International marketing research

International marketing research Introduction One of the most striking developments of recent decades has been the globalization of business. The growth of world trade requires more information about foreign markets and companies which expand into new and unknown markets must possess the information about the demand and conditions of these markets. Companies invade not only into such developed markets as Europe, US and Japan, but also into the unstable but growing markets of Latin America, the politically uncertain markets of the Middle East and Russia, and the rapidly changing markets of South East Asia and the emerging African markets[1]. The development of new communication and information technologies change the lifestyle, consumption behavior and purchasing patterns of different nations. All this indicates that the marketing research in global environment has become essential. The purpose of this paper is to give definition of the international marketing research and describe the factors which influence the marketing research in different countries. The paper also deals with the steps of international marketing research process and its main categories. The advantages and disadvantages of collecting secondary and primary data and survey methods of international marketing research are presented in the paper. Finally, the problems which may occur in the international marketing research are summed up. 1. Marketing Research in a Global Environment Marketing research practices and techniques have become truly global. For example, the worlds largest research firm, Nielsen, is headquartered in the U.S. but derives almost two-thirds of its revenue from outside the U.S. It is standardizing much of the data it routinely collects in 27 different countries. International marketing managers make the same basic types of decisions as do those who operate in only one country. Of course, they make these decisions in a more complicated environment. As with marketing decisions, the basic function of marketing research and the research process does not differ between domestic and multinational research. However, the process is complicated almost exponentially as more and more countries are involved in the same decision. The main factors which influence the marketing research in different countries are 1. Cultural differences. Culture refers to widely shared norms or patterns of behavior of a large group of people[2]. It is the values, attitudes, beliefs, artifacts and other meaningful symbols represented in the pattern of life adopted by people that help them interpret, evaluate and communicate as members of society[3]. A company which works on the international market is in need of cross cultural awareness. Cross cultural differences (language, non-verbal communication, different norms and values) may cause cross cultural blunders. There are examples of cultural blunders in the marketing mix. Product. When a soft drink was launched in Arab countries, it has a label with six-pointed stars. The sales were very low as the stars were associated with Israel. Price. An American firm was willing to set a reasonable price for the product they intended to sell to the Japanese. A detailed presentation was made to the Japanese businessmen, but it was followed by a deep silence. The Americans thought that the Japanese were going to reject the price and offered a lower price. The Japanese kept silence again. After that the Americans lowered the price again saying that it was the lowest they could sell at. After a brief silence the offer was accepted. Later the Japanese confessed that the first offered price was quite acceptable, but they had a tradition to think over the offer silently. An American company suffered great losses in this case. Place. A company wanted to enter the Spanish market with two-liter drinks bottles and failed. Soon they found out that Spaniards prefer small door fridges and they could not put large bottles into them. Promotion. Pepsico came to Taiwan with the ad Come Alive with Pepsi. They could not imagine that is it translated Pepsi will bring your relatives back from the dead into Chinese. 2. Racial Differences. This refers to the differences in physical features of people in different countries[4]. For example, types of hair cut and cosmetic products differ greatly in various countries. 3. Climatic Differences. These are the meteorological conditions such as temperature range or degree of rain. For example, Bosch-Siemens adapted their washing machines to the markets they sell. In Scandinavia, where there are very few sunny days, they sell washing machines with a minimum spin cycle of 1,000 rpm and a maximum of 1,600 rpm, whereas in Italy and Spain a spin cycle of 500 rpm is enough. 4. Economic Differences. Economic development of various countries is different and when a company introduces a new product it adapts it to that new market. There are factors which show the level of economic development Buying power and revenue of the market. In developed countries with higher income of revenue people prefer complicated product with advanced functions, while in poor countries simple product are preferable. The infrastructure of the market. Such elements of the infrastructure of the country as transport, communication system and others influence the product. When Suzuki entering the Indian market the suspension was reinforced as the state of roads in India is very poor. 5. Religious Differences. Religion affects the product greatly and makes companies adapt their product to religious norms. If a company exports grocery products to Islamic countries it must have a special certificate indicating that the animal was slaughtered according to Halal methods. 6. Historical Differences. Historical differences affect the consumer behavior. For instance, Scotch whiskey is considered fashionable in Italy and not very trendy in Scotland. 7. Language Differences. The correct translation and language adaptation is very important. For example, when Proctor Gamble entered the Polish markets it translated properly its labels but failed. Later they found out that imperfect language must have been used in order to show that the company fits in. Besides the differences mentioned above, there may be differences in the way that products or services are used, differences in the criteria for assessing products or services across various markets and differences in market research facilities and capabilities[5]. 2. International Marketing Research Process a. International Marketing Research Categories International marketing research is the systematic design, collection, recording, analysis, interpretation, and reporting of information pertinent to a particular marketing decision facing a company operating internationally. International marketing managers need to constantly monitor the different forces affecting their international operations[6]. There are three general categories of research based on the type of information required. Exploratory research deals with discovering the general nature of the problem and the variables that relate to it. Exploratory research is characterized by a high degree of flexibility, and it tends to rely on secondary data, convenience or judgment samples, small-scale surveys or simple experiments, case analyses, and subjective evaluation of the results. Descriptive research is focused on the accurate description of the variables in the problem model. Consumer profile studies, market-potential studies, product-usage studies, attitude surveys, sales analyses, media research, and price surveys are examples of descriptive research. Any source of information can be used in a descriptive study, although most studies of this nature rely heavily on secondary data sources and survey research. Causal research attempts to specify the nature of the functional relationship between two or more variables in the problem model. For example, studies on the effectiveness of advertising generally attempt to discover the extent to which advertising causes sales or attitude change. There are three types of evidence to make inferences about causation: (1) concomitant variation, (2) sequence of occurrence, and (3) absence of other potential casual factors. Concomitant variation, or invariant association, is a common basis for ascrib ­ing cause. For example, the advertising expenditures vary across a number of geographic areas and measure sales in each area. To the extent that high sales occur in areas with large advertising expenditures and low sales occur in areas with limited advertising expenditures, it is inferred that advertising is a cause of sales. It must be stressed that this have been only inferred, it is not proved that increased advertising causes increased sales. Sequence of occurrence can also provide evidence of causation. For one event to cause another, it must always precede it. An event that occurs after another event cannot be said to cause the first event. The importance of sequence can be demonstrated in the last example of advertising causing sales. It is supposed that further investigation showed that the advertising allocation to the geo ­graphic regions had been based on the last periods sales such that the level of advertising was directly related to past sales. Suddenly, the nature of our causal relationship is reversed. Now, because of the sequence of events, it can be inferred that changes in sales levels cause changes in advertising levels. A final type of evidence that is used to infer causality is the absence of other potential causal factors. That is, if one could logically or through our research design eliminate all possible causative factors except the one he/she is interested in, he/she would have established that the variable he/she is concerned with was the causative factor. Unfortunately, it is never possible to control completely or to eliminate all possible causes for any particular event. Always there is a possibility that some factor of which one is not aware has influenced the results. However, if all reasonable alternatives are eliminated except one, one can have a high degree of confidence in the remaining variable. b. Steps of International Marketing Research Process The international marketing research process as well as domestic one is a serious of separate steps. However, the international marketing research process has some peculiarities such as the national differences between countries arising out of political, legal, economic, social and cultural differences and, the comparability of research results due to these differences[7]. Step 1. Research Problem Definition. Problem definition is the most critical part of the research process. Research problem definition involves specifying the information needed by manage ­ment. Unless the problem is properly defined, the information produced by the research process is unlikely to have any value. Step 2. Information Value Estimation. Information has value only to the extent that it improves decisions. The value of information increases as (1) the cost of a wrong de ­cision increases, (2) our level of knowledge as to the correct decision de ­creases, and (3) the accuracy of the information the research will provide increases. The principle involved in deciding whether to do more research is that research should be conducted only when the value of the information to be obtained is expected to be greater than the cost of obtaining it. Step 3. Selection of the Data Collection Approach. There are three basic data collection approaches in international marketing research: (1) secondary data, (2) survey data, and (3) experimental data. Secondary data were collected for other purpose than helping to solve the current problem. Primary data are collected expressly to help solve the problem at hand. Survey and experimental data are therefore secondary data if they were collected earlier for another study; they are primary data if they were collected for the present one. Secondary data are virtually always collected first because of their time and cost advantages. Step 4. Measurement Technique Selection. Four basic measurement techniques are used in marketing research: (1) questionnaires, (2) attitude scales, (3) observation, and (4) depth interviews and projec ­ts techniques. As with selecting the data collection method, selection of a measurement technique is influenced primarily by the nature of the information required and secondarily by the value of the information. Step 5. Sample Selection. Most marketing studies involve a sample or subgroup of the total population relevant to the problem, rather than a census of the entire group. The popu ­lation is generally specified as a part of the problem definition process. Step 6. Selection of Methods of Analyses. Data are useful only after analysis. Data analysis involves converting a series of recorded observations into descriptive statements and/or inferences about relationships. The types of analyses, which can be conducted, depend on the nature of the sampling process, measurement instrument, and the data collection method. Step 7. Evaluation of the Ethics of the Research. It is essential that marketing researchers restrict their research activities to practices that are ethically sound. Ethically sound research considers the interests of the general public, the respondents, the client, and the research profession as well as those of the researcher. Step 8. Estimation of Time and Financial Requirements. Time refers to the time needed to complete the project. The financial requirement is the monetary representation of personnel time, computer time, and mate ­rials requirements. The time and finance requirements are not independent. Step 9. Preparation of Research Proposal. The research design process provides the researcher with a blueprint, or guide, for conducting and controlling the research project. This blueprint is written in the form of a research proposal. A written research proposal should precede any research project. The re ­search proposal helps ensure that the decision maker and the researcher are still in agreement on the basic management problem, the information re ­quired, and the research approach. 3. International Secondary Data Sources 1. The Nature of International Secondary Data Secondary data for international marketing decisions are subject to some disadvantages. Unfortunately, many of the disadvantages are multiplied when the data involve more countries. An additional problem is that most secondary data are available only in the host countrys language. Thus, multi-country searches require utilizing specializing firms or maintaining a multilingual staff. Data availability, recency, accessibility, and accuracy vary widely from country to country. Until recently, there were few commercial databases in Japan because of the difficulty of using Japanese characters on computers. Now the problem is resolved. The Japanese government prepares many potentially useful reports, but even Japanese firms seldom use them because they are poorly organized and indexed. Secondary data in many non-democracies often reflect political interests more closely than reality. In general, the amount of secondary data available in a country varies directly with its level of economic development. Even when the accurate data are accessible, it may not be possible to make multinational comparisons. Data from several countries may not be comparable because the data were collected at different times, use different units of measurement, cover slightly different topics, or define the classes (such as age groups) differently. This has become a major problem in the European Community as firms begin to analyze the market as a whole rather than as a collection of individual countries. To resolve part of the problem, ESOMAR has proposed a standardized set of questions to gather demographic data in both government and private surveys. Similar work is underway in Brazil, India, and the Middle East. 2. Internal Sources of International Secondary Data The internal sources of data for international decisions can be classified into four broad categories accounting records, sales force reports, miscellaneous records and internal experts. However, utilizing international internal data can be difficult. Different accounting systems, decentralized (often on a country basis) management and information systems, sales forces organized by country or region, and so forth, all this increases the difficulty of acquiring and using internal data in a timely manner. To deal with these problems global firms implement international information systems and require some standardization across countries in terms of internal recordkeeping and reporting. 3. External Sources of International Secondary Data For a example, when a company starts an external search for international secondary data it consults general guides to this type of data, such as International Marketing Handbook of the US Department of Commerces International Trade Administration, The World of Information (Africa Guide), or it contacts Euromonitor, the leading provider of world business information and market analysis. An alternative to conducting such a search in house is to use a specialist firm such as PricewaterhouseCoopers and McKinsey. a) Databases Both ABI (Abstract Business Information)/Inform, which contains 150-word abstracts of articles published in about 1,300 business publications worldwide, and Predicasts, which provides 11 on-line databases, have significant international content in their bibliographic databases. Predicasts coverage is particularly good and it is growing rapidly. In fact, half its information is on companies and industries from outside the U.S. Its major bibliographic database, PROMPT, contains material from all over the world. Both Infomat International Business and Worldcasts are focused on compa ­nies, products, industries, economies, and so forth outside the U.S. Predi ­casts also has separate FS Indexes for Europe and for the rest of the world excluding Europe and the U.S. A major advantage of these abstracts is that they are all in English. Copies of the entire articles are gen ­erally available in the original language. ( Table 1, Appendix) b) Foreign Government Sources All developed countries provide census-type data on their populations. However, the frequency of data collection and the type and amount of data collected vary widely from country to country. Germany went 17 years be ­tween its last two censuses, and Holland has not conducted a census in 20 years. The U.S. collects income data in its census and marketers make extensive use of it. Most other nations, including Japan, Britain, France, Spain, and Italy, do not. (Australia, Mexico, Sweden, and Finland do.) While the Scan ­dinavian countries, Japan, South Korea, Taiwan, and Thailand publish English-language versions of their main census reports, most countries report them only in their home language. c) International Political Organizations Three major international political organizations provide significant amounts of data relevant to international marketing activities. The United Nations and its related organization, the United Nations Educational, Scientific and Cultural Organization, provide hundreds of publications dealing with the population, economic, and social conditions of over 200 countries. The World Bank lends funds, provides advice, and serves as a catalyst to stimulate investments in developing nations. To carry out its missions, it collects substantial amounts of useful data which can be purchased inexpen ­sively. The Organization of Economic Cooperation and Development (OECD) con ­sists of 24 economically developed countries with the mission of promoting the members economic and social welfare by coordinating national policies. As part of this mission, it publishes reports on a broad range of socioeconomic topics involving its members and the developing nations. 4. Issues in International Primary Data Collection Primary data are the data collected to help solve a problem or take advantage of an opportunity on which a decision is pending[8]. The main advantage of primary data lies in the fact that it is collected for solving the exact problem and that is why it is characterized by high usefulness and novelty. The disadvantage is that the costs of collecting primary data are much higher in foreign developing markets as there is the lack of an appropriate marketing research infrastructure[9]. The international primary data is collected with the help of qualitative and quantitative research approaches. Qualitative research is particularly used as a first step in studying international marketing phenomena (focus groups, observation). However, the main constraint is that responses can be affected by culture as individuals may act differently if they know they are being observed[10]. Quantitative researches are more structured. They involve both descriptive research approaches, such as survey research, and causal research approaches, such as experiments. More respondents take part in quantitative research, although it highlights fewer problems than qualitative research. International marketing research in cross-cultural environment requires the measurement of behaviors and attitudes. A major issue in primary data collection is the existence of the so-called EMIC vs. ETIC dilemma. The EMIC school states that attitudinal and behavioral phenomena are unique to a culture. The ETIC school is primarily concerned with identifying and assessing universal attitudinal and behavioral concepts, and developing pan-cultural or culture-free measures. 5. Survey Methods of International Marketing Research The techniques of data collection used in international marketing research have both advantages and disadvantages. 1. Personal interviews are considered to be the most popular method of data collection in international marketing research. However, there are several constraints for the usage of this technique. In the Middle East countries personal interviews are treated with great suspicion. Moreover, the personnel for the survey should be male and they may conduct interviews with housewives only when their husbands are at home. In Latin American countries, where tax protest movement is being developed, the interviews are thought to be tax inspectors. 2. Mall intercept surveys may be used in the United States, Canada and the European countries. As far as the developing countries are concerned they are not common. 3. Telephone interviews have several advantages over other survey methods of international marketing research. The time and costs of international telephone calls are reducing, the surveys may be conducted from one place, the results of telephone interviews are considered reliable and it is easier to perform the client and interviewer control. But telephone surveys also have some limitations because of poor telecommunication systems in several countries. For example, in India telephone penetration is only 1 per cent and telephone surveys reduce the survey coverage greatly. But even in such developed countries as Great Britain telephone penetration comprises only 80 per cent. That is why a lot of marketers are very skeptical about telephone surveys and nowadays there is a great reduction in their application. 4. Mailing surveys are widely used in industrialized countries, where there is a high level of literacy, good mailing services and availability of mailing lists. However, the use of this method in developing countries has some constraints. In some countries people consider the mailing surveys to be the invasion into their private life and the effectiveness of these surveys is reduced. In such countries as Brazil, where only 30 per cent of mail is delivered, mailing surveys can not be used as well. 5. Electronic surveys become more popular in the United States and Europe and they are used for the products which require technological literacy such as computers and computer software. E-mail surveys begin to replace mail and telephone surveys. The limiting factors for electronic surveys are as follow: there are still many countries with low internet access, the internet versions available in various countries may not be compatible and there may be a big number of non-responses because of technical issues. At the same time the speed of getting responses and low costs of surveys makes this method suitable for international marketing research. Conclusion International marketing research is the systematic design, collection, recording, analysis, interpretation, and reporting of information relating to a particular marketing decision facing a company operating internationally. The international marketing research process has some peculiarities such as the national differences between countries arising out of political, legal, economic, social and cultural differences and, the comparability of research results due to these differences. A company performing the international marketing research may experience several problems. Firstly, there is a complexity of research design due to operation in a multi country, multicultural, and multi linguistic environment. Secondly, the availability of secondary data varies widely from country to country. On some markets, especially emerging and unstable, the data is neither available nor reliable. Thirdly, the costs of collecting primary data are much higher in foreign developing markets as there is the lack of an appropriate marketing research infrastructure. Fourthly, problems associating with coordinating research and data collection in different countries may arise. And finally, there are the difficulties of establishing the comparability and equivalence of data and research conducted in different context. Bibliography 1. Aaker D., Kumar V. , Day G., (2007), Marketing Research, 9th edition, John Wiley Sons. 2. Altstiel T. Grow J.M. (2005), Advertising Strategy: Creative Tactics From the Outside/In, Sage Publications, Inc. 3. Arnold D. (2004), The Mirage of Global Markets: How Globalizing Companies Can Succeed as Markets Localize, Pearson Education, Inc. 4. Barnard, P. (2007), Global developments and future directions in marketing research, Globalization and the Millennium: Opportunities and Imperatives, Marketing Science Institute, June 16-17, Brussels, Belgium. 5. Cateora, P. and Graham, J.L. (2009),International Marketing, 14 th edition, McGraw-Hill Company. 6. Craig, C. S. and Douglas, S. P. (2009), International Marketing Research, 2nd Edition. Chichester, UK: John Wiley Sons. 7. Douglas, S. P. and Craig, C. S. (2005), Evolution of global marketing strategy: scale, scope and synergy, Columbia Journal of World Business, Vol. 24, No. 3. 8. Kumar, V. (2000), International Marketing Research, Prentice-Hall, Inc. 9. Mahajan V. and Banga K. (2006), The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the 21st Century, Pearson Education, Inc. 10. Kumar V. David A. Aaker George S. Day (2009), Essentials of Marketing Research, 2nd Edition with SPSS 17.0, John Wiley Sons. 11. Payne, N. (2009), Public Relations Across Cultures Building international communication bridges, URL: http://www.aboutpublicrelations.net/ucpayne.htm Appendix Examples of Specialized Bibliographic Databases. The Information Bank Advertising Marketing Intelligence Service Advertising and marketing articles from over 60 trade and professional journals are summarized on topics such as new products, consumer trends, and sales promotions. Bank Marketing Association: Financial Industry Information Service Contains about 50,000 citations on the marketing of financial services by banks, credit companies, insurance firms, investment and real estate firms, thrift operations, and government agencies. Topics include on advertising, pricing, sales, marketing, and new technologies. FINDEX Reports and Studies Indexes and describes industry and market research reports, studies, and surveys (more than 11,000 citations) from more than 500 research firms worldwide. Frost Sullivan Research Reports Abstracts Contains citations and abstracts from approximately 1,500 market research reports providing analyses and forecasts of market size and share by product and company. Industries represented include chemicals, communications, consumer products, data processing, electronics, food, health, instrumentation, machinery, and transportation. Source: Kumar, V. (2000), International Marketing Research, Prentice-Hall, Inc. [1] Kumar V. David A. Aaker George S. Day (2009), p. 345. [2] Craig, C. S. and Douglas, S. P. (2009), p. 276. [3] Kumar V. David A. Aaker George S. Day (2009), p. 374. [4] Mahajan V. and Banga K. (2006), p. 213. [5] Craig, C. S. and Douglas, S. P. (2009), p. 215. [6] Kumar, V. (2000), p. 24. [7] Craig, C. S. and Douglas, S. P. (2009), p. 107. [8] Kumar, V. (2000), p. 67. [9] Ibid, p. 69. [10] Ibid, p. 73.