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DEVELOPING A GLOBAL VISION THROUGH MARKETING RESEARCH

Marketing

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Outline

DEVELOPING A GLOBAL VISION THROUGH MARKETING RESEARCH

Global perspective:  Assessing Market Entry with Good Information and Open Eyes

1. Breadth and Scope of International Marketing Research



2. The Research Process

3. Defining the Problem and Establishing Research Objectives

 Problems of Availability and Use of Secondary Data (Availability of Data; Reliability of Data; Comparability of Data; Validating Secondary Data)

5. Gathering Primary Data: Quantitative and Qualitative Research

6. Problems of Gathering Primary Data (Ability of Communicate Opinions; Willingness to Respond; Sampling in Field Surveys; Language and Comprehension)

7. Multicultural Research: A Special Problem

8. Research on the Internet: A Growing Opportunity

9. Estimating Market Demand (Expert Opinion; Analogy)

10. Problems in Analyzing and Interpreting Research Information

11. Responsibility for Conducting Marketing Research

12. Communicating with Decision Makers

Chapter Learning Objectives

What should we learn from Chapter 4:

-   The importance of problem definition in international research

-   The problems of availability and use of secondary data

-   Quantitative and qualitative research methods

-   Multicultural sampling and its problems in less-developed countries

-   Sources of secondary data

-         How to analyze and use research information

Global perspective:  ASSESSING MARKET ENTRY WITH GOOD INFORMATION AND OPEN EYES

Canada’s small and medium-size enterprises (SME) have traditionally ventured to the U.S. in efforts to evolve from locally based firms to international companies, and on to become global enterprises. The logic is simple: U.S. consumers are presumably very similar to Canadian consumers, therefore, an entry program based on a local market extension strategy will suffice. What works in Canada will work as well in the U.S., or so the thinking does.

Several Canadian researchers discovered that presumption of substantial similarity between Canadian and U.S. consumers is not well founded. In fact, their findings exposed a number of quantitative and qualitative differences between the two markets. Companies that recognized those differences and adjusted their strategies with them in mind tended to be more successful entering markets in the U.S.

First, American consumers demand to be treated with importance when shopping in retail establishments whereas Canadian are not as exacting. Furthermore, Americans are more likely than Canadian consumers to complain when service standards are not met.

Second, the authors discovered greater regional variations in buying behaviour in the U.S. than Canada businesses expected. Large east/west and north/south differences were noted that led to crucial mistakes by Canadian firms when entering regional markets. Canadians tend to assume regions are more homogeneous than they actually are. Compared with the U.S., however, Canada is more homogeneous politically, economically, socially, and regionally.

Third, American employees’ strong orientation toward work created an expectation that they would be rewarded based on personal merit. Since American employees worked more independently, the types of reward systems were different in the United States’ retail industry. American managers were also found to be different from Canadian managers in two major ways. First, the level of professionalism and experience in the retail industry were found to be higher in the United States. Second, American executives were expected to live up to higher performance standards compared to their Canadian cohorts. For example, not meeting goals was more likely to lead to termination in the United States than in Canada.

Fourth, Americans were found to be much more competitive than Canadians. The authors noted that American executives voiced comments couched in militaristic terms, such as “It was all-out war” or “Their arsenal was impressive”. Not expecting this difference in the level of competitiveness, Canadian companies found themselves at a significant competitive disadvantage.

Fifth, executives from companies that failed in the United States perceived no difference between the two markets prior to entry, and based decisions such as market information needs, product mix in the stores, store location, and entry mode on this inaccurate perception. On the other hand, successful companies recognized that there were differences prior to entry and incorporated this accurate knowledge into their entry decisions. As a result, successful companies were prepared for the level of competition and cultural differences they discovered upon entry while unsuccessful firms were not. Preliminary market research was conducted to varying degrees by both successful and unsuccessful firms; however, the critical differentiating factors were that successful firms 1) accurately defined the critical success factors and sought information as to ways of maximizing on these factors; 2) developed local market expertise by hiring U.S. managers and consultants, which aided in interpreting the data from the research, and 3) were able to perceive their markets from an American rather than a Canadian perspective. According to the authors, unsuccessful Canadian firms’ “lack of experience in the U.S. market hindered their ability to interpret it. Unfortunately, even after they recognized the obvious differences in the two cultures, they continued to assume that they could operate in the United States as they had in Canada. Mental models appropriate for the Canadian market led top management teams to make decisions as they would at home – with general disastrous outcomes. Consequently, they did not adjust to, not learn about, the United States market and were forced to withdraw from it”.

The general conclusions from the authors’ research are useful to international marketing students and managers: Be knowledgeable about the critical success factors in the market you are entering; ensure that you have sound information that is accurately interpreted from the perspective of the consumer, not from your own; know your strengths and weakness, core competencies, and competitive advantages; and be able to adjust strategies and plans when it becomes evident that initial presumptions and self-assessments are not accurate.

Information is the key component in developing successful marketing strategies and avoiding marketing blunders. Information needs range from the general data required to assess market opportunities to specific market information for decisions about product, promotion, distribution, and price. Sometimes the information can be bought from trusted research vendors or supplied by internal marketing research staff. But sometimes even the highest-level executives have to “get their shoes dirty” by putting in the miles and talking to the key customers and directly observing the marketplace in action.  As an enterprise broadens its scope of operations to include international markets, the need for current, accurate information is magnified. Indeed, some researchers maintain that entry into fast-developing, new-to-the-firm foreign market is one of the most daunting and ambiguous strategic decisions an executive can face. A marketer must find the most accurate and reliable data possible within the limits imposed by time, cost, and present state of the art. The measure of the competent researcher is twofold: the ability to utilize the most sophisticated and adequate techniques and methods available within these limits, and the effective communication of insights to the decision makers in the firm. The latter often requires involving senior executives directly in the research process itself.

Marketing research is traditionally defined as the systematic gathering, recording, and analyzing of data to provide information useful in marketing decision making. Although the research processes and methods are basically the same whether applied in High Prairie, Alberta, or Colombo, Sri Lanka, International Marketing Research involves two additional complications. First, information must be communicated across cultural boundaries. That is, executives in Windsor must be able to “translate” their research questions into terms that consumers in Guangzhou, China, can understand. Then the Chinese answers must be put into terms (i.e., reports and data summaries) that Canadian managers can comprehend. Fortunately, there are often internal staff and research agencies that are quite experienced in these kinds of cross-cultural communications tasks.

Second, the environments within which the research tools are applied are often different in foreign markets. Rather than acquire new and exotic methods of research, the international marketing researcher must develop the ability for imaginative and deft application of tried and tested techniques in sometimes totally strange milieus. The mechanical problems of implementing foreign marketing research often vary from country to country. Within a foreign environment, the frequently differing emphases on the kinds of information needed, the often limited variety of appropriate tools and techniques available, and the difficulty of implementing the research process constitute the challenges facing most international marketing researchers.

This chapter deals with the operational problems encountered in gathering information in foreign countries for use by international marketers. Emphasis is on those elements of data generation that usually prove especially troublesome when conducting research in an environment other than Canada.

1. BREADTH AND SCOPE OF INTERNATIONAL MARKETING RESEARCH

The basic difference between domestic and international market research is the broader scope needed for foreign research, necessitated by higher level of uncertainty. Research can be divided into three types, based on information needs:

-   general information about the country, area, and market;

-   information necessary to forecast future marketing requirements by anticipating social, economic, and industry trends within specific markets or countries;

-   specific market information used to make product, promotion, distribution, and price decisions and to develop marketing plans; and

-   specific information about the company’s capabilities to undertake the international marketing venture. Collecting and analyzing information about a foreign market opportunity is of limited utility if in the final stage the organization is unable to implement a successful entry effort.

A country’s political stability, cultural attributes, and geographical characteristics are some of the kinds of information not ordinarily gathered by domestic marketing research departments but which are required for a sound assessment of a foreign market. This broader scope of international marketing research is reflected in Unisys Corporation’s planning steps, which call for collecting and assessing the following types of information:

1.      Economic. General data on growth of the economy, inflation, business cycle trends, and the like; profitability analysis for the division’s products; specific industry economic studies; analysis of overseas economies; and key economic indicators for the United States and major foreign countries.

2.      Cultural, sociological, and political climate. A general non-economic review of conditions affecting the division’s business. In addition to the more obvious subjects, it also covers ecology, safety, and leisure time and their potential impact on the division’s business.

3.      Overview of market conditions. A detailed analysis of market conditions that the division faces, by market segment, including international.

4.      Summary of the technological environment. A summary of the state-of-the-art technology as it relate to the division’s business, carefully broken down by product segments.

5.      Competition situation. A review of competitors’ sales revenues, methods of market segmentation, products, and apparent strategies on an international scope.

Such in-depth information is necessary for sound marketing decisions. For the domestic marketer, most such information has been acquired after years of experience with a single market, but in foreign markets this information must be gathered for each new market.

There is a basic difference between information ideally needed and that which is collectible and/or used. Many firms engaged in foreign marketing do not make decisions with the benefit of the information listed. Cost, time, and human elements are critical variables. Some firms have neither the appreciation for information nor adequate time or money for implementation of research. As a firm becomes more committed to foreign marketing and the cost of possible failure increases, greater emphasis is placed on research. Marketing research expenditures reflect the size and growth of markets around the world. Please see Exhibit 6.1 for a listing of the top twenty markets for international marketing research.

Exhibit 1 Top Twenty Countries for Marketing Research Expenditures (millions of dollars)

United States

$5.992

Sweden

228

United Kingdom

1,623

Mexico

213

Germany

1,290

Brazil

197

Japan

1,206

China

181

France

958

Switzerland

118

Canada

434

Belgium

114

Italy

415

S. Korea

106

Spain



273

Austria

91

Australia

273

Argentina

90

Netherlands

228

Taiwan

74

Multicultural research is a special case within the international marketing research skill set. Researchers need to be cognizant of unique features of each individual culture – language, religion, gender roles, laws, and regulations to name a few of these features – but also the technical aspects of conducting careful, accurate research. Possessing solid technical skills without sufficient awareness of important cultural features could result in questionable research findings and, more importantly, inappropriate marketing actions. Managers are wise to step themselves in cultural imperatives, electives, and exclusives before starting a marketing research project.

2. THE RESEARCH PROCESS

A marketing research study is always a compromise dictated by limits of time, cost, and the present state of the art. The researcher must strive for the most accurate and reliable information within existing constraints. A key to successful research is a systematic and orderly approach to the collection and analysis of data. Whether a research program is conducted in Montreal or New Delhi, the research process should follow these steps:

  1. Define the research problem and establish research objectives.
  2. Determine the sources of information to fulfill the research objectives.
  3. Consider the costs and benefits of the research effort.
  4. Gather the relevant data from secondary or primary sources, or both.
  5. Analyze, interpret, and summarize the results.
  6. Effectively communicate the results to decisions makers.

Although the steps in a research program are similar for all countries, variations and problems in implementation occur because of differences in cultural and economic development. Whereas the problems of research in England or Canada may be similar to those in the United States, research in Germany, South Africa, or Mexico may offer a multitude of different and difficult distinctions. These distinctions become apparent with the first step in the research process – formulation of the problem. Subsequent text sections illustrate some frequently encountered difficulties facing the international marketing researcher.

4.3.         DEFINING THE PROBLEM AND ESTABLISHING RESEARCH OBJECTIVES

The research process should begin with a definition of the research problem and the establishment of specific research objectives. The major difficulty here is converting a series of often ambiguous business problems into tightly drawn and achievable research objectives. In this initial stage, researchers often embark on the research process with only a vague grasp of the total problem. A good example of such a loosely defined problem is that of Russian airline, Aeroflot. The company started a branding study to inform marketing decision makers regarding how to improve its long lasting reputation for poor safety standards and unreliable service. This is a tough challenge for international marketing researchers.

This first, most crucial step in research is more critical in foreign markets because an unfamiliar environment tends to cloud problem definition. Researchers either fail to anticipate the influence of the local culture on the problem or fail to identify the self-reference criterion (SRC) and so treat the problem definition as if it were in the researcher’s home environment. In assessing some foreign business failures it is apparent that research was conducted, but the question asked were more appropriate for the local than for the foreign one. For example, all of Disney’s years of research and experience in keeping people happy standing in long lines could not help them to anticipate the scope of the problems they would run into at EuroDisney. The firm’s experience had been that the relatively homogeneous clientele at both the American parks and Tokyo Disneyland were cooperative and orderly when it came to queuing up. Actually, so are most British and Germans. But the rules about queuing in other countries such as Spain and Italy are apparently quite different, creating the potential for a new kind of intra-European “warefare” in the lines. Understanding and managing this multinational customer service problem required new ways of thinking. Isolating the SRC and asking the right questions are crucial steps in the problem formulation stage.

Other difficulties in foreign research stem from failure to establish problem limits broad enough to include all relevant variables. Information on a far greater range of factors is necessary to offset the unfamiliar cultural background on the foreign market. Consider proposed research about consumption patterns and attitudes toward milk-based drinks. In the United Kingdom, hot milk-based drinks are considered to have sleep-inducing, restful, and relaxing properties and are traditionally consumed prior to bedtime. People in Thailand, however, drink the same hot milk-based drinks in the morning on the way to work and see them as being invigorating, energy-giving, and stimulating. If one’s only experience in Canada, the picture is further clouded since hot milk-based drinks are frequently associated with cold weather, either in the morning or the evening, and for different reasons each time of day. The market researcher must be certain the problem definition is sufficiently broad to cover the whole range of response possibilities and not be clouded by his or her self-reference criterion.

This is a problem that Wal-Mart may run into headlong as it enters Canada with its neighborhood grocery concept. North American consumers are becoming health conscious as they age, and the growth in healthy, organically-grown foods is on a rapid rise. Companies like Whole Foods Markets, a U.S.-based health food grocer, are expanding into Canada with a strategy quite different from Wal-Mart’s. They investigate the demographics of a population carefully and target markets where people are well educated, demand choice, and will pay more for authentically grown fish, fruits and vegetables.

With consumers alarmed about problems in traditional food production and distribution system (e.g., genetically modified food; BSE, avian flu; and the unhealthy amounts of saturated fat, cholesterol, and sodium in most processed foods), a greater number will be paying more attention to their health and not as much to the economic savings they receive from shopping at discount stores.

Mattel faces with a similar problem. The company conducted a coordinated global research program using focus groups of children in several countries. Based on their findings the firm is cutting back on customization and ignoring local managers’ advice by globally selling an unmodified Barbie. Not only is it dangerous to ignore the advice of local managers, it is also dangerous to ignore parents’ opinions involving toys. Kids may like a blonde Barbie, but parents may not. We will follow this case with great interest.

After the problem is adequately defined and research objectives established, the researcher must determine the availability of the information needed. If the data are available – that is, if they have been collected already by some other agency – the researcher should then consult these secondary data sources.

 PROBLEMS OF AVAILABILITY AND USE OF SECONDARY DATA

Analyzing market opportunities for a specific product or service requires detailed examination of international and domestic market data. The most comprehensive source of government data on Canadian industrial markets is Statistics Canada (StatCan), whose public reports are available, in limited form, free of charge online, via annual subscription and single-copy sales. Among the myriad of statistical reports released are: Canadian international trade statistics, broad macroeconomic and industry market indicators, listings of Canadian importers and exporters indexed alphabetically, inventory levels across hundred of industry sectors, manufacturing orders and shipments, annual industrial reports from the country’s most important industries, and hundreds of business surveys. In addition to economic data, StatCan offers comprehensive statistical information on population, socio-economic status, health status, and a myriad of other data pertinent to international marketers. The quality of StatCan’s information is highly respected, and the agency is recognized as among one of the leaders in the collection, analysis, and reporting of quantitative information. The task most industry users face is sorting through the large amount of tables and files to locate the information one needs!

The quantity and quality of marketing-related data available in the United States, Japan, the European Union, Australia, and New Zeeland is very substantial. Although the U.S. government probably produces the most voluminous assortment of statistics, other developed countries are very competitive. In a number of other newly emerging and less-developed countries, however, substantial data collection has been initiated only recently. Through the continuing efforts of organizations such as the United States and the Organization for Economic Cooperation and Development (OECD), improvements are being made worldwide.

In addition, with the emergence of Eastern European countries as potentially viable markets, a number of private and public groups are funding the collection of information to offset a lack of comprehensive market data. Several Japanese consumer goods manufacturers are coordinating market research on a corporate level and have funded 47 research centers throughout Eastern Europe. As market activity continues in Eastern Europe and elsewhere, market information will improve in quantity and quality. To build a database on Russian consumers, one Denver, Colorado, firm used a novel approach to conduct a survey; It ran a questionnaire in Moscow’s Komsomoloskaya Pravda newspaper asking for replies to be sent to the company. The 350,000 replies received (3,000 by registered mail) attested to the willingness of Russian consumers to respond to marketing inquiries. The problems of availability, reliability, and comparability of data and of validating secondary data are described in the following sections.

A. Availability of Data

Much of the secondary data that a Canadian marketer is accustomed to having about North American markets is just not available for many countries. Detailed data on the numbers of wholesalers, retailers, manufacturers, and facilitating services, for example, are unavailable for many parts of the world, as are data on population and income. Most countries simply do not have governmental agencies that collect on a regular basis the kinds of secondary data readily available in Canada. If such information is important, the marketer must initiate the research or rely on private sources of data.

Another problem relating to the availability of data is researchers’ language skills. For example, although data are often copious regarding the Japanese market, being able to read Japanese is a requisite for accessing them, either online or in text. This may seem a rather innocuous problem, but those who have tried to manoeuver through foreign data can appreciate the value of having a native speaker of the appropriate language on the research team.

B. Reliability of Data

Available data may not have the level of reliability necessary for confident decision making for many reasons. Official statistics are sometimes too optimistic, reflecting national pride or politics rather than practical reality, while tax structures and fear of the tax collector often adversely affect data.

Although not unique to them, less-developed countries are particularly prone to being both overly optimistic and unreliable in reporting relevant economic data about their countries. China’s National Statistics Enforcement Office recently acknowledged that it had uncovered about 60,000 instances of false statistical reports since beginning a crackdown on false data reporting several months earlier. Seeking advantages or hiding failures, local officials, factory managers, rural enterprises, and others filed fake numbers on everything from production levels to birthrates. For example, a petrochemical plant reported one year’s output to be $20 million, 50 percent higher than its actual output of $13,4 million. Finally, if you believe the statistics, the China in Hong Kong are the world-champion consumers of fresh oranges – 64 pounds per year per person, twice as much as Canadians. However, apparently about half of all the oranges imported into Hong Kong, some $30 million worth, were actually finding their way into the rest of China, where foreign imports were prohibited. One might predict a crash in citrus sales to Hong Kong now that WTO entry for China means that oranges can be directly shipped there.

Willful errors in the reporting of marketing data are not uncommon in the most industrialized countries either. Often print media circulation figures are purposely overestimated even in OECD countries. The European Union (EU) tax policies can also affect the accuracy of reported data. Production statistics are frequently inaccurate because these countries collect taxes on domestic sales. Thus some companies shave their production statistics a bit to match the sales reported to tax authorities. Conversely, foreign trade statistics may be exaggerated slightly because each country in EU grants some form of export subsidy. Knowledge of such “adjusted reporting” is critical for a marketer who relies on secondary data for forecasting or estimating market demand.

C. Comparability of Data

Comparability of available data is the third shortcoming faced by foreign marketers. In Canada, current sources of reliable and valid estimates of socioeconomic factors and business indicators are readily available. In other countries, especially those less developed, data can be many years out of data as well as having been collected on an infrequent and unpredictable schedule. Naturally, the rapid change in socioeconomic features being experienced in many of these countries makes the problem of currency a vital one. Further, even though many countries are now gathering reliable data, there are generally no historical series with which to compare the current information.

A related problem is the manner in which data are collected and reported. Too frequently, data are reported in different categories or in categories much too broad to be of specific value. The term supermarket, for example, has a variety of meanings around the world. In Japan a supermarket is quite different from its Canadian counterpart. Japanese supermarkets usually occupy two – or three – story structures; they sell foodstuffs, daily necessities, and clothing on respective floors. Some even sell furniture, electric home appliances, stationary, and sporting goods, and have a restaurant. General merchandise stores, shopping centers, and department stores are different from stores of the same name in North America.

D. Validating Secondary Data

The shortcomings discussed here should be considered when using any source of information. Many countries have similarly high standards for the collection and preparation of data as those generally found in Canada, but secondary data from any source, including Canada, must be checked and interpreted carefully. As a practical matter, the following questions should be asked to effectively judge the reliability of secondary data sources:

1.      Who collected the data? Would there be any reason for purposely misrepresenting the facts?

2.      For what purposes were the data collected?

3.      How were the data collected? (methodology)

4.      Are the data internally consistent and logical in light of known data sources or market factors?

Checking the consistency of one set of secondary data with other data of known validity is an effective and often-used way of judging validity. For example, a researcher might check the sale of baby products with the number of women of childbearing age and with birthrates, or the number of patient beds in hospitals with the sale of related hospital equipment. Such correlations can also be useful in estimating demand and forecasting sales.

In general, the availability and accuracy of recorded secondary data increase as the level of economic development increases. There are exceptions; India is at a lower level of economic development than many countries but has accurate and relatively complete government-collected data.

Fortunately, interest in collecting quality statistical data rises as countries realize the value of extensive and accurate national statistics for orderly economic growth. This interest improving the quality of national statistics has resulted in remarkable improvement in the availability of data during the last 20 years. However, where no data are available, or the secondary data sources are inadequate, it is necessary to begin the collection of primary data.

Almost all secondary data available on international markets can now be discovered or acquired via the Internet. For example, the most comprehensive statistics regarding international finances, demographics, consumption, exports, and imports are accessible through two North American sources: the U.S. Department of Commerce at www.stat-usa.gov and Statistics Canada at www.statcan.ca Many other governmental, institutional, and commercial sources of data can be found on the Internet as well.

5. GATHERING PRIMARY DATA: QUANTITATIVE AND QUALITATIVE RESEARCH

If, after seeking all reasonable secondary data sources, research questions are still not adequately answered, the market researcher must collect primary data – that is, data collected specifically for the particular research project at hand. The researcher may question the firm’s sales representatives, distributors, middlemen, and/or customers to get appropriate market information. In most primary data collection, the researcher questions respondents to determine what they think about some topic or how they might behave under certain conditions. Marketing research methods can be grouped into two basic types: quantitative and qualitative research. In both methods, the marketer is interested in gaining knowledge about market.

In quantitative research, usually a large number of respondents are asked to reply either verbally or in written to structured questions using a specific response format (such as yes/no) or to select a response from a set of choices. Questions are designed to obtain specific responses regarding aspects of the respondents’ behaviour, intentions, attitudes, motives, and demographic characteristics. Quantitative research provides the marketer with responses that can be presented with precise estimations. The structured responses received in a survey can be summarized in percentages, averages, or other statistics. For example, 76 percent of the respondents prefer product A over product B, and so on. Survey research is generally associated with quantitative research, and the typical instrument used is the questionnaire administered by personal interview, mail, telephone, and most recently over Internet.

Scientific studies often are conducted by engineers and chemists in product-testing laboratories around the world. There, product designs and formulas are developed and tested in consumer usage situations. Often those results are integrated with consumer opinions gathered in concurrent survey studies. One of the best examples of this kind of marketing research comes from Tokyo. You may not know it, but the Japanese are the world champions of bathroom and toilet technology. Their biggest company in that industry, TOTO, has spent millions of dollars developing and testing consumer products. Thousands of people have collected data (using survey techniques) on the best features of a toilet, and at the company’s “human engineering laboratory”, volunteers sit in a Toto bathtub with electrodes strapped to their skulls, to measure brain waves and “the effects of bathing on the human body”. Toto has now introduced one of its high-tech (actually low-tech compared with what they offer in Japan) toilets in the Canadian Market. It’s a $600 seat, lid, and control panel that attaches to the regular Canadian bowl. It features a heated seat and deodorizing fan.

In qualitative research, if questions are asked they are almost always open-ended or in-depth, and unstructured responses that reflect the person’s thoughts and feelings on the subject are sought. Direct observation of consumers in choice or product usage situations is another important qualitative approach to marketing research. Qualitative research seeks to interpret what the people in the sample are like – their outlooks, their feelings, the dynamic interplay of their feelings and ideas, their attitudes and opinions, and their resulting actions. The most often used form of qualitative questioning is the focus group interview. However, often in-depth interviewing of individuals can be just as effective while consuming far fewer resources.

A recent research project conducted with John Deere&Company dramatizes the use of qualitative research in international markets. John Deere distributes manuals with the equipment they sell. Whereas their products are adapted to fit the particular operating environment of the customer, their operating manuals are standardized to fit one particular group – North Americans. The organization of information (i.e., use of visual versus narrative presentations of the operating and maintenance procedures) and the amount of information provided to the user are designed for the North American customer; customers from other countries and regions must adapt to the North-American-based format even though their learning styles may vary considerably. Recognizing the potential communication problem, John Deere commissioned a research study with a team from the University of Manitoba to study whether their manuals fit the learning styles of customers across the globe. Among other research techniques, the team used focus groups and in-depth qualitative interviews to ascertain factors of importance to Asian, South American, European, Middle Eastern, and North American customers. The Manitoba researchers discovered that users displayed marked differences in preference for the organization and amount of information provided in the John Deere manuals. As a consequence, John Deere reevaluated their decision to supply standardized technical manuals to all users.




Qualitative research is used in international marketing research to formulate and define a problem more clearly and to determine relevant questions to be examined in subsequent research. It is also used where interest is centered on gaining an understanding of a market, rather than quantifying relevant aspects. For example, John Zalud, a Canadian retail food consultant, used direct observation and in-depth interviewing approaches to ascertain specific drivers for the demand for Canadian agricultural food products at an international food fair. He organized interviews with food distributors and buyers from Czech Republic about their attitudes, perceptions, feelings, and experiences with Canadian products in general, and their experiences with handling Canadian retail food products in the Czech Republic. His contacts supplied him with valuable information that helped his client more effectively promote and package the Canadian products for the Czech market.

Qualitative research is also helpful in revealing the impact of sociocultural factors on behaviour patterns and in developing research hypotheses that can be tested in subsequent studies designed to quantify the concepts and relevant relationships uncovered in qualitative data collection. Procter&Gamble has been one of the pioneers of his type of research - the company has systematically gathered consumer feedback for some 70 years. It was the first company to conduct in-depth research in China. In the mid-1990s P&G began working with the Chinese Ministry of Health to develop dental hygiene programs and has now reached over one million children in 28 cities. The company now offers Crest toothpaste in two flavours and toothbrushes in four colours to Chinese consumers.

Often the combination of qualitative and quantitative research proves quite useful in industrial and business-to-business marketing settings as well. In one study, the number of personal referrals used in buying financial services in Japan was found to be much greater than in the United States. The various comments made by the executives during the personal interviews in both countries proved invaluable in interpreting the quantitative results, suggesting implications for managers and providing ideas for further research. Likewise, the comments of sales managers in Tokyo during in-depth interviews helped researchers understand why individual financial incentives were found not to work with Japanese sales representatives.

As we shall see in this chapter, using either research method in international marketing research is subject to a number of difficulties caused by the diversity of cultural and languages encountered.

6. PROBLEMS OF GATHERING PRIMARY DATA

The problems of collecting primary data in foreign countries are different only in degree from those encountered in Canada. Assuming the research problem is well defined and the objectives are properly formulated, the success of primary research hinges on the ability of the researcher to get correct and trustful information that addresses the research objectives. Most problems in collecting primary data in international marketing research stem from cultural differences among countries, and range from the inability of respondents to communicate their opinions to inadequacies in questionnaire translation.

A. Ability of Communicate Opinions

The ability to express attitudes and opinions about a product or concept depends on the respondent’s ability of recognize the usefulness and value of such a product or concept. It is difficult for a person to formulate needs, attitudes, and opinions about goods whose use may not be understood, that are not in common use within the community, or that have never been available. For example, it may be impossible for someone who has never had the benefits of an office computer to express accurate feelings or provide any reasonable information about purchase intentions, likes, or dislikes concerning a new computer software package. The more complex the concept, the more difficult it is to design research that will help the respondent communicate meaningful opinions and reactions. Under these circumstances, the creative capabilities of the international marketing researcher are challenged.

No company has had more experience in trying to understand consumers with communications limitations than Gerber. Babies may be their business, but babies often can’t talk much less fill out a questionnaire. Over the years Gerber has found that talking to and observing both infants and their mothers are important in marketing research. In one study Gerber found that breast-fed babies adapted to solid food more quickly than bottle-fed babies because breast milk changes flavour depending on what the mother has eaten. For example, infants were found to stuck longer and harder if their mother had recently eaten garlic. In other study, weaning practices were studied around the world. Indian babies were offered lentils served on a finger. Some Nigerian children got fermented sorghum, fed by the grandmother through the funnel of her hand. In some parts of tropical Asia mothers “food-kissed” prechewed vegetables into their babies’ mouths. Hispanic mothers in the United States tend to introduce baby food much earlier than non-Hispanic mothers and continue it well beyond the first year. All this research helps the company decide which products are appropriate for each markets. For example, the Vegetable and Rabbit Meat and the Freeze-Dried Sardines and Rice flavours popular in Poland and Japan, respectively, most likely won’t make it to Canadian store shelves.

B. Willingness to Respond

Cultural differences offer the best explanation for the unwillingness or the inability of many to respond to research survey. The role of the male, the suitability of personal gender-based inquiries, and other gender-related issues can all affect willingness to respond.

In some countries, the husband not only earns the money but also dictates exactly how it is to be spent. Because the husband controls the spending, it is he, not the wife, who should be questioned to determine the preferences and demand for many consumer goods. In some countries, women would never consent to be interviewed by a male or a stranger. In some societies, a man would certainly consider it beneath his dignity to discuss shaving habits or brand preference in personal clothing with anyone – most emphatically not a female interviewer.

Anyone asking questions about any topic from which tax assessment could be inferred is immediately suspected of being a tax agent. Citizens of many countries do not feel the same legal and moral obligations to pay their taxes as do Canadian citizens. Tax evasion is thus an accepted practice for many and source of pride for the most adept. Where such an attitude exists, taxes are often seemingly arbitrarily assessed by the government, which results in much incomplete or misleading information being reported. One of the problems revealed by the government of India in a recent population census was the underreporting of tenants by landlords trying to hide the actual number of people living in houses and flats. The landlords had been subletting accommodations illegally and were concealing their activities from the tax department.

In Canada, publicly traded corporations are compelled by the Canada Securities Administration, through the Securities Regulatory Authorities (SRAs) of each province, to disclose certain operating figures on a periodic basis. In many European countries, however, such information is seldom if ever released and then most reluctantly. Attempts to enlist the cooperation of merchants in setting up an in-store study of shelf inventory and sales information ran into strong resistance because of suspicious and a tradition of competitive secrecy. The resistance was overcome by the researcher’s willingness to approach the problem step by step. As the retailer gained confidence in the researcher and realized the value if the data gathered, more and more requested information was provided. Besides the reluctance businesses to respond to surveys, local politicians in underdeveloped countries may interfere with studies in the belief that they could be subversive and must be stopped or hindered. A few moments with local politicians can prevent days of delay.

Although such cultural differences may make survey research more difficult to conduct, it is possible. In some communities, locally prominent people could open otherwise closed doors; in other situations, professional people and local students have been used as interviewers because of their knowledge of the market. Less direct measurement techniques and nontraditional data analysis methods may also be more appropriate. In one study, Japanese supermarket buyers rated the nationality of brands (foreign or domestic) as relatively, paired-comparison questioning techniques was used, brand nationality proved to be the most important factor.

C. Sampling in Field Survey

The greatest problem in sampling stems from the lack of adequate demographic data and available lists from which to draw meaningful samples. If current, reliable lists are not available, sampling becomes more complex and generally less reliable. In many countries, telephone directories, cross-index street directories, census tract and block data, and detailed social and economic characteristics of the population being studied are not available on a current basis, if at all. The researcher must estimate characteristics and population parameters, sometimes with little basic data on which to build an accurate estimate.

To add to the confusion, in some South American, Mexican, and Asian cities, street maps are unavailable, and in some Asian metropolitan areas, streets are not identified nor are houses numbered.  In contrast, one of the positive aspects of research in Japan and Taiwan is the availability and accuracy of census data on individuals. In these countries, when a house-hold moves, it is required to submit up-to-date information to a centralized government agency before it can use communal services such as water, gas, electricity, and education.

The effectiveness of various methods of communication (mail, telephone, personal interview, and Internet) in surveys is limited. In many countries, telephone ownership is extremely low, making telephone surveys virtually worthless unless the survey is intended to cover only the wealthy. In Sri Lanka, fewer than 10 percent of the residents – only the wealthy – have telephones. Even if the respondent has a telephone, the researcher may still be unable to complete a call.

The adequacy of sampling techniques is also affected by a lack of detailed social and economic information. Without an age breakdown of the total population, for example, the researcher can never be certain of a representative sample requiring an age criterion because there is no basis of comparison for the age distribution in the sample. A lack of detailed information, however, does not prevent the use of sampling; it simply makes it more difficult. In place of probability techniques, many researchers in such situations rely on convenience samples taken in marketplaces and other public gathering places.

McDonald’s got into trouble over sampling issues. The company was involved in a dispute in South Africa over the rights to its valuable brand name in that fast-emerging market. Part of the company’s claim revolved around the recall of the McDonald’s name among South Africans. In the two surveys the company conducted and provided as proof in the proceedings, the majority of those sampled had heard the company name and could recognize the logo. However, the Supreme Court judge hearing the case took a dim view of the evidence because the surveys were conducted in “posh, white” suburbs whereas 76 percent of the South African population is black. Based in part on sampling errors, the judge threw out McDonald’s case.

Inadequate mailing lists and poor postal service can be problems for the market researcher using mail to conduct research. In Nicaragua, delays of weeks in delivery are not unusual, and expected returns are lowered considerably because a letter can be mailed only at a post office. In addition to potentially poor mail service within countries, the extended length of time required for delivery and return when a mail survey is conducted from another country further hampers the use of mail surveys. Although airmail reduces this time drastically, it also increases costs considerably.

The kinds of problems encountered in drawing a random sample include the following:

·  No officially recognized census of population.

·  No other listings that can serve as sampling frames.

·  Incomplete and out-of-date telephone directories.

·  No accurate maps of population centers. Thus, no cluster (area) samples can be developed

Although all the conditions described do not exist in all countries, they illustrate why the collection of primary data requires creative applications of research techniques when firms expand into many foreign markets.

D. Language and Comprehension

The most universal survey research problem in foreign countries is the language barrier. Differences in idiom and the difficulty of exact translation create problems in eliciting the specific information desired and in interpreting the respondents’ answers. Equivalent concepts may not exist in all languages. Family, for example, has different connotations in different countries. In Canada, it generally means only the parents and children. In Italy and many Latin countries it could mean the parents, children, grandparents, uncles, aunts, cousins, and so forth. The meaning of names for family members can have different meanings depending on the context within which they are used. In the Italian culture, the words for aunt and uncle are different for the maternal and paternal sides of the family. The concept of affection is a universal idea, but the manner in which it is manifested in each culture may differ. Kissing, an expression of affection in the West, is alien to many Eastern cultures and even taboo in some.

Literacy poses yet another problem. In some less-developed countries with low literacy rates, written questionnaires are completely useless. Within countries, too, the problem of dialects and different languages can make a national questionnaire survey impractical. In India, there are 14 official languages and considerably more unofficial ones. One researcher has used pictures of products as stimuli and pictures of faces as response criteria in a study of eastern German brand preferences to avoid some of the difficulties associated with language differences and literacy in international research. Still others have used other nonverbal kinds of response elicitation techniques such as pictures and collages.

Furthermore, a researcher cannot assume that a translation into one language will suffice in all areas where that language is spoken. Such was the case when one of the authors was in Mexico and requested a translation of the word outlet, as in retail outlet, to be used in Venezuela. It was read by Venezuelans to mean an electrical outlet, an outlet of a river into ocean, and the passageway into a patio. Needless to say, the responses were useless – although interesting. Thus it will always be necessary for a native speaker of the target country’s language to take the “final cut” of any translated material.

All marketing communications, including research questionnaires, must be written perfectly. If not, consumers and customers will not respond with accuracy, or even alt all. The obvious solution of having questionnaires prepared or reviewed by a native speaker of the language of the country is frequently overlooked. One of the authors conducted a research project in which respondents from every province, and both Anglophones and Francophone in Quebec, were sent questionnaires. The author had recently arrived in Canada and knew little of its heritage of cultural dynamics. To translate the English version of the questionnaire for the Francophone respondents, he secured the services of a French translator who hailed from Paris, France. Although the questionnaire was grammatically correct and true to the French language as viewed by the Parisian translator, it most certainly was not appropriate for Francophone in Quebec. The author quickly learned the meaning of translation accuracy after a telephone call from the cultural minister’s office in Quebec, who passed on the complaints of several irate citizens offended by the errors in the translation. To a Spaniard orange juice is zumo de naranja; a Mexican would order jugo de naraja. These apparently subtle differences are no such things to Spanish speakers. In another case, german respondent was asked the number of washers (washing machines) produced in Geramny for a particular year; the reply reflected the production of the flat metal disk. To help ferret out translation errors ahead of time, marketers use three different techniques, back translation, parallel translation, and decentring.

Back translation. In back translation the questionnaire is translated from one language to another, and then a second party translates it back into the original. This process pinpoints misinterpretations and misunderstandings before they reach the public. A soft drink company wanted to use a very successful Australian advertising theme, “Baby, it’s cold inside”, in Hong Kong. They had the theme translated from English into Cantonese by one translator and then retranslated by another from Cantonese into English, in which the statement came out as “Small mosquito, on the inside it is very cold”. Although “small mosquito” is the colloquial expression for “small child” in Hong Kong, the intended meaning was lost in translation.

Parallel Translation. Back translation may not always ensure an accurate translation because of the commonly used idioms in both languages. Parallel translation is used to overcome this problem. In this process, more than two translators are used for the back translation; the results are compared, differences discussed, and the most appropriate translation selected.

Decentring. A third alternative, known as decentring, is a hybrid of back translation. It is a successive process of translation and retranslation of a questionnaire, each time by a different translator. For example, an English version is translated into French and then translated back to English by a different translator. The two English versions are compared and where there are differences, the original English version is modified and the process is repeated. If there are still differences between the two English versions, the original English version of the second iteration is modified and the process of translation and back translation is repeated. The process continues to be repeated until an English version can be translated into French and back translated, by a different translator, into the same English. In this process, the wording of the original instrument undergoes a change, and the version that is finally used and its translation have equally comprehensive and equivalent terminologies in both languages.

Regardless of the procedure used, proper translation and perfect use of the local language in a questionnaire are of critical importance to successful research design. Because of cultural and national differences, confusion can just as well be the problem of the researcher as of the respondent. The question itself may not be properly worded in the English version, or English slang or abbreviated words may be translated with a different or ambiguous meaning. Such was the case earlier with the word outlet for retail outlet. The problem was not with the translation as much as with the term used in the question to be translated. In writing questions for translation, it is important that precise terms, not colloquialism or slang, be used in the original to be translated. One classic misunderstanding that occurred in a Reader’s Digest study of consumer behaviour in Western Europe resulted in a report that France and Germany consumed more spaghetti than Italy. This rather curious and erroneous finding resulted from questions that asked about purchases of “packed and branded spaghetti”. Italians buy their spaghetti in bulk; French and Germans buy branded and packed spaghetti. Because of this crucial difference, the results underreported spaghetti purchases by Italians. Had the goal of the research been to determine how much branded and packed spaghetti was purchased, the results would have been correct. However, the goal was to know about total spaghetti consumption, the data were incorrect. Researchers must always verify that they are asking the right question.

Some of the problem of cross-cultural marketing research can be addressed after data are collected. For example, we know that consumers in some countries such as Japan tend to respond to rating scales more conservatively than North Americans. That is, on a 1 to 7 scale anchored by “extremely satisfied” and “extremely dissatisfied”, Japanese may tend to answer more toward the middle (more 3s and 5s), whereas North Americans’ responses may tend toward the extremes (more 1s and 7s). Such a response bias can be managed through statistical standardization procedures to maximize comparability. Some translation problems can also be detected and mitigated post hoc through other statistical approaches as well.

7. MULTICULTURAL RESEARCH: A SPECIAL PROBLEM

As companies become global marketers and seek to standardize various parts of the marketing mix across several countries, multicultural studies become more important. A company needs to determine to what extent adaptation of the marketing mix is appropriate. Thus, market characteristics across diverse cultures must be compared for similarities and differences before a company proceeds with standardization on any aspect of marketing strategy. The research difficulties discussed thus far have addressed problems of conducting research within a culture. When engaging in multicultural studies, many of these same problems further complicate the difficulty of cross-cultural comparisons.

Multicultural research involves dealing with countries that have different languages, economies, social structures, behaviour, and attitude patterns. When designing multicultural studies, it is essential that these differences be taken into account. An important point to keep in mind when designing research to be applied across cultures is to ensure comparability and equivalency of results. Different methods may have varying reliabilities in different countries. It is essential that these differences be considered in the design of a multicultural survey. Such differences may mean that different research methods should be applied in individual countries.

In some cases, the entire research design may be different between countries to maximize the comparability of the results. For example, Japanese, compared with North American businesspeople, tend not to respond to mail surveys. This problem was handled in two recent studies by using alternative methods of questionnaire distribution and collection in Japan. In one study, attitudes of retail buyers regarding pioneer brands were sought. In North America, a sample was drawn from a national list of supermarket buyers and questionnaires were distributed and collected by mail. Alternatively, in Japan questionnaires were distributed through contact people at 16 major supermarket chains and then returned by mail directly to the Japanese researchers. The second study sought to compare the job satisfaction of North American and Japan sales representatives. The questionnaires were delivered and collected via the company mail system for the North American firm. For the Japanese firm, participants in a sales training program were asked to complete the questionnaires during the program. Although the authors of the both studies suggest that the use of different methods of data collection in comparative studies does threaten the quality of the results, the approaches taken were the best (only) practical methods of conducting the research.

The adaptation necessary to complete these cross-national studies serve as examples of the need for resourcefulness in international marketing research. However, they also raise serious questions about the reliability of data gathered in cross-national research. There is evidence that often insufficient attention is given not only to nonsampling errors and other problems that can exist in improperly conducted multicultural studies, but also to the appropriateness of research measures that have not been tested in multicultural contexts.

8. RESEARCH ON THE INTERNET: A GROWING OPPORTUNITY

It is impossible to keep up with the worldwide growth in Internet usage. We know that at this writing there are more than 900 million users in more than 200 countries. International Internet usage is growing almost twice as fast as North American usage. Growth in countries such as Costa Rica was dramatically spurred by the local government’s decision to reclassify computers as “educational tools”, thus eliminating all import tariffs on the hardware. The demographics of users worldwide are as follows: 60 percent male and 40 percent female; average age about 32’ about 60 percent college educated; median income of about $60,000; usage time about 2.5 hours per week; and main activities are e-mail and funding information. The percentage of home pages by language is English, 80 percent; German, 3 percent; Japanese, 4 percent; French, 2 percent; Spanish, 1 percent; and all others less than 1 percent each.



For many companies the Internet provides a new and increasingly important medium for conducting a variety of international marketing research. Indeed, a survey of marketing research professionals suggests that the most important influences on the industry are the Internet and globalization. New product concepts and advertising copy can be tested over the Internet for immediate feedback. Worldwide consumer panels have been created to help test marketing programs across international samples. It has been suggested that there are at least seven different uses for the Internet in international research;

1.      Online surveys and buyer panels. These can include incentives for participation, and they have better “branching” capabilities (asking different questions based on previous answers) than more expensive mail and phone surveys.

2.      Online focus groups. Bulletin boards can be used for this purpose.

3.      Web visitor tracking. Servers automatically track and time visitors’ travel through websites.

4.      Advertising measurement.  Servers track links to other sites, and their usefulness can therefore be assessed.

5.      Customer identification system. Many companies are installing registration procedures that allow them to track visits and purchases over time, creating a “virtual panel”.

6.      E-mail marketing lists. Customers can be asked to sign up on e-mail lists to receive future direct marketing efforts via the Internet.

7.      Embedded research. The Internet continues to automate traditional economic roles of customers, such are searching for information about products and services, comparison shopping among alternatives, interacting with service providers, and maintaining the customer brand relationship. More and more of these Internet processes look and feel like research processes themselves. The methods are often embedded directly into the actual purchase and use situations and are therefore more closely tied to actual economic behaviour than traditional research methods can be. Some firms even provide the option of custom designing products online – the ultimate in applying research for product development purposes.

Toronto posts an online city guide (www.toronto.com). On it is a pop-up survey to solicit visitors’ reactions and demographic information. The latter data are collected to help build profiles, including browsing patterns, that can be used in promotional materials given to potential advertisers. More on line research applications are reported by SurveySite (www.surveysite.com), a Toronto-based company.

It is quite clear that as the Internet continues to grow, even more kinds of research will become feasible, and it will be quite interesting to see the extent to which new translation software impacts marketing communications and research over the Internet. Some companies now provide translation services for questionnaires, including commonly, used phrases such as “rate your satisfaction level”. Surveys in multiple languages can be produced quite quickly given the translation libraries now available from some application service providers. Finally, as it is the case in many international contexts, privacy is and will continue to be a matter of personal and legal consideration. A vexing challenge facing international marketers will be the cross-cultural concerns about privacy and the enlistment of cooperative consumer and consumer groups.

The ability to conduct primary research is one of the exciting aspects about the Internet. However, there are some severe limitations because of the potential bias of a sample universe composed solely of Internet respondents. Nevertheless, as more of the general population in countries gain access to the Internet, this tool will be that much more powerful and accurate for conducting primary research. Also, the Internet can be used as one of several methods of collecting data offering more flexibility across countries.

Today the real power of the Internet for international marketing research is the ability to easily access volumes of secondary data. These data have been available in print form for years, but now they are much easier to access and, in many cases, are more current. Instead of leafing through reference books to find two- or three-year-old data, as is the case with most printed sources, you can often find up-to-date data on the Internet. Such Internet sites as www.statcan.ca provide almost all data that are published by the Canadian government. If you want to know the quantity of a specific product being shipped to a country, the import duties on a product, and whether or not an export licence is required, it’s all there via your computer.

In addition to government sources, there are many private websites that provide information free or for a nominal price. Visit www.exporthonline.com to find market research for 80 countries, directories of business listing, and imports and exports by product and country – just to name a few of the resources. For people interested in doing business in Japan, JETRO (www.jetro.go.jp), a Japanese trade organization, provides information ranging from how to do business in Japan to specific product studies. Likewise, many universities offer sites that have links to resources all over the world. One of the best is https://globaledge.msn.edu.

There are volumes of good secondary data that can be accessed from your computer that will make international marketing research much easier and more efficient than it has ever been. Keep in mind, however, that this information must be validated, just as any secondary information should.

9. ESTIMATING MARKET DEMAND

In assessing current product demand and forecasting future demand, reliable historical data are required. As previously noted, the quality and availability of secondary data frequently are inadequate; nevertheless, estimates of market size must be attempted to plan effectively. Despite limitations, there are approaches to demand estimation that are usable with minimum information. The success of these approaches relies on the ability of the researcher to find meaningful substitutes or approximations for the needed economic, geographic, and demographic relationships. Some of the necessary but frequently unavailable statistics for assessing market opportunity and estimating demand for a product are current trends in market demand.

When the desired statistics are not available, a close approximation can be made using local production figures plus imports, with adjustments for exports and current inventory levels. These data are more readily available because they are commonly reported by the United States and other international agencies. After approximations for sales trends are established, historical series can be used as the basis for projections of growth. In any straight extrapolation, however, the estimator assumes that the trends of the immediate past will continue into the future. In a rapidly developing economy, extrapolated figures may not reflect rapid growth and must be adjusted accordingly. Given the greater uncertainties and data limitations associates with foreign markets, two methods of forecasting demand are particularly suitable for international marketers: expert opinion and analogy.

A. Expert opinion

For many market estimation problems, particularly in foreign countries that are new to the marketer, expert opinion is advisable. In this method, experts are polled for their opinions about market size and growth rates. Such experts may be companies’ own sales managers or outside consultants and government officials. The key in using expert opinion to help in forecasting demand is triangulation, that is, comparing estimates produced by different sources. One of the tricky parts is how best combine the different opinions. Developing scenarios is useful in the most ambiguous situations, such as predicting demand for accounting services in emerging markets such as China and Russia or trying to predict the impact of SARS on tourism in Hong Kong.

B. Analogy

Another technique is to estimate by analogy. This assumes that demand for a product develops in much the same way in all countries as comparable economic development occurs in each country. First, a relationship must be established between the item to be estimated and a measurable variable in a country that is to serve as the basis for the analogy. Once a known relationship is established, the estimator then attempts to draw an analogy between the known situation and the country in question. For example, suppose a company wanted to estimate the market growth potential for a beverage in country X, for which it had inadequate sales figures, but the company had excellent beverage data for neighbouring country Y. In country Y it is known that per capita consumption increases at a predictable ratio as per capita gross domestic product (GDP) increases. If per capita GDP is known for country X, per capita consumption for the beverage can be estimated using the method assumes that factors other than variable used (in this example GDP) are similar in both countries, such as the same tastes, taxes, prices, selling methods, availability of products, consumption patterns, and so forth. For example, the 13 million WAP (Wireless Access Protocol) users in Japan led to a serious overestimation of WAP adoptions in Europe – the actual number of 2 million was less than the 10 million forecasted for 2000. Despite the apparent drawbacks to analogy, it can be useful where data are limited. All the methods for market demand estimation described in this section are not substitute for original market research when it is economically feasible and time permits. The best approach to forecasting is almost always a combination of such macroeconomic database approaches and interviews with potential and current customers. As more adequate data sources become available, as would be the situation in most of the economically developed countries, more technically advanced techniques such as multiple regression analysis or input-output analysis can be used.

Finally, it should go without saying that forecasting demand is one of the most difficult and important business activities. All business plans depend entirely on forecasts of a future that no one can see. Even the best companies make big mistakes. For example, Microsoft apparently didn’t anticipate the waning interest of Japanese in video games in 2003.

10. PROBLEMS IN ANALYZING AND INTERPRETING RESEARCH INFORMATION

After data are collected, the final steps in the research process are the analysis and interpretation of findings in light of the stated marketing problem. Both secondary and primary data collected by the market researcher are subject to the many limitations just discussed. In any final analysis, the researcher must take into consideration these factors and, despite their limitations, produce meaningful guides for management decisions.

Accepting information at face value in foreign markets is imprudent. The meanings of words, the consumer’s attitude toward a product, the interviewer’s attitude, or the interview situation can distort research findings. Just as culture and tradition influence the willingness to give information, so they also influence the information given. Newspaper circulation figures, readership and listenership studies, retail outlet figures, and sales volume can all be distorted through local business practice. To cope with such disparities, the foreign marketing researcher must possess three talents to generate meaningful marketing information.

First, the researcher must possess a high degree of cultural understanding of the market in which research id being conducted. In order to analyze research findings, the social customs, semantics, current attitudes, and business customs of a society or a subsegment of a society must be clearly understood. At some level it will be absolutely necessary to have a native of the target country involved in the interpretation of the results of any research conducted in a foreign market.

Second, a creative talent for adapting research methods is necessary. A researcher in foreign markets is often called on to produce results under the most difficult circumstances and short deadlines. Ingenuity and resourcefulness, willingness to use “catch as catch can” methods to get facts, patience, a sense of humour, and a willingness to be guided by original research findings even when they conflict with popular opinion or prior assumptions are all considered prime assets in foreign marketing research.

Third, a skeptical attitude in handling both primary and secondary data is helpful. For example, it might be necessary to check a newspaper pressrun over a period of time to get accurate circulation figures, or deflate reported consumer income in some areas by 25 to 50 percent on the basis of observable socioeconomic characteristics. Indeed, where data are suspect, such triangulation through the use of multiple research methods is crucial.

These essential traits suggest that an international marketing researcher should be a foreign national or should be advised by a foreign national who can accurate appraise the data collected in light of the local environment, thus validating secondary as well as primary data. Moreover, regardless of the sophistication of a research technique or analysis, there is no substitute for decision makers themselves getting into the field for personal observation.

There are a host of firms, associations, and other organizations in the private sector to which the SME can turn for assistance. Usually the service (such as market research, export documentation, ocean or air shipping, marine insurance, or financing) requires payment; however, in some instances there is no charge. Listed below are sources of assistance the SME may use:

1.      Market Research – chambers of commerce, boards of trade in metropolitan areas, market research agencies, international accounting firms, Canadian chartered banks, freight forwarders, transportation companies, and trading houses.

2.      Pricing – industry trade associations, freight forwarders, transportation companies, and insurance companies.

3.      Documentation – freight forwarders, transportation companies, chambers of commerce, and industry trade associations (e.g., Canadian Manufacturers and Exporters Association).

4.      Insurance – freight forwarders and insurance companies.

5.      Transportation – transportation companies and freight forwarders.

6.      Business Planning – chambers of commerce, trade associations, universities, and international consulting firms.

            RESPONSIBILITY FOR CONDUCTING MARKETING RESEARCH

Depending on the size and degree of involvement in foreign marketing, a company in need of foreign market research can rely on an outside foreign-based agency or on a domestic company with a branch within the country in question. It can conduct research using its own facilities or employ a combination of its own research force with the assistance of an outside agency.

Many companies have an executive specifically assigned to the research function in foreign operations; he or she selects the research method and works closely with foreign management, staff specialists, and outside research agencies. Other companies maintain separate research department for foreign operations or assign a full-time research analyst to this activity. For many companies, a separate department is too costly; the diversity of markets would require a large department to provide a skilled analyst for each area or region of international business operations.

A trend toward decentralization of the research function is apparent. In terms of efficiency, it appears that local analysts are able to provide information more rapidly and accurately than a staff research department. The obvious advantage to decentralization of the research function is that control rests in hands closer to the market. Field personnel, resident managers, and customers generally have a more intimate knowledge of the subtleties of the market and an appreciation of the diversity that characterizes most foreign markets. One disadvantage of decentralized research management is possible ineffective communications with home-office executives. Another is the potential unwarranted dominance of large-market studies in decisions about global standardization. That is say, the larger markets, particularly the United States, Justify more sophisticated research procedures and larger sample size, and results derived via simpler approaches that are appropriate in smaller countries are often unnecessarily discounted.

A comprehensive review of the different approaches to multicountry research suggests that the ideal approach is to have local researchers in each country, with close coordination between the client company and the local research companies. This cooperation is important at all stages of the research project, from research design to data collection to final analysis. Furthermore, two stages of analysis are necessary. At the individual country level, all issues involved in each country must be identified, and at the multicountry level, the information must be distilled into a format that addresses the client’s objectives. Such recommendations are supported on the ground that two heads are better than one and that multicultural input is essential to any understanding of multicultural data. With just one interpreter of multicultural data, there is the danger of one’s self-reference criterion resulting in data being interpreted in terms of one’s own cultural biases. Self-reference bias can affect the research design, questionnaire design, and interpretation of the data.

If a company wants to use a professional marketing research firm, many are available. Most major advertising agencies and many research firms have established branch offices worldwide. There also has been a healthy growth in foreign-based research and consulting firms. Of the ten largest marketing research firms in the world (based on revenues), four are based in the United States, including the largest; three are in the United Kingdom; one is in France; one is in Germany; and one is in the Netherlands. The latest count of marketing research firms in China is more than 400 and growing fast. In Japan, where it is essential to understand the unique culture, the quality of professional market research firms is among the best. A recent study reports that research methods applied by Japanese firms and American firms are generally quite similar, but with notable differences in the greater emphasis of the Japanese on forecasting, distribution channels, and sales research. A listing of international marketing research firms is printed annually as an advertising supplement in the Marketing News (see the “Directory of International Marketing Research firms”).

An increasingly important issue related to international marketing research is the growing potential for governmental controls on the activity. In many countries consumer privacy issues are being given new scrutiny as the Internet expands companies’ capabilities to gather data on consumer’ behaviours. However, perhaps the most distressing development in this area is China’s recent crackdown on marketing research activities there.

12. COMMUNICATING WITH DECISIONS MAKERS

Most of the discussion in this chapter is about getting information from or about consumers, and competitors. It should be clearly recognized, however, that getting the information is only half the job. That information must also be given to decision makers in a timely manner. High-quality international information systems design will be an increasingly important competitive tool as commerce continues to globalize, and resources must be invested accordingly.

Decision makers, often top executives, should be directly involved not only in problem definition and question formulation, but also in the fieldwork of seeing the market and hearing the voice of the customers in the most direct ways when occasion warrants it (as in new foreign markets). Top managers should have a “feel” for their markets that even the best marketing reports cannot provide.

Finally international marketers face an additional obstacle to obtaining the best information about customers. At the most basic level, marketing research is mostly a matter of talking to customers. Marketing decision makers have questions about how best to serve customers, and those questions are posed and answered often through the media of questionnaires and research agencies. Even when both managers and customers speak the same language and are from the same culture, communication can become garbled in either direction. That is, customers misunderstand the questions and/or managers misunderstand the answers. Throw in a language/cultural barrier, and the chances of misinformation expand dramatically.

The four kinds of company-agency-customer relationships possible are presented in Exhibit 6.2. Options B and C are better suited for managing the cultural barrier across the chain of communication. That is, in both cases the cultural barrier is bridged within a company, wherein people have a common corporate culture and work together on an everyday basis. In option B the translation (in the broadest sense of the term – that is, of both questionnaires and reports) is worked out between employees of the international marketing research agency. In option C the translation is managed within the company itself. In options A and D both cultural and organizational barriers are being crossed simultaneously, thus maximizing the chances for miscommunication. These same company-agency-customer considerations are also pertinent to the other kinds of communication between companies and customers, such as advertising and distribution channel control, and this uniquely international topic is addressed again in subsequent chapters.

Exhibit 2 Managing the Cultural Barrier in International Marketing Research

Summary

The basic objective of the market research function is providing management with information for better decision making. This objective is the same for domestic and international marketing. In foreign marketing research, however, achieving that objective presents some problems not encountered on the domestic front.

Customer attitudes about providing information to a researcher are culturally conditioned. Foreign market information surveys must be carefully designed to elicit the desired data and at the same time not offend the respondent’s sense of privacy. Besides the cultural and managerial constraints involved in gathering for primary data, many foreign markets have inadequate or unreliable sources of secondary information. Such challenges suggest three keys to successful international marketing research: 1) the inclusion of natives of the foreign culture on research team; 2) the use of multiple methods and triangulation; 3) the inclusion of decision makers, even top executives, who must on occasion talk directly to or directly observe customers in foreign markets.








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