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International Marketing International Marketing Researches Researches
Stefano PelleStefano Pelle October 2013October 2013
ContentsContents
Marketing Researches: an indispensable Marketing Researches: an indispensable tooltool
The most common mistakesThe most common mistakes Global Marketing Research Process and Global Marketing Research Process and
PhasesPhases Why and Where Marketing researches: a Why and Where Marketing researches: a
practitioner perspectivepractitioner perspective Some ExamplesSome Examples
What is Marketing?What is Marketing?
““Marketing is the process of planning and Marketing is the process of planning and executing the conception, pricing, executing the conception, pricing, promotion and distribution of ideas, goods promotion and distribution of ideas, goods and services to create exchanges that and services to create exchanges that satisfy individual (customer)satisfy individual (customer) and and organizational objectivesorganizational objectives””. .
Marketing Researches and Marketing Researches and Marketing Marketing
As per the above definition marketing As per the above definition marketing researches are imperative for a company to researches are imperative for a company to know what type of products or services would know what type of products or services would be profitable to introduce in the marketbe profitable to introduce in the market
Also with respect to its existing products in Also with respect to its existing products in the market, a good market research enables the market, a good market research enables a company to know if it has been able to a company to know if it has been able to satisfy customer needs and whether any satisfy customer needs and whether any changes need to be made in the marketing changes need to be made in the marketing mixmix
Marketing ResearchesMarketing Researches
An Indispensable tool to compete in the An Indispensable tool to compete in the market placemarket place
Is this true?Is this true?
Marketing ResearchesMarketing Researches
The most used decision making tools The most used decision making tools
Rules of thumbRules of thumb Back of the envelope calculationsBack of the envelope calculations Gut feelingGut feeling
Marketing ResearchesMarketing Researches
The most effective decision making tools The most effective decision making tools
Common senseCommon sense
Marketing ResearchesMarketing Researches
Though what mentioned earlier is often Though what mentioned earlier is often the reality of facts, marketing researches the reality of facts, marketing researches are indeed extremely useful tools to help are indeed extremely useful tools to help decide in a more accurate waydecide in a more accurate way
At times the empirical tools can be At times the empirical tools can be deceptive and bring unpleasant surprises deceptive and bring unpleasant surprises and waste of resourcesand waste of resources
The Most Common The Most Common MistakesMistakes
An American company learned that tomato ketchup An American company learned that tomato ketchup was not available in Japanwas not available in Japan
In order to gain first mover advantages, the company In order to gain first mover advantages, the company immediately shipped without first hesitation (and immediately shipped without first hesitation (and researches) a large quantity of its ketchup to Japanresearches) a large quantity of its ketchup to Japan
The products remained longtime on the shelves The products remained longtime on the shelves before being withdrawn and disposed ofbefore being withdrawn and disposed of
Successive researches showed that Japanese Successive researches showed that Japanese consumers preferred soy to tomato-based consumers preferred soy to tomato-based condiments. condiments.
From Ricks, David (1983) Big Business Blunders. Dow Jones-Irwin, Homewood, Illinois
Ignoring the Need for Ignoring the Need for Marketing ResearchesMarketing Researches
In China Toyota was forced to withdraw an ad In China Toyota was forced to withdraw an ad showing some stone lions bowing to a Toyota showing some stone lions bowing to a Toyota PradoPrado
The Ad struck an historic nerve since the lions The Ad struck an historic nerve since the lions resembled those flanking the Marco Polo bridge resembled those flanking the Marco Polo bridge in Beijing, site of the opening battle of the 1937 in Beijing, site of the opening battle of the 1937 Japan’s invasion of ChinaJapan’s invasion of China
From Cultural pitfalls tarnish some Ads in China, Asian Wall Street Journal, January 19 th, 2004
Ignoring the Need for Ignoring the Need for Marketing ResearchesMarketing Researches
Kentucky Fried Chicken (KFC) learned through secondary Kentucky Fried Chicken (KFC) learned through secondary data about Brazilian loving the chicken and decided to enter data about Brazilian loving the chicken and decided to enter the Brazilian, market planning to open 100 storesthe Brazilian, market planning to open 100 stores
However the Initial reactions in Sao Paulo were disappointingHowever the Initial reactions in Sao Paulo were disappointing
In Brazil Street corner vendors sell low-priced charcoal-In Brazil Street corner vendors sell low-priced charcoal-broiled chicken virtually everywherebroiled chicken virtually everywhere
Successive researches revealed that local consumers Successive researches revealed that local consumers preferred the taste of charcoal broiled to deep fried chickenpreferred the taste of charcoal broiled to deep fried chicken
Insufficient Marketing Insufficient Marketing ResearchResearch
From Ricks, David (1983) Big Business Blunders. Dow Jones-Irwin, Homewood, Illinois
A U.S. soft drink company conducted research in A U.S. soft drink company conducted research in Indonesia to determine market potential Indonesia to determine market potential
The research focused on the major urban areas: the The research focused on the major urban areas: the results obtained were extrapolated to the whole results obtained were extrapolated to the whole countrycountry
The company established large bottling and The company established large bottling and distribution facilitiesdistribution facilities
Sales were disappointing: rural and urban Sales were disappointing: rural and urban consumers have very different behaviors. Only consumers have very different behaviors. Only foreign visitors and tourists purchased the product.foreign visitors and tourists purchased the product.
Misleading ResearchMisleading Research
From Ricks, David (1983) Big Business Blunders. Dow Jones-Irwin, Homewood, Illinois
Global Marketing Global Marketing ResearchResearch
M.R. : A Necessary ToolM.R. : A Necessary Tool
Given the complexity of the global Given the complexity of the global marketplace, solid marketing research is marketplace, solid marketing research is critical for a host of global marketing critical for a host of global marketing decisionsdecisions
Most of the cultural blunders in global Most of the cultural blunders in global marketing stem from inadequate marketing marketing stem from inadequate marketing researchresearch
Conducting Global M.R.Conducting Global M.R.
Six steps in conducting global market researchSix steps in conducting global market research
1. Define the research problem(s)1. Define the research problem(s)
2. Develop a research design2. Develop a research design
3. Determine information needs3. Determine information needs
4. Collect the Data (secondary and primary)4. Collect the Data (secondary and primary)
5. Analyze the data and interpret the results5. Analyze the data and interpret the results
6. Report and present the findings of the study6. Report and present the findings of the study
Research Problem DefinitionResearch Problem Definition
A well defined problem is often a half solved oneA well defined problem is often a half solved one
Once the nature of the research problem becomes Once the nature of the research problem becomes clear it needs to be translated into specific research clear it needs to be translated into specific research questions: questions: – e.g. What does the target consumer want from a e.g. What does the target consumer want from a
similar product? What is he getting from the similar product? What is he getting from the existing competitors?existing competitors?
In an international context the marketing research In an international context the marketing research problem formulation may be hindered by the problem formulation may be hindered by the self self reference criterionreference criterion
Self Reference CriterionSelf Reference Criterion
Refers to the unconscious tendency to resort to Refers to the unconscious tendency to resort to their own cultural experience and value systems their own cultural experience and value systems to interpret a business situationto interpret a business situation
A four step correction mechanism for this:A four step correction mechanism for this:– Define the business problem (BP) as per own Define the business problem (BP) as per own
cultureculture– Define the same as per the host cultureDefine the same as per the host culture– Isolate the SRC and understand how it Isolate the SRC and understand how it
interferes with the BPsinterferes with the BPs– Redefine the BP with the SRC influenceRedefine the BP with the SRC influence
Research Problem DefinitionResearch Problem Definition
Even more dangerous than the SRC is the Even more dangerous than the SRC is the trap of trap of ethnocentrismethnocentrism, the belief that , the belief that one’s own culture is superior to othersone’s own culture is superior to others
This leads to major mistakes not only in the This leads to major mistakes not only in the researches but often also in products researches but often also in products formulationsformulations
Many MNCs have seen failures in their Many MNCs have seen failures in their launches due to thislaunches due to this
Research Problem DefinitionResearch Problem Definition
A major difficulty in formulating the research A major difficulty in formulating the research problem is the lack of familiarity with the problem is the lack of familiarity with the foreign environmentforeign environment
This may lead to false assumptions hence This may lead to false assumptions hence eventually implying misleading research resultseventually implying misleading research results
Some preliminary and exploratory researches Some preliminary and exploratory researches can reduce part of the uncertainty: a useful can reduce part of the uncertainty: a useful tool for this are Omnibus Surveystool for this are Omnibus Surveys
Conducting Global M.R.Conducting Global M.R.
Six steps in conducting global market researchSix steps in conducting global market research
1. Define the research problem(s)1. Define the research problem(s)
2. Develop a research design2. Develop a research design
3. Determine information needs3. Determine information needs
4. Collect the Data (secondary and primary)4. Collect the Data (secondary and primary)
5. Analyze the data and interpret the results5. Analyze the data and interpret the results
6. Report and present the findings of the 6. Report and present the findings of the studystudy
Research Design and Research Design and InformationInformation
Depending on the problems, several kinds Depending on the problems, several kinds of research designs could be envisaged. It of research designs could be envisaged. It could even be possible to go through could even be possible to go through several round of researches, but this would several round of researches, but this would also depend on the budget available also depend on the budget available
Once the research issues have been stated, Once the research issues have been stated, the management needs to determine the the management needs to determine the information needs: this will also help fine information needs: this will also help fine tune the most adequate research designtune the most adequate research design
From: Young, R.B. and Javalgi, R.G. (2007). International marketing research: A global project management perspective. Business Horizon 50: 113-122
The Marketing Research The Marketing Research ProcessProcess
Secondary DataSecondary Data
Collected by Collected by persons persons other than other than the the researcher researcher for general for general purposespurposes
Primary DataPrimary Data
Collected by Collected by the the researcher researcher ad hoc for ad hoc for the specific the specific researchresearch
Data CollectionData Collection
Sources of Sources of Secondary DataSecondary Data
Data Sources
Primary data sources
Secondary data sources
Internal records
External sources
Published data
Standardized sources of
marketing data
•Sales results (outcomes)
•Marketing activity (inputs)
•Cost information
•Distributor reports and feedback
•Customer feedback
•Consumer Attitudes and Opinion Polls
•Market Segment Definition
•Market Tracking
•Media Usage and Promotion Effectiveness Monitoring
Printed
Electronic
•Indexes
•Dictionaries and Encyclopedias
•Directories
•Statistical Sources
Secondary DataSecondary Data
Selected Secondary Data Sources:Selected Secondary Data Sources: National Trade Data Bank, U.S. National Trade Data Bank, U.S. Department of Commerce, CIA Factbook, Department of Commerce, CIA Factbook, Japan External Trade Organization (JETRO), Japan External Trade Organization (JETRO), OECD, IMF, The Economist Intelligence OECD, IMF, The Economist Intelligence Unit (E.I.U.), ACNielsen Co, Taylor Nelsen Unit (E.I.U.), ACNielsen Co, Taylor Nelsen Sofres, etc.Sofres, etc.
Secondary Global Marketing Secondary Global Marketing ResearchResearch
Problems with Secondary Data ResearchProblems with Secondary Data Research::
– Accuracy of DataAccuracy of Data: definition of certain indicators : definition of certain indicators differ across countries (e.g. procedures to assemble differ across countries (e.g. procedures to assemble data in developed or emerging markets)data in developed or emerging markets)
– Age of dataAge of data: countries collect information at : countries collect information at different moments (e.g. frequency of Census) different moments (e.g. frequency of Census)
– Reliability over TimeReliability over Time: definitions of indicators can : definitions of indicators can be changed (e.g. basket of goods to measure be changed (e.g. basket of goods to measure inflation)inflation)
Secondary Global Marketing Secondary Global Marketing ResearchResearch
Problems with Secondary Data ResearchProblems with Secondary Data Research::
– Comparability of DataComparability of Data: comparing indicators across : comparing indicators across countries can be misleading, since data could have countries can be misleading, since data could have come from different sources. This could be partly come from different sources. This could be partly handled by triangulation. i.e. obtaining of data for handled by triangulation. i.e. obtaining of data for the same item from at least three different sources the same item from at least three different sources and analyze the reasons behind the differences. and analyze the reasons behind the differences. Comparability also depends on Comparability also depends on Functional Functional and and Conceptual EquivalenceConceptual Equivalence
Developing a Research Plan for Developing a Research Plan for Primary Data CollectionPrimary Data Collection
Do we need quantitative or Do we need quantitative or qualitative data?qualitative data?
What is the information worth What is the information worth (versus what will it cost to collect)?(versus what will it cost to collect)?
What will it cost if we donWhat will it cost if we don’’t get the t get the information?information?
What can be gained from the What can be gained from the information?information?
Primary Global Marketing Primary Global Marketing ResearchResearch
Focus Groups (Qualitative)Focus Groups (Qualitative)
Survey Methods for Cross-Cultural Marketing Survey Methods for Cross-Cultural Marketing Research:Research:– Questionnaire DesignQuestionnaire Design
Conceptual and Functional EquivalenceConceptual and Functional Equivalence Translation issues (parallel, back Translation issues (parallel, back
translation) translation) Scalar Equivalence: scores from subjects Scalar Equivalence: scores from subjects
of different countries should have same of different countries should have same meaning and interpretationmeaning and interpretation
Primary Global Marketing Primary Global Marketing ResearchResearch
– Sampling - A sampling plan consists of:Sampling - A sampling plan consists of: Sampling unit –what is the target population?Sampling unit –what is the target population? Sample size – how many people should be Sample size – how many people should be
surveyed?surveyed? Sampling procedure – how should respondents be Sampling procedure – how should respondents be
chosen?chosen?
– Contact Method Contact Method MailMail TelephoneTelephone Person-to-person interviewsPerson-to-person interviews Online Survey Methods :Online Survey Methods :
– E-mail surveysE-mail surveys– Random Web site surveysRandom Web site surveys– Panel Web site surveysPanel Web site surveys
Primary Global Marketing Primary Global Marketing ResearchResearch
Some of the issues encountered in Some of the issues encountered in collecting primary data are the followingcollecting primary data are the following
Issues of non responseIssues of non response Courtesy biasCourtesy bias Social desirability biasSocial desirability bias Redundancy (asking the same Redundancy (asking the same
question in different ways)question in different ways) Issues of ethnographic researchIssues of ethnographic research
Issues in Primary Global Issues in Primary Global ResearchesResearches
Non response:Non response:– mainly for reluctance to talk to strangers, mainly for reluctance to talk to strangers,
confidentiality, cultural biasconfidentiality, cultural bias Courtesy bias: Courtesy bias:
– respondents feel obliged to please the interviewerrespondents feel obliged to please the interviewer Social desirability: Social desirability:
– attempting to reflect a certain social status in attempting to reflect a certain social status in their answertheir answer
Redundancy:Redundancy:– helpful to ask the same questions in different helpful to ask the same questions in different
ways ways
Challenges In Global Marketing Challenges In Global Marketing ResearchesResearches
Structuring a research in several markets together Structuring a research in several markets together implies different problems vs. a one country implies different problems vs. a one country researchresearch
1. Complexity of research design due to 1. Complexity of research design due to environmental differencesenvironmental differences
2. Lack and inaccuracy of secondary data2. Lack and inaccuracy of secondary data
3. Time and cost requirements to collect primary 3. Time and cost requirements to collect primary datadata
4. Coordination of multi-country research efforts4. Coordination of multi-country research efforts
5. Difficulty in establishing comparability across 5. Difficulty in establishing comparability across multi-country studiesmulti-country studies
Example: choice of a Country to Example: choice of a Country to Expand the International Expand the International
presencepresence
The Country Selection
Leads the process of formulating the international marketing marketing startegy: influences the entry in the country and the
budget allocation
Wrong (or sub-optimal) choices imply a number of negative consequences, in terms of
actual costs as well as opportunity-costs
The Country AnalysisUniverse of countries to be considerd for the analysis
First screenin
g
Potentially attractive countriesSecond
screening
Countries attractive for the specific Industry
Third screenin
g
Countries attractive for the Company
Competitive Pressure
Market Size AssessmentMarket Size Assessment
When using market size estimates, keep When using market size estimates, keep the following rules in mind:the following rules in mind:– Use several different methodsUse several different methods– DonDon’’t be misled by numberst be misled by numbers– Do a sensitivity analysis by asking what-Do a sensitivity analysis by asking what-
if questionsif questions– Look for interval estimates with a lower Look for interval estimates with a lower
and upper limit rather than for point and upper limit rather than for point estimatesestimates
Understanding the Actual Understanding the Actual Market PotentialMarket Potential
Bangladesh has over 160 million people: Bangladesh has over 160 million people: its market potential is almost 3 times that its market potential is almost 3 times that of Italyof Italy
The per-capita Income in 2005 was The per-capita Income in 2005 was 21.000 US$ in Italia, 420 US$ in 21.000 US$ in Italia, 420 US$ in Bangladesh Bangladesh
Understanding the Actual Market Understanding the Actual Market PotentialPotential
The price of sugar in Holland is almost The price of sugar in Holland is almost double than the corresponding one in double than the corresponding one in India: there is a major opportunity in India: there is a major opportunity in importing sugar from India importing sugar from India
In India sugar export is bannedIn India sugar export is banned
Management of Global Marketing Management of Global Marketing ResearchResearch
Selecting a Research AgencySelecting a Research Agency: The : The following considerations should be taken following considerations should be taken into account while choosing agency:into account while choosing agency:– Level of expertiseLevel of expertise– QualificationsQualifications– Track recordTrack record– Credibility and experienceCredibility and experience– Client recordClient record
Coordination of Multi-Country ResearchCoordination of Multi-Country Research::– Emic versus Etic dilemmaEmic versus Etic dilemma
Designing Questionnaires to be Designing Questionnaires to be Administered GloballyAdministered Globally
Emic instruments Etic instruments
Management of Global Marketing Management of Global Marketing ResearchResearch
– The emic schoolThe emic school focuses on the focuses on the peculiarities of each countrypeculiarities of each country
– The etic approachThe etic approach emphasizes universal emphasizes universal behavioral and attitudinal traitsbehavioral and attitudinal traits
– In cross-cultural market research, the In cross-cultural market research, the need for comparability favors the etic need for comparability favors the etic paradigm with an emphasis on the paradigm with an emphasis on the cross-border similarities and parallelscross-border similarities and parallels
– Several approaches may be used to Several approaches may be used to balance these conflicting demandsbalance these conflicting demands
Enhancing Comparability of Enhancing Comparability of DataData
Emic analysisEmic analysis Ethnographic in Ethnographic in
naturenature Studies culture from Studies culture from
withinwithin Uses culturesUses cultures’’ own own
meanings and meanings and valuesvalues
Etic analysisEtic analysis From the outsideFrom the outside Detached Detached
perspective that is perspective that is used in multi-used in multi-country studiescountry studies
Enhances Enhances comparability but comparability but minimizes precisionminimizes precision
International Research StagesInternational Research Stages
Preliminary assessmentPreliminary assessment
Macro AnalysisMacro Analysis
Micro AnalysisMicro Analysis
Preliminary AssessmentPreliminary Assessment
Prescriptive Information: Laws, regulations, Prescriptive Information: Laws, regulations, rulings concerning taxes, earnings, dividends rulings concerning taxes, earnings, dividends in both host and home countriesin both host and home countries
General Environment: Overall review of socio-General Environment: Overall review of socio-cultural, political, and technological cultural, political, and technological environmentsenvironments
Economic Environment: GDP Growth trend, Economic Environment: GDP Growth trend, Balance of payments, interest rates, Balance of payments, interest rates, attractiveness of country currencyattractiveness of country currency
Research Stage 1: MacroResearch Stage 1: Macro
Preliminary OpportunitiesPreliminary Opportunities
Macro-level ResearchMacro-level Research (Estimation of General Market Potential) (Estimation of General Market Potential)
• Growth Trends for Similar ProductsGrowth Trends for Similar Products• Cultural Acceptance of Such ProductsCultural Acceptance of Such Products• Availability of Market DataAvailability of Market Data• Target Market SizeTarget Market Size• Stage of Market DevelopmentStage of Market Development• Taxes & Duties, LawsTaxes & Duties, Laws• Regulations concerning earnings/dividends in both host and Regulations concerning earnings/dividends in both host and
home countrieshome countries
Possible OpportunitiesPossible Opportunities
Research Stage 2: MicroResearch Stage 2: Micro
Micro-level ResearchMicro-level Research (Specific Factors Affecting the Product) (Specific Factors Affecting the Product)• Existing and Potential CompetitionExisting and Potential Competition• Entry BarriersEntry Barriers• Reliability of DatabasesReliability of Databases• Cost of EntryCost of Entry• Sales ProjectionSales Projection• Probable Product Acceptance (Demand estimates, Probable Product Acceptance (Demand estimates,
consumer behavior, review of marketing mix)consumer behavior, review of marketing mix)• Profit PotentialProfit Potential
Probable OpportunitiesProbable Opportunities
Target MarketsTarget Markets• Corporate Factors Influencing ImplementationCorporate Factors Influencing Implementation
Country Priority ListingCountry Priority Listing
Practical ExamplePractical Example
A Confectionery Company wants A Confectionery Company wants to enter one priority market to enter one priority market through a direct investment through a direct investment
Preliminary AssessmentPreliminary Assessment
Prescriptive InformationPrescriptive Information
Possibility of FDI in the confectionery Possibility of FDI in the confectionery sectorsector
Possibility of fully owned subsidiaryPossibility of fully owned subsidiary Food LawsFood Laws Fiscal LawsFiscal Laws Possibility of profit repatriationPossibility of profit repatriation Labor LawsLabor Laws
Preliminary AssessmentPreliminary Assessment
General InformationGeneral Information
Political stabilityPolitical stability Economic environment (GDP, Exchange,..)Economic environment (GDP, Exchange,..) Income distributionIncome distribution Structure of populationStructure of population Percentage of food expenses Percentage of food expenses Labor CostLabor Cost Cultural restrictionsCultural restrictions
Evaluation of political riskSource: Root (1994), p. 155 Copyright © 1994.
Research Stage 1: MacroResearch Stage 1: Macro
General Industry InformationGeneral Industry Information
Market size and trendMarket size and trend Presence of Competitors and general dataPresence of Competitors and general data Distribution networkDistribution network Trade typologies and marginsTrade typologies and margins Availability and prices of main materials Availability and prices of main materials
(e.g. sugar, glucose, flavors, wrappers,…) (e.g. sugar, glucose, flavors, wrappers,…) Consumer profile Consumer profile Consumption Patterns Consumption Patterns
Research Stage 2: MicroResearch Stage 2: Micro
Business related InformationBusiness related Information
Business planBusiness plan Definition of Marketing Mix variablesDefinition of Marketing Mix variables Market and Competitors details Market and Competitors details Sales projectionsSales projections