Global Marketing

Management
Global Marketing Management

Part 2 International market research

1) Export market research
2) International market research for multinational companies
 Learning objectives

After this week you will …

1. Understand which steps to follow in order to make a

Market research in international marketing
2. Have an understanding of primary and secondary data
needed, the tools to find it for evaluating an international
market opportunity and the challenges such data present
3. Be able to use the CAGE framework for assessing the
attractiveness of countries and how “far away” is one
country from another
4. Understand the different entry modes and the information
to look before entering a new market
 Identify a Business
Opportunity

Public Private Business Trade Fairs

Institutions Organizations

• Customs
• Ministry of
Foreign Trade &
Tourism
• Promperú
 Evaluate the Market
 Market Evaluation

Phase 1
– Data gathered before starting an in-
depth and on-site market research
– Secondary sources
Phase 2
– On-site market research
– Primary sources
 Market Evaluation

• Secondary sources
 Activity 1

• Each group will investigate one or more

secondary sources
• Create a 3 slide presentation about the research
tool and present it to the class
– What kind of information does the tool offer?
– Give an example of the research you made.
– Send ppt to b.meunier@up.edu.pe

2 Groups
10 minutes : presentation
 Market Evaluation

• International Economic Cooperations or Free

Trade Agreements
– EU
– APEC
– NAFTA
– Pacific Alliance
– CAN
 Market Evaluation

• Products with government subsidies

• Important to investigate
– Demand
– Local prices
– Profit margins
– Competition
– Seasonality
– Quality standards
– Regulations
– Tariffs
 Market Evaluation

Primary Sources
• Identifying potential customers and market
trends
– Survey
– Focus groups
– Sending samples
 Market Evaluation

Entry Mode

• Direct export
• Agents
• Partnerships & alliances
• Greenfield
International Market Research

Adapting to local tastes

• For which occasion?
• Which flavor is successful?
• Eg. Oreo Coconut, strawberry, coffee
• Local flavors
• Eg. Starbucks Peru
Traditional flavors?
International Market Research

Adapting to customs
• How many point of sales?
• Do they prefer tea or coffee?
• In the morning or in the afternoon?
• In group or alone?
• In POS or at the office?
• Local customs
• Sometimes linked to religion
• Eg. Vegetarian Burger in India
• Local customs
• Sometimes linked to religion
• Local customs
• Eg. Soup at KFC Colombia
• Adapting to new tastes, customs and
international trends
International Market Research

Adapting to country regulations

Creating a Global
Brand
International Market Research for
MNC
 International Marketing Research
• More complex than domestic
• Greater:
• time to complete projects
• cost to collect primary & secondary data
• coordination required
• difficulty in predicting competitor reaction
• Tendency to use self reference criterion
– costly mistakes e.g.,KFC in Brazil
 Market research in
international marketing
6 steps in conducting international marketing
research
I. Define the research problem(s)
II. Develop a research design
III. Determine information needs
IV. Collect the data (secondary & primary)
V. Analyse the data and interpret the
results
VI. Report and present the findings of the study
 1. Define the
Research Problem
• Any research starts by defining the
research problem
• A well-defined problem is a half-solved
problem
• Once the nature of the problem is clear, it
needs to be translated into specific
questions
 1. Define the
Research Problem
• The research problem needs to
be translated into specific
research questions
• Fancy data-analytical tools will
not compensate for wrong
problem definitions

Source: Kotabe, M. & Helsen, K. (2010). Global Marketing Management.

 1. Define the
Research Problem
• For example, BMW in a European positioning
strategy study posed the following questions:
– What do motorists in the different countries
demand from their cars?
– What do motorists believe they are getting from
various brands?
– What does that imply with regard to positioning
the BMW brand across borders?
 1. Define the
Research Problem
• Self-reference criterion (own cultural norms
and values)
– Market researchers must try to view the problem
from the cultural perspective of foreign players

• Lack of familiarity with the foreign

environment
– Leading to false assumptions or even mis-defining
the research problem

Source: Kotabe, M. & Helsen, K. (2010). Global Marketing Management.

 2. Secondary Global
Marketing Research

• To assess the quality of the data the

researcher should obtain answers to the
following:
1. When were the data collected? Over what
timeframe?
2. How were the data collected?
3. Have the variables been redefined over time?
4. Who collected the data?
5. Why were the data gathered?
 2. Secondary Global
Marketing Research
• Secondary Data: International Tools
 2. Secondary Global
Marketing Research
• Secondary Data: Resources within the
Company
 2. Secondary Global
Marketing Research
• Secondary Data: Special Global Market
Research Companies
 2. Secondary Global
Marketing Research
• Secondary Data: Special Global Market
Research Companies
 2. Secondary Global
Marketing Research
Problems
• Accuracy of data: difference in definitions,
difference in quality of information
• Age of data: can be outdated
• Reliability over time: to what degree has the
data been measured consistently over time

Source: Kotabe, M. & Helsen, K. (2010). Global Marketing Management

 2. Secondary Global
Marketing Research
Problems
• Comparability of data: different sources sometimes
give contradictory information (triangulation of information) or
sometimes it’s difficult to compare monetary-based
indicators (exchange rates)
• Lumping of data: sometimes data is grouped in
different categories. Its important to investigate what
is included in those categories

Source: Kotabe, M. & Helsen, K. (2010). Global Marketing Management

 2. Secondary Global
Marketing Research
Problems
• Time & cost requirements to collect
primary data
• Coordination of multi-country research
efforts
• Different practical considerations
– legal aspects of conducting research
 2. Secondary Global
Marketing Research
Advantages Disadvantages
• government & private agencies, • developing countries not
internet easily available
• country surveys: low cost • “pre-digested” data
– restricted to OECD countries – level of aggregation - prevent
segmentation analysis
• provides general picture
• definitions not consistent
• good 1st step, may lead to other
sources • inconsistent timing:
– differences in census
– age of data
• political motives for not
providing real data
• availability of data: paper,
digital, none
 3. Primary Global
Marketing Research
Surveys
• Questionnaire design
– Order of questions
– Assure comparability across countries
– Translation: Back-translation and Parallel translation
– Scalar equivalence: scores in different countries
should be equivalent
– Imperative to test the questionnaire

• Sampling plan
– Sampling unit, sampling size and sampling procedure
– Decisions depend on costs, reliability and time
requirements
The Funny Faces Scale
Source: Kotabe, M. & Helsen, K. (2010). Global Marketing Management.
 3. Primary Global
Marketing Research
Surveys
• Contact method
– Mail / Social Media / Internet
– Telephone
– Person to person
• Collect the information
– Non-response
– Courtesy bias
– Social desirability bias
– Disparities in cultural backgrounds can lead to misunderstandings
– Redundancy is helpful

Source:: Kotabe, M. & Helsen, K. (2010). Global Marketing Management.

 3. Primary Data
Consumer Research - Quantitative

Questionnaires Design
• Translation Trans-1
Master Q’nnaire Interpreter 1
(e.g.English) Arabic
Back Translation
Trans-2
• iterative process Interpreter-2

Master Translation
Parallel Translation Q’nnaire by several
(e.g.English) independent
translators
Reconcile differences
 3. Primary Data
Consumer Research - Quantitative

Questionnaire design
• Scalar Equivalence

US and Australia:
e.g.,This product is fun to use
1 2 3 4 5
5 - 7 point scales common

France: 20 point scales are common 1 20

Anchor points may not have the same meaning Agree/

e.g., Japan: definitely true Disagree
not at all true didn’t work
somewhat true
 3. Primary Data
Consumer Research - Quantitative

Cultural & social factors

• Courtesy bias

– Japanese respondents
– high level of agreement on everything - reluctant to
disagree
• increase scale sensitivity: 10 point instead of 5-7 point
• 2 stage scale - broad agree/disagree category
– then scale within category
• Collectivist cultures
– conform to group patterns of responses
• PRC/Japan
• Low literacy levels
– pictographic scales
 3. Primary Global
Marketing Research
Internet as a Tool for Global Marketing Research

Source: Kotabe, M. & Helsen, K. (2010). Global Marketing Management.

 3. Primary Data
Consumer Research - Qualitative

• Focus groups
– Exploratory prior to large scale quantitative studies
– Role of moderator - familiarity with local culture
• eg. Japanese consumer’s reluctance to criticise new product ideas
– collective societies - exclusion of strangers to group
• Guidelines
– recruit to ensure homogeneity
– moderators who can develop/control group dynamics
– moderators who can spot and challenge “consensus”
 3. Primary Global
Marketing Research
• Observational Research

“Ethnographic research usually

involves observing target users in their
natural, real-world setting, rather than
in the artificial environment of a lab or
focus group.

The aim is to gather insight into how

people live; what they do; how they
use things; or what they need in their
everyday or professional lives”

Government Service Design Manual. www.gov.uk

 3. Primary Global
Marketing Research
Problems
• Consumers
– willingness to cooperate: cultural influences (culture’s
norms about sharing opinions with strangers)
– ability to cooperate: language, dialects and
literacy
– instruments: translation & back translation
– cultural dynamics in interviews & focus groups
• Differences in data collection methods
– infrastructure
• Telephones, Access, Cost
 Market Size
Assessment

Source: Kotabe, M. & Helsen, K. (2010). Global Marketing Management.

 Market Potential - Use of
Secondary data
Methods
• Trade audit

• Analogy method. Its basis:

• similarities between countries in economy
• culture and development
• use of proxy variables

E.g. estimate potential sales of Urban Vans in Poland

• Proxy known: sales of SUVs in Hungary
• Use Hungary data - estimate Poland market
potential
 Secondary data for Market
Potential Estimation - Analogy

D Urban Vans (Pol.) D Urban Vans (Hung.)*

= Many different methods
available for Market
D SUVs (Pol.)* D SUVs (Hung.)*
potential estimates
* known data
Use:
• Multiple methods
• Sensitivity analysis
Solve for unknown = D Urban Vans (Poland)
• what if?
Problems: • Range of estimates
finding comparable country and good
surrogate measures
 Chain Ratio Method

• Start with rough base

– eg. Country population
• Systematic refinement
– apply string of ratios (%)
– meaningful estimate of market total potential

Total country population

% Urbanisation level and rate

% Potential users based on indicator eg. Birth

rate per 000s pop’n
Mkt. Potential
 Analysis Tools

• Market intelligence on competitors

– approaches by Japanese and Korean firms
• market intelligence gathering
– e.g. chemical plant tour
– e.g. Xerox and new competitors from Japan

• Statistical Methods
– Regression analysis
• prediction of market potential
 Formal Market Screening
• Per capita purchasing power
Indicator Variables
• Psychic distance
• Other key characteristic (e.g.,women
in workforce)

Weighting of
Income per capita wt = 1-100
importance indicators Population wt = 0-100

Rate country Country A 50 25 …..

based on each Country B 20 50 …..
indicator
Country Pcap Inc Population Score
A 50 25 3400
Compute overall B 20 50 3600
score C 30 30 3650

(Multiply scores) Used when no obvious clues to market

entry criteria other than Psychic distance
 New market information
technologies
• The Internet can facilitate quick, low-cost research. It
can be used for conducting both secondary and
primary marketing research

• The Internet has made use of the following

measurement tools possible:
– Online surveys
– Bulletin boards and chat groups
– Web visitor tracking
– Virtual panels
– Focus groups
– Cookies
 New market information
technologies

• Laser scanner technology has spurred the

development of several sorts of databases. The
major ones include:
– Consumer panel data. Consumers whose purchases
are tracked by scanner technology.
– Single-source data that combines TV viewing
behaviour with purchase transaction information.
 New Market Information
Technologies

• Point-of-Sale Store Scanner Data

Thanks to products coming with bar codes, companies can process data to
provide instant information on weekly sales movements and market shares of
individual brands, sizes and product variants.

Source: Kotabe, M. & Helsen, K. (2010). Global Marketing Management.

 Managing Global
Marketing Research
Key Questions

3 key issues in managing international marketing research are:

1. Selecting a research agency
2. Coordinating market research projects
3. Building international marketing information systems
Source: Kotabe, M. & Helsen, K. (2010). Global Marketing Management.
 Ethics in international
marketing research
• Ethical issues can arise in marketing research any
time the market researcher, the client, the
respondent or the public have conflicting
interests or act without consideration of the
other stakeholders
 Ethics in international
marketing research
• These can occur in any stage of the marketing
research process:
– Research design (client misrepresents purpose)
– Determining information needs (unnecessary collection of
expensive data)
– Questionnaire design (privacy issues)
– Sampling (stating using one method but in reality using another)
– Data collection (disclosure of respondent information to outside parties)
International Marketing Planning
Process

International market selection

 International Market
Selection & Entry
• Two critical questions
– Which market?
– How to enter?

• Complexity surrounds the choices

– Trade blocs
– FDI restrictions
– Tariff barriers
– Strategic alliances
– Information technology
– Global markets
– The firm’s goal?
 Issues for Market
Selection
• Profits/losses achieved in the foreign market may also
affect the firms domestic market
• Treat market selection as a part of the firms overall
strategy
– Linked to its resource position, core competence, and
competitive position

• Structure of the industry: domestic/global?;

strategies of competitors
• Overseas markets may be integrated and may
facilitate simultaneous entry into other markets
 Approaches
to Market Selection & entry

• Implications for SMEs v.s. large firms

– Incremental entry vs simultaneous entries
• Incremental entry - less resources, risks;
provides for learning experiences; may
preclude economies of scale
• Simultaneous entries - resource intensive;
higher operating risk; acquire overseas
experience rapidly; facilitate economies of
scale
 Approaches
to Market Selection & entry

• Implications for SMEs v.s. large firms (cont.)

– Concentrated approach vs diversified approach

• Concentrated approach - resources concentrated
in limited number of markets; reduced costs,
operating risks; economies of scale
• Diversified strategy - spreads risks exposure;
broadens market knowledge; strategic flexibility;
resources spread thinly?
Distance still matters
“[Companies] routinely overestimate
the attractiveness of foreign markets.

They become so dazzled by the sheer

size of untapped markets that they
lose sight of the vast difficulties of
pioneering new, often very different
territories”.

Pankaj Ghemwat
 Distance still matters

• Distance: the difference between countries.

• CAGE: a tool used to analyze the attractiveness of

countries and how “far away” is one country from
another.

Distance Still Matters. Pankaj Ghemwat

 Distance still matters

• Countries 5,000 miles apart will trade only 20% of

the total trade between countries just 1,000 miles
apart
• A company will trade ten times as much with a
former colony
• Trade between countries with the same language
will be three times greater than between
countries without a common language
• Preferential trade agreements boost trade by
300%
Distance Still Matters. Pankaj Ghemwat
CAGE Distance
Framework
 Analyzing the Attractiveness of
Individual Markets

• AUSTRADE approach
– For the category of products/services to be offered
• (External analysis) Rate characteristics of the market,
competitive conditions, financial & economic conditions,
legislative & socio-political conditions

– In terms of potential competitiveness of the

market
• (Internal analysis) Rate the firm’s management &
marketing characteristics, technology attributes, &
production related competencies
 Staged Screening Approach
for Market Selection

Involves analysis of each country

(possibly beyond the resources of SMEs)

– 5 stage approach
• Domestic issues
• Macro environmental issues
• Competitive environments
• Response to marketing activities
• Firms objectives

– Progressively eliminate markets

– Small selection of markets
 Modes for Entering
Foreign Markets

• Indirect export
– Home agent
– Cooperative exporting

• Direct exporting
– Greater resources/control
– Foreign agent
– End-user

• Establish sales office in foreign market

 Modes for Entering
Foreign Markets (Cont.)

• Licensing
• Franchising
• Manufacturing-based entry
– Joint Venture
– Acquisition
– Greenfield operation

• Relationship-based entry
– Contract manufacturing
– Strategic alliance
 Evaluation of Entry
Modes

• Choice of entry mode involves trade-offs

between
1. degree of control
2. commitment of resources

• Relates to the depth of involvement in the

foreign market - from FDI to export
 Theories of Market Entry:
Dunning’s OLI Paradigm

Ownership Attributes A Schematic

• Competitive Representation
advantage of firm of Entry Choice
• Core competencies factors
• Control of resources

Location Attributes
• Factor endowments
• Government
regulations

Internalisation
• FDI of competitive
advantage in
foreign market
 Theories of Market
Entry (Cont.)
Williamson’s Transaction Cost Approach
– Considers that the extent to which the chosen
entry mode should provide control is a function of:
• Transaction specific assets - specialized physical or
human investments
• External uncertainty - unpredictability due to economic
& political factors
• Internal uncertainty - difficult in exercising control over
the agent
• Free-riding potential - agent’s ability to exploit the
relationship to personal advantage
 Information for Market
Entry and Expansion

• Factors internal to the firm

– Management characteristics
– Firm’s characteristics:
• Problems of competing in the domestic market
• Willingness to commit resources
• Nature of domestic market
• Ability to make the necessary resources available
• Extent to which products are high-tech
• Size of the firm
 Information for Market
Entry and Expansion (Cont.)
• Factors external to the firm
– Nature and attractiveness of the product category
• Physical characteristics, level of technology, brand recognition of
the product
– Potential of overseas market
• Size of market; political an environmental risk; marketing
infrastructure
– Government regulations and trade barriers
• Tariff and non-tariff barriers, quarantine barriers,, mandatory
local standards etc.
– Assistance from Government and other bodies
• Investment incentives; facilitation of relationship formation
 Approaches to
Internationalization

Sequential approaches

• Stages approaches
– Firms start with the mode of entry which requires the
least commitment of resources
– With experience firms gradually increase their
commitment of resources to international activities

• Learning approaches
– Recognize that internationalization is a dynamic process
– Firms focus more on an evolutionary, sequential build up
of foreign commitments over time
– Firms recognize the role that psychic distance can play in
the process
 Approaches to
Internationalization (Cont.)

Non-sequential approaches
• Contingency approaches
– Based on contingency theory
– The firm evaluates & responds to an opportunity as
it occurs
– Regardless of whether the market is close in
psychic distance terms or whether an advanced
mode of entry is required
 Approaches to
Internationalization (Cont.)
Non-sequential approaches (cont.)
• Network approaches
– Emphasizes the role of linkages & relationships in
the internationalization process

– Johanson & Mattsson describe modes of entry in

terms of position - international extension,
international penetration, international integration

– Arrive at 4 categories of the firm - early starter,

lonely international, late starter, and international
among others
 A Holistic View of
Internationalization

• Inward activities
– Buying agent; buy direct
– Buying office overseas
– Franchisee in Australia
– FDI in Australia for OS - licensed manufacturing
• Outward activities
– Export agent; export direct
– Sales office overseas
– License a manufacturer overseas
– FDI to supply OS
A Model of International
Behavior
 Activity 2

• Use a real life example of a company/product

that either succeeded or failed in entering a new
country
• Detail the dimensions of distance that influenced
this outcome.

• 2 Groups
• Make a 10m PPT presentation
• Send ppt to b.meunier@up.edu.pe