International Marketing Research: an Analysis

According to our last year’s studies, the term „marketing research” refers to the gathering, recording, analysing and presenting information which focus on a previously defined problem and it is closely linked to the firm’s decision-making processes concerning new product launch, diversification, advertising and so on. Kotler gives the following definition: „Marketing research is the function linking the consumer, customer and public to the marketer through information – information used: to identify and define marketing opportunities and problems; to generate, refine and evaluate marketing actions; to monitor marketing performance; and to improve understanding of the marketing process.”

International marketing research is, on the other hand, a more comprehensive and complex area, as it requires the thorough study of the market potential in foreign markets which involves the investigation of cultural, political, legal and macroeconomic factors, as well. International competition also has to be taken into account, and instead of only analysing each (individual) market’s competitive situation, a multinational approach is more sufficient and suitable.

Information It Provides

The very first issue to be considered in case of the expansion of a firm is whether to go international at all, or to remain in the domestic market. To answer this question, information is needed not just on the local or domestic future opportunities and competitiveness of the firm, but on the global market demand, and the firms possible share in it. Furthermore, the commitment of the management to go international has to be observed, as well. Once it has been decided that a firm enters foreign markets, the question of which specific country(ies) or market(s) to target still remains. In order to select the most desirable market, the ranking of the markets „according to market potential, local competition, and the political situation” has to be made. The next step in the decision-making process is to elaborate on the different ways of entering the market – exporting or licensing etc. This requires the analysis of the market size and its segments, the nature of the product, the existing trade barriers of the country, the government’s regulations and laws and whole attitude towards imports, the political situation and the local competition and industry, as well. Designing the global marketing programme is also an essential part of the decision-making process and requires data concerning buyer behaviour, competitive practice and the observation of the already available distribution, media and promotional channels. In order to implement and control the programme successfully, information related to the differences in the negotiation styles of the cultures, the marketing expenses per market has to be gathered.

Richard Holton suggests three questions to be answered related to foreign market segmentation and entry: „Who are the players – the competitors, customers, suppliers, government officials, and others – who can affect our operation?”, „What strategic alternatives or actions is each player likely to consider?”, „What are the probabilities attached to each strategic alternative?” Besides these aspects, the conventional marketing questions, such as product and pricing decisions, buying behaviour, distribution channels or simply „how to market in the target markets?” also have to be investigated. Without the relevant data and information collected through the marketing research, decision-making by the firm would be unimaginable.

According to Terpstra, the tasks of global marketing research can be divided into five categories: the first is collecting information about the marketing environment in a specific country, the second is the competition in the country in question, the third is the analysis of the product itself, then the investigation of the marketing mix and finally, the collection of firm-specific data. Researching the marketing environment involves two basic areas, namely the political and the economic dimensions. (Chisnall uses the term politico-cultural factors, and provides additional information on the importance of cultural differences.) The former includes a detailed overview of the political structure, ideology and national objectives of the particular country, while the latter focuses on the economic factors, such as productivity, market potential based on gross national product per capita , marketing infrastructure, labour costs, inflation rates, etc. Assessing foreign competitors is a more complicated issue, as data and statistics about their objectives, future plans or influential relationships can hardly be collected. In this case, assumptions have to be made, and potential strategies have to be assessed. The third group of tasks, namely the information gathering on the product, investigates the buyers’ behaviour, the effects of cultural differences on the users, the differences between the customers based on age, sex, income levels, etc. The marketin mix decisions are also influenced by the marketing mix choice in the target market. The findings concerning distribution channels, comparative pricing strategies, advertising, promotion, the quality of service, and the logistics of network capabilities in the particular country greatly influence the firm’s decisions for example to standardize its product’s marketing mix to the target country’s market. And at last, but not least, firm-specific data, such as sales history by product, by customer etc. are valuable, as well.

No matter whether primary, secondary, internal or external data is considered, there are four criteria by their quality and acceptability are measured and judged. One is timelessness, or being up-to-date; the second is accuracy, which requires clear and unambiguous definitions of the terms investigated; the third is comparability, that can be achieved for example by using standardized reporting procedures; and finally the relevance of the data. The cost of data constitutes an essential factor in the decision-making process of the firm, and it is closely connected to the relevance of the data needed.

The Global Marketing Research Process

As the very first step of each and every research, the research problems have to be carefully and precisely defined and formulated, otherwise, the results can be misleading and the procedure extremely costly. Then, the information needs to be determined by the management of the company. According to the data required, the methods and ways of collecting it – in other words: the research design – has to be developed. Only at this point can data collection begin, first the secondary (information that is already available), then the primary data (information that is collected first-hand). The following step is to analyse and interpret the finding, and then to report and present them to the management of the firm.

Secondary Research

The order of data collection in case of international marketing research is not different from the domestic method: secondary research (or desk research as Chisnall refers to it) is carried out first, and only then is primary data gathered. Although, secondary research has its advantages, such as lower costs and objectivity, which derive from the fact that it can be conducted from the home base, there several problems with the method, as well.

A basic difficulty is when the data simply does not exist or it is not available, which is often the case in developing countries with weak economies and poor statistical services. Trade associations usually provide relevant information related to particular industries, but in some countries they do not exist, and in others they do not possess reliable or complete data. The reliability of data can also be questionable, due to political reasons or the misrepresentation of the facts by the personnel who gathered them. Data classification can cause further difficulties, mainly in comparability, as „in many countries, the data reported are too broadly classified for use at the micro level.” The differences in the definition of „youth market” is mentioned by Terpstra as an example. As a result, market researchers have to evaluate secondary data for validity and reliability.

Valuable information can be obtained from the database of the company itself. It is more than likely that the company keeps record of its total sales, sales statistics by countries, sales by products or product groups, sales volume by market segment and by type of channel distribution, price adjustements, communication mix (advertising, sponsorship etc.), sales representatives reports.

Furthermore, international business information can also be found in libraries, or on the Internet, which are both external data sources. Hollensen provides a list of sources – Web sites – including research sites at universities, www addresses of organisations, United Nations’ pages, OECD, WTO, World Bank addresses, and a plenty of external data sources grouped geographically. (Data for Western Europe, Eastern Europe including Russia, North America, South America, Africa and the Middle East, Asia-Pacific.)

Primary Research

If the questions that have been formulated at the beginning of the market research process have not been properly or adequately answered by the secondary research, additional information can be obtained by conducting the primary research.

The are two techniques the researcher can choose from, one is the quantitative research that provides information on a large number of consumers, and which is „characterised by a certain degree of distance as the construction of the questionnaire, data retrieval and data analysis take place in separate phases” and the other one is qualitative research, which measures a small sample of consumers and which is „characterised by proximity to the source of data, where data retrieval and analysis are done by the same person: namely the interviewer”.

Problems with Primary Data

Although, the researcher has the opportuniy to decide which research approach, contact method or research instrument to use and he or she has the freedom to develop the sampling plan, as well, but there is one thing that can not be changed: each piece of information is collected from people. „This reliance on human subjects as the primary source of marketing intelligence gives rise to what we might call ’people problems’.”

Obtaining information from consumers in the international market requires the understanding of the differences of the cultures and the whole environment. Cultural and national or regional differences affect the results of the research instruments being used and make the data less reliable, simply because of the fact, that the dissimilarities can hardly be measured and the data being gathered can not be compared.

Language problems might arise in foreign market researches at the very beginning of the process, which influence effective communication. „The research design and specificaions must be translated twice, first (in the case of a U.S. firm) from English into the language of each country where the study is to be conducted. Then, on completion of the study, the result mut be translated back into English.”

But there are even simpler barriers to effective data collection, namely the unwillingness of the consumers being interviewed or questioned to respond. One possible reason for the negative attitude is the low esteem held in a lot of countries for marketing as a whole. To make the situation even worse, manufacturers are often interested only in the production phase and not in the sales or advertising part of a product’s life-cycle. Businesspeople have various reasons for not participating in the marketing research procedure, as well. They either assume that the researcher is a government representative investigating taxation issues or they are simply afraid of giving out confidential information to competitors. (The cultural environment and business practices have significant influence on this attitude.)

The general unwillingness to talk not only to strangers, but foreign strangers, especially about personal matters affects the consumers’ behaviour, as well. Receiving polite answers, which aim at pleasing the interviewer are not valid, either. Illiteracy in case of written materials and technical illiteracy in case personal interviews further deepen the problems. The differences between the thinking of two people from distinct cultures or nationality can also result in misunderstandings and the lack of the effectiveness of data collection. „Observationl research can obtain information that people are unwilling or unable to provide.” But the observational approach has limitations, as well, as there are important factors, such as feelings or attitudes that simply can not be observed. In most cases the survey research method is used for mapping customer attitudes, buying habits and market trends, but the combination of two is in some cases more desirable.

Unfortunately, there are also technical barriers - such as the gaps in the economic and infrastructural development in some countries – that restrict the possible options of data collection besides the above-mentioned human and social problems. Considering for example the fact, that in less developed countries postal service is often not dependable, mail surveys are not reliable research methods. They are also characterised by low response rates even in more developed countries. Choosing telephone rentals might prove to be uneffective, as well, for example in Venezuela, „where the average telephone ownership is about six per cent of homes.” When neither surveys are appropriate, the only option for the researcher is to choose personal interviews. However, reaching people in rural areas where there is lack of public transportation might prove to be impossible or too expensive. Collecting data becomes even more complicated as a result of the lower level of development of supporting marketing researcher services, which provide additional local data for the market researcher.

Conclusion

Because of the recent changes in the business environment and the constantly growing dependence of the nations on each other concerning their products and services, and the rapid improvement of communication and transportation, internationalization has become a realistic and crucial issue that has to be considered by today’s business people. „As international trade becomes more liberalized, firms are facing tougher foreign competition int he domestic market. They must develop the abilities to fight off competitors on their own home ground, or exploit business opportunities in foreign markets. For companies already selling in global industries, however, they have few options but to internationalize their operations.”

In order to enable the management of the firm to make such risky and expensive decisions, a comprehensive and detailed study of the global market potential essentially has to be carried out