CHAPTER 5

ANSWERS TO QUESTIONS FOR DISCUSSION

5.1 How would you respond to a person making the following statement: As a general rule, the
export market manager has few sources of information available for use in market selection.

This is not an accurate statement. To the contrary, the sources of international and product information
are usually overwhelming, and the problem is to identify the relevant data. The Internet and World Wide
Web, indexes and guides, and other publications provide a wealth of information.

In any given situation, certain specific information desired by the export market manager may not be
available, so market research may have to be undertaken.
Even though there are usually many sources of market-related information, there still remain problems
regarding the age of the data, its accuracy, and its relevance for the decision to be made.

5.2 For three different products that are being exported, or are exportable, list the major sources
of information on competitors activities.

Specific answers to this question will vary. General sources of such information include: trade
publications, competitors house organs and annual reports, a companys salespersons, employees of
other companies, competitors advertising and product introduction/ improvement notices, competitors
web listings on the Internet, and other sources.

5.3 Select two foreign markets one a developed country and one a developing country and
develop a list of sources of information which might be helpful to you in assessing the
probable market for an exportable product from your country (specify your product and the
country). Are web-based or nonweb-based sources preferable? Discuss.

Answers will vary. Selections from the many sources listed in the text and Appendix of Chapter 5 should
provide a good start.

The use of a combination of web-based and nonweb-based sources will provide the best/most complete
results. For many countries, using web-based sources will be the easiest and fastest place to start, but
will not generally provide all the information required.

5.4 What is the market research process that the international/export marketer uses and what are
the major issues that can arise to provide complications?

The international market research process involves problem formulation (determining what management
needs to know), research method and design, data collection, analysis, and interpretation, and the
reporting of results.

Complications may arise due to incomparability of data: different definitions or methods of collection, and
different uses of products. Other problems may include complexity of research design, lack of accurate
secondary sources, and high costs of collecting primary data.

5.5 Marketing research is beyond the capabilities and needs of the small exporter. Only larger
companies doing business in many countries have need for research services. Discuss.
This is not true. Small exporters face the same risks and problems as larger companies with respect to
potential market acceptance of the product, size of the market etc. The limited resources of the smaller
exporters may restrict the methods used and extent of marketing research conducted, but the basic
needs for information are the same. The Internet and web have made it easier and less costly for small
exporters (as well as large exporters) to do marketing research.

5.6 What is the nature of the equivalence problem in doing research in multiple foreign markets,
and how can it be resolved?

The equivalence problem is the difficulty in establishing comparability and equivalence of data and
research conducted in different countries with differing cultures, languages, measuring systems, etc.
People in different countries often: (a) place different interpretations or meanings on similar
objects/stimuli/behavior; (b) categorize objects/stimuli/behaviors differently; and/or
(c) have different roles or functions for concepts/objects/behaviors. These result in problems in translation,
calibration, and metrics. Making a valid comparison is difficult in these circumstances and requires that the
researchers and users of data understand the differences, make adjustments for the differences insofar
as is possible, and recognize that achieving absolute equivalence may not be possible.

5.7 Explain how the Internet may be a valuable source for information, for even the smallest-
sized exporter.

The Internet can be a valuable source of information, especially for the smallest-sized exporter, because
a wealth of information is available for a minimum of effort. Up-to-date information is now available on the
Internet which previously was not available, was difficult to locate, or would have required visits to offices
of banks, governments, or other organizations.

5.8 How can the international marketer overcome the incompatibility of research methods usable
in different countries when doing a comparative study?

The international marketer doing a comparative study covering a number of countries can partially
overcome the incompatibility of usable research methods by:

(1) determining the questions/approaches which can be used in each country/area;

(2) clearly indicating/stating the differences in collection and reporting of results; and

(3) indicating limitations in the interpretation and use of noncompatible data.

Various students are likely to approach this question from differing perspectives, but should cover in some
manner the requirements listed above.

5.9 If a company cannot use the same methods of data collection for the same study in its
different markets, how can a valid comparison be made? Discuss.

Making a completely valid/accurate comparison may not be possible, but a satisfactory comparison may
be made by recognizing the possible differences in the meanings derived from the data and then
adjusting for them.

ANSWERS TO CASE QUESTIONS

5.1 SAN A/S

1. Explain how secondary information can be used to meet the objectives of the market study.
Secondary sources can provide: basic information about the economy, including total size, income levels,
and industrial structure; information about imports and exports of similar/related products; potential
customers, competitors, and marketing intermediaries. Comparisons with similar data from countries in
which SAN A/S already sells it products and services will provide some estimate of sales potential for the
companys products. Knowledge of the potential market, existing competitors, and the availability of
appropriate marketing intermediaries will provide a basis for a preliminary evaluation of possible
marketing strategies and policies. These, of course, should be followed by visits and conducting more in-
depth studies.

2. What kind(s) of data and sources of such data would be useful?

Useful data on the economys size, structure and development; customs and regulations; the people and
culture; potential customers and competitors; facilitating organizations etc. can be obtained through the
sources listed in the chapter. These include, but are not limited to: government offices and publications
(national and supranational), news and trade papers and magazines, business and trade associations,
foreign freight forwarders/customs house brokers, commercial banks, published studies, websites on the
Internet of the above and of potential customers and competitors, etc.

3. Should SAN A/S enter the Australian market? Defend your answer.

It would be premature to give a definite answer at this point. The sources of secondary information
discussed above can provide relevant and useful information, but additional data should be gathered by
inquiries of marketing intermediaries and trips to Australia.

At this point, favorable indicators are that the Australian market size and economic structure fall within the
ranges of other markets that SAN A/S has already successfully penetrated. Adjusting to customs and
language differences will require careful study, but should not present serious problems.

A problem is that, in spite of the increased speed and ease of international travel, the greater travel
distance from Denmark of the Australian market (and time differences) may present problems in
communications and control.

5.2 Aquabear AB
1. Should Aquabear AB enter southern hemisphere markets with its line of ski wear?

Students answers to the basic question of whether or not Aquabear should enter southern hemisphere
markets with its line of ski wear will vary. The question cannot be answered properly from using only the
facts that are presented in the case. Some additional secondary research will be necessary.

Some students may raise the question of looking into entering Canada and the United States rather than
the Southern Hemisphere. These North American markets are large, but competition will be intense. Also,
the company has stated that it wants to even out the seasonal variations in production and sales.

The question of why South Africa was not included in the list of potential markets was already raised in
the case. Some students may also want to discuss this.

If seasonal variations are of primary concern, other alternatives are available to the company. Production
variation would be easier to handle than would sales. The ski wear product line could be produced
throughout the year, but this would require storage facilities, which may increase the cost. However, ski
wear, particularly vests and jackets, may be sold for other uses such as hunting, hiking, fishing, and other
outdoor activities. This would expand sales to cover spring and fall seasons, but not summer seasons.
Thus year-long sales, even of vests and jackets, are not feasible. Since ski wear has become a fashion
item, much like regular clothes, annual changes are required and year-long production may not be
feasible. Finally, customers are accustomed to reduced-price sales just prior to the season starting and at
the end of the season.

A better alternative for Aquabear to pursue might be contra-seasonal or all-season, products for its
existing and new geographical markets. This would be particularly appropriate if the existing plan and
machinery could be used. Thus, Aquabear should look to sport or recreational clothing that is used in
seasons other than the ski season-light-weight jackets and rain gear, swimsuits, runners clothing, boating
gear, etc. After all, the company started manufacturing and selling maritime leisure wear as its original
product line. This could be expanded in its present markets and could be marketed in Southern
Hemisphere markets as a contra-seasonal product.
2. If so, which market(s) should it enter and why?

3. If not, why not?

Questions 2 and 3 are interrelated and can best be answered together.

Most students should pursue the basic question asked about Aquabear ski wear line Snowbear. In order
to answer this, a more extensive market analysis needs to be done using secondary data sources. Some
background data developed by Harald Gornisson is given in the case, and a list of necessary additional
information which he believes should be gathered is also provided in the case. A comparative analysis of
the four countries can then be done. Some students may decide to analyze the countries on the basis of
geographic proximity and may end up with two alternatives Argentina/Chile and Australia/New Zealand.
Whether this is desirable may depend upon the entry mode that is to be used. At present, the company
exports directly through a foreign-based agent. This may be good for New Zealand where the specialty
stores are strong but not so good for Australia where large department stores play a dominant role. In this
case, some other entry mode may be used. In any event, such pairing should not be done until individual
country data have been examined.

As an illustration, students may present their analysis for each country in the following way.

SIZE:
POPULATION:
MAJOR METROPOLITAN AREA POPULATION: (cities and populations)
MAIN SKIING RESORTS: (location and number)
SKIING SEASON:
ESTIMATED NUMBER OF ACTIVE SKIERS:
OUTLOOK: (for sport)
TOURISTS: (number and expenditures)

OUTLOOK: (for tourism)

BUSINESS LANGUAGE:

MARKET POTENTIAL: (ski suits per year)

CURRENCY:
ECONOMIC SITUATION:

GNP PER INHABITANT:

STANDARD OF LIVING:
OUTLOOK:
POLITICAL SITUATION:
CUSTOMS TARIFF:
IMPORT RESTRICTIONS:
EXPORT CREDIT:
DISTRIBUTION CHANNELS:
MEDIA:
TRANSPORTATION COSTS: by air:
by sea:
Other useful information would include foreign trade data (export and import situation), particularly for
textile, clothing, and footwear products. Also, the trade specifically with Sweden should be examined.

A general evaluation of the four potential markets may appear to be as follows:

Argentina Australia Chile New Zealand

Number of skiing resorts + (+) + +

Skiing resorts close to densely - (+) + +

populated areas

Estimated number of active skiers + + - +

Length of skiing season + + + +

Language/cultural barriers - + - +

GNP per capita - + - +

Price level ? + ? +

Market growth potential - + - +

Customs tariff, import-related fees - - + -

Sales (service) tax - + - -

Import restrictions + - - -

Political situation (+) + - +

Competition ? ? ? ?

Media situation + + ? +

One interpretation of this is that Chile has the least promising market despite good skiing opportunities
and low tariffs (duty). Similarly, Argentina has a high duty and sales tax as well as an uncertain economic
and political situation. These factors together with a potential language barrier make Argentina a less
promising market despite having a relatively large market potential for the product class, at least this time.

Australia and New Zealand seem to be the overall best choices. However, the small market potential is
New Zealand and the staggeringly high duty on womens ski wear by far outweigh the other factors as the
relatively long and stable skiing season, great skiing opportunities, and a large number of local and
foreign skiers. Thus, a possible conclusion is that Australia is the most promising market in the Southern
Hemisphere despite not having as developed ski areas as other countries. Since Australia and New
Zealand are not too far from each other, both countries could be entered by export with Australia serving
as a base. Aquabear might consider licensing as a mode of market entry, with the licensee being in
Australia. Naturally, a suitable Australian company would have to be available and agree to such an
agreement.
5.3 Ford Motor Company Latin America
1. Evaluate Fords use of different methodologies in its Global Quality Research program prior to
2000.

Fords original Global Quality Research System was a major step forward in obtaining information globally
from customers on vehicle quality of Fords and competitors quality. The information was then used by
the Ford Quality Office and manufacturing plants to identify and fix quality problems. The methodology
was designed for use by mail, though other methods were used in countries in Latin America where the
mail system was unreliable or inefficient. It required a fairly long time for respondents to complete the
form and response rates were low even in the US (where they averaged only 35 to 40%). In Latin
America, where personal intercepts or appointments were used, results were not satisfactory. Because of
this, information obtained was often either misleading or incomplete and practically paralyzed the Latin
American manufacturing plants that were supposed to find and fix the underlying problems.

2. Evaluate Fords decision to change to what is essentially a single global methodology for data
collection, a CATI system.

Ford and the RDA Group, their full service market research firm, worked together in identifying the
problems in the research program in Latin America. The methodology was faulty, particularly the length of
the survey. Those people who did respond to the survey were a biased sample of owners. It was also
found that it took almost a year to get the results analyzed and sent to the manufacturing plants. These
delays allowed manufacturing problems, identified at the home office, to continue in the plants for a long
period.

Ford and the RDA Group worked with both customers and Ford management to determine problems and
possible solutions. The analysis led to a reduction in the number of questions and a customization of the
questionnaire according to the type of vehicle the interviewee owned. A switch was made to a CATI
(computer assisted telephone interview) form of interview. Tests indicated that the new program solved
the major problems of the previous method, and resulted in quicker and more useful information flowing to
the manufacturing plants.

3. What method should Ford and the RDA Group use in markets having low telephone
penetration? Explain.

The CATI program might not work well in markets where there is low telephone penetration among
automobile purchasers. This would seem to be increasingly unlikely with the spread of cellular phones
around much of the globe. However, if such a problem does arise, the personal intercept or appointment
approach could be used with the customized question-asking format/process changed to approximate
that of the CATI approach.

5.4 United Parcel Service, Inc.

1. Evaluate UPSs use of survey research data to aid clients and potential clients.

The two surveys have been effective in helping clients and potential clients to begin/expand marketing in
China. The first survey indicated the general product categories of imports in which urban middle-class
Chinese were interested. The second developed specific information about what appeals to Chinese
customers about certain American products. This will enable potential/existing exporters to better meet
consumer preferences.

UPS should also inform clients/potential clients about where they can find more information about doing
business with the Chinese, and information regarding useful service organizations and marketing
intermediaries.
2. Is using survey research the way UPS does as a marketing/promotional tool a sound use
of marketing expenditures? Explain.

Yes, it is an efficient and effective use of marketing funds. It serves two major functions. First, it provides
clients and potential clients with information about what they may be able to export to China and how to
adapt present products to better suit customer preferences. This can be expected to directly generate
additional business for UPS (and on presently underutilized flights to China from the US). Second, it is
providing valuable publicity for UPS that can be expected to attract additional customers from among
companies not presently using UPS.

3. How might UPS use marketing research to aid its own operations?

UPS could use marketing research to determine what customers like best about their service, what
services should be added, and what aspects of their operations need improvement. Understanding what
the customers want/need is the key to developing programs to improve customer relations/satisfaction.

TEST BANK

1 Secondary sources of information available to exporters:

(a) may provide an overwhelming amount of information.
(b) include information from commercial banks, consulates, and freight forwarders.
(c) usually should not be relied upon as a sole source.
(d) All of the above.
(e) None of the above.

2. The key dimension(s) in assessing market potential include the number of possible users of the
product and the maximum expected purchase rate.
(a) True
(b) False

3. Useful techniques for estimating export market size include:

(a) income elasticity measurements.
(b) lead-lag analysis.
(c) regression analysis.
(d) All of the above.
(e) None of the above.

4. Problems in international marketing research data collection and interpretation include:

(a) lack of secondary data available for some countries.
(b) problems in establishing comparability and equivalence of data and research conducted in
different contexts.
(c) translation equivalence in questions.
(d) All of the above.
 (e) None of the above.

5. International marketing research is no longer needed once a company is selling in a foreign country
since its sales tell it what it needs to know.
(a) True
(b) False
6. As a general observation, the sources of international market and product information are very
limited, and the problem is to find data.
(a) True
(b) False

7. The basic international marketing research process is no different from the general domestic approach
to marketing research.
(a) True
(b) False

8. Many companies overlook, underutilize, or ignore internal data sources.

(a) True
(b) False

9. Primary data refers to information obtained directly from those about whom one desires the
information.
(a) True
(b) False

10. Qualitative research in Europe and the US is virtually identical because the countries all use
rationally-based approaches.
(a) True
(b) False

11. Data analysis of information gathered in the EU is relatively easy because of the standardization of
definitions and categories.
(a) True
(b) False

12. Dangers arising from measure equivalence (translation equivalence) in questionnaires are that a
poorly worded item:
(a) may cause respondents difficulty in answering.
(b) may produce data that are not valid.
(c) Both of the above.
(d) None of the above.
13. Using the Web has made the gathering of secondary data easier and cheaper, but may not provide all
of the information required.
(a) True
(b) False
14. The Internet does not offer any assistance to the researcher in gathering primary data.
(a) True
(b) False

Answers to Test Bank questions

1. (d) 2. (a) 3. (d) 4. (d) 5. (b) 6. (b) 7. (b) 8. (a) 9. (a) 10. (b)
11. (b) 12. (c) 13. (a) 14. (b)