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Introduction
In international marketing, the marketer is faced with a dilemma of having too much data and too little information. There is plenty of global data from sources like the World Bank and other international bodies, but often a lack of specific information on countries and markets. In helping to reduce uncertainty around decision-making, precise information is the key.
Whilst searching for opportunities globally, uncertainties arise due to four main factors: [1] lack of knowledge of the existence of possible new market alternatives, [2] the conditions internal and external to the firm which will determine the consequences of a new alternative, [3] what consequences these conditions when known may have for the firm, [4] and how these consequences maybe expressed in relevant terms of goal fulfilment. This is due to the time lapse between the decision and the outcome of the action decided on. Uncertainty also increases with the degree of “foreignness” of the place of outcome, the cost of information and the learning effect.
When marketing domestically, the system is fairly easy to learn. When crossing global boundaries the whole process is exaggerated by necessary paperwork, exchange rates, cash flows and transportation problems to name a few. This uncertainty gives rise to the need for information.
Definition
Marketing research can be defined as the systematic study and evaluation of all factors bearing on any business operation relative to marketing of goods and service. Logically, marketing research begins before production starts-in fact, even before the factory is built or the plant is set up, and continues as long as the business remains in operation. Although marketing research is invaluable in the solution of business and marketing problems, it is by no means a substitute for sound business judgement based on knowledge, experience or even intuition. It is an aid and a guide to the managerial decision-making process. It eliminates or reduces guess work by providing facts and throwing light on the areas of enquiry. Objectivity is at the heart of marketing research.
There is no difference between the fundamentals of international and domestic marketing research. The research process is basically the same wherever it is applied. Generally, the tools and techniques in foreign and domestic marketing research remain more or less the same but the areas of its application are divergent, creating a variety of operational problems. The environmental factors, for example, that are relevant for marketing may vary from country to country or specific information needed in one country may not be required in another. Within a foreign environment, the changing emphasis on the kinds of information needed, the research tools and techniques required to collect the information and the difficulty in implementing the research process constitute the real problems in international marketing research.
Marketing Research: The Global Scene
As per the study conducted by ESOMAR, the total worldwide market for market research for the year 2001 was U.S. $ 15.9 billion.
In the year 2001, VNU was the world’s leading research firm controlling nearly 25% of Top 25 research firms’ revenues. The next three highest ranking firms IMS Health Inc., WPP Group Plc and Taylor Nelson Sofres Plc. account for almost 31%. Together the top four firms control 55% of the Top 25 market place.
Craig and Douglas in their article ‘Conducting International Marketing Research in the Twenty-First Century’ [ International Marketing Review; London 2001 ] state that “marketing researchers must find creative ways to harness the new technologies to facilitate the conduct of research. At the same time, research organizations must begin to develop the capability to conduct marketing research simultaneously in the developed and the developing world. Increasingly, multinational marketers are designing and selling global brands and need research to guide their decision making across an increasingly diverse and disparate world. Sound and timely marketing research becomes even more critical for firms as key complete in the 21st Century”.
The Scope Of International Marketing Research
The scope of international marketing research covers a wide range of marketing and environmental factors that can affect a product’s success in a foreign market. These factors can be broadly classified as:
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- Socio-economic and political profile of the country.
- Size and trend of the market.
- Structure of competition.
- Rules and regulations.
Socio-Economic And Political Profile Of the Country
Information under this category includes a wide variety of data on factors like size of the population, national income and principal sources, per capita income, standard of living, cultural attributes, geographic and climatic conditions, political system and policy etc.
It is also necessary to find out political and economic relations of the country with other countries, including the country of the exporting company, and the country’s political status among the international trading community.
Size And Trend Of The Market
Several factors enter into the analysis of the size and growth trend of the market for specific product groups. These include: data on indigenous production and product-mix; direction and sources of export and import, size and trend of foreign trade, proportion of national consumption of the product supplied by the domestic industry, price behavior of the market, future growth prospects, etc.
Structure Of Competition
The study of competitive structure of the market is very important for an intending exporter. The strength of competition is a key factor that must be taken into account before an exporter decides to enter a foreign market. The competition may come from the domestic supplies as well as from other exporters into the same market. Competition may come not only from similar products but also from substitute products. For example, for a coffee exporter, other coffee suppliers would be direct competitors and tea or cocoa suppliers would be indirect competitors.
In studying the strength and structure of competition, a number of specific factors are to be taken into consideration; such as:
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- What are the competitors’ shares of the market?
- Is the market dominated by a small group of large-scale suppliers or a large number of small suppliers?
- What are the marketing strategies of the competitors, including product range, pricing strategy, distribution channels, promotional techniques and the like?
- What are infrastructural and institutional facilities available in the market and their cost; for instance transportation, warehousing, finance, insurance etc.?
- What are the commercial and business practices, norms, ethical standards etc.?
These and many more similar factors are required to be considered in order to chalk out a competitive profile of the market, highlighting the strengths and weaknesses of the competition.
Rules And Regulations
Rules and regulations governing a foreign market are many and diverse. The rules could be broadly divided into two areas, namely [1] rules governing entry conditions of foreign goods into the country and [2] rules governing internal business practices. All countries regulate import of foreign goods by various means such as, imposition of complete ban or of quantitative quotas on imports; tariff barriers; non-tariff barriers of a wide variety; currency and licensing restrictions; internal tax structure; product specifications and standards; health and safety regulations; promotional methods; branding, trademark and patent regulations; and various kinds of restrictions on business relationships and dealings between the exporting and importing organizations. It is important to examine the impact and implications of these factors on the conduct of export business.
Following is a checklist of information required for assessing market potential in a foreign country.
1- Socio-Economic And Political Profile
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- Population-size, growth, composition
- Gross national product
- Per capita income
- Balance of payments
- Industrial structure
- Cultural attributes
- Climatic conditions
- Political system
2- Size And Trend Of The Market
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- Indigenous production, volume and growth
- Direction and composition of foreign trade
- Consumption patterns and trends Marketing Planning
- Market Segmentation pattern
- Demand trends
3- Structure Of Competition
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- Direct and indirect competition
- Nature of competition
- Competitive shares of the market
- Standards and specifications of competitive products
- Competitive marketing strategies
- Business and commercial practices
- Trademarks and patents
4- Rules And Regulations
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- Market entry regulations
- Tariff and non-tariff barriers
- Foreign exchange regulations
- Internal taxes
- Health and safety regulations
- Trademarks and patents regulations
- Regulations on marketing practices and promotional methods
In addition to collection and analysis of information on markets and marketing conditions prevailing in foreign countries, it is necessary to conduct research on consumer characteristics and consumption habits of people; product preferences in terms of attributes like size, shape, style, color, taste, materials, performance, packaging and-the like. Marketing practices with regard to sales and distribution channels, pricing mechanism, advertising and sales promotion, after-sales service etc. are important areas of research.
The foregoing are only illustrative of the various areas of application of international marketing research and are by no means, exhaustive. Marketing research techniques could be applied in any area of business on which information is required to plan and conduct international marketing functions. Before conducting research, it is therefore necessary to carefully define the specific information need in light of marketing problems required to be solved or decisions to be made. It is therefore of utmost importance that appropriate procedures and methodologies are followed by the researcher in planning and conducting international marketing research.
International Marketing Research Procedure
The following are the basic steps in planning international marketing research.
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- Definition of the objectives of research in light of marketing problem to be investigated and decisions to be made.
- Determining the information required to throw light on the problem to be solved.
- Determining the methodologies and planning the collection of information.
- Actual collection of information from predetermined sources.
- Analysis and interpretation of information.
- Preparation of the report.
Defining Research Objectives
The first step in starting the process of international marketing research is to define the objectives. The clear definition of objectives helps the researcher to identify the appropriate sources of information and select the suitable methodologies for collection of information.
Determining Information Required
The information required in the light of research objectives has to be listed out for planning of data collection. For example, if one of the objectives is to find out the market potential for a new product, it is necessary to spell out the specific kinds of information that will throw light on market potential, so that research can be planned to collect the required information.
Determining Methodologies
For collection of different kinds of information from various sources, different methodologies are used in marketing research. For example, the method of desk research is used to collect information from secondary sources and survey research is used to collect data from the primary sources. In desk research various kinds of statistical or non-statistical techniques are used for compilation and analysis of data. Similarly, in survey research various techniques are used for generating quantitative and qualitative data on the objectives of the research study. The reliability and validity of the data is closely related to the sources and methodologies used for the survey.
Actual Collection Of Information
Actual collection of data involves appropriate planning of fieldwork for contacting respondents or other sources for the survey. Respondent contact can be made either personally or via mail or telephone or online, depending on the nature of research. It is very crucial stage in conducting survey research, for on the effective conduct of fieldwork will depend the success of the survey.
Analysis And Interpretation
The field data collected via various methods are to be properly edited, analyzed and interpreted in the light of the research objectives initially set out. It is important that analysis and interpretation is done in an objective manner in order to avoid the possibility of bias or any kind of subjectivity.
Preparation Of The Report
The information and data collected through research is, after analysis, presented in the form of a report. The report usually contains not only the findings of the research but also the comments and recommendations of the researcher.
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