant trading base for the South-East Asian region, with low corporate taxes and strong intellectual property rights attracting companies to set up their operations in the region. For example, in April 2011, Pan Pacific Hotels & Resorts announced that it will launch its flagship Parkroyal Hotel in Singapore in 2012.
EXECUTIVE SUMMARY Companies face key challenges in market uncertainty, responding to pricing pressure and cost containment Market uncertainty, responding to pricing pressure and cost containment are the most immediate business concerns for the global industry. Market uncertainty is considered a leading concern by most companies due to falling or limited demand that has increased price competition between companies. With the aim of increasing revenues, business models have to be reworked to avoid the prospect of markets being lost. For example, major European home decoration companies such as Saint-Gobain, DIY and B&Q have closed retail stores in prominent cities in China due to low individual demand. Many companies are forced to innovate and differentiate products. Average annual procurement budget is expected to increase in the next 12 months The average size of the global annual procurement budget for respondents in 2011 is expected to be US$26 million, with Asia-Pacific leading with US$47 million. Procurement budgets are expected to rise over the next 12 months by an average of 11%, and companies are also expected to invest in developing advanced technologies to reduce costs and enhance brand value. Procurement expenditure is high in Asia-Pacific due to strong economic growth, rising affluence and a surge in demand for raw materials, which have compelled companies to invest in new technologies and sustainable measures. For example, Harmony Gold Mining Company Ltd., based in South Africa, is considering diversifying its mining operations into Indonesia and the Philippines. Average marketing budgets are expected to rise by 10% in 2011 as compared to 2010 The average size of the global, annual marketing budget is estimated to be US$1.2 million in 2011 , with the Rest of the World leading with US$1.2 million. ICD Researchs industry survey revealed that, on average, global industry suppliers marketing budgets are expected to rise by 10% over the next 12 months. The generation of new customers, introduction of new products, increased new contract orders, brand awareness and support and expansion of current markets are considered to be the most important objectives to achieve through the increased budgets. As we are planning to expand our business, publicity and industry awareness is crucial for our company. Therefore, our marketing department is under pressure to reveal its presence across the industry, quotes a board-level executive of a packaging industry supplier company in the AsiaPacific region. Market intelligence research, client acquisition solutions and business performance management solutions will dominate future investment Market intelligence research, client acquisition solutions, business performance management solutions and CRM solutions emerged as the most important areas of investment among marketing and sales solutions activities in 2011. New media such as email and newsletters, corporate and brand websites and online content sites have increased in importance among C-level respondents. The rapid development of online social networking channels such as Twitter, LinkedIn and Facebook provides new opportunities for respondents to effectively communicate messages between industry partners to build networks.
INDUSTRY DYNAMICS
3 Industry Dynamics
In this chapter, executives provide their future expectations for the growth prospects of their companies, as well as insights into the type and likelihood of structural changes in the competitive landscape in terms of mergers and acquisitions and business structure. This provides a snapshot of the business outlook for the industry.
Key Findings:
Across the industry, 63% of respondents are more optimistic about revenue growth for their companies over the next 12 months. Of all respondents, 74% from the Rest of the World, 65% from Asia-Pacific are optimistic about revenue growth over the next 12 months, compared to 63% in the North America and 59% in Europe. Respondents from medium and large sized companies are more optimistic about revenue growth than smaller companies in the next 12 months. The top three key expected changes for 2011 are expand in current market, introduction of new products and services and expand abroad. Overall, respondents from all industries expect to see increased levels of consolidation, as 61% predict an increase in the level of M&A activity over the next 12 months. The majority of respondents from North America and Europe expect an increase in M&A activity during the next twelve months. From large companies, 82% of respondents expect an increase in M&A activity during the next twelve months, while 74% from medium-sized companies and 60% from small companies anticipate similar trends.
3.1 Revenue growth expectations

Overall, 63% of respondents are more optimistic about revenue growth for their company over the next 12 months than the previous 12 months. A further 24% are neutral, while 9% of respondents are less optimistic about their companys revenue growth prospects. Strong growth in emerging markets such as Eastern Europe has contributed to an increase in revenue optimism. For example, Imtech, a technical services provider in Europe, has received high order inflow for high-tech traffic solutions in Russia, Lithuania and Romania. The need to expand customer base and invest in
INDUSTRY DYNAMICS
innovative technologies are cited as the major factors behind the rise in revenue growth optimism for industry. The expansion of product offerings to increase sales is also considered to be a prime factor. In addition to this, the revision of business policies, management changes, steps taken by companies to rationalize costs, favorable government policies and commodity price stability have all led to increased optimism levels among industry respondents. For example, the Australian governments plan to reduce the headline rate of tax from 40% to 30% has proved to be immensely beneficial for companies that either operate in Australia or plan to expand their businesses into the country. In an interesting development, many major companies are shifting their research and manufacturing activities to the Asia-Pacific region, and as a result, markets in China, South Korea, India, Vietnam and Indonesia are set to grow at a healthy rate despite regulatory constraints. A comparatively large and increasing population, coupled with increasing disposable income, makes the Middle East and Asian countries attractive for investment. Table 4: Revenue Growth Optimism (%), 2011
Growth optimism More optimistic Neutral Less optimistic Don't know Overall N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research % Respondents 63% 24% 9% 2% 100%
Figure 1: Revenue Growth Optimism (%), 2011

Question: Are you more or less optimistic about revenue growth for your company over the next 12 months compared to the previous 12 months?
4%
9%
More optimistic
24% 63%
Neutral
Less optimistic
Don't know
Source: ICD Research Industry Survey 2011
ICD Research
INDUSTRY DYNAMICS
3.1.1 Revenue growth expectations by region Of all respondents, 74% from the Rest of the World and 65% from Asia-Pacific are optimistic about revenue growth over the next 12 months, compared to 63% in North America and 59% in Europe. Optimism in Europe is slightly lower than other regions due to the recent debt crisis, although Europe is expected to move towards recovery in 2011 with various strategic moves which are either in the process of implementation or have already been implemented earlier this year. For example, in March 2011, the UK government announced a freeze on air passenger duty (APD) until 2012 to increase demand for long-haul flights. On a similar note, companies from other sectors are also optimistic about increases in their revenue growth outlooks. For example, Kinnarps, a leading supplier of interior products in Sweden, has obtained the largest single-order contract from Princess Noura Bint Abdulrahman University in Riyadh, Saudi Arabia, to deliver thousands of desk tables, chairs, easy chairs, coffee tables and more. Strong growth in emerging markets such as India and China has also contributed to an increase in revenue optimism. For example, Advanced Technologies, which is based in the US, has doubled the production capacity of its water technologies manufacturing plant in Wuxi New Zone in Eastern China. Table 5: Revenue Growth Optimism (%), 2011
Growth optimism More optimistic Neutral Less optimistic Don't know Overall North America 63% 22% 9% 6% 100% Europe 59% 28% 11% 3% 100% Asia-Pacific 65% 21% 8% 6% 100% Rest of the World 74% 17% 6% 4% 100%
N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research
Figure 2: Revenue Growth Optimism by Region (%), 2011

Question: Are you more or less optimistic about revenue growth for your company over the next 12 months compared to the previous 12 months? (% respondents by region)
North America 63 22 9 6
Europe
59
28
11
Asia-Pacific
65
21
Rest of the World

More optimistic
74 Neutral Less optimistic Don't know
17
ICD Research
INDUSTRY DYNAMICS
3.1.2 Revenue growth expectations by turnover For analyzing revenue growth expectations by company turnover, companies are classified as small, medium sized and large, based on the turnover mentioned below: Turnover less than US$100 million: small company Turnover between US$100 millionUS$1 billion: medium-sized company Turnover more than US$1 billion: large company Medium-sized and large companies are more optimistic about revenue growth than smaller companies, with 71% and 70% of C-level respondents expecting growth in revenue in the next 12 months. Table 6: Revenue Growth Optimism by Turnover (%), 2011
Revenue optimism More optimistic Neutral Less optimistic Dont know Overall Less than US$100 million 63% 24% 9% 5% 100% US$100 millionUS$1 billion 71% 23% 6% 1% 100% More than US$1 billion 70% 19% 11% 100%
Figure 3: Revenue Growth Optimism by Turnover (%), 2011

Question: Are you more or less optimistic about revenue growth for your company over the next 12 months compared to the previous 12 months? (% respondents by turnover)
63
More optimistic
71 70
24
Neutral
19 9
23
Less optimistic
6 11 5
Dont know
0
Less than US$100 million
US$100 millionUS$1 billion
More than US$1 billion
ICD Research
INDUSTRY DYNAMICS
The net differences in the optimism levels of various industries are mapped in the following figure; the global nature of the ICD Research Survey 2011 allows for analysis of the relative positions of each industry. The mining industry leads the chart, followed by aerospace and power, whereas the defense and construction industries exhibit the lowest growth optimism.
Figure 4: Company Revenue Growth Optimism: Cross-Industry Comparisons (%), 2011

Net difference in revenue growth optimism
70% 60% 50% 40% 30% 20% 10% 0% 38% 34% 39% 40% 41%
43% 46%
58% 54% 48% 48% 49% 50%
60%
Source: ICD Research Analysis
/ ICD Research
INDUSTRY DYNAMICS
3.2 Future developments in business structure

The changing economic environment has forced companies to reconsider their business structures and incorporate necessary changes. Respondents were asked how they see their companies business structures changing in the next 12 months, and if they will be expanding or diversifying into specific markets or product sectors. The answers have been segmented into different stakeholder categories, which identify the apparent changes anticipated across the industry and provide insights into general airport industry dynamics. The top three key expected changes for 2011 are expand in current market, introduction of new products and services and expand abroad. Companies have assigned high importance to the launch of new innovative products and services, and managing prices. For example, Orville Redenbacher, a popcorn specialist based in the US, introduced a new microwavable popcorn bag that is considered to be extremely consumer friendly. On a similar note, Borealis, involved in chemical and innovative plastics solutions, introduced a new packaging film, BorShape. Expansion in current markets remained the highest priority in 2011, and respondents plan to increase their product lines and expand facilities in present locations. For example, Moses H Cone Memorial Hospital has begun construction of its US$200 million North Tower in Greensboro, North Carolina. This will add an additional 79,248 square meter to the hospitals existing area and allow it to replace semi-private rooms with 96 private patient rooms designed to enhance patient recovery and safety. Figure 5: Key Expected Changes in Business Structure (%), 2011
Question: Globally, what are your company's top priorities in the next 12 months? (% respondents)
Expand in current market New products and services Expand abroad Stabilizing company finances Hiring new talent Pricing management Other Don't know 1 3 16 27 30 37 51
70
ICD Research
INDUSTRY DYNAMICS
3.3 Merger and acquisition activity predictions

Overall, executives from all industries expect to see increased levels of consolidation, with 61% of respondents predicting that there will be either a significant increase or an increase in M&A activity over the next 12 months. ICD Researchs 2011 survey highlights improving operational efficiency to attain economies of scale, increases in geographical presence and business competence, and increases to customer bases for better return on investment (ROI) as the key drivers for M&A activity. A high proportion of respondents expected that, due to market uncertainty, small companies may have found it difficult to sustain credit lines and will look to larger companies for support. For instance, a C-level executive of an airport operator company based in North America states: Repeated losses due to the economy have made consolidation and mergers the only sensible business solution for many industries. At this point, it is not so much a matter of business success that is key, but having a revenue source that is stable. In a competitive and technology-driven market, unstructured business entities are most favorable for consolidation in the process of growth. The current security and surveillance market is fragmented and unstructured, but is likely to witness a number of acquisitions to improve growth through collaborative efforts in technology, research and innovation, explains a board-level executive of a defense security and surveillance company based in Europe. Attempts to reduce operational costs and increase organizational efficiencies are also major factors in the rise in consolidation expectations. For example, a C-level executive from a packaging converter company in Europe comments: A significant number of smaller converters or packaging companies will be struggling to survive as operational costs increase to unprecedented levels. Such spiraling costs will drive smaller companies to either sell or close their businesses. For their customers sakes, however, these companies should opt to sell. Other factors that help to create a favorable environment for M&A are a steady improvement of the global economy and equity market, intention to increase current facilities to meet overwhelming demand, intention to achieve synergies and reduce costs, low interest rates and financial support from governments in accelerating growth. Table 7: Merger and Acquisition Activity Expectations (%), 2011
Expectations Significant increase Increase No change Decrease Significant decrease Dont know Percentage 15% 46% 23% 2% 1% 12%
N.B. Responses are not mutually exclusive, and therefore do not equal 100% Source: ICD Research Industry Survey 2011 ICD Research
INDUSTRY DYNAMICS
3.3.1 Merger and acquisition activity predictions by region The majority of respondents from North America and Europe expect an increase in M&A activity during the next twelve months. Of companies that operate in North America, 67% expect increased level of M&A activity, while 60% of respondents from Europe have similar expectations. Table 8: Merger and Acquisition Activity Expectations by Region (%), 2011
Expectations Significant increase Increase No change Decrease Significant decrease Dont know Overall North America 16% 51% 22% 2% 8% 100% Europe 13% 47% 24% 2% 1% 13% 100% Asia-Pacific 15% 44% 25% 3% 1% 12% 100% Rest of the World 20% 39% 19% 2% 2% 18% 100%
Figure 6: Merger and Acquisition Activity Expectations by Region (%), 2011

Question: What change do you expect to see in the number of mergers and acquisitions in your industry over the coming 12 months and why? (% respondents by region)
16 15 20 47 51
Significant increase
13
Increase 39 22 No change 19 Decrease 2 2 2

Significant decrease 24 25
44
0 1 1 2 8 13 12
Dont know
18 Europe Asia-Pacific Rest of the World

ICD Research
North America
INDUSTRY DYNAMICS
3.3.2 Merger and acquisition activity predictions by company turnover An analysis of survey results reveals that 82% of respondents from large companies expect an increase in merger and acquisition activity during the next twelve months, while 74% of respondents from medium-sized companies and 60% from smaller companies and anticipate similar trends. Using synergies between multiple partners or organizations, such as purchasing and integrated flight networks, helps us to reduce costs and improve our strategic position in the market, says a board level respondent from an airports systems integrator company that operates in Europe. Table 9: Merger and Acquisition Activity Expectations by Company Turnover (%), 2011
Expectations Significant increase Increase No change Decrease Dont know Overall Less than US$100 million 15% 45% 23% 2% 13% 100% US$100 millionUS$1 billion 19% 55% 19% 2% 5% 100% More than US$1 billion 19% 63% 11% 7% 100%
Figure 7: Merger and Acquisition Activity Expectations by Company Turnover (%), 2011
Question: What change do you expect to see in the number of mergers and acquisitions in your industry over the coming 12 months and why? (% respondents by company turnover)
15 Significant increase 19 19 45 Increase 55 63 23
No change
19 11 2 2 0 13
Decrease
Dont know
5 7 Less than US$100 million US$100 millionUS$1 billion More than US$1 billion
ICD Research
MARKET GROWTH OUTLOOK
4 Market Growth Outlook

This chapter provides a definitive assessment of the emerging regions on which marketing executives should concentrate, and their interpretation of the economic situation in developed regions. Responses were categorized by company type, region and turnover.
Key Findings:
China, India, Brazil and Middle East are considered to be the most promising emerging markets in 2011. Large companies prefer Russia and South Africa as the other two promising regions, while medium -sized companies consider Eastern Europe and the Middle East as having high potential for growth. India, China and the Middle East have been identified as the most promising markets by C-level respondents throughout all regions. The top five developed countries expected to generate the most demand in 2011 are the US; Singapore, Taiwan and Hong Kong; Australia; Germany and the UK. Companies operating in North America expect to invest in the US, while respondents from Asia-Pacific gave more importance to Singapore, Taiwan and Hong Kong, and Australia. Irrespective of turnover, Singapore, Taiwan and Hong Kong, Australia and the US are identified as the developed regions with the most growth potential.
Figure 8: Top Ten Growth Regions (%), 2011
ICD Research
4.1
Demand in emerging markets
Developments following the global economic crisis of 20082009 suggest that demand and consumption will be increasingly sourced from emerging economies. As a result, multinational corporations are viewing emerging economies not only as production locations, but also as major customer bases for future growth. Respondents were asked: Which emerging markets do you expect to offer your industry the most growth over the next 12 months? Responses have been categorized by different stakeholder categories to identify specific growth regions. The top five emerging markets expected to offer most opportunities for industry growth in 2011 include China with 33% of respondents, India with 30%, Brazil with 24%, the Middle East with 22% and Eastern Europe with 22%. Chinas growth is expected to increase in 2011 due to strong market potential, strong economic growth and sufficient labor resources. Both China and India have become very attractive to foreign investors due to their strong economic growth. For example, CSR Zhuzhou Electric Locomotive Research Institute Co., Ltd., a subsidiary of CSR Corporation Ltd. (CSR), signed an agreement with Wabtec Corporation, based in the US, in May 2011. Under the agreement, the company will manufacture braking systems for rail cars. Domestic companies are competing with multinational companies in the Chinese market. For example, Zhuhai United Laboratories, a Hong Kong-headquartered pharmaceutical manufacturing company, expects to invest US$151.42 million for the development of the domestic insulin market, which is usually dominated by foreign players. India plans to place more emphasis on PPP projects, particularly regarding plans that have been proposed in the India Vision 2020 document. For example, software service provider Infosys Technologies has already secured government projects to design intelligent power grids for several state governments in India; the company plans to secure more government contracts in the near future. Similarly, a new coal power plant is currently under construction in Gujarat, India; the new plant is expected to be one of the biggest coal-fired plants in the world and will be commissioned in 2012. Other emerging markets with strong growth potential are: Rwanda Peru Chile Nigeria Venezuela UAE (Dubai) Central and Eastern European countries The Caribbean Islands The Philippines Indonesia
Table 10: Demand in Emerging Markets (%), 2011

Market China India Brazil Middle East Eastern Europe Russia South Africa Saudi Arabia Turkey Indonesia Mexico Argentina Vietnam Percentage 33% 30% 24% 22% 22% 19% 12% 10% 10% 9% 9% 7% 7%
Figure 9: Demand in Emerging Markets (%), 2011

Question: Which emerging markets do you expect to offer your industry the most growth over the next 12 months? (% all respondents)
China
33 30 24 22 22 19 12 10 10 9 9 7 7
ICD Research
India Brazil
Middle East
Eastern Europe Russia

South Africa
Saudi Arabia Turkey

Indonesia
Mexico Argentina Vietnam

4.1.1 Demand in emerging markets by region According to respondents from different regions, China, India and the Middle East are expected to register most growth. Although some similarities exist throughout regions regarding emerging markets identified for growth, the order of importance assigned to different markets varies by region. In North America: China India Brazil In Europe: Eastern Europe China Russia Figure 10: Demand in Emerging Markets by Region (%), 2011
Question: Which emerging markets do you expect to offer your industry the most growth over the next 12 months? (% respondents by region)
Russia 50 Eastern Europe
40
In Asia-Pacific: India China Middle East In the Rest of the World: Brazil Saudi Arabia Middle East
China
Middle East
30
20
India
10
Vietnam 0 Brazil
Turkey
Argentina
South Africa
Indonesia
Saudi Arabia North America

Mexico Asia-Pacific Rest of the World

ICD Research
Europe
4.1.2 Demand in emerging markets by company turnover Irrespective of turnover, emerging markets such as China, India and Brazil are identified as the regions with the largest growth potential in the industry in the next 12 months. The survey results show that, apart from these regions, large companies identify Russia and South Africa as the other promising regions, while medium-sized companies consider Eastern Europe and the Middle East as having high potential for growth.
Figure 11: Demand in Emerging Markets by Company Turnover (%), 2011

Question: Which emerging markets do you expect to offer your industry the most growth over the next 12 months? (% respondents by company turnover)
Russia 60
Eastern Europe China
50
40
Middle East
30
India
20 Vietnam 10 0 Brazil
Turkey
Argentina
South Africa
Indonesia
Saudi Arabia Less than US$100 million

Mexico More than US$1 billion

ICD Research
4.2
Growth expectations in developed countries
Many critics cite developed regions as the most negatively affected by the global economic crisis in 2008 2009. As a result, emerging markets have attracted increasing amounts of investment over the last two years, due to improved chances of ROI. However, as the world economy enters a recovery phase, there are indications that developed regions will offer increased opportunities for the airports industry in 2011. This section identifies the developed countries expected to offer the most growth potential. Respondents were asked: How do you expect economic conditions to change in the following regions in 2011? Survey results indicate that the top five developed countries expected to generate demand in 2011 are the US; Singapore, Taiwan and Hong Kong; Australia; Germany; and the UK. The US is one of the most important developed markets in the world: for example, NV Energy has added a 484MW combined-cycle plant at its existing 144MW Harry Allen Generating Station in Nevada, US. The new facility will be able to meet 80% of Southern Nevadas energy needs. Similarly, in April 2011, American Airlines and Japan Airlines (JAL) entered into a close co-operation agreement to provide cargo customers with more routing choices, new destinations, and increased cargo capacity by utilizing their mutually combined worldwide network. Singapore acts as a significant trading base for the South-East Asian region, with low corporate taxes and strong intellectual property rights attracting companies to set up their operations in the region. On a similar note, in April 2011, Pan Pacific Hotels & Resorts announced that it will launch its flagship Parkroyal hotel in Singapore in 2012, located at the key gateway into the central business district and the Raffles Place financial hub. On a similar note, Hon Hai Precision, the parent of Taiwanese IT giant Foxconn, plans to buy a stake in E-Ton Solar Tech, a Taiwanese solar cell company, for a consideration of US$130 million. The investment is in line with Hon Hai's new development policies targeting clean energy. Table 11: Growth Expectations in Developed Countries (%), 2011
Growth expectations USA Singapore, Taiwan and Hong Kong Australia Germany UK Canada South Korea Japan France Italy Spain N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research Increase 43% 41% 35% 34% 31% 30% 28% 27% 20% 13% 13% Remain the same 30% 27% 33% 39% 37% 40% 32% 21% 44% 41% 34% Decrease 12% 3% 6% 6% 16% 4% 7% 27% 13% 20% 28% Don't know 15% 29% 25% 21% 16% 25% 33% 26% 24% 26% 25% Overall 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
4.2.1 Growth expectations in developed countries by region An analysis of responses by region reveals significant variations with respondents from companies with leading operation in North America expected to invest in the US, while respondents from Asia-Pacific gave more importance to Singapore, Taiwan and Hong Kong, and Australia. Respondents from Europe expect to invest in Germany and UK, while Japan seems promising to respondents from companies operating in the Rest of the World. Overall, developed markets identified for growth by respondents in various regions are: In North America: USA Canada In Europe: Germany UK In the Asia-Pacific: Singapore, Taiwan and Hong Kong Australia In the Rest of the World: Japan Singapore, Taiwan and Hong Kong
Figure 12: Growth Expectations in Developed Countries by Region (% Increase Responses), 2011
Question: For the following developed markets how do you expect demand to change in 20112012? (% respondents by region)
USA
70% Singapore, Taiwan and Hong Kong 60%

50% Canada
40% Australia 30% 20% 10%

0%
UK
South Korea
Germany
Japan
France
Spain North America

Italy AsiaPacific Rest of the World

ICD Research
Europe
4.2.2 Growth expectations in developed countries by company turnover An analysis of growth expectations for developed countries by company turnover reveals no significant variation. Irrespective of turnover, Singapore, Taiwan and Hong Kong, Australia and the US are identified as the developed regions with the most growth potential. Nevertheless, large companies also gave high preference to South Korea and Japan, while small companies consider Germany and the UK to be promising. Figure 13: Growth Expectations in Developed Countries by Company Turnover (% Increase), 2011
Question: For the following developed markets how do you expect demand to change in 20112012? (% respondents by turnover)
USA
60% Singapore, Taiwan and Hong Kong 50% 40% 30% Australia
20% 10% 0% Canada
UK
South Korea
Germany
Japan
France
Spain
Italy


ICD Research
THREATS AND OPPORTUNITIES
5 Threats and Opportunities

Constantly changing business dynamics present both threats and opportunities to companies operating across all industries. The most important challenges facing companies and how these can be overcome have been captured in our industry survey. In addition, respondents were surveyed on how suppliers can better maintain or win business from buyers, and where the key areas of opportunity lie during the next 1218 months.
Key Findings:
Market uncertainty, responding to pricing pressure and cost containment are the most immediate business concerns for the industries. Regulatory change seems to be a leading concern for companies operating in North America, while responding to pricing pressure is of higher importance to companies with leading operations in Europe. Rising competition and the retention or recruitment of skilled staff remains a more immediate business concerns for larger companies than small and medium-sized companies. Industry respondents consider innovate products, improved customer service, provide support for generating new business, engage in partnerships to optimize working capital and reduce costs, improve payment terms and reduce prices to be the foremost actions for suppliers to secure business. Reduce prices and work harder to reduce costs are considered of higher importance to large companies than to medium-sized and small companies.
5.1
Leading business concerns for 20112012
Of all the challenges industry executives are expected to face in 2011, market uncertainty, responding to pricing pressure and cost containment are the most immediate business concerns. While 51% of companies rate market uncertainty as the most important business concern during 20112012, a further 39% rate responding to pricing pressure as the second-most-important concern. Similarly, cost containment and rising competition are considered to be the other significant business challenges in 20112012 by 37% and 32% of the industry respondents respectively. Market uncertainty is considered a leading concern by most companies, as falling or limited demand has increased price competition between companies. With the aim of increasing revenues, business models have to be reworked to avoid the prospect of markets being lost. For example, major European home decoration companies such as Saint-Gobain, DIY and B&Q have closed retail stores in prominent cities in China due to low individual demand.
THREATS AND OPPORTUNITIES According to 37% of respondents, cost containment is a major concern. Rises in raw material prices have become a leading business challenge and many companies are on the lookout for innovative solutions. Increased competition has led to increased pricing pressure for many companies, which in turn has negatively affected their profitability. Many companies are forced to innovate and differentiate products, and at the same time save considerable amounts in operational costs. A C-level respondent from a supplier company based in North America states: My company is focused on the development and application of new technologies for increasingly sophisticated missions and mission support. Retention or recruitment of skilled workforce is a leading concern, as identified by 28% of respondents. In order to retain staff, many companies plan to raise salaries substantially in 2011. Other incentives including education programs and fringe benefits are on the cards. Table 12: Leading Business Concerns (%), 20112012
Leading business concerns Market uncertainty Responding to pricing pressure Cost containment Rising competition Retention or recruitment of skilled staff Political interference Regulatory change Reducing debt or bad debt Dealing with staff shortages Others N.B. Responses are not mutually exclusive, and therefore do not equal 100% Source: ICD Research Industry Survey 2011 ICD Research 20112012 51% 39% 37% 32% 28% 25% 24% 17% 15% 4%
Figure 14: Leading Business Concerns (%), 20112012

Question: What are the biggest concerns for your organization in 2011 2012? (% all respondents)
Market uncertainty Responding to pricing pressure Cost containm ent Rising com petition Retention or recruitm ent of skilled staff Political interference Regulatory change Reducing debt or bad debt Dealing with staff shortages Others 4 15 17 22 25 28 32 37 39 51
ICD Research
5.1.1 Leading business concerns for 20112012 by region Market uncertainty, cost containment and retention or recruitment of skilled staff remains the leading business challenges for respondents throughout regions. Highlighting this concern, a board member of a coal mining company in North America states: Our company is expecting a severe shortage of skilled technical labor which could be a significant constraint on our business growth. Table 13: Leading Business Concerns by Region (%), 20112012
Leading business concerns Market uncertainty Regulatory change Retention or recruitment of skilled staff Cost containment Responding to pricing pressure Political interference Rising competition Dealing with staff shortages Reducing debt or bad debt Others North America 52% 37% 36% 33% 32% 30% 29% 17% 17% 5% Europe 56% 20% 19% 36% 46% 20% 30% 9% 16% 3% Asia-Pacific 45% 18% 34% 43% 36% 24% 38% 21% 14% 5% Rest of the World 44% 24% 34% 36% 36% 34% 36% 19% 21% 2%
5.1.2 Leading business concerns for 20112012 by company turnover Irrespective of size, companies consider market uncertainty, cost containment and responding to pricing pressure to be the three leading business concerns. However, rising competition and the retention or recruitment of skilled staff remains a more immediate business concerns for larger companies than small and medium-sized companies. Table 14: Leading Business Concerns by Company Turnover (%), 20112012
Leading business concerns Market uncertainty Responding to pricing pressure Cost containment Rising competition Retention or recruitment of skilled staff Political interference Regulatory change Reducing debt or bad debt Dealing with staff shortages Others Source: ICD Research Industry Survey 2011 Less than US$100 million 52% 38% 36% 32% 28% 25% 23% 17% 14% 4% US$100 million US$1billion 36% 48% 48% 35% 31% 27% 36% 17% 18% 3% More than US$1 billion 41% 44% 48% 48% 44% 22% 30% 7% 22% 4% ICD Research
5.2
Key supplier actions to maintain and secure buyer business
Global economic uncertainty has made cost concerns a higher priority for most companies. Simultaneously, demand is changing as regular patterns of purchasing have become disrupted due to the recession and a subsequent tentative move into recovery in some parts of the world. These changes require proactive and improved methods of securing new business, as well as maintaining current business, as industry buyers review their current supplier bases more closely. Respondents were asked to identify the three most important ways that suppliers can secure business from buyers in the current economic climate. Survey results show that, in 2011, suppliers identified innovate products, improve customer service, provide support for generating new business, engage in partnerships to optimize working capital and reduce costs, improve payment terms and reduce prices as key factors to secure business, as expressed by 46%, 43%, 39%, 39% and 29% respectively of C-level respondents. To improve customer service and reduce costs, some companies are showing willingness to form partnerships with suppliers. A C-level executive from a power industry supplier company operating in North America says: My company is looking to collaborate with other companies in the power sector to significantly reduce lead times and meet commitments. Another board-level respondent of a mining equipment supplier company with leading operations in Asia-Pacific states: Our company is focused on providing technical support that is, in a way, related to customer service for our clients. Figure 15: Actions to Maintain and Secure Buyer Business (%), 2011
Question: What are the three most important ways that suppliers can help buyers' business in the current business climate? (% respondents)
Innovate products Improve customer service Engage in partnerships to optimize working capital and Provide support f or generating new business Improve payment terms Reduce prices
Work harder to reduce costs 29 39
46 43
39
28 28 24 22 18 13
9
Of f er more f lexibility in delivery

Sign long term agreements
Demonstrate better ROI Provide other concessions and incentives Provide support f or offsetting existing business attrition Other None of these
2
1
ICD Research
5.2.1 Actions to maintain and secure buyer business by region Respondents across all regions rank efforts to innovate products, provide support for generating new businesses, improve customer service and engage in partnerships to optimize working capital and reduce costs as the leading actions suppliers should take to secure business. For example, a C-level executive from a hydropower generation company operating in Asia-Pacific states: We expect our suppliers to provide goodquality products and services at a reasonable price. Respondents from North America and Europe region give importance to innovate products as technological innovation can help reduce costs, enable the development of more efficient processes and bring products to market more quickly than in the past. For example, InterCall Europe, a UK-based arm of Intercall Inc., introduced a new line of easy-to-install and competitively priced conferencing packages designed for small and medium-sized businesses under the InterCall SMB portal in April 2011. Table 15: Actions to Maintain and Secure Buyer Business by Region (%), 2011
North America 52% 43% 40% 39% 26% 23% 22% 22% 18% 18% 12% 9% 4% 2% Rest of the World 35% 40% 44% 43% 29% 14% 40% 32% 32% 28% 17% 7% 1% 1%
Actions Innovate products Provide support for generating new business Engage in partnerships to optimize working capital and reduce costs Improve customer service Work harder to reduce costs Demonstrate better ROI Improve payment terms Reduce prices Sign long-term agreements Offer more flexibility in delivery Provide other concessions and incentives Provide support for offsetting existing business attrition Others None of these
Europe 48% 40% 38% 41% 29% 19% 26% 28% 19% 24% 12% 10% 1% 1%
Asia-Pacific 45% 35% 39% 50% 26% 16% 32% 31% 26% 24% 12% 8% 3% 1%
5.2.2 Actions to maintain and secure buyer business by turnover An analysis of responses by company turnover identified minor variations in responses and attitudes. Irrespective of size of company turnover, innovate products, improve customer service, engage in partnerships to optimize working capital and reduce costs and provide support for generating new business are identified as the major actions for suppliers to maintain and secure business with buyers. However, reduce prices and work harder to reduce costs are considered of higher importance to large companies than to medium-sized and small companies. Figure 16: Actions to Maintain and Secure Buyer Business by Company Turnover (%), 2011
Question: What are the three most important ways that suppliers can help buyers' business in the current business climate? (% respondents by company turnover)
Innovate products 46 46 42 43
59
Improve customer service

Provide support for generating new business Engage in partnerships to optimize working capital and reduce costs
59
22
30
40 39 39
44
Improve payment terms

Reduce prices
11 26
29 30 28 33
Work harder to reduce costs
27
33 24 24 22
35
Offer more flexibility in delivery

Sign long term agreements
22 18
11 13
23
26
30
Demonstrate better ROI Provide other concessions and incentives

Provide support for offsetting existing business attrition
9
0 0
12 11 9
11
Others None of these

2
1
1 0
ICD Research
PROCUREMENT DYNAMICS
6 Procurement Dynamics
This chapter reveals the current size of companies procurement budgets and how spending in supplier organizations will change, providing insight into the buying behaviors and market competition for supplier companies. Forward-looking expectations for category-level spending on specific products and services reveal the future needs in the industry and identify vital business opportunities for suppliers.
Key Findings:
For 2011, the average size of the global, annual procurement budget is estimated at US$26 million. Respondents in Asia-Pacific have the highest procurement budgets, at US$47 million in 2011, followed by the Rest of the World at US$35 million and North America at US$22 million. Procurement budgets of survey respondents are expected to rise by an average of 11% over the next 12 months. The greatest increase in procurement budgets is expected for respondents that primarily operate in North America, as they expect a 13% budget increase. This is in contrast to respondents in Europe, who are expected to see the lowest increase in spending. Respondents from large companies expect their procurement expenditures to increase by an average of 8% over the next 12 months, while respondents from small companies expect their procurement expenditure to rise by 10%. Of all respondents, 63% expect an increase in supplier prices, while 13% expect a decrease and 21% expect no change. Of respondents from companies that operate in North America and the Rest of the World, 68% each expect supplier prices to increase, followed by respondents from Europe with 61% expecting an increase.
6.1
Annual procurement budgets
The total size of the annual procurement budgets reveals the potential available share of expenditure to suppliers. This section identifies budgets by company type, turnover and region. For 2011, the average size of the global annual procurement budgets is estimated at US$26 million. While 41% of respondents indicate that they will restrict their procurement budgets to less than US$250,000 in 2011, 21% of respondents expect their annual procurement budgets to range between US$1 million and US$10 million. Companies are also expected to invest in developing advanced technologies to reduce costs and enhance brand value. Some companies plan to enhance their product mix and market presence through acquisitions. For example, Terra Firma, a high-voltage-grid operator based in Italy, acquired Rete Rinnovabile Srl, a solar energy company also based in Italy, for US$905.5 million in March 2011. The acquisition is considered one of the biggest solar-generation buy-outs in Europe. Table 16: Annual Procurement Budgets in US$ (%), 2011
Annual procurement budgets Less than US$250,000 US$250,000US$1 million US$1US$10 million US$10US$50 million US$50US$500 million More than US$500 million Don't know Overall N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research 2011 41% 18% 21% 6% 4% 2% 7% 100%
Figure 17: Annual Procurement Budgets in US$ (%), 2011

Question: What is your company's global, annual procurement budget in US dollars? (% all respondents)
Less than US$250,000
US$250,000US$1 million US$1US$10 million US$10US$50 million 6 4 2 18 41
21
US$50US$500 million More than US$500 million

Don't know
ICD Research
6.1.1 Annual procurement budgets by region A comparison of global procurement budgets by operating region shows that respondents in Asia-Pacific have the highest procurement budgets, at US$47 million in 2011. Companies with leading operations in the Rest of the World and North America have the next-largest budgets, at US$35 million and US$22 million respectively. Procurement expenditure is high in Asia-Pacific due to strong economic growth, rising affluence and a surge in demand for raw materials, which have compelled companies to invest in new technologies and sustainable measures. For example, Harmony Gold Mining Company Ltd., which is based in South Africa, is considering diversifying its mining operations into Indonesia and the Philippines. A board level respondent from power generation company based in Asia-Pacific states: Our procurement budget will increase significantly in 2011 as all the major items intended for the refurbishments for the three of our major installations has been undertaken. Therefore, we expect rise in production and in turn rise in procurement budget.
Figure 18: Annual Procurement Budgets in US$ by Region (%), 2011

Question: What is your company's global, annual procurement budget in US dollars? (% respondents by region)
28 Less than US$1 million 20 20 34 19 20 37 47 52
US$250,000US$1 million
12 US$1US$10 million 7 9
15 16
US$10US$50 million 3 3 0
2
5 5
4 3
US$50US$500 million
More than US$500 million
5
Don't know
6 6 7
3 North America
12
Europe
Asia-Pacific
Rest of the World

ICD Research
6.1.2 Annual procurement budgets by company turnover In 2011, C-level respondents from large companies have average budgets of US$283 million available to them. Respondents from medium-sized companies have average procurement budgets of US$122 million and respondents from small companies have an average of US$10 million to spend. While 45% of respondents from small companies expect procurement budgets to be less than US$250,000, 31% of respondents from large companies expect annual procurement budgets of more than US$500 million. Furthermore, 24% of respondents from medium-sized companies expect procurement budgets between US$1 million and US$10 million. The survey result also shows that 23% of respondents from large companies are unaware of their annual procurement budget allocation. Table 17: Annual Procurement Budgets in US$ by Company Turnover (%), 2011
Annual procurement budgets Less than US$250,000 US$250,000US$1 million US$1US$10 million US$10US$50 million US$50US$500 million More than US$500 million Don't know Overall Less than US$100 million 45% 18% 22% 6% 1% 0% 7% 100% US$100 millionUS$1 billion 14% 17% 24% 10% 19% 12% 5% 100% More than US$1 billion 0% 15% 8% 0% 23% 31% 23% 100% ICD Research
Figure 19: Annual Procurement Budgets in US$ by Company Turnover (%), 2011
Question: What is your company's global, annual procurement budget in US dollars? (% respondents by company turnover)
45
Less than US$1 m illion
14 18 17 22 8 6 10
US$250,000US$1 m illion
15
US$1US$10 m illion
24
US$10US$50 m illion
0 1
US$50US$500 m illion
19 0 12 5 7
23
More than US$500 m illion
31
Don't know
23
Less than US$100 m illion
US$100 m illionUS$1 bllion
ICD Research
6.2 Planned change in procurement expenditure

The ICD Research survey reveals that the average annual procurement budgets are expected to rise by an average of 11% over the next 12 months. Survey results show that 48% of respondents expect their budget to increase between 5% and 25%. With the revival of the economy in various markets, many companies look to expand their businesses to highgrowth regions such as the US; Singapore, Taiwan and Hong Kong; China; India; Australia; Germany; the UK; Canada; Japan and South Korea. Rising raw material costs such as coal, oil and steel prices also played a vital role in increasing procurement expenditure for most companies. Our company expects to capitalize on growth opportunities in the Asian region and we are already in the final stages of undertaking two airport modernization projects, states a C-level executive of an airport contractor based in the Asia-Pacific region. Respondents plan to increase their procurement budgets to expand their operations, new product innovations and the purchase of machinery and equipment, and to diversify business and increase shipments. A boardlevel respondent of a rail infrastructure development company in the North American region states: Our company is planning to increase our procurement budget by 25% as we plan to expand our operations to manufacture electric rail equipment and buses. Another C-level executive of an airport operator company based in North America states: Our company plans to allocate a major portion of our procurement budget towards security and technology upgrades to comply with passenger security concerns as well as federal guidelines. An increase in fuel prices, material costs, technology upgrades and business expansion are some of the other reasons stated by C-level respondents for procurement budget increases. A board-level respondent from a ground support company based in North America says: Our company plans to automate 30% of our existing operations with the use of modern technology by 2012, and in the process we have planned to increase our budgets by around 15% this year. However, 17% of respondents expect no change in their procurement budgets. This could be due to the fact that they increased procurement budgets in 2010 and intend to keep them at 2010 levels until the market fully recovers. Table 18: Expected Change in Total Procurement Expenditure (%), 2011
Expected change Increase by 25%+ Increase between 1025% Increase between 510% Increase between 15% No change Decrease between 15% Decrease between 510% Decrease between 1025% Decrease by 25%+ Overall N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research 2011 19% 24% 24% 12% 17% 2% 2% 1% 1% 100%
6.2.1 Planned change in procurement expenditure by region Regional analysis of procurement budgets reveals that the greatest increase in average procurement budgets is expected by respondents that operate in North America, as they expect a 13% budget increase. This is in contrast to respondents from Europe, who predict an average increase of 9%. Although respondents are concerned about market uncertainty, they are still showing their willingness to increase procurement expenditure in order to benefit from the opportunities which will arise from economic recovery. A C-level respondent from a rail infrastructure development company in the North American region states: Our company is planning to increase our procurement budget by 25% as we plan to expand our operations to manufacture electric rail equipment and buses. Similarly, another board-level respondent from a metal ore mining company in the Rest of the World region says: Our company is planning to increase our procurement budget by 10% as we are in the process of commissioning two new mines. Increases in petroleum prices increase inflation and fuel transport costs, which in turn increase the price of raw material prices. Therefore we need to take into account higher expenditure for procurement, states a board level respondent of a road equipment manufacturing company that operates in the Asia-Pacific region in support to the rationality behind the rise in procurement expenditure. Figure 20: Expected Change in Total Procurement Expenditure by Region (%), 2011
Question: How do you expect your organization's procurement expenditure to change over the next 12 months and why? (% respondents by region)
Increase by 25%+
13 21
25
22 27 25 25 23 25
Increase between 1025%
20

21 6 Increase between 15%
26
12
13 16 14
22
No change 10 1 Decrease between 15%

1 Decrease between 510% 2
13
3
3
3 2 2
Decrease between 1025% 0 Decrease by 25%+ 0 0
1 1
1
3
North America
Europe
Asia-Pacific
Rest of the World
ICD Research
6.2.2 Planned change in procurement expenditure by company turnover Respondents from large companies expect their procurement expenditure to increase by an average of 8% over the next 12 months, compared to respondents from medium-sized and small companies, who expect procurement expenditure to increase by 13% and 10%, respectively. Results show that 47% and 52% respectively of respondents from small and medium-sized companies expect their procurement budgets to increase between 5% and 25%, while 15% of respondents from large companies expect no change in their procurement budgets in 2011.
Figure 21: Expected Change in Total Procurement Expenditure by Company Turnover (%), 2011
Question: How do you expect your organization's procurement expenditure to change over the next 12 months and why? (% respondents by company turnover)
18
15 Increase between 1025%
Increase by 25%+
25
24 0
27
Increase between 510% 12

15
23
25
46
No change
11 2 8 2 2
1
17
15
Decrease between 15%
Decrease between 510% 0
0 0 0 0
Decrease by 25%+


ICD Research
6.3 Variations in regional supplier prices

Respondents were asked: How do you expect supplier prices to change over the course of the next six months? Of all respondents, 63% expect an increase in supplier prices, while 13% expect a decrease and 21% expect no change. Rising demand, increasing component prices, energy costs, rises in marketing expenditure and expansion activities as well as stringent environmental guidelines have contributed to supplier price increases. For example, Duratread, a tire manufacturer based in Panama supplying tires to the mining and construction industries, announced a 7% increase in tire prices effective February 2011 due to recent increases in the price of rubber. This follows on from a 6% increase in the companys product prices in September 2010. Similarly, in February 2011 Hempel A/S, which supplies protective coatings to the marine industry, announced a general product price increase because of a shortage of raw materials and increasing energy costs. The limited availability of raw material sources across the globe affects specific industries such as defense. For example, the US defense market is one of the largest global consumers of cobalt and depends on a single supplier from Zaire which controls a large part of the global cobalt market. As a result, the suppliers monopoly decisions regarding pricing controls are expected to influence the whole US defense market due to its large cobalt consumption. Most companies expect to increase prices as their raw material prices have increased considerably. For example, Koehler Paper Group announced a price increase of 5% for its thermal papers in Europe. Cost pressures on energy, chemicals and other raw materials forced the increase in price. Table 19: Variations in Regional Supplier Prices (%), 2011
Variations Increase significantly Increase somewhat Stay unchanged Reduce somewhat Reduce significantly Dont know Overall N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research Percentage 17% 46% 21% 12% 1% 3% 100%
Figure 22: Variations in Regional Supplier Prices (%), 2011

Question: How do you expect supplier prices to change over the course of the next six months? (% all respondents)
1% 3%
17%
12%
Increase significantly Increase somewhat Stay unchanged
Reduce somewhat
21% 46%
Reduce significantly Dont know
ICD Research
6.3.1 Variations in regional supplier prices by region Of respondents from companies that operate in North America and the Rest of the World, 68% each expect supplier prices to increase, followed by respondents from Europe with 61% expecting an increase. However, 27% of respondents from Asia-Pacific expect no change in supplier prices. Strict regulations related to environmental emissions are also expected to increase raw material prices. For example, in Sweden, transport companies are incurring high costs due to having to use an extra oil mix that reduces sulfur emissions, as directed by the government. This has, in turn, increased the cost of timber and related products by US$6.7 per cubic meter in 2010, and prices are expected to rise further in 2011. Table 20: Variations in Regional Supplier Prices by Region (%), 2011
Variations Increase significantly Increase somewhat Stay unchanged Reduce somewhat Reduce significantly Dont know Overall North America 14% 54% 17% 10% 1% 4% 100% Europe 18% 43% 20% 16% 1% 3% 100% Asia-Pacific 15% 42% 27% 11% 3% 2% 100% Rest of the World 21% 47% 21% 9% 0% 3% 100%
6.3.2 Variations in regional supplier prices by company turnover Of all respondents, 63% from small companies expect at least some increase in supplier prices, followed by 61% of respondents from medium-sized companies and 54% from large companies. Large companies enjoy greater bargaining power and tend to engage in more long-term contracts than small and medium-sized companies, which face the challenge of rising international oil prices and reduced profitability. Table 21: Variations in Regional Supplier Prices by Company Turnover (%), 2011
Variations Increase significantly Increase somewhat Stay unchanged Reduce somewhat Reduce significantly Dont know Overall Less than US$100 million 16% 47% 21% 11% 1% 3% 100% US$100 millionUS$1 billion 25% 36% 18% 16% 2% 2% 100% More than US$1 billion 15% 39% 23% 23% 0% 0% 100%
Figure 23: Variations in Regional Supplier Prices by Company Turnover (%), 2011
Question: How do you expect supplier prices to change over the course of the next six months? (% respondents by company turnover)
Increase significantly 16
15
25 36 18
21 47
Increase somewhat
Stay unchanged Reduce somewhat Reduce significantly 1
39
23 23
11
16
0 0
2
3
Dont know
2
US$100 millionUS$1 billion More than US$1 billion
ICD Research

PROCUREMENT BEHAVIOR AND STRATEGIES
7 Procurement Behaviors and Strategies

Well-executed procurement and supplier selection are vital to the future success of companies with regard to the quality and effectiveness of their investments and financial operations. This is particularly important following the recent market instability. This chapter identifies and analyzes the most important criteria for supplier selection from the point of view of both buyers and suppliers. In addition, the effects of economic uncertainty on companies current and future procurement objectives, behaviors and attitudes are examined. Respondents were also asked about the implementation of e-procurement in their organizations.
Key Findings:
Quality, level of service, supplier's record for reliability and price are considered to be the most important factors for supplier selection by majority of C-level respondents, while proximity of supplier operations, privileged access to supplier's R&D and suppliers CSR reputation are considered least important. The implementation of e-procurement is a priority for 36% of respondents, while 26% confirm that their companies are already in the process of implementation. Large and medium-sized companies expressed more willingness to adopt e-procurement solutions than respondents from small companies. A total of 36% of C-level respondents from North American region confirmed either a limited deployment or generalized deployment of e-procurement, while 53% of respondents from Asia-Pacific have a commitment, an evaluation or pilot use or an intention to implement e-procurement.
7.1 Critical success factors for supplier selection

This chapter analyzes the most important factors that the companies consider when selecting a supplier, providing insight into the business opportunities for suppliers to adopt in order to fulfill buyer companies expectations. Respondents were asked: How important are the following factors when choosing a supplier for a major contract? The results are indexed on a five-point scale, where five carries the most importance and one the least. Quality, level of service, supplier's record for reliability and price are considered to be the most important factors for supplier selection by the majority of C-level respondents. For example, Forrest Paint, a producer of packaging for high-temperature-tolerant spray paint products based in the US, recently purchased a 5100 series in-line wrap labeler from Label-Aire with print-on-demand (POD) capabilities. Forrest Paint selected Label-Aire due to the reasonable pricing of the labeling machine and the suppliers reputation for quality products and reliable service. Suppliers should, therefore, focus on competitive pricing and enhancing the speed of supply to overcome supply disruption bottlenecks. However, proximity of supplier operations, privileged access to supplier's R&D and suppliers CSR reputation are considered least important. These findings point to opportunities for suppliers to better align their capabilities with buyers needs and to better market their companies. Although all the listed factors are important to buyers, the relative prominence given to each should be taken into consideration by suppliers in their marketing, particularly given the current unstable market conditions during which many buyer companies are re-evaluating suppliers and renegotiating contracts. Figure 24: Critical Success Factors for Supplier Selection, 2011
Question: How important are each of the following factors to your company when selecting a supplier for a major contract? (Scores are indexed to the most highly rated factor, with 5 representing the most important factor) Quality Level of service Supplier's record for reliability Price Financial strength and stability of supplier Existing relationship with supplier Innovation Supplier's record for speed Supplier's knowledge of buyer's market Supplier's brand reputation
Supplier's CSR reputation 2.6 4.1
5 4.8 4.8 4.8
4.1 4 3.9 3.5 3.3
Privileged access to supplier's R&D Proximity of supplier operations

2.5 2.4
ICD Research
7.2 E-procurement
Online solutions can bring many advantages to businesses, and as most of the industries are large and fragmented there are several areas where e-procurement could bring measurable benefits. This section identifies the extent to which e-procurement has generated interest among the C-level respondents from various industry segments. The implementation of e-procurement in organizations could help to increase accountability and clarity in corporate expenditure and eventually reduce operational expenditure. For example, Penoles, a producer of refined silver and sodium sulfate, recently implemented an e-procurement program as a part of its reengineering process reduced its cost per transaction from US$36 to US$13. In total 62% of respondents highlight acceptance of e-procurement, and this is evidence of the potential for IT services in the procurement process. However, the remaining 38% of respondents are either unsure or have no intention to implement e-procurement. This could be due to the fact that many companies do not believe their business is suitable for e-procurement or that it will create too much emphasis on price. Others lack the skills and resources to implement e-procurement or do not think in terms of e-business.
Table 22: EProcurement: Level of Implementation (%), 2011

Level of implementation No intention to implement Intention to implement Evaluation or pilot use Commitment Limited deployment Generalized deployment Rejection Don't know Overall N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research Percentage respondents 21% 15% 11% 9% 23% 4% 2% 15% 100%
Figure 25: EProcurement: Level of Implementation (%), 2011

Question: From an overall organizational level perspective, to what extent has your organization used e-procurement? (% all buyer respondents)
15%
2% 21%
No intention to implement Intention to implement
4%
Evaluation or pilot use Commitment Limited deployment
15% 23% 9% 11%
Generalized deployment
Rejection
Don't know
ICD Research
Of all respondents, 28% that identify at least some increase in their procurement budget in section 6.2 have already begun to implement e-procurement, and a further 16% express an intention to implement eprocurement. Table 23: Procurement Budget Increase vs E-Procurement (%), 2011
Level of implementation No intention to implement Intention to implement Evaluation or pilot use Commitment Limited deployment Generalized deployment Rejection Don't know Overall N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research Percentage of respondents 20% 16% 12% 9% 23% 5% 2% 14% 100%
7.2.1 E-procurement by region E-procurement deployment compared by region reveals the following: Of respondents from companies operating in North America, 36% either have a limited deployment or a generalized deployment of e-procurement. While 53% of respondents from Asia-Pacific have a commitment, are in evaluation or pilot use or have an intention to implement e-procurement, 27% of respondents from Europe have no intention to implement eprocurement. Of respondents from North America and Europe, 18% each dont know what their companies current levels of e-procurement implementation are, followed by 9% each from Asia-Pacific and the Rest of the World. The willingness of respondents from the Rest of the World and the Asia-Pacific region to consider and implement e-procurement could be due to emerging opportunities and favorable economic conditions in these regions. As a result, companies from these regions are interested in global procurement processes rather than focusing on local vendors, and this is best achieved through the implementation of e-procurement.
Figure 26: EProcurement: Level of Implementation by Region (%), 2011

Question: From an overall organizational level perspective, to what extent has your organization used e-procurement? (% respondents by region)
23 No intention to implement 4 Intention to implement 8
6 Commitment 11 12
27
12 12 14 8
9
22
29
Evaluation or pilot use
15
16 21 21
29
Limited deployment
23
Generalized deployment
2
3 3
1 Rejection 0
5 9 9 18 18
Don't know
North America
Europe
Asia-Pacific
Rest of the World

ICD Research
7.2.2 E-procurement by company turnover Of all respondents, 57% from large companies have a limited deployment' or a generalized deployment of eprocurement, and 34% of respondents from small companies have an intention to implement, a commitment or are in the evaluation or pilot use stage of implementation of e-procurement. E-procurement is expected to reduce procurement expenditure by a considerable amount for all companies, but considering the number of transactions, e-procurement will have the most positive impact on large companies. Table 24: EProcurement: Level of Implementation by Company Turnover (%), 2011
Level of implementation No intention to implement Intention to implement Evaluation or pilot use Commitment Limited deployment Generalized deployment Rejection Don't know Total Less than US$100 million 22% 15% 11% 8% 23% 4% 2% 15% 100% US$100 millionUS$1 billion 7% 14% 14% 21% 16% 7% 5% 16% 100% More than US$1 billion 14% 7% 21% 43% 14% 100%
Figure 27: EProcurement: Level of Implementation by Company Turnover (%), 2011

Question: From an overall organizational level perspective, to what extent has your organization used e-procurement? (% respondents by company turnover)
No intention to implement Intention to implement Evaluation or pilot use Commitment Limited deployment Generalized deployment Rejection Don't know 2 0 0 4 5 15 16 US$100 millionUS$1 billion More than US$1 billion
ICD Research
7 7 11 0 8
22 14 15 14 14 21 21 16 23 43
14

MARKETING SPEND ACTIVITY
8 Marketing Spend Activity

This chapter reveals the current sizes of companies marketing and advertising budgets, and how spending will change, providing insight into global marketing behavior. Forward-looking expectations on media channel expenditure and investment in specific marketing solutions, along with key marketing adaptations in 2011 2012, reveal the future needs and strategies of key companies in the industry.
Key Findings:
The average size of the annual global marketing budget is estimated to be US$1.2 million in 2011. Respondents in the Rest of the World have the highest average budgets of US$1.2 million in 2011, compared to US$1.1 million and US$1 million respectively for companies with leading operations in AsiaPacific and North America. ICD Researchs industry survey revealed that average marketing expenditure is expected to rise by an average of 10% over the next 12 months. The largest rate of increase in budgets of 12% is expected from the Asia-Pacific region, whereas respondents from Europe expect the lowest growth of 8% in 2011. Respondents from larger companies by turnover expect their marketing expenditures to increase by 13% over the next 12 months, while respondents from medium-sized and small companies expect expenditure to increase by 11% and 10% respectively. Market intelligence research, client acquisition solutions, business performance management solutions and CRM solutions emerged as the most important areas of investment among marketing and sales solutions activities in 2011.
8.1 Annual marketing budgets

The overall size of the marketing budgets reveals the current investment into this area by competitors. This section identifies budgets by turnover and region. The average size of the global, annual marketing budget is estimated to be US$1.2 million in 2011. The marketing budgets correspond with the positive revenue growth expectations projected by respondents in section 3.1. Table 25: Annual Marketing Budgets (%), 2011
Marketing Budget Less than US$250,000 US$250,000US$1 Million US$1 MillionUS$10 Million US$10 MillionUS$50 Million More than US$50 Million Overall Source: ICD Research Industry Survey 2011 2011 93% 4% 2% 1% 1% 100% ICD Research
Figure 28: Annual Marketing Budgets: Airports Industry Suppliers (%), 20092011
Question: What is your company's global, annual procurement budget in US dollars? (% respondents)
Less than US$250,000 93
US$250,000US$1 Million
US$1 MillionUS$10 Million
ICD Research
8.1.1 Annual marketing budgets by region A comparison of global marketing budgets by operating region shows that respondents in the Rest of the World have the highest average budgets of US$1.2 million in 2011. Respondents with leading operations in Asia-Pacific and North America have the next-largest average budgets in 2011, estimated at US$1.1 million and US$1 million respectively.
Table 26: Annual Marketing Budgets by Region (%), 2011

Marketing Budget Less than US$250,000 US$250,000US$1 Million US$1 MillionUS$10 Million US$10 MillionUS$50 Million More than US$50 Million Overall Source: ICD Research Industry Survey 2011 North America 87% 7% 4% 0% 1% 100% Europe 94% 5% 1% 0% 0% 100% Asia-Pacific 95% 2% 1% 1% 1% 100% Rest of the World 94% 2% 2% 1% 1% 100% ICD Research
Figure 29: Annual Marketing Budgets by Region (%), 2011

Question: What is your company's global, annual marketing and advertising budget in US dollars? (% respondents by region)
87 Less than US$250,000 7
94
95 94
US$250,000US$1 Million
2 2
5
4
1
0
1 2
1 1 1
More than US$50 Million
1 1 Europe Asia-Pacific Rest of the World

ICD Research
North America
8.1.2 Annual marketing budgets by company turnover A comparison of global marketing budgets by company turnover shows that, in 2011, companies with a turnover in excess of US$1 billion have budgets of US$13.6 million available to them. Companies that generate annual revenues of between US$100 million and US$1 billion have average budgets of US$1.3 million, while companies generating less than US$100 million typically have budgets of US$0.6 million in 2011. While 95% of respondents from small companies and 73% of respondents from medium-sized companies have marketing budgets of less than US$250,000, 33% of large companies have minimum budgets of US$10 million available to them. Table 27: Annual Marketing Budgets by Company Turnover (%), 2011
Marketing budget Less than US$250,000 US$250,000US$1 Million US$1 MillionUS$10 Million US$10 MillionUS$50 Million More than US$50 Million Overall Less than US$100 million 95% 3% 1% 0% 1% 100% US$ 100 millionUS$1 billion 73% 20% 5% 3% 0% 100% More than US$1 billion 25% 8% 33% 25% 8% 100%
Figure 30: Annual Marketing Budgets by Company Turnover (%), 2011

Question: What is your company's global, annual marketing and advertising budget in US dollars? (% respondents by company turnover)
95 Less than US$250,000 25 3 US$250,000US$1 Million
8 1
73
20
5 33 0
3 25 1 0 8
More than US$50 Million

US$ 100 millionUS$1 billion

ICD Research
8.2 Planned change in marketing expenditure levels

ICD Researchs industry survey revealed that average marketing expenditure is expected to rise by an average of 10% over the next 12 months. In section 3.1, the majority of the C-level industry executives expected a rise in revenue for 2011. As a result of this optimism, companies also plan to increase their marketing expenditures for 2011. This suggests that recovery is fully underway and confidence is being restored following the global economic crisis. The generation of new customers, introduction of new products, increased new contract orders, brand awareness and support, and expansion of current markets are considered to be the most important objectives to achieve through the increased budgets. Moreover, steps have been taken by companies to increase revenue and market shares, and aid entry into new, profitable markets. These include the expansion of customer bases, investment in innovative technologies, the expansion of product offerings, and an increase in industry-wide awareness to increase sales. As we are planning to expand our business, publicity and industry awareness is crucial for our company. Therefore, our marketing department is under pressure to reveal its presence across the industry, quotes a C-level executive of a packaging industry supplier company in the Asia-Pacific. A few companies are in the process of developing new product offerings, which in turn requires increases to marketing budgets to position new products in the specific targeted market segments. My company is planning to launch new electrical vehicles to be used in airports and other such industries, so our total marketing focus this year, in terms of time and money, will be towards making our new product a success, says a board-level executive of an airport industry supplier company based in North America. Several respondents intend to rebrand their companies due to growth optimism, which requires a heavy spend on marketing activities. For example, Contech Medical International, a provider of contract services in design, assembly, manufacturing and packaging to the global medical device industry, has changed its name to Advant Medical. Our new corporate identity allows us to realign and position the company to target new business in both new medical markets and international territories," explains a C-level company executive. In addition, supplier respondents plan to increase expenditure on different online media formats, such as digital, newsletters, online, blogs, videos, webcasts, podcasts, resource centers and talkback. Table 28: Planned Change in Marketing Expenditure (%), 2011
Planned changes Increase by 25%+ Increase between 1025% Increase between 510% Increase between 15% No change Decrease between 15% Decrease between 510% Decrease between 1025% Decrease by 25%+ Overall Source: ICD Research Industry Survey 2011 2011 18% 22% 22% 10% 22% 2% 2% 1% 1% 100% ICD Research
Figure 31: Planned Change in Marketing Expenditure (%), 2011

Question: How do you expect your organization's marketing and advertising expenditure to change over the next 12 months and why? (% all respondents)
Increase by 25%+ Increase between 1025% Increase between 510% Increase between 15% No change Decrease between 15% Decrease between 510% Decrease between 1025% Decrease by 25%+
1 1 2 2 10 22 18 22
22
/ ICD Research
8.2.1 Planned change in marketing expenditure levels by region A regional analysis of spending budgets shows that the largest increase in budgets, of 12%, is expected by respondents that primarily operate in the Asia-Pacific region, whereas respondents from Europe expect the lowest growth, of 8%, in 2011. Notably, 52% of respondents from Asia-Pacific expect an increase in marketing expenditure of at least 10%. Although profits were not so strong, we have obtained a good number of customers in the last 12 months due to a widespread marketing initiative we started last year. As we grow in 2011, we need to extend our reach further by means of new-age social media and other electronic marketing, states a C-level executive of a medical device supplier company operating in the Asia-Pacific. Interestingly, 29% of respondents from companies in Europe and 21% from North America expect no significant change in their marketing budgets, suggesting a level of uncertainty in these regions. A board-level respondent of a mining equipment manufacturing company based in North America states: Our company is concentrating on being economical and reaching our profit margin targets, which have a higher priority.
Table 29: Planned Change in Marketing Expenditure Levels by Region (%), 2011
Change in marketing expenditure Increase by 25%+ Increase between 1025% Increase between 510% Increase between 15% No change Decrease between 15% Decrease between 510% Decrease between 1025% Decrease by 25%+ Overall N.B. Results may not equal 100% due to rounding Source: ICD Research Industry Survey 2011 ICD Research North America 17% 29% 22% 8% 21% 1% 1% 1% 1% 100% Europe 13% 17% 22% 12% 29% 3% 2% 1% 1% 100% Asia-Pacific 23% 29% 21% 7% 14% 2% 2% 1% 100% Rest of the World 26% 14% 25% 12% 17% 2% 2% 2% 1% 100%
Figure 32: Planned Change in Marketing Expenditure Levels by Region (%), 2011
Question: How do you expect your organization's marketing and advertising expenditure to change over the next 12 months and why? (% respondents by region)
17 23 26 29
29 22 22
Increase by 25%+
13

14 Increase between 510%
17
21 8
25
12 12 21 29
No change
1 Decrease between 15%
14
17
2 1
2 2

0 1 Decrease by 25%+ 1 1
1
2 1
North America
Europe
Asia-Pacif ic
Rest of the World
/ ICD Research
8.2.2 Planned change in marketing expenditure levels by company turnover Respondents from larger companies by turnover expect their marketing expenditures to increase by 13% over the next 12 months, while respondents from medium-sized and small companies expect expenditures to increase by 11% and 10% respectively. While 44% of respondents from small companies expect their marketing budgets to rise between 5% and 25% in 2011, 46% of respondents from large companies expect their budgets to increase by at least 10%. Table 30: Planned Change in Marketing Expenditure Levels by Company Turnover (%), 2011
Planned changes Increase by 25%+ Increase between 1025% Increase between 510% Increase between 15% No change Decrease between 15% Decrease between 510% Decrease between 1025% Decrease by 25%+ Overall Less than US$100 million 18% 22% 22% 10% 23% 2% 2% 1% 1% 100% US$ 100 millionUS$1 billion 16% 26% 33% 7% 12% 5% 2% 100% More than US$1 billion 23% 23% 39% 15% 100%
Figure 33: Planned Change in Marketing Expenditure Levels by Company Turnover (%), 2011
Question: How do you expect your organization's marketing and adverising expenditure to change over the next 12 months and why? (% respondents by company turnover)
Increase by 25%+
16 18
23
Increase between 1025% Increase between 510% Increase between 15% No change Decrease between 15% Decrease between 510% Decrease between 1025% Decrease by 25%+
7
10
22 23 22
26 33
39
15
12
23
2 0 2 0 0 0
0 0
1
1
ICD Research
8.2.3 Planned change in marketing expenditure levels vs. revenue growth expectations Notably, 57% of respondents that express optimism about revenue growth expectations also expect their marketing expenditures to increase between 5% and 25%. Interestingly, 55% of respondents that expect no change in their revenue growth, as seen in section 3.1, expect to increase their marketing expenditures by at least 5% in 2011. However, 30% of respondents that are less optimistic about revenue growth still expect their marketing budgets to increase between 1% and 10%. This indicates that, although a few companies are less optimistic about revenue growth, they are still keen to invest in marketing initiatives to drive sales to overcome the difficult period. Figure 34: Change in Marketing Expenditure Levels by Revenue Growth Expectations (%), 2011
Question: How do you expect your organization's marketing expenditure to change over the next 12 months and why? (% respondents by revenue growth expectations)
25
Increase by 25%+
11 11 19
34
Increase between 1025% 6 Increase between 510% 10

14
23 14 18
25
15 16 27
38 45 44
No change 29
3

11
0 0 0 2
Decrease by 25%+
2
7 Neutral Less optimistic Don't know

ICD Research
More optimistic
8.3 Future investment in marketing and sales technology

Industry respondents were also asked which marketing and sales solutions their companies intend to purchase in the next 12 months, providing understanding into the key investments earmarked for the development of a company sales strategy. The responses received help companies to understand the evolution of various marketing tools and solutions, in order that service providers can align their offerings according to the projected requirements. Market intelligence research, client acquisition solutions, business performance management solutions and CRM solutions emerged as the most important areas of investment among marketing and sales solutions activities in 2011. Overall, respondents plan to invest in market research to offer a better likelihood of greater return on investment (ROI). Market intelligence research is still a relatively new practice, but across all markets, however, companies do appear to conduct some form of market and competitive intelligence activity, such as continuous monitoring, regular reviews and ad-hoc reports. Business performance management provides companies with a measure of improving the effectiveness or efficiency of sales processes. These solutions ensure greater ROI and increase accountability across different functions of management. In a competitive environment such as the aviation business, maintaining a loyal customer base, which generates a major part of the companys revenue, is one of the key drivers for success. CRM systems help companies to execute business strategies on a more consistent and cost-effective basis, and to manage customer experience through all points of contact, including initial online and offline enquiries, follow-up, sales experience, customer service, aftercare and loyalty programs. CRM systems are used by companies to develop existing customer target groups. An upcoming marketing activity is event marketing, which provides optimal ROI as brand preference and awareness are considered to be the most effective ROI drivers. Other marketing activities include email auto-responders, webcasts, search engine optimization, and pay-per-click strategies. Table 31: Planned Investment in Marketing and Sales Technologies (%), 2011
Planned investment Market intelligence research Client acquisition solutions Business performance management solutions CRM systems Direct internet distribution systems Competitor intelligence research Loyalty solutions Customer segmentation solutions ERP solutions Other None Don't know % Respondents 34% 25% 22% 21% 21% 20% 15% 13% 12% 2% 20% 6%
8.3.1 Planned investment in marketing and sales technologies by region An analysis of responses by region reveals minor variations. Irrespective of region, market intelligence research and client acquisition solutions are identified as one of the most important areas of investment. Figure 35: Planned Investment in Marketing and Sales Technologies by Region (%), 2011
Question: Which of the following marketing and sales solutions do you expect your company to invest in over the next 12 months? (% respondents by region)
Market intelligence research CRM systems Client acquisition solutions
Business performance management solutions Loyalty solutions
10
13 16 19 21
26 25
21 23
37
39
48
19
24 23 25 29
31
31
21 18 21 24 21
23
Direct internet distribution systems Competitor intelligence research

11 16 18
31
Customer segmentation solutions

8
13 16 14
ERP solutions Others

1 2 2 2
16 17
19
None
13
15
26
Don't know
5 5
North America
Europe
Asia-Pacific
Rest of the World

ICD Research
8.3.2 Planned investment in marketing and sales technologies by company turnover An analysis of responses by company turnover identified minor variations in responses and attitudes. Irrespective of company turnover, market intelligence research and CRM systems are identified as two of the major areas of investment. However, client acquisition solutions is considered more important by small companies, whereas investment on business performance management solutions is more important among respondents from medium-sized and large companies. Figure 36: Planned Investment in Marketing and Sales Technologies by Company Turnover (%), 2011
Question: Which of the following marketing and sales solutions do you expect your company to invest in over the next 12 months? (% respondents by turnover)
34
Market intelligence research

26
36
54
Client acquisition solutions
16 15
21 41
Business performance management solutions

31 21
Direct internet distribution systems

20 21 15 20
23 31
Competitor intelligence research
CRM systems
14 14
31 13
39 39
Loyalty solutions
Customer segmentation solutions

15 10
18
ERP solutions
2 2 0 21
27
31
Others
None
6
15
Don't know
0
ICD Research
9 Marketing and Sales Strategies

Well-executed marketing and sales strategies are vital to companies future success and their ability to identify and win new business and retain existing contracts. This is particularly critical in unfavorable market conditions, when many buyers in the industry will be reviewing or renegotiating their supplier bases. This chapter identifies organizations key marketing aims and sales strategies to be adopted to deal with market conditions in 20112012. In addition, it aims to identify the new media channels that are currently considered favorites in terms of business generation, while the most important criteria for marketing agency selection and marketing and sales attitudes are also examined.
Key Findings:
Email and newsletters, corporate and brand websites, online content sites, conferences and events and social media and networking sites are expected to witness the strongest investment from marketers. Online content sites and email and newsletters dominate the future investment areas for respondents across all regions. The ability to target specific audience niches, the ability to generate leads and low cost are considered to be the most critical success factors for supplier selection. Irrespective of the operating region and turnover, companies assign higher importance to the ability to target specific audience niches and the ability to generate leads or setup customer meetings as critical success factors for supplier selection.
9.1 Future investment by media channel

Industry executives have provided their channel-specific media spending expectations for the next 12 months; respondents reveal which channels they are looking to invest more or less in over the next 12 months. New media such as email and newsletters, corporate and brand websites and online content sites are expected to witness the strongest investment, as identified by 55%, 46% and 43% of respondents respectively. Conversely, the effectiveness of media such as radio, outdoor advertisements, television and video newspaper is gradually declining due to minimal options of differentiation, high costs and low target segmentation, and are therefore expected to attract the least investment. A C-level respondent of an airport industry supplier company based in North America agrees: Our company believes in maintaining a loyal customer base, and our interactive company website and blogs helps us to maintain this relationship. In the current market, customers demand valuable, relevant content that addresses their requirements. Websites are increasingly being tailored to make content attractive to prospective clients and improve web presence.
Investing in search engine marketing such as Google Adwords, Yahoo search engine marketing and MSN adCenter is also growing. In order to attract traffic to their websites, companies are increasingly adopting methods such as designing search engine friendly web sites using SEO techniques, ensuring key words and phrases are properly used within the site, and adopting search engine marketing (SEM) campaigns. Figure 37: Future Investment by Media Channels (%), 2011
Question : Do you expect to increase or decrease expenditure on the following media over the next 12 months? (% respondents)
Email and newsletters 55 46 34 33 3 3 22 15 8
Corporate and brand websites

Online content sites
43
40
34
39
2 4
9
16
3 10
Conferences and events

Social media and networking sites
40
38
31
36
4
3
4
6
22
17
Online portals
Public relations
36
30 39
40
9
4 3
3
17
19
Direct mail
Search
29
25 37
41
4 7
21
28
Webcasting
Trade magazines
24
20 46
46
9
10
4
5
22
16
Consumer business magazines

Telemarketing
18
16
34
43
5
9 5
34
28
Sponsorship
Newspapers Television and Video
9
9 8 5 32
38
35 38 9 7 7 5
11
5 7
38
45 40 50
Outdoor
Radio
Increase
No change
Decrease
Don't know
Not applicable
ICD Research
9.1.1 Future investment by media channel by region Online content sites and email and newsletters dominate the future investment areas for respondents across all regions. However, some variations can be observed regarding the preferences of respondents by region. Respondents from companies with business operations in North America and Europe identified social media, and corporate and brand websites as the most promising media channels, while respondents from companies that operate in the Rest of the World consider public relations and online portals to be most important. Many respondents in North America have started using social networking in everyday business, including the maintenance of relationships with existing customers and the acquisition of new customers; Facebook, YouTube and Twitter are social media tools frequently used by companies for these purposes. Figure 38: Future Investment by Media Channels by Region (% Increase Responses), 2011
Question: Do you expect to increase or decrease expenditure on the following media over the next 12 months? (% respondents by region)
Online content sites Public Relations Telemarketing
60%
Online portals Consumer andbusiness magazines
50%
40%
Outdoor
30%
Trade magazines
20%
10%
Newspapers
0%
Television and Video
Radio
Webcasting Sponsorship Search
Direct mail Email and newsletters
North America
Europe
Asia-Pacif ic
Rest of the World
ICD Research
9.1.2 Planned change in marketing spend by company turnover A comparison of planned change in marketing expenditure by company turnover reveals no significant differences. Irrespective of company size, respondents expressed a strong preference for new media channels such as online portals, emails and newsletters, and corporate websites. However, small and large company respondents identified social media and networking sites as other prospective channels for investment, whereas respondents from large companies prefer to invest in conferences and events. Figure 39: Future Investment by Media Channel by Company Turnover (% Increase Responses), 2011
Question: Do you expect to increase or decrease expenditure on the following media over the next 12 months? (% respondents by turnover)
Online content sites 70%
Public Relations
Online portals
60% Telemarketing
50% 40%
Consumer andbusiness magazines
Outdoor 30%
20%
Trade magazines
10%
0%
Newspapers
Television and Video
Radio
Webcasting
Direct mail
Sponsorship Search
Email and newsletters
US$100 millionUS$1billion
ICD Research
9.2 Marketing agency selection criteria

This section provides insights into the marketing needs of airport industry suppliers and how they are looking to develop their marketing and sales strategies in the future. In the process of choosing marketing agencies, the ability to target specific audience niches, the ability to generate leads and low cost are considered to be deciding factors by 53%, 39% and 38% of C-level respondents respectively. For example, in an attempt to target specific customer segments, American Airlines and British Airways chose advertising agency OgilvyOne, which began promoting the Miles Millionaire loyalty contest on Facebook, Twitter and YouTube in April 2011 to acquire new program members, targeting existing American Airlines AAdvantage and British Airways Executive Club members, as well as prospective members. In order to reduce the operating costs, low cost is considered to be a critical factor by C-level respondents who look for suppliers which can provide solutions at competitive prices. For example, MedAssets, who partner with healthcare providers to improve their financial strength, announced in April 2011 that it recognized many cost-competitive suppliers and awarded them for cost-containment achievements. The move enables suppliers to gain access to MedAssets group purchasing agreements to supply their products to hospitals and healthcare facilities. At present, most supplier companies prefer to focus marketing strategies on a narrow section of prospective customers rather than the total market, as this helps to reduce costs. Moreover, 34% suppliers consider flexibility in customizing services to be a crucial factor for business continuity. Therefore, companies endeavor to incorporate more flexibility, scalability, extensibility and integration across their distribution channels. This encourages collaborative relationships with partners. Figure 40: Marketing Agency Selection Criteria (%), 2011
Question: What are the 3 most important attributes of a marketing and advertising vendor to your company? (% respondents)
Ability to target specific audience niches Ability to generate leads or setup customer meetings Low cost Flexibility in customizing services Ability to customize and target ad delivery Strategic and tactical consulting Access to specific audience demographics Thorough reporting and analysis Ability to integrate and co-ordinate global, national and local campaigns Size and breadth of audience Other
3 12 16 19
25 25
53 39 38 34 30
ICD Research
9.2.1 Marketing agency selection criteria by region Regardless of region, respondents assigned the most importance to the ability to target specific audience niches, low cost and ability to generate leads as critical success factors for selecting marketing agencies for their companies.
Figure 41: Marketing Agency Selection Criteria by Region (%), 2011

Question: What are the 3 most important attributes of a marketing and advertising vendor to your company? (% respondents by region)
53 54
Ability to target specific audience niches

38 39 39
37 34 33 33 35 34 25 30
50 52
Ability to generate leads

34
Ability to customize and target ad delivery
40
45
Access to specific audience demographics
33
35
Low cost
Thorough reporting and analysis
20
30 23
30 27
25 30
Flexibility in customizing services

16
22
Strategic and tactical consulting
13 11
Ability to integrate and co-ordinate global, national and local campaigns

12 11
15
20 18
23
Size and breadth of audience

2
20
27
Others
2
North America
Europe
Asia-Pacific
Rest of the World

ICD Research
9.2.2 Marketing agency selection criteria by company turnover Irrespective of turnover, companies assign higher importance to the ability to target specific audience niches and the ability to generate leads or setup customer meetings as critical success factors, whereas the ability to customize and target ad delivery and strategic and tactical consulting are considered important by more respondents from larger companies.
Figure 42: Marketing Agency Selection Criteria by Company Turnover (% ), 2011

Question: What are the 3 most important attributes of a marketing and advertising vendor to your company? (% respondents by company turnover)
53
Ability to target specific audience niches

39 38
46 38
50 55
Ability to generate leads or setup customer meetings
Low cost
9
33
34
Flexibility in customizing services

29
35
38 36
Ability to customize and target ad delivery
18 25 25
18 24
Access to specific audience demographics
Strategic and tactical consulting

18
28
46
Thorough reporting and analysis

15
23
27
Ability to integrate and co-ordinate global, national and local campaigns

12
28
18
Size and breadth of audience

0 3
10
Other
0
9
US$100 million - US$1billion
ICD Research
APPENDIX
10 Appendix
10.1 Methodology
ICD Researchs dedicated research and analysis teams consist of experienced professionals with industry backgrounds in marketing, market research, consulting and advanced statistical expertise. ICD Research adheres to the Codes of Practice of the Market Research Society (www.mrs.org.uk) and the Society of Competitive Intelligence Professionals (www.scip.org). All ICD Research databases are continuously updated and revised.
10.2 Contact us
If you have any queries about this report, or would like any further information, please contact icdreports@progressivedigitalmedia.com
10.3 About ICD Research

ICD Research is a full-service market research agency and premium business information provider, specializing in industry analysis in a broad set of B2B and B2C markets. ICD Researchs products and services help companies to make better decisions, win business and position themselves more effectively. ICD Researchs areas of expertise include online research, qualitative and quantitative research, industry analysis, custom approaches and actionable insights. ICD Research has access to over 500 in-house analysts and journalists and a global media presence in over 30 professional markets, enabling unique and insightful research via trusted business communities.
10.4 Disclaimer
All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, ICD Research. The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions and recommendations that ICD Research delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such, ICD Research can accept no liability whatsoever for actions taken based on any information that may subsequently prove to be incorrect.

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Panel Report

Global CEO Business Outlook Survey 20112012

Reference code: ICDR1250 Published: August 2011

Executive Summary ...................................................................................................................9 Industry Dynamics ...................................................................................................................11

Market Growth Outlook............................................................................................................20

4.2 Growth expectations in developed countries ................................................................................ 25

Threats and Opportunities ......................................................................................................28

Procurement Dynamics ...........................................................................................................34

6.2 Planned change in procurement expenditure ............................................................................... 38

6.3 Variations in regional supplier prices ........................................................................................... 41

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Procurement Behaviors and Strategies ................................................................................44

Marketing Spend Activity ........................................................................................................50

8.2 Planned change in marketing expenditure levels ......................................................................... 54

8.3 Future investment in marketing and sales technology .................................................................. 59

Marketing and Sales Strategies .............................................................................................. 62

9.2 Marketing agency selection criteria ............................................................................................. 66

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Profile of survey respondents

Table 2: Respondents by Global Company Turnover (%), 2011

Table 3: Respondents by Region (%), 2011

Page 8 Published: August 2011

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3.1 Revenue growth expectations

Page 11 Published: August 2011

Figure 1: Revenue Growth Optimism (%), 2011

Source: ICD Research Industry Survey 2011

Page 12 Published: August 2011

Figure 2: Revenue Growth Optimism by Region (%), 2011

Rest of the World

74 Neutral Less optimistic Don't know

Page 13 Published: August 2011

Figure 3: Revenue Growth Optimism by Turnover (%), 2011

Less than US$100 million

US$100 millionUS$1 billion

More than US$1 billion

Source: ICD Research Industry Survey 2011

Page 14 Published: August 2011

Figure 4: Company Revenue Growth Optimism: Cross-Industry Comparisons (%), 2011

58% 54% 48% 48% 49% 50%

Source: ICD Research Analysis

Page 15 Published: August 2011

3.2 Future developments in business structure

Source: ICD Research Industry Survey 2011

Page 16 Published: August 2011

3.3 Merger and acquisition activity predictions

Page 17 Published: August 2011

Figure 6: Merger and Acquisition Activity Expectations by Region (%), 2011

Increase 39 22 No change 19 Decrease 2 2 2

18 Europe Asia-Pacific Rest of the World

Page 18 Published: August 2011

Source: ICD Research Industry Survey 2011

Page 19 Published: August 2011

MARKET GROWTH OUTLOOK

4 Market Growth Outlook

Figure 8: Top Ten Growth Regions (%), 2011

Source: ICD Research Industry Survey 2011

Page 20 Published: August 2011