Practices and Challenges of International Marketing Research (Notes)

Marketing Research is a systematic gathering, recording and analysis of data about issues relating to marketing products and services

The goal of marketing research is to identify and assess how changing element of marketing mix impacts customer behavior 

International marketing research is a research that evaluates consumer, export and import statistics in other parts of the world

International marketing research often reflects the way in which spending patterns differ across the globe and are related to a region’s culture, customs and other socio economic influences

International marketing research can be especially challenging when attempting to gather data from remote parts of the world, where language differences and limited accessibility to outsiders pose as communication barriers

International marketing research is especially critical to companies that are planning to export(trade) their goods to other to other countries. Prior to embarking on international sales, a company will want to determine whether or not there is a demand for their product in other regions.

The company will also want to research any potential cultural conflict that could impede profitability of the product or service they intend to export(trade)

Importance of Marketing Research

- To enable managers to make decision regarding marketing environment

- Better communication with customers

- Identification of opportunities

- Minimize risk on existing product by developing

- Can help in measuring progress of the marketing activities

Challenges of International Marketing Research

Many factors add to the complexity and diversity of conducting marketing research in international markets. They include the following;

Understanding the Culture

A thorough understanding of the culture is necessary if the researcher is to obtain satisfactory response rate. Quite apart from the problems associated with rates of illiteracy, in some cultures a woman will not consent to an interview by a stranger, let alone a man

In other cultures men will be reluctant to discuss topics such as personal hygiene or preference in clothing because they feel that this would be beneath their dignity and they will definitely not address these issues in the presence of a female interviewer

In addition, it is difficult for respondent to answer questions concerning goods and services that have never been available or are not commonly used in the community or whose use is not well understood

Lack of secondary data

The usually large amounts of secondary data that characterise countries such as the USA are in most cases not available in every other countries.

Even if data are available, they will be of variable quality. For instance population censuses in some countries are frequently made by people who are not professionals and data on income and sales from tax returns can be totally inaccurate in countries where such information is often undeclared or under-reported

Cost of collecting primary data

One soon discovers, when trying to collect in international markets, that the cost of collecting it can be considerably higher without a network of established marketing companies.

Many countries lack companies that are experienced in collecting information, which means that a sponsoring firm will have to invest in the development of sampling frames and other materials and in the training of interviewers and other necessary personnel

International Strategy Planning

Strategy planning is a systematized way of relating to the future.

It is an attempt to manage the effects of external uncontrollable factors on the firms strengths, weaknesses, objectives and goals to attain a desired end

Further, it is a commitment of resources to a country market to achieve specific goals

Remember planning is the job of making things happen that may not otherwise occur

International strategic planning operates at high level and for this reason it deals with products, capital and research and a long and short term goals of the company

Strategic planning allows for rapid growth of the international function, changing markets, increasing competition and the ever varying challenges of different national markets

Structurally planning may be viewed as corporate, strategic and or tactical international planning the corporate level

International planning at the corporate is essentially long term, incorporating generalize goals for the enterprise

Advantages

An international marketer who has gone through the planning process has a framework for analyzing marketing problems and opportunities and a basis for coordinating information from different country markets

The process of planning may be as important as the plan itself because it forces decision makers to examine all factors that affect the success of a marketing and involves those who will be responsible for the implementation 

The Planning Process

Whether a company is marketing in several countries or is entering a foreign market for the first time, planning is a major factor of success. For the first time marketer,

i. Decide which product to develop

ii. In what market

iii. Level of resource commitment 

Phase 1: Preliminary Analysis and Screening; matching company needs

a) Company character

Objective, resources, management style, organization, financial limitations, management and marketing skills, etc.

b) Home country constraint

Political, legal, Economical, etc.

c) Host country

Political, legal, Economical, competitive, level of  technology, structure of distribution

Phase 2: Adapting the Marketing Mix to Target markets

a) Product : adaptation, Brand name, features, packaging, service, warranty, style

b) Price: Credit, discounts, etc.

c) Promotion: Advertising, Personal Selling, Public Relations, Sales Promotion and Direct Marketing

d) Distribution: logistics channels

Phase 3: Developing the marketing Plan

a) Situation Analysis

b) Objectives and goals

c) Strategy and tactics 

d) Budgets, action programs i.e. AIDA (Attention, Interest, Desire & Action)

Phase 4: Implementation and Control

a) Objectives

b) Standards

c) Assign responsibility

d) Measure performance

e) Corrections for errors

Expansion Strategy and Entry Mode Selection

i. An Expansion Strategy

Increase your sales and products in existing markets. This is obviously the easiest and most risk free way to expand

This may require a bigger location, different pricing strategies, newly improved marketing techniques

Getting existing customers to buy more and getting potential customers to buy

ii. Introduce a new product

When you have successful product or service that you have been offering for some time and have been collecting data, customer  feedback and doing the tinkering on your newest product.  This is a normal evolution in a business, not just an expansion tactic. When positioned as adding value and being responsive to customer needs, this be a relatively risk-free way to expand

iii. Develop a new market segment or move into new geography

Both of these areas require cost outlays and uncertainty moving your products into new categories or demographics segments requires market research, testing and new market strategies.  Example:  A message for 16 year old will differ than one for a 60 year old

Management of new remote locations may absorb significant time and attention. While the risks are more, the payoffs are large and for most businesses looking to expand, these two methods of expansion are inevitable

Entry mode selection

The decision of how to enter a foreign market can have a significant impact on the results. Expansion  into foreign markets can be achieved via the following four mechanisms;

i. Exporting

Exporting is the marketing and direct sale of domestically produced goods in another country.

Exporting is a traditional and well established method of reaching foreign markets. Since the exporting does not require that the goods be produced in the target in the target country, no investment in foreign production facilities is required most of the costs associated with exporting take the form of marketing expenses

Exporting commonly requires coordination among four players;

a) Exporter

b) Importer

c) Transport provider

d) Government

ii. Licensing

Licensing essentially permits a company in target country to use the property of the licensor.

Such property usually is intangible such as trademarks, patents and production techniques. The licensee pays a fee in exchange for the right to use the intangible property and possibly for technical assistance

Because little investment on the part of the licensor is required, licensing has the potential to provide a large Return On Investment (ROI), however, because the licensee produces and markets the product, potential returns from manufacture and marketing activities may be lost

iii. Joint Venture

This is the establishment of a firm that is jointly owned by two or more independent firms or companies. There are five common objective in a joint venture;

a) Market entry

b) Risk reward sharing

c) Joint product development

d) Conformity to government regulations

Other benefits include;

a) Political connections

b) Distribution channel access that may depend on the relationships

iv. Foreign Direct Investment

Foreign direct investment is the direct ownership of facilities in the target country

It involves the transfer of resources including capita, technology and personnel

FDI may be made through the acquisition of an existing entity or the establishment of a new enterprise 

Direct ownership provides a high degree of control in the operations and the ability to better know the consumers and competitive environment. However it requires a high level of resources and a high degree of commitment