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International Marketing

Developing a Global Vision Through Marketing Research

Reference Book: International Marketing by Cateora/Graham/Salwan 14e TMH

What Should You Learn?

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

International Marketing Research

Enterprises with international scope of operations
Need for current, accurate information magnified

Marketing research
The systematic gathering, recording, and analyzing of data to provide information useful in marketing decision making

International marketing research involves two complications

Information must be communicated across cultural boundaries The environments within which the research tools are applied are often different in foreign markets

Breadth and Scope of International Marketing Research

Types of information needed by research
1. General information about the country, area, and/or market 2. Information to forecast future marketing requirements

By anticipating social, economic, consumer, and industry trends within specific markets or countries

3. Specific market information used to make and develop marketing plans

Product Promotion Distribution Price decisions

Breadth and Scope of International Marketing Research

A countrys political stability, cultural attributes and geographical characteristics are some of the kinds of information not ordinarily gathered by domestic Marketing research departments. Unisys Corporations planning steps for collecting and assessing the following types of information
1. 2. 3. 4. 5. Economic and demographic Cultural, sociological; and political climate Overview of market conditions Technological environment Competitive situation

Top 20 Countries for Marketing Research Expenditures (millions of dollars)

The Research Process

Research process 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 relevant data from secondary or primary sources, or both 5. Analyze, interpret, and summarize the results 6. Effectively communicate the results to decision makers

Research steps are similar for all countries

Variations and problems can occur in implementation

Differences in cultural and economic development

Defining the Problem and Establishing Research Objectives

The major difficulty is converting a series of often ambiguous business problems into tightly drawn and achievable research objectives The first, most crucial step in research is more critical in foreign markets because an unfamiliar environment tends to cloud problems definition Other difficulties in foreign research stem from failures to establish problem limits broad enough to include all relevant variables

Problems of Availability and Use of Secondary Data

Some government like US provides comprehensive statistics for their countries Marketing data not matched in other countries
Quality Quantity Exceptions are Japan and several European countries

Continuing efforts to improve data collection

United Nations Organization for Economic Cooperation and Development (OECD)

Problems of Availability and Use of Secondary Data:

Availability and Reliability of Data Availability of Data
Most countries simply do not have governmental agencies that collect on a regular basis the kinds of secondary data readily available in some western developed countries like U.S. Researchers language skills impede access to information

native speaker of language

Reliability of Data
Official statistics are sometimes too optimistic, reflecting national pride rather than practical reality, while tax structures and fear of the tax collector often adversely affect data
Less-developed Willful

countries prone to optimism

errors Adjusted reporting

Problems of Availability and Use of Secondary Data :Comparability of Data Comparability of Data
Issues with data (especially in less developed, countries)

can be many years out of date Data collected on an infrequent and unpredictable schedule

Too frequently, data are reported in different categories or in categories much too broad to be of specific value

Problems of Availability and Use of Secondary Data: Validating Secondary Data

Validating Secondary Data
Questions to judge the reliability of secondary data sources
Who collected the data? Would there be any reason for purposely misrepresenting the facts? For what purposes was the data collected? How was the data collected? 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
An effective and often-used way of judging validity for eg hospital equipments sold with the number of hospital beds

The availability and accuracy of recorded secondary data increase with level of economic development

Gathering Primary Data Quantitative and Qualitative Research

Primary data
Data collected specifically for the particular research project

Quantitative research
Usually a large number of respondents Respondents answer structured oral or written questions using a specific response format (such as yes/no) or to select a response from a set of choices Responses can be summarized in percentages, averages, or other statistics

Toto a Japanese firm with the premiers quantitative research on bathroom and toilet technology

Gathering Primary Data Quantitative and Qualitative Research

Qualitative research
If questions are asked, they are almost always open-ended or indepth Seeks unstructured responses that reflect the persons thoughts and feelings on the subject

Qualitative research interprets people in the sample for eg focus groups.

Qualitative research is helpful in revealing the impact of sociocultural factors on behavior patterns and in developing research hypotheses

Problems of Gathering Primary Data

Hinges on the ability of the researcher to get correct and truthful information that addresses research objectives Problems in international marketing research
Stem from differences among countries Range from inability or unwillingness of respondents to communicate their opinions Inadequacies in questionnaire translation

Problems of Gathering Primary Data :

Ability to Communicate Opinions Formulating opinions about a product or concept
Depends on the respondents ability to recognize the usefulness of such a product or concept Product or concept must be understood and used in community

The more complex the concept, the more difficult it is to design research that will help the respondent communicate meaningful opinions and reactions
Gerber has more experience in trying to understand consumers with limitations

Babies can neither answer questions or fill out questionnaires

Problems of Gathering Primary Data:

Willingness to Respond Cultural differences provide best explanation for unwillingness or inability of many to respond to research surveys The role of the male, the suitability of personal gender-based inquiries, and other genderrelated issues can affect willingness to respond Less direct measurement techniques and nontraditional data analysis methods may also be more appropriate

Problems of Gathering Primary Data:

Sampling in Field surveys Problems in sampling stem from the lack of adequate demographic data and available lists from which to draw meaningful samples Affected by a lack of detailed social and economic information
No officially recognized census information No other listings that can serve as sampling frames Incomplete and out-of-date telephone directories No accurate maps of population centers

Problems of Gathering Primary Data:

Language and Comprehension The most universal survey research problem in foreign countries is the language barrier Literacy poses yet another problem Marketers use three different techniques to help ferret out translation errors ahead of time
Back translation Parallel translation Decentering

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 Multicultural research involves dealing with countries that have different languages, economies, social structures, behavior, and attitude patterns

In some cases the entire research design may have to be different between countries to maximize the comparability of the results

Research on the Internet a Growing Opportunity

One billion users in more than 200 countries
One-sixth in U.S.

International Internet use is growing rapidly Uses for Internet in international research
Online surveys and buyer panels Online focus groups Web visitor tracking Advertising measurement Customer identification systems E-mail marketing lists Embedded research Observational research

Estimating Market Demand

To assess current product demand and forecast future demand
Requires reliable historical data

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

Two methods of forecasting demand

Expert opinion

The key in using expert opinion to help in forecasting demand is triangulation Assumes that demand for a product develops in much the same way in all countries as comparable economic development occurs in each country


Personal Computer and Mobile Phone Diffusion Rate (per 1,000 people)
Personal Computer Mobile Phone

Problems in Analyzing and Interpreting Research Information

Accepting information at face value in foreign markets is imprudent The foreign market researcher must posses three talents to generate meaningful marketing information
1. The researcher must posses a high degree of cultural understanding of the market in which research is being conducted 2. A creative talent for adapting research methods is necessary 3. A skeptical attitude in handling both primary and secondary data is helpful

Responsibility for Conducting Marketing Research

A company in need of foreign market research can rely on an outside foreign-based agency or domestic company with a branch in that country A trend toward decentralization of the research function is apparent
Local analysts appear to be able to provide information more rapidly and accurately

Control rests in hands closer to the market

Disadvantage lies in ineffective communications with homeoffice executives

Unwarranted dominance of large-market studies in decisions about global standardization

Responsibility for Conducting Marketing Research

A comprehensive review of the different approaches to multicountry research suggests
Ideal approach is to have local researchers in each country, Close coordination between the client company and the local research companies

Two stages of analysis are necessary

Individual-country level Multi-country level

Communicating with Decision Makers

Gathered information must be given to decision makers in a timely manner Decision makers should be directly involved not only in problem definition and questions formulation, but also in the fieldwork Even when both managers and customers speak the same language and are from the same culture, communication can become garbled in either direction

Managing the Cultural Barrier in International Marketing Research

International Marketing

Identifying Foreign Markets

Reference Book: International Marketing Management by Varshney/Bhattacharyya Sultan Chand and Sons Publications Chapter 12

Identifying Foreign Markets

Selection of markets is the 1st stage in international marketing The firm will not succeed unless it is marketing the right product in the right export market.

No firm has unlimited resources so proper selection of markets would avoid waste in time and effort.
Better to concentrate on few fruitful markets than to spread too thinly. Market concentration can lead to better debt collection and cost savings for eg L&T

Criteria for Classifying World Markets

To identify and shortlist markets which offer or might offer in future opportunities that can be exploited by it, a classification scheme for segmenting the world markets is required. There are several bases of classification, principal among them are Classification on the
1. Basis of Stages of Demand
2. Basis of Stages of Development. 3. Other Bases of Division of World Markets

1. Classification on the Basis of Stages of Demand

Keegan has produced a 3 fold classification 1. Existing markets
a. Consumer needs are known and are already being serviced by some products. The market opportunities can be assessed by estimating the consumption rate and the share of imports in current consumption.


2. Latent Markets
a. Have potential customers, but because no-one has offered a product to fill the latent need there is no existing market

1. Classification on the Basis of Stages of Demand. contd

3. Incipient Markets
a) b) They do not exist in the present. Conditions and trends can be identified that points towards the emergence of future needs and preferences for products and services that will create a latent market, which if supplied will become an existing market.

2. Classification on the Basis of Stages of Development

The world markets can be divided into 4 distinct segments on the basis of Stages of Development: 1. Industrial Economies
a) These countries lay more emphasis on R&D and devote their resources to production of more sophisticated products and will therefore like to import goods of simpler technology and simpler manufactures. They have an acute shortage of labor and tend to import labor intensive products like electronics and light engineering goods. They also tend to import spares and components and raw materials. Egs include US, UK, France, Japan, Germany etc.

b) c) d)

2. Classification on the Basis of Stages of Development. contd

2. More Developed Developing Countries
a. Like to update technology for current range of manufacturers and would like to import machinery and equipment to set up new manufacturing facilities. Also interested in setting up JVs in other less developed countries. Egs include Brazil, Mexico, India, Russia etc

b. c.

2. Classification on the Basis of Stages of Development. contd

3. Raw material Exporting Economies
a. Infrastructure not completely adequate and therefore need various types of goods like consumer durables, food products, transport equipments, service facilities etc. They are interested in importing turnkey projects. Changes in these countries take place slowly and therefore the level of sophistication in products required by these countries is much less than that required by developed countries. Egs include Gulf countries and some countries in Africa and Latin America

b. c.


2. Classification on the Basis of Stages of Development. contd

4. Subsistence Economies
a. They will require equipments to exploit their untapped resources as also infrastructural facilities like railways, roads, building, transport equipment etc. They provide a lot of scope for turnkey projects like housing, schools, hospitals etc. Latest developments in technology in production may not have been offered by competitors in these countries and therefore the opportunities are much greater for developing countries like India to export their products to subsistence economies

b. c.

3. Other Bases of Division of World Markets

1. Population
Generally, The higher the population, the bigger the market When analyzing population essential to look at

Age Groups and Sex Social Class Educational Background Number of households Geographic concentration and differences Rates of changes in all the above

3. Other Bases of Division of World Markets. contd

2. Gross National Product (GNP)
its rate of growth Standard of living of population Traditionally Large industrialized nations like the US, Western Europe countries, Japan, Australia, Canada etc are the best markets for consumer good and durables even though these countries manufacture these products themselves, people are affluent enough to buy imported products and in many cases prefer to do so

3. Other Bases of Division of World Markets. contd

Whether the per capita income is a useful indicator of the size or quality of the market or not depends upon the product to be exported. Sales of many consumer goods correlate more closely with population or household figures than with per capita income for example soft drinks, ball point pens, radios, bicycles etc. Industrial goods and capital equipment sales generally correlate better with the industrial structure or total income than with per capita income. Big countries may have different market characteristics in different parts of the country for eg US can be divided into 4 parts Northeast, South, Midwest and West and each part has different market characteristics. What may be sold in California may not be sold in Connecticut. On the other hand, though there are many countries in the continent, their market characteristics may be more or less same

International Marketing

Social and Cultural Environments

Reference Book: Global Marketing Management by Keegan/Bharagava, 7e, Pearson education, Chapter 3

Basic Aspects of Society and Culture Analytical Approaches to Cultural Factors Handling Cultural Diversity Impact of Social and Cultural Environments on marketing Industrial Products Consumer Products

Learning Objectives
Understanding how important cultural and social differences are in global marketing
Learning fundamental concepts that provide an understanding of cultural differences Understanding where potential conflicts may arise in global business relations

Knowing how cultural differences impact the marketing of products and services

Basic Aspects of Society and Culture

Culture defined as ways of living built up by a group of human beings, which are transmitted from one generation to another It includes both Conscious and unconscious values, ideas, attitudes, and symbols that shape human behaviour and that are transmitted from one generation to the next Culture is learned, not innate

Culture defines the boundaries between different groups

All facets of culture are interrelated

Basic Aspects of Society and Culture

Attitude towards whole classes of products can also be a function of culture for eg US consumers have a cultural disposition for product innovations having a gadgetry quality. Nevertheless, the demand for convenience foods, luxury consumer products, electronic products, disposable products and soft drinks in US, Europe, Asia, Africa and the Middle East suggests that most consumer products have broad , almost universal appeal.

The Search for Cultural Universals

Universal = Mode of behaviour existing in all cultures Universal aspects = opportunities to standardize some or all elements of a marketing program Cultural universals: e.g., athletic sports, body adornment, religious rituals, music, cooking, education, marriage, medicine, mourning etc E.g.: Music provides one example of how these universals apply to marketing. Music is a part of all the cultures, accepted as a form of artistic expression and source of entertainment but the type of music appropriate for commercial in one part of the world may not be acceptable in some other part of the world. A jingle might utilize a bossa nova rhythm for Latin America, a rock rhythm for North America and high life for Africa. Music, then, is a cultural universal that global marketers can adapt to cultural preferences in different countries or regions

The Anthropologists Standpoint

Global marketers must understand human experience from the local point of view and become insiders with cultural empathy Global marketers need combination of toughmindedness and generosity Tough-mindedness: be secure in your own convictions and traditions Generosity: Appreciate the integrity and value of other ways of life

High- and Low-Context Cultures

Low-context culture: Messages are explicit Words carry most of the information in communication E.g., United States, Switzerland, Germany

High- and Low-Context Cultures contd

High-context culture Less information is contained in the verbal part of the message More information resides in the context of communication (background, associations, basic values of communicators) In general, high context culture functions with much less legal paperwork than is deemed essential in low context cultures India, Japan, Saudi Arabia and other high context cultures place a lot of importance on a persons values and position or place in society

High- and Low-Context Cultures contd

Factors Lawyers A persons word Time High-Context - less important - his/ her bond - everything is dealt with in its own time Negotiations - lengthy Competitive - infrequent Bidding Japan, Middle East Responsibility for - taken by highest level organizational error Space - People breathe on each other Low-Context - very important - get it in writing - time is money

- quick - frequent US, Northern Europe pushed to lowest level

people maintain private space

Communication and Negotiation

Global marketers face challenges in Verbal communication Non-verbal communication Knowledge and understanding of cross-cultural differences is crucial during negotiations People growing up in the west tend to be verbal where as eastern world is more non verbal

Analytical Approaches to Cultural Factors

Maslows hierarchy of needs

Analytical Approaches to Cultural Factor. contd

Hofstedes cultural typology Cultures of different nations can be compared in terms of four dimensions Power distance Integration into groups Individualist Collectivist Masculinity/Femininity Uncertainty avoidance

Analytical Approaches to Cultural Factor. contd

Self-reference criterion (SRC) and perception Perception of market needs is framed by own cultural experience Four-step framework Define problem in terms of home country norms Define problem in terms of host country norms Isolate SRC influence. See how it complicates problem Redefine problem without SRC influence. Solve for host country market situation

Analytical Approaches to Cultural Factor. contd

Environmental Sensitivity The extent to which products must be adapted to the culture-specific needs of different national markets View products on a continuum of environmental sensitivity Environmental sensitive products Require significant adaptation to the environments of various global markets (e.g., food) Environmental insensitive products Do not require significant adaptation (e.g., integrated circuits)

Impact of social and cultural environments on marketing INDUSTRIAL PRODUCTS

Industrial products might exhibit Lower levels of environmental sensitivity (e.g., computer chips) Higher levels of environmental sensitivity (e.g., government policies influencing purchasing behaviour of turbine generators, buy national)

Impact of social and cultural environments on marketing CONSUMER PRODUCTS

Consumer goods are usually more sensitive to cultural diversity than industrial goods Culture is changing so rapidly that innovative marketing may be able to change established consumption patterns rooted in cultural differences

Impact of social and cultural environments on marketing CONSUMER PRODUCTS

Example: Consumption of Soft Drinks (C) Y = f (A, B, C, D, E, F, G)
A = influences of other beverages relative prices, quality, taste B = advertising expenditure and effectiveness, all beverage categories C = availability of products in distribution channel D = cultural elements, tradition, custom, habit E = availability of raw materials F = climatic conditions, temperature, relative humidity G = income levels

Cross Cultural Complications

Culture always has been a major source for disagreement and misunderstandings Cross-cultural complications can lead to costly failures Companies realize the importance of training and supporting people in cultural awareness