Marketing Decision Making

BM032-3-3

Chapter 3
Methods in Gathering Data and
Information
 LEARNING OUTCOME

Quantitative and Qualitative Method

The differences between both methods.
Types of information gathered using each
method.
Techniques and tools use in both
methods.

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 International and Domestic
Research
The tools and techniques
of international research
are the same as those of
domestic research.
The difference is in the
environment to which the
tools are applied.

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 International and Domestic
Research (contd)
The four primary reasons for the differences
between international and domestic research are:

New Parameters

New Environmental
Factors

An Increase in the
A Broader Definition Number
of Competition of Factors Involved

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 New Parameters
In crossing international borders, a firm
encounters parameters not found in
domestic business.
Examples include:
Duties
Foreign currencies and changes in their value
Different modes of transportation
International documentation
Differing modes of operating internationally

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 New Environmental Factors
Many of the domestic assumptions on
which the firm and its activities were
founded may not hold true internationally.
Management needs to:
Learn the culture of the host country
Understand its political systems and level of
stability
Comprehend the existing differences in societal
structures and language
Understand pertinent legal issues

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 The Number of Factors
Involved
When a firm enters a new international
market, the number of changing dimensions
increases.
Coordination of the interaction among the
dimensions is crucial to the international
success of the firm for two reasons:
In order to exercise some central control over
international operations, a firm must be able to
compare results and activities across countries.
The firm must be able to learn from its international
operations and must find new ways to apply the new
lessons learned to different markets.
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 Broader Definition of
Competition
The international market exposes
the firm to much greater variety of
competition than that found in the
home market.
Firms must:
Determine the breadth of the competition,
Track competitive activities,
Evaluate their actual and potential impact
on company operations on an ongoing
basis.

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 Lack of International
Research
International research is often less rigorous, less
formal, and less quantitative than domestic
research.
The four reasons why managers are reluctant to
engage in international research are:
Their lack of sensitivity to differences in culture,
consumer tastes, and market demands.
Limited appreciation for different environments abroad.
Lack of familiarity with national and international data
sources.
Firms build international business activities gradually,
frequently based on unsolicited orders.

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 The Importance of
International Research
Firms must learn where the opportunities are,
what customers want, why they want it, and how
they satisfy their needs and wants.
Research allows management to identify and
develop international strategies.
Firms must identify, evaluate, and compare
potential foreign business opportunities and the
subsequent target market selection.
Research is necessary for the development of a
business plan.

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 Determining Research
Objectives
As a starting point,
research objectives must
be determined for a firm.
These objectives will
depend on the views of
management, the
corporate mission of the
firm, the firms level of
internationalization, and its
competitive situation.
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 Going International-
Exporting
A frequent objective of international research
is that of foreign market opportunity analysis.
The aim is to utilize a broad-brush approach.
Steps to this approach include:
A cursory analysis of general variables of a country.
A preliminary evaluation of each individual country.
Selection of appropriate markets for in-depth
evaluation.
Finally, a competitive assessment must be made.

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 Process of Researching Foreign
Market Potentials
Stage One
Preliminary Screening for Attractive Country Markets
Key Question to be answered:
Which foreign markets warrant detailed information?

Stage Two
Assessment of Industry Market Potential
Key Question to be answered:
What is the aggregate demand in each of the selected markets?

Stage Three
Company Sales and Promotion Analysis
Key Question to be answered:
How attractive is the potential demand for our products and services?

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 Going International-
Importing
When importing, the major focus shifts from
supplying to sourcing.
Management must identify markets that
produce suppliers or materials desired.
The importer needs to know:
The reliability of a foreign supplier,
The consistency of its product or service quality,
The length of delivery time,
Government rules and restrictions of the exporting
country
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 Secondary Data
Secondary data is information that already has
been collected by some other organization.
This data should be evaluated regarding the
quality of the source, how recent the data is, and
the relevance to the task at hand.
Because secondary data were originally collected
to serve another purpose, they can often only be
used as proxy information.
Precautions should be taken due to increasing
sensitivity to data privacy. Firms must inform
their customers of privacy policies.
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 Sources of Secondary Data
Other Firms
Directories

Governments

International
Institutions

Service
Trade Associations Organizations

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 Conducting Primary Research
Primary data are obtained by
a firm to fill specific
information needs.
The researcher must decide
whether research is to be
conducted in the consumer or
the industrial product area.

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 Determining the Research
Technique
Selection of the research technique
depends on a variety of factors:
The objectivity of the data sought must be
determined. Unstructured data will require more
open-ended questions and more time than
structured data.
Whether the data should be collected in the real
world or in a controlled environment.
Whether to collect historical facts or information
about future developments.
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 Research Techniques

Interviews

Focus Groups
Observation

Surveys Use of Web

Technology

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 The International
Information System
An information system is the systematic and
continuous gathering, analysis, and reporting of
data for decision-making purposes.
To be useful, the information system must be:
Relevant
Timely
Flexible
Accurate
Exhaustive
Consistent
Convenient

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 Export Complaint Systems
An export complaint system allows
customers to contact the original supplier
of a product in order to inquire about
products, make suggestions, or to present
complaints.
A firm must be able to aggregate and
analyze complaints and to make use of
them internally.
Increasingly, the Internet enables
customers to provide feedback on their
experiences with a firm.

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 The Mechanisms of Export
Complaint Systems
Environmental
Scanning

Delphi Studies Scenario Building

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 Environmental Scanning
Environmental scanning activities provide
continuous information on:
Political, social, and economic affairs
internationally
Changes of attitudes of public institutions and
private citizens
Possible upcoming alterations
Two significant methods of environmental
scanning are obtaining factual input and
content analysis.

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 Delphi Studies
Delphi studies are a means for
aggregating the judgements of a
number of experts who cannot come
together physically.

The Delphi technique is particularly

valuable because it uses mail, fax, or
electronic communication to bridge
large distances and therefore makes
experts accessible at a reasonable
cost.

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 Scenario Building
Scenario building involves the identification of
crucial variables and the degree of variation.
The possibility of joint occurrences must be
recognized.
For scenarios to be useful, managers must
analyze and respond to them by formulating
contingency plans.
Through the anticipation of possible problems,
managers hone their response capability and in
turn shorten response times to actual problems.

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 Issues in Marketing Research
(contd)
International Issues in Marketing
Research
Modification of data-gathering methods to
account for regional differences
Use of two-pronged approach to international
marketing research
Detailed search for and analysis of secondary data
Field research to refine firms understanding of
how local environment will shape/restrict data-
gathering about customer needs and preferences

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 Sources of Market Information

Direct perception provides a vital

background for the information that comes
from human and documentary sources
Gets all the senses involved
Some information requires sensory
experience to interpret it correctly
Can be important when the domestic
market is dominated by a global player

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 Formal Market Research

Global Marketing Research is the project-

specific, systematic gathering of data in
the search scanning mode on a global
basis
Challenge is to recognize and respond to
national differences that influence the way
information is obtained

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 Steps in the Research Process

Identifying the research problem

Developing a research plan
Collecting data
Analyzing data
Presenting the research findings

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 Identifying the Information
Requirement
What information do I need?
Existing Markets customer needs already
being served by one or more companies;
information may be readily available
Potential Markets
Latent market an undiscovered market;
demand would be there if product was there
Incipient market market will emerge as macro
environmental trends continue
Why do I need this information?

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 Overcoming the SRC

Self-Reference Criterion occurs when a persons

values and beliefs intrude on the assessment of
a foreign culture
Must be aware of SRCs
Enhances managements willingness to conduct
market research
Ensures that research design has minimal home-
country bias
Increases managements receptiveness to findings

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 Developing A Research Plan

Do we need quantitative or qualitative

data?
What is the information worth (versus what
will it cost to collect)?
What will it cost if we dont get the
information?
What can be gained from the information?

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 Collecting Data

Secondary Data
Statistical Abstract of the United States
Statistical Yearbook of the United Nations
World Factbook
The Economist
The Financial Times
Syndicated studies
And much more

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 Collecting Data (cont.)

Primary Data Collection Methods

Survey research
Interviews
Consumer panels
Observation
Focus groups

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 Special Considerations for
Surveys
Benefits:
Data collection from a large sample
Both quantitative and qualitative data possible
Can be self-administered
Issues
Subjects may respond with social desirability
Translation may be difficult
Use back and parallel translations to ensure
accuracy and validity

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 Sampling

A sample is a selected subset of a

population that is representative of the
entire population.
Probability samples
Non-probability samples

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 Analyzing Data

Demand Pattern Analysis

Income Elasticity Measurements
Market Estimation by Analogy
Time-series displacement
Comparative Analysis
Cluster Analysis

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 Presenting the Findings

Report must clearly address problem

identified in Step 1
Include a memo or executive summary of
the key findings along with main report

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 Global Issues in Marketing
Research
Many country markets must be included
Markets with low profit potential justifies
limited research expenditures
Data in developing countries may be
inflated or deflated
Comparability of international statistics
varies greatly
Limits created by cultural differences

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 Enhancing Comparability of Data

Emic analysis Etic analysis

Ethnographic in From the outside
nature Detached
Studies culture perspective that is
from within used in multi-
Uses cultures own country studies
meanings and Enhances
values comparability but
minimizes precision

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 Intranet

A Private network
Allows authorized
company personnel
(or outsiders) to
share information
electronically
24-Hour Nerve
Center

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 Electronic Data Interchange

Allows business units

to:
Submit orders
Issue invoices
Conduct business
electronically
Transaction formats
are universal

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 Efficient Consumer Response
(ECR)
This is in addition to EDI
An effort for retailers and vendors to work
closely on sock replenishment

ECR can be defined as a joint initiative by

members of a supply chain to work toward
improving and optimizing aspects of the
supply chain to benefit customers.

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 Electronic Point of Sale

Gathers data at checkout

scanners
Identifies product sales
trends
Identifies how consumer
preferences vary
geographically

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 Data Warehouses

Can help fine-tune

product assortments
for multiple locations
Enhances the ability
of management to
respond to changing
business conditions

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 Information

Information is the key component in

developing successful marketing strategies
and avoiding major marketing blunders.

Information needs range from the general

data required to assess market opportunities
to specific market information for decisions
about the 4Ps (product, promotion, place
[distribution], and price).
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 A marketer must find the most accurate and
reliable data possible within the limits imposed by
time, cost, and the present state of art.

The measure of a 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.

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 Marketing Research
Marketing Research is traditionally defined as 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.

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 Breadth and Scope of International Marketing
Research

The basic difference between domestic and

foreign market research is the broader scope
needed for foreign research, necessitated by higher
levels of uncertainty.

In domestic operations, most emphasis is placed

on the third type, gathering specific market
information, because the other data are often
available from secondary sources.

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 Three Types of Research
General information about the country, area,
and/or market
Information necessary to forecast future
marketing requirements by anticipating social,
economic, consumer, and industry trends
within specific markets or countries
Specific market information used to make
product, promotion, distribution (place), and
price decisions and to develop marketing
plans.

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 Broader Scope of Intl Marketing
Research

Economic
Cultural, sociological and political climate
Overview of market conditions
Summary of the technological
environment
Competitive situation

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 The Research Process

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 decision
makers

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 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.

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 Defining the Problem and Establishing Research
Objectives

The first, most crucial step in the research

process
It 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)
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 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.
Once 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.

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 Problems of Availability and Use of
Secondary Data

I.Availability

Much of the secondary data that a

marketer is accustomed to having about local
markets is just not available for many
countries.
Another problem relating to the availability
of data is researchers language skills.

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 II.Reliability
Although not unique to them, less-developed
countries are particular prone to being both overly
optimistic and unreliable in reporting relevant
economic data about their countries.
For example, Chinas National Statistics
Enforcement Office recently acknowledged that it
had uncovered about 60,000 instances of false
statistical reports since beginning a crack-down
on false data reporting several months earlier.

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 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.

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 III.Comparability

Comparability of available data is the third

shortcoming faced by foreign marketers.

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.

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 IV.Validating Secondary Data
The following questions should be asked to
effectively judge the reliability of secondary data:
Who collected the data? Would there be any
reason for purposely misrepresenting the facts?
For what purposes were the data collected?
How were the data collected? (methodology)
Are the data internally consistent and logical in
light of known data sources or market factors?

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 Checking the consistency of one set of secondary
data with other data known validity is an effective
and often-used way of judging validity.
The availability and accuracy of recorded secondary
data increase as the level of economic development
increases.
Interest in collecting quality statistical data rises as
countries realize the value of extensive and
accurate national statistics for orderly economic
growth.

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 Gathering Primary Data: Quantitative and
Qualitative

Primary Data data collected specifically for the

particular research project at hand.
To get appropriate market information, the
researcher questions the firms sales
representatives, distributors, middlemen, and/or
customers.
The researcher questions the respondents to
determine what they think about some topic or
how they might behave under certain conditions.

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 Marketing research methods can be grouped into
two basic types: quantitative and qualitative research.
In quantitative research, usually a large number of
respondents are asked to reply either verbally or in
writing to structured questions using a specific
response format or to select a response from a set of
choices.
It provides the marketer with responses that can
be presented with precise estimations (in
percentages, averages, etc.).

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 In qualitative research, if questions are asked
they are almost always open-ended or in-depth, and
unstructured responses that reflect the persons
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.
The most often used form of qualitative
questionnaire is the focus group interview. However,
in-depth interview is used for the sake of consuming
fewer resources.
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 Problems of Gathering Primary
Data
Most problems in collecting primary data in
international marketing research stem from
cultural differenced among countries, and
range from the inability of respondents to
communicate their opinions to inadequacies
in questionnaire translation.

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 Problems:
Ability to Communicate Opinions
Willingness to Respond
Sampling Field Surveys
Language and Comprehension

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 Multicultural Research: A Special
Problem
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.

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 Research on the Internet: A Growing
Opportunity
For many companies the Internet provides a new and
increasingly important medium for conducting a variety of
international marketing research.

Uses for the 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

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 Estimating Market Demand

In assessing current product demand and

forecasting future demand, reliable historical
data are required.
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 of
approximations for the needed economic,
geographic, and demographic relationships.
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 Given the greater uncertainties and data
limitations associated with foreign markets,
two methods of forecasting demand are
particularly suitable for international markets:

Expert opinion
Analogy

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 Problems in Analyzing and Interpreting Research
Information

Once data have been 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.

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 To cope with such disparities, the foreign market
researcher must possess three talents to generate
meaningful marketing information:
The researcher must possess a high degree of
cultural understanding of the market in which
research is being conducted.
A creative talent for adapting research findings is
necessary.
A skeptical attitude in handling both primary and
secondary is helpful.

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 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.

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 Communicating with Decision
Makers
Decision makers should be directly
involved not only in problem definition and
question formulation, but also in the field work
of seeing the market and hearing the voice of
the customers in the most direct ways when
the occasion warrants it. Top managers
should have a feel for their markets that even
the best marketing reports cannot provide.

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 QUESTIONS

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