International Marketing – Building a Knowledge Base

Pesewa Presentat ions

The Importance of the Knowledge Base• Key condition for international marketing

success

• Companies need to accumulate data and information through research

• Primary and secondary research

• It should have a business purpose

Defining Marketing Research

• “Systematic and objective identification, collection, analysis and dissemination of data for the purpose of improving decision making related to the identification and solutions of problems and opportunities in marketing.”

AMA• Marketing research is the systematic search for, and analysis of, information

relevant to the identification and solution of problems relevant to the firm in marketing decisions and activities.– Functions: description and explanation, prediction, evaluation.– To provide information for planning, control and evaluation.– Information from both present and potential customers is of particular

importance. Customer satisfaction measurement.

International Market Research• The tools may be the same but the environment

differs. Although the objectives can be the same, the execution of the research may differ as a process.

• New parameters• New environments• Number of factors involved• Broader definition of competition

Research Problems• Language• Lack of published market information• Time factor• Lack of international standardisation and so

statistical bases.• Governments compile statistics for their own

use.• Beware local market distortion factors

Comparability of National Statistics?• Very little! Government is the largest single

source of statistical information, compiled for its own purposes.

• Harmonisation is taking place across nations.

Identifying Messages

• Can we find out hidden information in officially published statistical data?

• How can such analysis and derived information help marketing decision makers?

Decision Making for Foreign Markets

• More expensive, more variables involved, special legal, financial and area skills required

• Less likely to arise from company market survey, more likely to result from external pressures on the firm

• More likely to be result of selective analysis of market opportunities rather than universal and comparative analysis

Steps in Secondary Data Research Process

• Understand the need for information• Determine research objectives• Identify sources of data• Evaluate data source, quality and

compatibility• Obtain data• Interpret and analyse data• Present research results

S.Tamer Cavusgil

Sequential Process of Researching Foreign Markets

• Stage 1: Preliminary screening for attractive country markets – so, which foreign markets warrant detailed investigation?

• Stage 2: Assessment of industry market potential - so, what is the aggregate demand in each of the selected markets?

• Stage 3: Company sales potential analysis – so, how attractive is the potential demand for company products and services?

Research Plan• Background information• Analysis of supply• Demand and end-use analysis• Demand forecasts• Information on prices• Market access• Trading practices• Sales promotion• Documentation

Evaluating Data Source and Quality

• Source Quality• Data Compatibility• Data Quality

• Comparability of data from different countries often a problem: different definitions, different methods of data collection, different views and uses of products.

Most Critical Information• Macro Data

– Tariff information– Import/export information– Non-tariff measures– Foreign export/import data– Data on government trade policy

• Micro data– Local laws and regulations– Size of market– Local standards & specifications– Distribution system– Competitive activity

Market segmentation• A breakdown into segments of customers for particular products in particular

countries.• Need to consider countries, channels, customer segments, etc.• Bases of segmentation

– General market indicators; specific product indicators– Several models available as guides to market segmentation, no one model is a

complete guide.• psychographic segmentation.• segmentation by core values for certain products.

• Strategies available to increase sales, include (Asoff’s product/market matrix):– (a) increase penetration: extra market share in existing markets– (b) develop products: product innovation– (c) extend markets: new users for existing basic offerings– (d) widen activities: new products and markets around core activities.

Need to Know Behaviour, attitudes and needs of– Consumers– Intermediaries– Competitors

and response of consumers and intermediaries to these activities

Where Data is Lacking…

• Market Quality Index calculated by averaging the percentage figures over eight variables (apart from population)– First 4 reflect economic development– Next 4 reflect quality of life

Market Quality Index and Market Potential• Population

• Income per capita• Employment in manufacturing????• Steel consumption• Kilowatt hours produced• Motor vehicle registration• Telephones in use• Radio licences• Television licences

Foreign Market Entry Decision Criteria

• Speed of market entry desired• Costs (direct and indirect)• Flexibility• Risk• Investment payback period• Long term profit objectives

Operating Risk Reduction Mechanisms• Production & Logistics– Stimulation of local suppliers.– Specialisation of production.– Multiple sourcing of production.– Location of facilities e.g. refineries.– Control of transportation.– Control of patents and know-how.

• Marketing– Marketing control.– Brand name & trademark control.

Operating Risk Reduction Mechanisms• Financial– Maximising local debt finance– Localising capital structure.– Utilising contractual protection devices.– Internal money management practices.

• Organisation– Joint ventures.– Multiple nationality.– Management contracts.

Operating Risk Reduction Mechanisms

• Political– Gain home country political support.– Political patronage.– Active external relation strategy.– Bribery & illicit methods.