Chapter 8: Developing a Global Vision Through Marketing Research PDF

Chapter 8 Developing a Global Vision through Marketing Research  Country Assessment and Local Market Research Here we learn how to decide which country or countries to enter, and also how to enter. This chapter deals with the research process and necessary research before deciding o...

Chapter 8 Developing a Global Vision through Marketing Research  Country Assessment and Local Market Research Here we learn how to decide which country or countries to enter, and also how to enter. This chapter deals with the research process and necessary research before deciding on country selection. It goes through the screening process by which the country's opportunities can be ranked to arrive at a decision. Analyzing key indicators on macro variables in the economic, political, and cultural environment, the firm will be able to select the country with the best fit and highest potential.  Country Attractiveness At a basic level, country attractiveness for a firm depends on five factors: Market size: larger is generally more attractive Market growth: fast growth opens up opportunities Competitive intensity: intense rivalry lowers attractiveness Trade barriers (including regulations): less is better Membership in a trade bloc: increases size and provides opportunities Competitive intensity involves the competition between domestic and foreign brands and the rivalry between entering global brands. Where domestic brands are favored by consumer patriotism and loyalty, attractiveness will be lower.  COUNTRY SELECTION PROCESS KEY VARIABLES TASK STAGE DATA SOURCES Environment: Publ. country data: Stage 1. Political Risk ID set of candidate World Bank, IMF countries Terrorism United Nations Preliminary Economic regime Pew, OECD Trade bloc members KEEP REJECT Screening Economic development Secondary data Regulations Stage 2. Industry size, growth Preliminary Tariff barriers screening Market shares, Competitive intensity domestic shares KEEP REJECT In-depth Cultural barriers research Stage 3. Market Market Social environment In-depth Consumer data (on- screening Screening Cultural distance line focus groups, Country image Surveys) KEEP REJECT Stage 4. Local trade practices Personal visit Final selection International marketing research International marketing research is reflected in planning steps, which call for collecting and assessing the following types of information:  International marketing research The basic difference between domestic and foreign market research is the broader scope needed for foreign research, necessitated by higher levels of uncertainty. It is necessary as firms expand abroad, but it is challenging. The info must be communicated across cultural boundaries. Application of research tools might be different in the environment of foreign market.  Stage 1—ID of the set of Candidate Countries In the country identification stage, various statistical data are used to identify candidate regions and countries. Typically, the company decides to enter a particular trade area, e.g. Middle East, and then do a more in-depth analysis within each of the regions to identify where to place their sales headquarters and which countries to enter first. If, after seeking all reasonable secondary data sources, research questions are still not adequately answered, the researcher must collect primary data- research project at hand This first, most crucial step in research is more critical in foreign markets because an unfamiliar environment tends to cloud problem definition.  Stage 2 - Preliminary Screening: A Business Environment Data collected for preliminary assessment of a product or service: – Physical environment (climate) Is there a market for the product and will it function well? – Ex: Air conditioning for cars in Norway – Sociocultural environment Are cultural and social factors aligned with product usage? – Economic environment Is the level of development and infrastructure conducive? – Ex: Big SUVs in small cities – Trade blocs Does the country belong to a desirable trade bloc? – Ex: EU, BRICS,… The idea is to weed out obviously problematic candidates from consideration.  Stage 3 - In-Depth Screening The in-depth screening stage is the core of the attractiveness evaluation. Data here are specific to the industry and product markets, if possible even down to specific market segments. Market Size Market Growth Competitive Intensity Local trade regulations  Market Size For market size it is useful to distinguish between the current market and the potential future market. Current market: Size of potential target segment – Population, age-groups, no. of households (B2B number of businesses) – Disposable income per capita – Per capita spending on product category Future potential: Product life cycle – Stage of the PLC – Potential saturation level – Percent of saturation potential sold (penetration) Market saturation arises when the volume of a product or service in a marketplace has been maximized. At the point of saturation, a company can only achieve further growth through new product improvements  Market Growth New potential buyers – Population growth – Growth in disposable income Market penetration (new actual buyers) – Per capita spending growth in product category – Growth in percent of total potential sold Market penetration is a measure of how much a product or service is being used by target customers compared to the total estimated market for that product or service. Existing buyers – Growth in buying frequency – Growth in buying amounts  Competitive intensity Number of competitors, domestic and foreign – Domestic companies, market shares – Multinational competitors, market shares Market shares in the product category – Domestic competitors – Multinational competitors Own strength – Competitive advantages – Actual and potential market shares  Local Trade Regulation Local barriers – Infrastructure barriers (ex. local transport) – Cultural diversity, cultural distance Artificial barriers – Regulatory barriers for the product category – Non-tariff barriers (ex. customs procedures) – Preferential treatments by country of origin  Summarizing Country Attractiveness In-depth screening uses managerial judgment based on research findings. Managers assign numerical scores to the most important factors for market potential in each country. Weighting factors on importance to success or failure, each candidate country gets a comparable summary score. Case study: How attractive is China to Under Armour? https://www.ambrosetti.eu/en/global-attractiveness-index/  Stage 4—Final Selection Personal Experience. The final selection of the country to enter cannot and should not be made until personal visits have been made to the country and direct experience acquired by the managers. There is no substitute for on-the-spot information and the hands-on feeling of a new market. The visits will often have serendipitous effects, creating marketing opportunities not recognized before  Local Market Research Once the country selection process is over, there is a need for further market research to better understand the local customer and prepare the introductory campaign. Now there is a need to match the company strengths and weaknesses with the specifics of the local market.  Marketing Research Systematic gathering, recording, and analyzing of data. Provides useful information for decision-making. Marketer must find most accurate and reliable data within limits of time, cost, and technology. Steps: Define the research problem and establish research objectives. Determine the sources of information to fulfill the research objectives. Consider the costs and benefits of the research effort. Gather the relevant data from secondary or primary sources, or both. Analyze, interpret, and summarize the results. Effectively communicate the results to decision-makers.  E.g. of Marketing Research Lego has five times aimed its strategic initiatives at girls, with little success. On its sixth try, the company spent $40 million globally. - The new campaign and associated products were designed based primarily on qualitative research methods. The company recruited top product designers, sales strategists, outside consultants, and dispatched them in small teams to shadow girls and interview their families in Germany, South Korea, the United Kingdom, and the United States. This “Olivia” figure attempts to reflect the girls’ reported preferences for thinner shapes and pastel colors, rather than the boxy, primary-colored toys for boys. The new product line was a huge success, boosting Lego’s profits by more than $1 billion in 2013. A decade later, in an interesting adaptation to trends it found in global research, Lego, now the world’s largest toy company, no longer markets gender-specific products. The company says the research revealed that its young customers (and their parents) did not respond well to stereotypes and prefer gender-neutral toys.  Breadth and Scope of International Marketing The basic difference between domestic and foreign market research is the broader scope needed for foreign research, necessitated by higher levels of uncertainty. Three basic market research needs 1. General info about the country, area, and market 2. Info to forecast future marketing requirements (social, economic, consumer, industry trends) 3. Specific info to develop marketing plan (product, promotion, distribution, price) 20  Multicultural Research: A Special Problem Companies are becoming more global Seek to standardize marketing mix across cultures. Important to do multicultural research. Compare and contrast language, economy, social structure, behavior, and attitude patterns of cultures. Helps determine how much the marketing mix should be adapted. May need to use different research methods in different cultures. Ensure comparability and equivalency of results. 21 Next week Tueday: pre-mid term exercise. You will grade yourself. - Study for Tuesday so that you can test yourself. Thursday: mid-term exam. Chapters 1-8. See Syllabi for details.