Planning International Market Research PDF

PLANNING INTERNATIONAL MARKET RESEARCH **Section 1: Why Is This Important?** Market research is used to gain knowledge of potential markets and customers: who they are, what they need, what they value and what they are prepared to buy. Market research is critical for gaining a better understanding...

PLANNING INTERNATIONAL MARKET RESEARCH **Section 1: Why Is This Important?** Market research is used to gain knowledge of potential markets and customers: who they are, what they need, what they value and what they are prepared to buy. Market research is critical for gaining a better understanding of the opportunities and risks associated with a target market. It allows organizations to determine their competitiveness and facilitates strategic planning. This is critical when engaging in international trade, as the business environment is constantly shifting and current information must be used to ensure business decisions and business planning are effective. Market research must be carefully and thoughtfully planned to produce useful results for the organization. Table 2.1 describes the multiple uses for the results of international market research. Table 2.1 - Applications of International Market Research Business planning Research supports the development of a business plan and its various components, including marketing. financing, distribution and product development. --------------------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Determining market potential Estimating the demand for a product or service in an international market is a vital component of strategic and financial planning. Research enables companies to make a realistic assessment of the strengths of their products or services and the amount of competition in a potential market. Market Selection Research helps managers decide which markets to target and what approaches to use in entering them. It reduces the risk of making costly errors and identifies potential threats before they become harmful. Identifying new opportunities Research enables companies to identify new opportunities for products and services or new markets. Research enables potential opportunities to be evaluated so that the most suitable ones can be acted upon. Enabling cost- benefit analysis Every business decision has costs and benefits associated with it. Research indicates how management should balance costs and risks against potential returns. Guiding the marketing process Research is used to determine customer needs in a market and how to deliver products or services that will meet those needs. Research provides comparisons with competing products and identifies the modifications required to address new markets. This Unit describes the seven stages of the market research process and the types of information that organizations need to consider when developing their research questions. **\ ** **Section 2: Describing Market Intelligence and Competitive Intelligence** Market intelligence is the process of acquiring and analyzing information in order to understand a market, determine current and future trends and preferences. and assess changes in the business environment. Competitive intelligence is the process of analyzing information about all aspects of the competitive environment for the purposes of planning and making decisions. Throughout this module, we will consider both. Market intelligence for international markets is generated from international research and personal experience. To develop intelligence about international markets, organizations must have clear strategic objectives relating to international trade. These will determine the business decisions that must be made and therefore indicate the type of market intelligence required and the data needed to develop that type of intelligence. The type of market intelligence organizations need to make decisions depends on specific organizational circumstances and strategic objectives, as well as on the target market. However, there are general guidelines that organizations interested in international trade opportunities should use. For each global market being considered, researchers should gather four types of market information: - The factors shaping the political, legal and business environment: Used to assess general conditions in a market and the risks associated with them. - The market infrastructure: Used to evaluate the difficulties and costs that will be associated with the physical distribution of a product or service. - The forces affecting the market: Includes market size, consumer trends and market dynamics and can provide an estimate of the potential for sales and profit. - Product-specific or service-specific data: Used to evaluate the suitability of the product or service and to determine whether adaptations or positioning might be required. Effective research also requires the development of competitive intelligence. An important component of competitive intelligence is competitor intelligence: gathering information about competitors to determine their possible future actions and strategies in order to gain a competitive advantage. Competitive intelligence is an ongoing process that involves gathering data about: - Competitors and their strategic intentions - Technology, especially emerging trends and possible future developments - Legal and regulatory changes - Suppliers and changes to supply and distribution systems - Materials - Industry and market trends - Political and economic changes People sometimes confuse competitive intelligence with stealing information from or spying on competitors. Although finding out about competitors is an essential component of competitive intelligence, it does not involve covert gathering of information. Developing competitive intelligence includes all factors in the competitive environment, not just competitors. In competitive intelligence, all information is gathered from publicly available and non-proprietary sources. The information is analyzed constantly to answer the questions raised by organizations\' strategic planning and objectives. Competitive intelligence keeps organizations informed about critical issues that might influence profitability and the ability to compete in the marketplace. It also enables decision makers to make more effective planning decisions. Organizations need competitive intelligence as well as market intelligence to be more profitable and avoid losses. For example, market intelligence might indicate that customers in a new market desire a certain new product. An organization might invest considerable time and financial resources into developing that product and preparing a marketing plan, only to see a competitor also develop the same product and release it first. Competitive intelligence helps organizations to make better decisions regarding long-and short-term planning, research and development programs, and marketing. It also helps organizations to react quickly to legislative and regulatory changes in the competitive environment. With international trade, competitive intelligence becomes even more important. Developing an understanding of the competitive situation prevailing in foreign markets is invaluable for making a decision about whether to enter a market. It can also be used to decide on the method of market entry and to assess potential profitability. For example, competitive intelligence might show that the target market is dominated by a few large and powerful corporations, which might make securing an initial market foothold prohibitively expensive. In this situation, organizations might decide that it would be a strategic move to develop a partnership with one of the large corporations already in the market. Competitive intelligence can contribute to organizations\' international activities in other ways. They might be able to determine why competitors have succeeded or failed in a new market and learn from their mistakes. New product ideas and design considerations might be uncovered, or organizations might gain advance warning of new product introductions. Other monitoring activities might reveal competitors\' prices, which can help in making decisions about cost structure. Organizations need to consider both market and competitive intelligence when developing their research objectives and research plan. **\ ** **Section 3: Describing the Overall Research Process** The process for conducting international market research is the same process as the one used for conducting domestic market research. There are usually seven main stages in the process: 1. Define the research objectives: defining the problem, need or opportunity driving the research. 2. Create a research brief: outlining the parameters of and planning the research. 3. Screen potential markets: narrowing the focus of the in-depth research. 4. Select the research design and data sources: selecting the most appropriate research design. 5. Design collection tools and collect the data: developing data collection tools when required. 6. Organize and analyze the data: assembling the research into a meaningful format. 7. Present conclusions and apply the research: communicating the findings to decision makers and stakeholders. +-----------------------------------+-----------------------------------+ | Figure 2.1 - The Research Process | | +===================================+===================================+ | Define Research Objectives | Identify Problem | | | | | | Develop Questions | | | | | | Identify Opportunities | +-----------------------------------+-----------------------------------+ | Create Research Brief | Background Information | | | | | | Estimated Budget | | | | | | Timelines | +-----------------------------------+-----------------------------------+ | Screen Potential International | | | Markets | | +-----------------------------------+-----------------------------------+ | Select Research Design and Data | Primary Sources | | Sources | | | | Qualitative Exploratory | | | | | | Secondary Sources | | | | | | Quantitative Quantitative | | | (Causal) | +-----------------------------------+-----------------------------------+ | Design Data Collection Tools and | Surveys | | Collect Primary Data | | | | Questionnaires | | | | | | Focus Groups | | | | | | Observation | +-----------------------------------+-----------------------------------+ | Organize and Analyze the Data | | +-----------------------------------+-----------------------------------+ | Present Conclusions and Apply the | | | Research | | +-----------------------------------+-----------------------------------+ This Unit further explores stages one and two of the research process: define the research objectives and create a research brief. The other five stages will be addressed in later units. **Section 4: STAGE 1: Define the Research Objectives** Define Research Objectives (Identify Problems, Develop Questions, Identify Opportunities) Determining the research objectives is an early and essential stage of the international trade research process. When organizations do not establish clear objectives, they can incur large costs from having to commission additional investigation, extend timelines or make business decisions based on inappropriate findings. Clear research objectives are even more crucial in international trade research than in domestic due to potential long distances and time delays involved in collecting data. Clear objectives help ensure the correct information is gathered the first time. **Section 5: Starting with a Problem or Opportunity** Organizations usually initiate international trade research because they have a business problem associated with international trade or because they want to take advantage of a trade opportunity. These problems or opportunities will lead managers to ask, for example, how best to expand the business, whether to export to a country, and which product lines would be best to introduce to a new market. To answer these questions, organizations require information that can guide their decision making. Defining the problem or opportunity enables organizations to develop questions that relate to their strategic objectives. Possible Questions When Addressing Specific Business Problems - Problem: Our export sales are dropping. - Problem: We are suffering from bad press regarding our international business practices. Questions might also be based on the desire to exploit new opportunities: - Opportunity: Restrictions have been lifted on exporting meat products to the European Union. - Opportunity: We have received emails from potential purchasers overseas. When organizations are considering trading internationally, these questions are usually very broad at first. Organizations just starting out as international traders will want to know whether there will be benefits from international trade, which markets to enter and how to break into any suitable markets. As organizations become more familiar with the international environment, their research efforts. will tend to focus on specific issues. Researchers must ensure they have a clear understanding of an organization\'s strategic objectives and motivations for a new initiative. The organizational readiness assessment discussed in Unit 1 sets out clear motivations for a new venture, and provides the scope needed to conduct research. How an organization can attain these strategic objectives should be answered by the international trade research. **Dividing the Problem** Once researchers have clearly identified the research problem or opportunity and the questions that must be answered, they can divide the problem into a series of research objectives that state exactly what information is required. Clear research objectives make the research process easier and more focused. Research objectives will be influenced by business and competitive factors, so researchers should determine the answers to the following questions: - What is the background to this problem or opportunity? The history of an organization, its structure and its strategic objectives will indicate how a problem or opportunity arose. This information will help researchers understand the exact research required by decision makers and will therefore help them word their research objectives. - How does this problem or opportunity relate to the competitive environment? The competitive environment will affect how an organization does business and how it approaches business problems or opportunities. For example, if an organization is interested in an opportunity in a European market, it would be wise to find out whether competing organizations are also making moves to enter that market. Considering this type of competitive information can help to identify areas that researchers must investigate further. - Is the required research possible? There might be ethical, legal, financial or time constraints that will make it impossible to meet a specified research objective. In these circumstances, researchers must modify the research. A few examples of good international trade research objectives are: - Identify three international markets for the new software. - Define the US government requirements for electronic imports. - Monitor the music streaming trends in India over the next 12 months. A Canadian organization called Tentware has been exporting its camping equipment to the EU for two years. Its sales in Europe are sluggish, despite increasing marketing and advertising investment. Managers are asking why Tentware\'s camping products are not selling well in Europe and how to increase their European sales? A researcher discusses this business problem and the managers\" questions with Tentware\'s senior management. The researcher identifies the following points: One of Tentware\'s strategic objectives is to expand its European presence. Previous marketing campaigns have not increased sales. Tentware\'s main competitor in North America entered the European market at the same time and is having more success than Tentware. Tentware\'s problem, the questions that need answering, and the identified business and competitive factors might lead researchers to develop the following research objectives: 1. Describe Tentware\'s competitors in the European market by size, assets, capabilities, competitive advantages and marketing strategies. 2. Compare Tentware\'s current product offering and price structure to that of competing organizations. 3. Identify the success factors for sales of camping equipment in the EU, such as quality, price and features. 4. Identify customer attitudes towards Tentware camping products. 5. 5\| Identify niches in the European camping supplies market and any unfulfilled customer needs. 6. Determine the product adaptations that would be required to fill a niche or to meet customer needs more effectively. 7. Describe the positioning that would be required to persuade potential customers that Tentware can satisfy their camping needs better than competing organizations. **Section 6: Key Research Issues for Exporters** When exploring feasibility, organizations moving into a new export venture should focus their research objectives around answering the following questions: - Which international opportunities meet or do not meet the organization\'s strategic objectives? - What are the characteristics, pressures, trends and requirements in the target countries that meet the strategic objectives? - What are the preliminary priorities and risks associated with export trade opportunities? The topics of investigation will be a mix of market intelligence and competitive intelligence and are further described in the following text. 1. **Macroeconomic Data** To investigate potential opportunities and identify unsuitable markets. researchers should first examine macroeconomic data. Macroeconomics refers to research into the overall aspects of a country\'s economy, including income. national output and the interrelationship between economic sectors. The economic and cultural characteristics of an international market are conditions that organizations cannot control. If an organization cannot contend with these characteristics, or if the characteristics mean that a product or service is unlikely to be suitable for that country, then the market can be discounted as an opportunity or the organization can investigate methods of adapting to the market The macroeconomic features of a potential host country can be divided into several areas for research: a. Gross national product (GNP): The market value of all final goods and services produced by the nationals of a country in an annual time frame. GNP is often used as a measure of the size of a country\'s economy, and incorporates income derived from overseas activity. b. 2Gross domestic product (GDP): The market value of all final goods and services produced in a country or region in an annual timeframe. GDP per capita is often used as a measure of the standard of living in a country. c. Purchasing power parity (PPP): Compares the purchasing power of different currencies in their domestic countries and is often used as an alternative to GDP figures for measuring the standard of living in a country. PPP is calculated using the amount of domestic currency needed to purchase a similar collection of goods in different countries. d. Household disposable income: The is the average amount a household in a country has to spend after taxes and payment of essential items, such as housing costs and utilities. e. Market size: The market\'s total number of buyers. The larger a country\'s population, the larger the potential customer base. f. Market potential: The number of people or businesses in a country that could realistically be expected to purchase a product or service. Market potential is often described using the number of customers in a specific market and the expected rate of purchasing, to produce a total dollar value for a given market over a particular time period (e.g. 50,000 potential customers X USD 50/month would represent a market potential of USD 2,500,000 per month). g. Market resources: The presence of resources in a country will have an impact on international business success. The presence of resources such as oil, soil, timber and minerals increases a country\'s wealth and leads to increased development of infrastructure. It is also important for exporters to consider the geography and climate of a potential market country. because both have an impact on the transportation of goods and dictate which products or services are likely to be purchased. For organizations considering sourcing goods from an international market or setting up a production site in a foreign county, the presence of resources needed for production processes will be essential for success. h. Market sectors: In some cases, organizations will need to investigate the major economic industries present in a specific country. For example, a given market can have varying degrees of economic activity occurring in the agriculture, industrial and service sectors, depending on their resources and their state of development. So, an organization wishing to sell industrial equipment/machinery would need to assess whether or not a potential market has much industrial economic activity. i. Infrastructure: A country\'s infrastructure, such as the transportation network, the distribution of cities and major centres, and the extent of the national power supply, will have an impact on the distribution of goods or services and the costs involved with distribution. In some cases. this information will also indicate a need to adapt a product or service (because the supply of electricity or Internet service is intermittent, for example), or will indicate the unsuitability of exporting to that market. Information about a country\'s infrastructure will also give an idea of how effective business communications might be (for instance, the availability of telephone, Internet and mail services) and how easy it will be to travel to the country for meetings and to monitor business activities. j. Urbanization: The amount of urbanization in a country is a measure of that country\'s demand for certain goods and services and its income levels. In general, workers in urban areas are paid higher wages than workers in rural areas and have different characteristics (e.g. behaviours, preferences, cultural norms, ways of thinking). +-----------------------------------+-----------------------------------+ | Some potential research | | | objectives for these factors are | | | detailed in Table 2.2. | | | | | | Table 2.2-Macroeconomic Research | | | Objectives | | +===================================+===================================+ | GNP | Identify the country\'s annual | | | GNP for the last five to ten | | | years. Identify the criteria used | | | for measuring GNP. This will | | | enable researchers to verify that | | | figures are accurate and | | | comparable with the GNP for other | | | markets. | +-----------------------------------+-----------------------------------+ | GDP and PPP | Identify the GDP per capita for | | | the last five to ten years. This | | | is a useful measure if it can be | | | compared accurately across | | | different countries. | | | | | | Estimate the PPP for the market | | | compared to the domestic | | | currency. | +-----------------------------------+-----------------------------------+ | Household disposable income | Identify national and regional | | | household disposable incomes. | +-----------------------------------+-----------------------------------+ | Market size | Identify the country\'s | | | population, age distribution, | | | population density and population | | | distribution. | +-----------------------------------+-----------------------------------+ | Market potential | Identify the country\'s average | | | income and income-distribution | | | figures. | | | | | | Examine patterns of consumption | | | spending and industrial spending. | +-----------------------------------+-----------------------------------+ | Market resources | Provide detailed information | | | about the topography, climate and | | | natural resources of the target | | | country. | +-----------------------------------+-----------------------------------+ | Market sectors | Evaluate the degree of economic | | | activity occurring in major | | | economic sectors le.g. | | | agriculture, industrial, service, | | | etc. Track the rate of change in | | | market activity in major economic | | | sectors. | +-----------------------------------+-----------------------------------+ | Infrastructure | Identify the safest and most | | | reliable routes and modes. | | | Determine travel times from major | | | urban centres. | +-----------------------------------+-----------------------------------+ | Urbanization | Assess the reliability, cost and | | | accessibility of business | | | communications. | | | | | | Determine population density and | | | demographics of major urban | | | areas. | | | | | | Identify the average income and | | | income-distribution figures for | | | city workers. | +-----------------------------------+-----------------------------------+ 2. **Cultural and Lifestyle Information** It is essential that organizations take into account the lifestyles and culture of countries to which they are considering exporting. This information can be used to determine whether a product or service would be considered essential, useful, a luxury or even unnecessary in a target country. Some products and services might even be found culturally unacceptable. Research into culture and lifestyle can also identify potential problems with translation, marketing and advertising. Package colours, sizes and styles, and product functions can all require adaptation because of cultural requirements. Exporters of consumer products will be affected by a country\'s culture more than exporters of industrial goods or components because consumer products must be designed to meet needs, values and beliefs. The middle class in China has expanded dramatically in the last twenty years. Due to this increase in wealth, and thus consumerism, a number of foreign companies have tried to expand into the Chinese market. While results vary wildly from one business to another, IKEA is an example of a company that has had great success there. To see why, it helps to compare their strategy to Home Depot, a company that did not do well in China. Home Depot is a home improvement company that relies on customers understanding home repairs and renovations. In China, the large middle class now able to afford home improvement is relatively new, and many consumers do not know all of the nuances of home repair. IKEA recognized this, and included in their stores many models and resources to guide them on how a home should be furnished and otherwise improved. This helped Chinese consumers understand exactly how IKEA products worked and could add value to their homes. In other words, IKEA basically taught its customers in China how to furnish and decorate their homes. This education attracted customers, many of whom were brand new to home ownership. The result was a success for IKEA. The cultural and lifestyle information about a country can be broken down into several areas of research: a. Material culture: This includes the technological goods used by the majority of the population, personal transport (including car ownership) and the availability of resources such as electricity, natural gas, telephone, Internet and wireless communication. b. Cultural preferences: Each international market will have varying preferences for products, foods, product- and food-quality levels and even brands. The meaning of shapes, colours and iconic features can also have different cultural significance. These cultural differences must be taken into account to determine whether products are suitable for a market or whether they can be adapted for greater business success. For example, Fanta soda is orange flavoured for the North American market. However, the Coca-Cola organization, which produces Fanta, has adapted the flavouring for certain markets to take cultural taste preferences into account. Fanta is peach flavoured in Botswana, tastes of passion fruit in France and is flavoured to taste like flowers in Japan. This is further explored under product and service potential later in this Unit. c. Languages: The languages spoken and used in a country have an impact on marketing, brand names, advertising, the collection of information through surveys and interviews, and the conduct of business relationships. Languages might vary between regions of a country, and some countries have more than one official language. For example, Switzerland has four main languages, and Kenya has twenty-two. The number of languages spoken in a country can indicate the level of cultural diversity. However, even countries where only one language is spoken can have wide cultural diversity. d. Education: This can indicate the quality of a potential work force and the status of consumers. e. Religion: This can affect many aspects of life, including the role of women in society, rules about food and beverage consumption, clothing habits and holiday activities. f. Ethics and values: These can have an impact on international business, especially when conducted from within another country. However, it is important for researchers to remember that the same ethics and values are not held by everyone in a target market. They can depend on status, region, ethnicity, religion, and social norms. Researchers should also consider the human rights conduct of any potential market. g. Social organization: The composition of family groups, the prevalence of minority groups and attitudes toward them, racial diversity, and recreational lifestyles are all important to consider when investigating a country as a potential export market. Some research objectives that organizations might need to consider for these factors are detailed in Table 2.3. +-----------------------------------+-----------------------------------+ | Table 2.3 - Cultural and | | | Lifestyle Research Objectives | | +===================================+===================================+ | Material culture | Identify the percentage of the | | | population that owns a car. | | | | | | Identify the percentage of the | | | population with access to | | | Internet and wireless | | | communication. | | | | | | Determine the affordability and | | | availability of natural gas and | | | electricity for households. | +-----------------------------------+-----------------------------------+ | Cultural preferences | Determine cultural taste | | | preferences. | | | | | | Identify common associations | | | related to symbols and colours. | | | | | | Language | | | | | | Identity cultural sensitivities | | | that may impact product or | | | service sales. | | | | | | Describe societal roles and | | | expectations. | +-----------------------------------+-----------------------------------+ | Language | Identify the national languages. | | | | | | Identify the official languages. | | | | | | Identify the rates of | | | multilingualism. | +-----------------------------------+-----------------------------------+ | Education | Describe the level of technical | | | education. | | | | | | Identify the percentage of the | | | population that attains higher | | | education. | | | | | | Identify the percentage of women | | | who attain higher education. | +-----------------------------------+-----------------------------------+ | Religion | Identify the main religions. | | | | | | Identify the official religion. | | | | | | Describe any influence or control | | | religion has on behaviour that | | | may affect sales of the product | | | or service. | +-----------------------------------+-----------------------------------+ | Ethics and values | Explore whether dealing with | | | foreign traders is considered a | | | suspect activity. | | | | | | Identify the human rights record. | | | | | | Describe environmental concerns. | +-----------------------------------+-----------------------------------+ | Social organization | Describe the role of women in | | | society. | | | | | | Identify attitudes towards | | | minority groups within the | | | population. Describe the extent | | | of militarization. | +-----------------------------------+-----------------------------------+ 3. **Political and Legal Information** Even when economic and social conditions indicate that a potential export market might be suitable, political and legal issues such as import restrictions or lack of copyright protection might make the market less suitable. When trading with another country, organizations are directly influenced by the political, legal and business conditions of that country. Even if customers in a target market are willing and able to buy a product, political hostility, internal instability, legal restrictions, pressure from competitors, fluctuating currency exchange rates or other unfavourable business conditions can cause organizations to fail. Some of the potential risks that can be identified and evaluated through research are: a. Political instability: A country\'s level of political instability is the likelihood that its government will be challenged, destabilized or overthrown by peaceful, violent or unconstitutional means, such as terrorism, civil disobedience and/or civil war caused by a political divide. It can result in frequent changes to the legal requirements, destruction or appropriation of property or goods, inflation volatility, rapid price increases and a decline in the quality of life for the country\'s inhabitants. b. Discrimination against foreigners, foreign trade or foreign investment: Some countries openly welcome foreign trade and investment by offering incentives or beneficial tax reductions. In other markets, discriminatory legislation, trade barriers, quotas and tariffs are applied to foreign organizations. c. Control over commerce: In some countries, control over commerce can lead to situations in which organizations feel pressured to bribe officials in order to secure the permits required to conduct trade. However, gift giving and bribery can result in severe criminal and civil penalties. International trade research will help identify markets in which organizations are likely to face trade barriers unless they or their representatives act in an illegal manner. d. Weak legal protection for property and intellectual property rights: In countries with weak protection for property rights, there are increased black market activities. Organizations are wary about investing in such countries because of the possibility of large property losses when property is stolen or misappropriated without recourse or when contracts are not honoured. Intellectual property rights are also important. The degree to which intellectual property is protected influences a country\'s flow of innovative ideas and creation of new products, which has an impact on creative and economic wealth. Intellectual property includes inventions, literary and artistic works, and symbols, images, names and designs used in commerce. e. Legal business structures: A company\'s legal structure (e. corporate status and form) will have implications on its capacity to operate and tax liabilities. Thus, it is important to consult with a lawyer and accountant to assess which legal structure is best suited for the international trade venture. f. Tax regimes: Tax rates on identical items vary from country to country and sometimes between regions in the same country. Tax practices might be unusual or complex. If tax treaties between the foreign country and the company\'s home country are not set up, the company might have to pay tax twice. Greece is one example of a country that does not have a large network of trade treaties. Some research objectives that organizations might need to consider for these factors are detailed in Table 2.4. +-----------------------------------+-----------------------------------+ | Table 2.4 - Political Research | | | Objectives | | +===================================+===================================+ | Political instability | Identify the stability of the | | | current government and how | | | frequently anti-government | | | protests occur. Identify popular | | | support for the existing regime. | | | | | | Describe the strength and nature | | | of any political | | | | | | opposition. | +-----------------------------------+-----------------------------------+ | Discrimination against | Identify the general attitude and | | foreigners, foreign trade or | discriminatory policies in the | | investment | market that hinder, or create | | | barriers for, foreigners, foreign | | | trade and foreign investment. | | | | | | Identify key decision makers and | | | their attitudes and preferences | | | towards foreigners and foreign | | | trade. | +-----------------------------------+-----------------------------------+ | Control over commerce | Describe any potential ethical | | | issues that may arise because of | | | business practices in the foreign | | | market, e.g. corruption, bribery. | +-----------------------------------+-----------------------------------+ | Weak legal protection for | Identify if and how property | | property and intellectual rights | rights and intellectual property | | | rights are protected. | +-----------------------------------+-----------------------------------+ | Legal business structures | Describe the available forms of | | | legal business structure in the | | | target market. | | | | | | Identify any effect of an | | | organization\'s legal structure | | | on liabilities and taxes. | +-----------------------------------+-----------------------------------+ | Tax regime | Identify tax rates and reporting | | | requirements. | | | | | | Describe how taxes are | | | calculated. | | | | | | Describe how tax issues are | | | adjudicated. | +-----------------------------------+-----------------------------------+ 4. **Product or Service Potential** The information gathered from the preceding research areas will help organizations identify whether a market is promising. For organizations with a wide range of products or services, research can help identify which product has the greatest potential and where it is most likely to succeed. Research can also uncover potential pitfalls with packaging, marketing. brand names and advertising. Researchers should consider the following factors: a. Regulations and prohibitions: Trade researchers will need to investigate the regulations, restrictions and policies concerning import and export controls. These will include regulations governing the preferential rules of origin, recycling of packaging materials, ingredients subject to import controls and prohibited substances. For example, there are strict regulations prohibiting the sale of alcohol in some Muslim countries. Even products such as perfumes and mouthwashes can have alcohol as an ingredient, and may need to be adapted so as not to offend consumers in the target market. Researchers may need to know the HS Codes for the products to be exported. HS codes identify how the goods are classified for customs duty and statistical purposes. For the export of services, researchers must confirm if the service is regulated and which mode of delivery applies: cross border supply, consumption abroad, commercial presence or movement of natural persons. b. Sizes, weights and measures: What is the standard size of similar products in the target market? For example, in Ecuador, beer is most commonly sold in 1-litre bottles, which deviates from common North American packaging conventions. In addition, apparel and footwear sizing differ dramatically around the world. c. Packaging preferences: How many units are commonly sold in a package in the target market? What material is preferred in the packaging (cellophane, plastic, paper, glass, etc.)? Attractive packaging may be more important in some target markets than in others. For example, in Japan. the desire for beautiful packaging has led exporters to redesign cartons. Concepts of beauty will vary dramatically from culture to culture and even within market segments of one culture. d. Labelling: What are the language and labelling requirements in the source and target markets? These will include which ingredients and nutritional facts are required by law to be listed on products for consumption. e. Pricing: How are comparable products priced in the target market? The product to be introduced must be priced competitively and appropriately. A lower-priced product targeted for an exclusive or high-end market may be negatively perceived as being less desirable or of lower quality. f. Logos, design and colour: Company names, brand names and trademarks may have to be modified to ensure that the logo or trademark will not offend consumers when translated. Modification ensures that messages have the same or similar meanings in the target market. The meanings associated with certain colours vary extensively from culture to culture and within demographic segments of the target market. In addition, preferences specific to the target market will also determine the design of a particular product. For example, a coffee set sold in the United Kingdom will include a creamer, while sets sold in other parts of Europe will not include one because continental Europeans prefer to drink black coffee. Utensils such as knives, forks and spoons are used predominately in Western cultures, whereas chopsticks and rice spoons are the preferred utensils in Japan and South Korea. g. Quality: What are the regulatory quality standards to sell the product in the target market? What are the cultural assumptions and expectations for quality in the target market? h. Preferred purchasing method: Where do consumers typically go to purchase similar products? Are they bought locally in markets, in shopping malls, online or at specialty shops? i. Warranties and service: After-sales service will offer many global companies a competitive advantage. Many companies offer 1-800 hotlines, Internet-based help, low-cost upgrades and extended warranty packages. Researchers should investigate what warranties and services are commonly offered for similar products and services in the target market. j. Distribution considerations: Organizations must be confident of the distribution of their product or the availability of transport and communication avenues to enable them to provide a service. They should also consider issues such as warehousing, local delivery, and access to trade centres. Some potential research objectives for these factors are detailed in Table 2.5. +-----------------------------------+-----------------------------------+ | Table 2.5 - Product or Service | | | Potential Research Objectives | | +===================================+===================================+ | Regulations and prohibitions | List regulations, restrictions | | | and policies concerning import | | | and export controls for services, | | | products and packaging materials. | | | | | | Describe any regulatory standards | | | related to selling the product or | | | service in the target market. | +-----------------------------------+-----------------------------------+ | Sizes, weights and measures | Identify the standard size of | | | similar products in the target | | | market. | | | | | | Identify any legal requirements | | | for standards or certifications | | | required for products. | | | | | | List testing that products must | | | undergo before exporting. | +-----------------------------------+-----------------------------------+ | Packaging preferences | Describe how products are | | | commonly sold in the target | | | market in terms of number of | | | units, look of packaging, and | | | type of packaging materials. | +-----------------------------------+-----------------------------------+ | Labelling | Describe the regulations for | | | product labelling. | +-----------------------------------+-----------------------------------+ | Pricing | Identify competitors\' pricing | | | structures. | | | | | | Describe any cultural perceptions | | | related to pricing. | +-----------------------------------+-----------------------------------+ | Logos, design and colour | Identify cultural perceptions | | | related to logos and messaging. | | | | | | Identify cultural perceptions | | | related to colour. | | | | | | Identify modifications that may | | | be necessary for the target | | | market. | +-----------------------------------+-----------------------------------+ | Quality | Identify any relevant product | | | certification standards. | | | | | | Describe cultural expectations | | | for quality in the target market. | +-----------------------------------+-----------------------------------+ | Preferred Purchasing method | Identify where consumers in the | | | target market typically purchase | | | similar products. | +-----------------------------------+-----------------------------------+ | Warranties and service | Describe target market | | | expectations related to | | | after-sales service. | +-----------------------------------+-----------------------------------+ | Distribution considerations | Describe potential transportation | | | routes for goods or for employees | | | performing a service. | | | | | | Identify storage areas, | | | warehousing facilities and | | | delivery options. | +-----------------------------------+-----------------------------------+ 5. **Competitors** A key component of competitive intelligence is competitor intelligence. Organizations should research their competitors, especially if they are competing against the same firms in different markets. Some potential research objectives for these factors are detailed in Table 2.6. Table 2.6 - Competitor Research Objectives Competitor a. Describe the competitor in terms of: - Location and structure - Key employees and their skill sets - Existing strategic partnerships - Main product or service offerings b. Identify competitor\'s typical and key customers. c. Describe competitor\'s marketing strategies and activities. d. Identify competitor\'s market share. e. Identify competitor\'s suppliers. f. Identify if modifications are required to products or services to differentiate them from competitor\'s offerings. **Section 7: Key Research Issues for Importers** The research processes used to evaluate an export opportunity can also be applied to investigating an import venture; however, the processes must be adjusted to reflect the different perspective. Table 2.7 presents a list of research objectives that can be used to help organizations that are considering importing because a domestic market need has been identified or because domestic sources of a product or service are not as competitive as international ones. The main focus of the research objectives is on assessing operational issues related to the suitability of a supplier or partner, as well as the impact of the supplier\'s or partner\'s country on the business relationship. The information gathered from this international research should be combined with results of a domestic-market assessment to determine whether the opportunity should be pursued. Table 2.7 - Key Research Objectives for Importing +-----------------------------------+-----------------------------------+ | MACRO-LEVEL SOURCE COUNTRY | | | ATTRACTIVENESS | | +===================================+===================================+ | Political and legal environment | State whether the export of the | | | desired product, technology or | | | service is restricted from the | | | source country and whether import | | | into the home country is | | | prohibited or permitted. | | | | | | Identify the safety standards | | | that apply in the source country | | | and state whether these are | | | adequate for the importing | | | country. | | | | | | Describe issues with the | | | political situation that could | | | affect the security of the supply | | | and access to it | | | | | | Identify whether counter-trade | | | arrangements are required. | +-----------------------------------+-----------------------------------+ | Technological environment | Describe how the infrastructure | | | in the country will affect | | | communication with the supplier. | | | | | | Determine whether data protection | | | or cyber security will be an | | | issue when using the supplier. | +-----------------------------------+-----------------------------------+ | Marketing benefits | Explore the image and reputation | | | the source country has in the | | | organization\'s home country: is | | | it positive or negative? | | | | | | What impact will this have on | | | your own corporate image? | +-----------------------------------+-----------------------------------+ | Sociocultural environment | Identify social customs that will | | | influence how the firm conducts | | | business. | +-----------------------------------+-----------------------------------+ | Financial environment | Identify financial circumstances | | | that could make it difficult for | | | the importing organization to | | | make payments. These | | | circumstances might include | | | monetary policy or the banking | | | infrastructure. | +-----------------------------------+-----------------------------------+ | Labour environment | Describe the current and expected | | | labour-market conditions in the | | | source country. Is there adequate | | | transparency and accountability | | | to ensure shareholders will be | | | appeased and public perception | | | will be positive? | +-----------------------------------+-----------------------------------+ | Environmental | Identify potential climate change | | | impacts of proposed activity. | +-----------------------------------+-----------------------------------+ | Pandemic | Identify any issues related to | | | the global pandemic that might | | | impact the proposed activity. | +-----------------------------------+-----------------------------------+ +-----------------------------------+-----------------------------------+ | MARKET POTENTIAL AND SUPPLIER | | | ATTRACTIVENESS | | +===================================+===================================+ | Domestic market conditions | Identify whether there are | | | tariffs or non-tariff barriers | | | that can affect the entry of | | | goods into the importing country. | | | | | | Assess whether the product | | | technology is compatible with | | | required standards in the | | | importing country. | +-----------------------------------+-----------------------------------+ | Supplier selection | Identify all suppliers that | | | possess the product, process or | | | service that the organization can | | | use. | | | | | | Assess the reliability of the | | | suppliers in terms of product | | | quality, delivery, financial | | | stability and employment | | | conditions in relation to ethical | | | sourcing standards. | | | | | | Assess the skills gap of the | | | suppliers that the organization | | | must meet. | | | | | | Describe the suppliers\' previous | | | experience with international | | | operations. | +-----------------------------------+-----------------------------------+ | Physical infrastructure | Describe how distribution and | | | transportation facilities will | | | affect delivery capacity and | | | delivery times. | +-----------------------------------+-----------------------------------+ +-----------------------------------+-----------------------------------+ | INTERNAL SUITABILITY | | +===================================+===================================+ | Management of the business | Identify product or service | | operation on an ongoing basis | adaptations that must be met to | | | meet rules and requirements of | | | the importing country. | | | | | | Identify labelling standards. | | | | | | Describe training procedures that | | | must be put in place for the | | | organization\'s employees. | +-----------------------------------+-----------------------------------+ 1. **Macro-Level Source Country Attractiveness** Organizations require a rapid evaluation of how the environment in the country from which the product or technology originates (i.e. the source country) will affect the trading opportunity. One way to assess this is to ask if the potential source country currently trades with the organization\'s country and, if so, what the nature of the trade is. For example, if a South Korean organization is considering procuring copper from Pakistan, research into the existing nature and history of trade relations between the two countries would be valuable. If there is very little trade or the trade is highly specialized, then a new trader or a small- or medium-sized organization might not want to take on the risk of developing new imports in an uncharted environment. At a more detailed level, a new trader might want to know whether any trade occurs between the two countries in the organization\'s own industry. This can also signal whether the source country is seen as a viable trading partner. However, if an organization only uses this trade measure to determine whether or not to purchase from a source country, the organization might miss out on a good opportunity. That is why it is important to research the bigger picture in a range of areas. 1. **Political and Legal Environment** - Can the product, service or technology legally be brought into the importing country from the target market? - Do the political and legal conditions in the target market provide a reasonable likelihood of uninterrupted operations? Are the risks involved in the transaction commensurate with the potential returns from the trading activity? 2. **Technological Environment** 3. **Marketing Benefits** 4. **Sociocultural Environment** 5. **Financial Environment** 6. **Labour Environment** 2. **Market Potential and Supplier Attractiveness** 7. **Domestic Market Considerations** - Product specifications, product-testing requirements or product-certification - requirements - Labelling requirements - Packaging requirements - Documentary requirements 8. **Supplier Selection** 9. **Physical Infrastructure** 3. **Internal Suitability** 1. **Ownership-Based Investments** - Greenfield: The investing organization establishes a completely new operation in a target market, building it from the ground up. - Brownfield: Similar to Greenfield, this is an aggressive market entry strategy. Brownfield investments are an acquisition of existing facilities in the target country. Often this strategy involves some site remediation, such as the clean-up of soil chemicals. - Acquisition: The investor purchases an existing operation in the target market. - Joint venture: The investor identifies a partner with complementary capabilities, and they set up an entirely new operation in the target market, each of them owning a stake proportional to the value of their original contribution. The original founding organizations continue operations as entities distinct from the newly formed joint venture. - Merger: The investor identifies an operation with complementary capabilities, and the two organizations abandon their original distinct identities to join forces into a single, combined new firm. 2. **Investments Based on Strategic Alliances** This is a category of investment in which resources are contributed directly but do not create a distinct asset. Usually, such investments create partnerships in which the relationship is the only real asset. Investments based on strategic alliances are as follows: - Supplier alliances: Many organizations are investing in stable long-term relationships with suppliers of parts, technology, equipment or other key inputs. Such investments require more than simply entering into a long-term supply contract. In many cases, they involve harmonization of standards, agreements on quality control, and integration of manufacturing and delivery processes. In technology-driven industries, supplier alliances can include agreements to share research and development (R & D). - Research consortium: There is a growing number of organizations in particular sectors pooling their R and D efforts to improve their ability to face related challenges. In some cases, such consortia focus on developing common standards that allow products to interconnect and interact. In others, they organize something akin to a division of labour by apportioning research tasks to the consortium members best able to carry them out. This can be significant internationally if organizations from different countries bring different kinds of expertise into a relationship. - Co-marketing alliance: Some organizations enter into an agreement. to market each other\'s products or services as part of their own set of offerings. They do this to fill out product lines and to provide consumers with a comprehensive offering. When the two organizations operate in different countries, this type of arrangement allows one to sell its products. in the other country without setting up its own marketing organization. Such arrangements are not cost-free; partners must invest not only in making the relationship work, but also in costs such as relabeling and rebranding. - Co-production alliance: Just as organizations exchange marketing services, they can also exchange production facilities. Rather than shipping finished products to a distant market, an organization can enter into an alliance with a local manufacturer to assemble components or manufacture a complete unit according to original specifications. Again, this can be a cost-effective way of entering a market, but it requires an investment in the relationship as well as in the transfer of knowledge, skills & design. - Bidding consortium: Perhaps the loosest form of strategic alliance occurs when organizations enter into a consortium to bid on a project that none of them could carry out individually. Such consortia are very common in large international infrastructure projects. Even though the organizations retain their distinct identities, entering into a consortium does require some longer-term commitments, especially if the bid is successful & the winners are obliged to work together for several years. The simple fact of participating in a bid can require a significant investment of time, human resources & money, especially if bid bonds are required. **Section 9: Types of Research Requirements** All of these investment types have unique information requirements that must be satisfied before decisions can be taken or recommendations offered. Usually, all investment types require a combination of location and partnership information. Ownership-based investment research focuses on issues of location, because this plays a decisive role in determining the value of the asset being acquired or created. Location in this context means more than the physical place in which the asset exists. It also includes its economic, business, regulatory and political environments. Researchers will be called upon to provide details of the environmental context for decision makers to test the viability and feasibility of this kind of investment. Some investment types go beyond issues of location, focusing also on the relationships required to make them successful. This applies to alliances, mergers and acquisitions. Investments in which partnerships play a significant role will require information about the prospective partner, its capabilities, its strategic direction and its reliability. That information goes beyond a corporate description and can include details about the personalities of the key executives involved. 1. **Location-Oriented Research Requirements** When investments are made in a specific location, the investor needs as much relevant information as possible about that location to make a decision on the viability and feasibility of the proposed venture. In this context, location can mean a country, a region or a specific municipality. It is up to the researchers to understand the nature of the proposed venture and to provide information at the right level of detail. Researchers must keep in mind that information must always reflect an appropriate jurisdictional level. It should be governed by the nature of the investment being contemplated. To take a simple example, some types of investments might not involve the transfer of staff across a border. For such ventures, information about immigration requirements or work permits is superfluous. Again, researchers must understand the nature of the deal being contemplated in order to provide the right kind of information to decision makers. Typical research considerations are summarized in Table 2.8. +-----------------------------------------------------------------------+ | Table 2.8 - Location-Oriented Research Considerations | | | | GEOGRAPHIC CONSIDERATIONS | | | | Identify the proximity to target markets in terms of distance and | | travel time. | | | | Describe the nature and state of the transportation routes. | | | | Identify the size and disposable income of the target market. | | | | Describe the workforce available within commuting distance of the | | proposed investment. | | | | Describe the infrastructure in the proposed location, including | | utilities, level of land servicing, broadband connectivity and other | | services available. | +-----------------------------------------------------------------------+ +-----------------------------------------------------------------------+ | Provide detailed estimates of the costs of doing business in the | | target location compared with other options. | | | | LEGAL CONSIDERATIONS | | | | Describe the types of organizations that are recognized in law and | | the benefits and responsibilities of each type. | | | | Define the procedures governing legal incorporation of a business. | | | | Describe the frequency, content and format of financial reports that | | are required by tax authorities. | | | | Define the legal requirements for organizations that are listed | | publicly on a stock exchange. | | | | Define anti-trust legislation and legal issues surrounding | | competition in the target location. | | | | FINANCIAL CONSIDERATIONS | | | | Develop a definitive statement of the expected tax burden. | | | | Identify the duties imposed on exports. | | | | Detail additional fees and charges, including registration, licences, | | permits and inspections. | | | | Describe the local banking system and its services. | | | | Monitor exchange rates for the local currency and describe their | | overall trend. | | | | REGULATORY CONSIDERATIONS | | | | Identify the licences and permits required to conduct business. | | | | Describe how to obtain official approval and certification of | | products, if required. | | | | Evaluate the country\'s legislation for protection of intellectual | | property rights. Define local environmental laws and regulations. | | | | Identify all required import and export permits, rules of origin and | | regulations governing movement of goods. | | | | EMPLOYMENT CONSIDERATIONS | | | | Describe the local laws and regulations governing the hiring, | | employment and dismissal of staff. | | | | Identify the requirements for unionization in the industry being | | considered. | | | | Define required provisions for health, safety, insurance and | | compensation for accidents. | | | | RELOCATION CONSIDERATIONS | | | | Describe immigration procedures for the target location and detail | | requirements for work permits, visas and other documentation. | | | | Evaluate the ease of travelling into and out of the country. | | | | Describe the quality of life in the target country. | +-----------------------------------------------------------------------+ 2. **Partner-Based Research Requirements** For investments where the viability of the proposed partnership is critical, decision makers will want information about the potential partners. The information researchers must gather is divided into several categories: - Size: Different organization sizes are appropriate to different undertakings. The relative sizes of partners can determine whether they will work well together. Researchers can identify organization size through indicators such as gross revenues, sales volumes, number of employees, number of business locations and the number of countries in which the business is active. - Financial stability: An organization does not want to invest time and effort building a relationship with a partner that might cease operating after a short time. If the organization of interest does not publish financial statements, researchers can use indicators of size, the length of time in business and the value of the organization\'s transactions to estimate financial viability. Information from suppliers can also be useful; for example, they might report difficulties in being paid. - Product and service orientation: The products and services provided by a potential partner organization must be compatible with and complementary to those of the investigating organization. The general objectives of the partnership should be understood before any research is performed. - Market orientation: Complementary market orientation can be integral to a successful partnership. Researchers should investigate whether the target partner is active in the correct markets or is in a position to enter correct markets. - Intellectual property: Researchers should identify whether the proposed partner has strategically important intellectual property that it can contribute to the venture. This usually involves technology and processes, but can also include a trademark or brand name that the investor will benefit from through association. - Relationships: Researchers should identify the relationships the proposed partner has established in order to help determine the value of partnering. Management and personnel: The organization must identify whether the proposed partner\'s philosophy, vision and approach match its own. Researchers can also investigate how well the proposed partner works with other organizations. - Reputation: An organization\'s reputation is important in determining its suitability as a candidate for partnership. Researchers should independently verify its reputation by talking to the organization\'s clients, partners and suppliers. - Strategic direction: Any viable partnership depends on the parties moving in the same strategic direction. Researchers can identify whether the organizations intend to address the same markets and whether their products and service strategies are compatible. In providing decision makers with recommendations about the suitability of a partner, researchers will have to investigate the partner\'s business plan and its overall strategy to determine whether they fit the investor\'s own plans and expectations. Obtaining a copy of the organization\'s true business plan might be difficult, especially when the investor is merely prospecting for likely partners and there are no formal negotiations. Sifting through the organization\'s annual reports, press releases, executive speeches, white papers and other documentation may help make an informed guess about the real strategic objectives. - Corporate culture: The compatibility of corporate cultures is vitally important in successful partnerships. Researchers need to identify whether prospective partners have a similar approach to R and D and whether they reinvest their profits or distribute them. Research can help reveal management structure, employee motivation, problem solving and management attitudes towards both shareholders and customer satisfaction. Organizations can enter international trade through exporting, importing or foreign direct investment. In each of these cases, the research objectives will be different. Organizations considering exporting will focus on identifying market qualities that might benefit the organization. Organizations considering importing will examine the suitability of potential suppliers and the effect that foreign market conditions will have on the reliability of imports. Organizations considering foreign direct investment will require in-depth information about potential locations or partners in order to make a sensible decision about what action to take. Formulating clear and concise research objectives is crucial to conducting international trade research. Research objectives should always relate directly to the organization\'s strategic objectives and state exactly what information needs to be found. To aid with developing these objectives, researchers require a good understanding of the decisions an organization must make and the business and competitive operating environments. Without this, the information obtained might fail to answer the questions being asked. **Section 10 : STAGE 2: Create a Research Brief** Create Research Brief 1\. Background Information 2. Timelines 3. Estimated Budget With the research objectives set, a research brief can be created. This brief outlines the research parameters and helps researchers plan the project. The brief should include the following information: - Organizational background information: This helps researchers understand the business context. - Business problem or opportunity background: This will also help researchers understand the research problem. - The reason for the research: This details what decisions must be made. The actions to be taken with the research information: This helps identify the required deliverables and their format. - The deadline: This helps researchers to map the project design to the available timelines. - The budget: This will influence which research methods can be used. 1. **Estimating Timelines** The organization must prepare an initial timetable for the research process, structured so research is completed within a defined time period. This helps ensure decision makers have the information they need when they need it, that gathered data is not out of date when recommendations are made, and that research costs do not spiral out of control. Research timetables should account for natural cycles in business activities. For example, an organization that wants to export ski equipment needs research findings submitted and acted upon before the next winter\'s selling season. 2. **Estimating Budgets** Estimating a realistic budget is an important component of planning international research. The budget will depend on how much organizations can afford to invest, but also factors in the potential profits or cost savings if research leads to successful market entry. In other words, estimates should consider the return on investment. A rough budget calculation for the research should realistically estimate the sales value expected from breaking into a new market. This figure should be multiplied by an estimate of the reduced chance of an undesired result that the research could bring about. For example, if previous experience has shown that a quarter of the new markets the organization has tried to enter have been unreceptive to their product or service, the organization could estimate the odds of failure at 25 percent. Research might reduce these odds by 10 percent. If annual sales in a new market are USD 250,000 and effective international trade research would reduce the odds of failure by 10 percent, the maximum research budget should be USD 25,000. Tips for Helping You Determine Your Market Research Budget There are several factors to consider when trying to set a realistic market research budget. Here are a few tips to help you choose the best percentage of your budget to allocate to your market research efforts. Determine your overall project budget. The amount you allocate to market research should be a reasonable percentage of the overall budget. Review what\'s already available. Before moving ahead with planning customized research, take stock of existing published information and consider how/if it helps answer your research questions. Know what you are in for. If customized research is the way forward, expect it to cost more and take longer. Custom projects can cost an average USD 30,000-USD 50,000 and add upwards of two months to the initial timeline. Set realistic expectations. Educate yourself on what type of information research reports in your budget can realistically provide. Consider this cost vs. information comparison: USD 100-USD 1000: Top-Level Reports typically included in this price range tend to cover very basic information about an industry. They will answer questions like how large is the industry and who are the top players, and provide some basic insights into the fundamentals of why the industry is what it is today. USD 1,500-USD 8,000: Full-Market Reports include a full explanation of the market and its subcategories as well as metrics covering the market\'s current state and future projections for market development. These reports will also have current trends and technologies, and they often have explanations of why a market will move in one way or another over the course of several years. USD 15,000-USD 35,000: Product Detail Market Reports cover not only the performance of the market and its subcategories as a whole, but they also cover the specific market values and trends of specific products/services in the industry within specific regions or countries. For example, if you are a pharmaceutical manufacturer and want to know how the different drug offerings for one specific allment are selling within each country, a Product Detail Market Report is the best option.\" Some forms of research can be very expensive. Conducting surveys and focus groups or sending questionnaires to potential consumers in a foreign market can cost an organization upwards of USD 20,000. Determining budget constraints prior to initiating research is essential. In some cases, the potential value of international market research will be too low to justify the more complex and in-depth research processes. There are countries that prohibit certain forms of international research, such as surveys, or do not allow foreign organizations or individuals to conduct market research. For example, rules introduced in China in 2004 stipulate that foreign organizations and individuals cannot conduct any form of market research in China. Instead, organizations licensed by the Chinese government to conduct market surveys for foreign organizations must be used. Identifying possible restrictions during the planning process allows organizations to adjust budgets accordingly. **Section10: Important Considerations in International Trade Research** International market research is more complicated than domestic market research for many reasons. There can be more parties involved in an international initiative that need to be considered or contacted during the research phase. These can include customs officials, government authorities, banks, financial institutions, insurers, distributors and international carriers. Other challenges include: - Multiple markets need to be researched, each with its own unique characteristics, availability of data and research services - Many small markets that may not justify the investment of resources in research and planning for small potential returns - Methodological challenges such as nuances of language, interpretation, inaccurate or false data represented as accurate, lack of access to technology - Infrastructure challenges such as lack of telephones, roads, transportation - Cultural differences like a reluctance to speak with strangers, inability to speak with women or children, legal limitations on data collection or distribution - Security challenges such as ensuring technology used is private and the information does not disclose corporate secrets or customer data The context of the research must be taken into consideration when planning the research objectives and process. Extended Learning Challenge yourself to apply learning from this Unit in more complex situations and contexts that relate to your own environment or ones of particular interest to you. Answers will vary. No answer key is provided.1 \| An organization wants to determine if there is an international market for its line of women's lingerie products. It is looking at Brazil, India and/ or Pakistan as potential markets, and hope to start exporting within the next calendar year. Identify if there are any ethical, legal, financial or time constraints that will make it impossible to complete the specified research objective.2 \| Using your own organization, or a sample organization of your choosing, identify a potential new problem or opportunity in international trade. Develop a research question based on this problem or opportunity. Develop research objectives for the project. Create a research brief. **1 \| Ethical, Legal, Financial, and Time Constraints for Exporting Women's Lingerie Products to Brazil, India, and/or Pakistan** When assessing the potential for exporting a line of women's lingerie products to the specified markets (Brazil, India, and Pakistan), an organization must consider the following constraints: **Ethical Constraints:** - **Cultural Sensitivities**: In countries like India and Pakistan, cultural norms surrounding modesty and public perceptions of women\'s intimate apparel can pose challenges. Advertising, promotions, and even product lines must respect cultural sensibilities, requiring sensitivity and nuance. - **Body Positivity and Inclusivity**: The organization may face ethical scrutiny if their products or marketing practices are not inclusive or if they reinforce harmful stereotypes. Adopting diverse sizing and representation is critical. **Legal Constraints:** - **Import Regulations**: Each market will have specific regulatory standards governing imported textiles, labeling requirements, product safety standards, and customs duties that must be met. Compliance with these laws can be complex. - **Advertising Restrictions**: Advertising laws may limit or dictate how intimate apparel can be marketed, particularly in conservative markets like Pakistan. - **Intellectual Property (IP) Protection**: Ensuring that the brand\'s IP is protected from counterfeit products and unauthorized use is crucial, particularly in markets where enforcement may be challenging. **Financial Constraints:** - **Tariffs and Duties**: Exporting lingerie to these countries may incur high t