Transcript Analysis of the International Environment

ANALYSIS OF THE
INTERNATIONAL
ENVIRONMENT
Learning Outcomes
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After completing this session, you should be able
to:
Evaluate the importance of market research
information to international marketing managers
Outline the major information needs
Compare various transnational segmentation
methods
Discuss the uses & problems of data collection in
international markets
WHY GLOBAL RESEARCH?
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Primary function of global marketing is to make and
sell what international buyers want
Consequently, what customers want must be assessed
through marketing research
5-3
TASKS OF
GLOBAL MARKETING RESEARCH
BY DECISION PHASE
Phase 1:
Deciding
whether to
internationalize
Assessment of
•Global market opportunities
•Commitment of management
•Competitiveness of firm
•Global demand vs domestic demand
5-4
TASKS OF
GLOBAL MARKETING RESEARCH
BY DECISION PHASE
Phase 2:
Deciding
which markets
to enter
Assessment of
•Market potential
•Local competition
•Political risks
•Trade barriers
•Psychic distance
5-5
TASKS OF
GLOBAL MARKETING RESEARCH
BY DECISION PHASE
Phase 3:
Deciding
how to enter
foreign markets
Assessment of
•Nature of the product
•Size of market segments
•Behaviour of potential intermediaries
•Behaviour of local competition
•Transport costs
•Government requirements
5-6
TASKS OF
GLOBAL MARKETING RESEARCH
BY DECISION PHASE
Phase 4:
Designing
the global
marketing
programme
Assessment of
•Buyer behaviour
•Competitive practice
•Available distribution channels
•Media and promotional channels
5-7
TASKS OF
GLOBAL MARKETING RESEARCH
BY DECISION PHASE
Phase 5:
Implementing/
controlling the
global
marketing
programme
Assessment of
•Negotiation styles by culture
•Sales by product line, etc.
•Contribution margin
•Marketing expenses per market
5-8
International Marketing
Research & Information Systems
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Information is key
Information is costly
Additional complications
Marketing Research v MkIS/DSS
3 primary functions:
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Environmental scanning
Building a MkIS
Conduct primary research
GLOBAL MARKETING RESEARCH
Information is key in International Marketing
 Due to lack of familiarity with customers and
markets
 Your research could span a number of countries
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 Role
of international Market Research is to
aid decisions and reduce risks
 The
principle tasks of global marketing
research are as follows:
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Deciding whether to internationalise
Deciding which markets to enter
Deciding how to enter foreign markets
Designing the global marketing programme
Implementing & controlling the global marketing
programme
International Opportunity
Analysis
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Market selection can be opportunistic or
systematic
Market scanning:
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Accessibility, Profitability, Size
Existing, Latent, Incipient
Competitive edge
Risk Analysis, eg. BERI, Goodnow & Hansz
temperature gradient
DECIDING WHETHER TO
INTERNATIONALISE
Assessment of Global market opportunities
 Commitment from management to
internationalise
 Competitiveness of the firm relative to local &
international competitor
 Domestic Vs International market opportunities
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DECIDING WHICH MARKETS TO ENTER
Ranking of world markets according to market
potential of countries/regional
 Level of local competition
 Political Risks
 Trade Barriers
 Cultural/psychic Barriers
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DECIDING HOW TO ENTER FOREIGN
MARKETS
Nature of the product (standardises v complex)
 Size of markets/segments
 Behaviour of potential intermediaries
 Behaviour of local competition
 Transport costs
 Government requirements
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DECIDING THE GLOBAL MARKETING
PROGRAMME
Buyer Behaviour
 Competitive practice
 Available Distribution
 Media & promotion channels
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IMPLEMENTING & CONTROLLING THE
GLOBAL MARKETING PROGRAMME
Negotiation styles in different cultures
 Sale of product lines, customer type and
country/region
 Contribution margins
 Marketing expenses per market
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SECONDARY RESEARCH
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Advantages of Secondary Research in Foreign
Markets:
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Less expensive
No contacts have to be made outside the domestic
market
Can keep commitment to decision low
Objectivity
Good generation of market information for
preliminary market screening
DISADVANTAGES OF SECONDARY MARKET
RESEARCH IN FOREIGN MARKETS
Non-availability of data – inaccessibility
 Reliability of data – if government data is it
overly optimistic?
 Data Classifications – too broad for micro use
 Comparability of data - across different countries
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These issues can be minimised by good research
methodologies
Secondary Data Sources
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Internal sources
Web
Published trade/market reports
Journals
Government sources
Trade organisations (domestic & foreign)
INTERNAL DATA SOURCES
Total Sales
 Sales by Country
 Sales by Products
 Sales volume by market segment
 Sales volume by channel distribution
 Pricing information
 Communications mix
 Sales rep reports and opinion
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SOME EXTERNAL SOURCES OF DATA
1. International Global Sources:
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Over 50,000 business intelligence publications
from 350 of the industry's most respected
publishers make Marketresearch.com your
comprehensive, global information source.
http://www.marketresearch.com/redirect.asp?progi
d=2230
 The
Market Research Society's web site
contains news, events, training programmes
and publications. It also gives the full text of
the Society's Code of Conduct, including
relevant guidelines, recommended for SBU
Business Studies students studying the
Market Research unit.
http://www.marketresearch.org.uk/
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Berkeley Business Guides:
http://www.lib.berkeley.edu/BUSI/bbg18.html
Helsinki School of Economics: Business Economics
Resources: http://www.helsinki.fi/WebEc/webecm.html
ICC (International Chamber of Commerce):
http://www.iccwbo.org
BRINT: Business Researcher's Interest:
http://www.brint.com/interest.html
Bulletin board for Libraries, giving subject sources for
marketing
http://link.bubl.ac.uk/marketing/
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International market research from the Canadian business
site Strategies. This site gives background to business
practices, economic trends and prospects, trade, investment
statistics and industry information worldwide.
http://strategis.ic.gc.ca/sc_mrkti/ibinddc/engdoc/1a1.html
ESOMAR is the World (formerly European) Association of
Opinion & Marketing Research Professionals. This web site
gives access to press releases, the ESOMAR directory of
research organisations, events, publications and guidelines.
There are also useful links to worldwide national and
international market research associations.
http://www.esomar.nl/
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The PMRS web site contains news, advertising
guidelines and an imprints archive for
members/subscribers. It also has a useful list of
Canadian, US and international links relevant to
market researchers.
http://www.pmrs-aprm.com/
The Association for Qualitative Research is the new
name for the former Association of Qualitative Research
Practitioners. The site contains a library of articles on
qualitative research; a directory of qualitative research
practitioners and suppliers; information on forthcoming
training courses and other events; and, of course,
information about the AQR organisation itself.
http://www.aqr.org.uk/
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engine covering over 10,000 publications, including reports,
from 350+ market research publishers. This site combines free
searching plus fee-based purchasing options and a subscriber
access section. It also offers free 'E-lerts', emailing details of
latest available market research for particular industries.
http://www.marketresearch.com
Online classified directory of UK businesses searchable by
business type (A-Z index), location and company name.
http://www.eyp.co.uk
European business directory containing brief details of several
hundred thousand European companies. Searchable by
product/service or company name - details in German,
English, Spanish, French and Italian. Also contains a section
on European economic information. http://www.europages.com
SECONDARY DATA USED TO ESTIMATE
POTENTIAL
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Lead-lag analysis: Time Series data from one
country is used to project sales data in another.
Assumes the determinants of demand in the two
countries are the same
 Requires diffusion rates to be standard across the
countries
 Problem – this is a bit too deterministic & diffusion
rates are increasing
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Estimation by analogy: a single-factor approach
whereby a correlation value between one factor
and the demand for the product (i.e. pop)
gathered in one country is applied to the desired
target market in another
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Obviously there is a problem with this as it assumes
that other factors other than the correlation factor
are the same – culture, buying power etc
PRIMARY RESEARCH
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Qualitative Research – quality – exploratory etc
Quantitative – quantity – numeric, statistical
inferences
Triangulation – has been criticised
Problems With Primary Data
Collection
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Product concept considerations
Cultural considerations
Language barriers
Sampling restraints
Non-response
RESEARCH DESIGN
A broad statement of the general problem,
identifying the specific mechanisms involved in
the problem - Most important stage
 What is the purpose of the study = what
information you require
 It provides direction
 The specifics of your problem will highlight the
main issues underlying the problem and provide
guidance on how to proceed.
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RESEARCH APPROACHES
Observation – watching & recording market
behaviour – TAM, Ethnographic, Store Checks,
loyalty schemes
 Experiments – causal information – looking for
cause and effect – independent and dependent
variables
 Surveys – attitudes, buying habits, potential
market, trends etc ..
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COLLECTION METHODS
 Mail
or Internet Surveys – poor response rate
– how do you know who has answered the QQ
etc?
 Telephone Survey – higher response rate
than mail & lower cost that mail
Flexibility
 CATI
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 Focus
Groups – very popular
 Personal Interviews (in-depth, semistructured, structures)
Classification of Sampling Techniques
Sampling Designs
Nonprobability Samples
Convenience
Judgment
Quota
Probability Samples
Simple Random
Stratified
Proportionate
Disproportionate
Cluster
Systematic
Area
Probability Sampling
 Each target population element has a known,
nonzero chance of being included in the sample –
Sampling Frame
 Everyone has a known probability of inclusion. The
probability is determined by specific mechanical
procedures used to select the sample – probability
sampling procedures.
 All elements (e.g., persons, households) in the
population have some opportunity to be included in
the sample, and we calculate the mathematical
probability that any one of them will be selected.
Non-Probability Sampling:
 A sample that relies on personal judgment
somewhere in the selection process and
therefore prohibits estimating the probability
that any population element will be included
in the sample.
 Population elements are selected basis on
availability (volunteered) or because of the
researcher's personal judgment that they are
representative. As such an unknown portion
of the population is excluded.
 Useful if researcher wants to describe a
specific group – I.e. Individuals with HIV
CHOOSING YOUR SAMPLE SIZE
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For Quantitative research your sample size must
be representative
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Statistical techniques for sample size determination
For qualitative research this is almost impossible
– so you cannot generalise to the wider
population but make inferences
RESEARCH INSTRUMENT
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Survey/Questionnaires
Design you QQ – cross-cultural factors must be
considered in design – must avoid misrepresentation
& misunderstandings
 Wording you QQ – sequencing, wording, layout,
length etc ..What does Family mean in Europe V
USA V Asia V Middle East?
 Types of Questions – Structured V Unstructured –
avoid double barrelling & leading questions
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Pre Test-Pilot you QQ – particularly important in
International Markets
ANALYSIS & INTERPRETATION
Giving Data meaning
 Quantitative Analysis (Cluster, Factor, Liner
Regression) - SPSS
 Qualitative – Interpretative (Discourse,
Narrative, Phenomenology etc ..)- NVIVO,
NUDIST
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ON-LINE PRIMARY RESEARCH
Improvement in this area & much research being
undertaken
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Efficiency
Cost
short response time
PC – collection & analysis gap is reduced (SPSS)
Use of visual stimuli
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Disadvantages:
No Physical address
 Downloading
 Who is at the other end of the cable?
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OTHER TYPES OF MARKET RESEARCH
FOR INTERNATIONAL RESEARCH
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Ad Hoc Research
Custom Designed Studies – V Expensive!
 Multi-client Studies – Omnibus, Independent studies
for purchase
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Longitudinal Studies
Panels (Consumer/retailer – Tesco
 Sales Forecasting – short, medium, long-term)
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SEGMENTATION
SEGMENTATION IN INTERNATIONAL
MARKETS
Figure 7.2
International market segmentation
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Step 1: Defining criteria
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Measurability
Accessibility
Substantiality
Profitability
actionability
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Step 2:
General Characteristics
 Specific Characteristics
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Step 3:
Preliminary Screeneing – external variables – the
state of the market. For SME’s internal (finacial)
resources will also be considered – BERI (Business
Environment Risk Index) and BMI (Business Monitor
International)
 Fine Grained Screening – Firms competitive Power
and special competencies in different markets will be
taken into account
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THE BASIS OF INTERNATIONAL MARKET
SEGMENTATION
Figure 7.3
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Step 4:
Develop subsegments in each qualified country
 Demographic, lifestyles, motivations, geograpgy,
buyer behaviour, psychographics etc
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TRANSNATIONAL CLUSTERING OF THE
WESTERN EUROPEAN MARKET
Source: Welford and Prescott, 1996. European Business: An issue-based approach, 3rd Edition. Reprinted by permission of Pearson Education Ltd
MICROMARKET SEGMENTATION
Figure 7.7
UNILEVER’S GLOBAL PORTFOLIO
Figure 7.12
SANEX
Leader in Spain – bought by Sara Lee
 Build a Cross Border 9European) Concept of
health in consumers minds.
 Contrast to perfumed goods of Unilever etc
 Product launch simultaneously in European
markets – The Shower Approach
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Geographic Segmentation:
Business Portfolio Matrix
(Harrell & Keifer,
1993)
Country Attractiveness
Compatibility
Primary
High
Medium
Low
High
Medium
Low
Secondary
Tertiary
Transnational Segmentation
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Demographics
Benefit segmentation
Psychographic (lifestyle)
Sociocultural
Geodemographic eg. EuroMosaic
SES - Strategically Equivalent Segments
(Kale & Sudarshan, 1987)
FOUR CATEGORIES OF BUYER
Ireland
Europe
US
Britain
Dealmakers
29%
26%
37%
26%
PriceMakers
24%
36%
36%
27%
Brand
Loyalists
24%
21%
11%
29%
Luxury
23%
Innovators
17%
17%
18%
SHELL SEGMENTATION
New Barbarians: aggressive, outgoing, socially
active, conspicuous consumer. Minimal hassle,
convenience, work and play hard
 Little Irelanders – aloof, time and society passing
them by. Cranky, few committed interests, hard
to please, regressive values, conservative and
reserved.
 Egalitarians – soft and caring, balance busy lives
with gentle pastimes. Value independence &
friendship. Dependable, genuine. Concerned with
cleanliness, courteousness and social justice.
Heavy consumers of broadcast media.
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Bourgeois – Concerned with standards of service
and courtesy but in a slower-paced environment.
Accept their station in life but have broad
interests and pastimes. Secure, cultivated and
relaxed. More newspaper than TV focused.
 Constrained – relatively modest and humble but
with a love of life, food and sex but with a desire
to avoid extremes. Like to gratify their desires
and are broadminded but reserved. Time and
income depressed. Average media consumption
and primarily electronic
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ROPER STARCH WORLDWIDE INC
Deal makers (29%): well educated, median age of
32, with avg affluence and employment; this
group concentrates on the process of buying
 Price Seekerds (27%): the highest proportion of
retirees, lowest education level, tends to be
female with avg level of affluence
 Brand loyalists (23%): The least affluent, mostly
male, median age 36, avg education and income
 Luxury Innovators (21%): seek new prestigious
brands, are the most educated and affluent
shoppers, mostly male, median age of 32, highest
proportion of executives and other professionals
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CORE VALUES SEGMENTATION: 1000
ADULTS, 35 COUNTRIES
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Strivers: slightly more male, larges group, emphasis on
material and professional goals. One in three in developing
Asia
Devouts: (22%) More women than men, traditional duty is
important, most common in Asia, Mid East and Africa,
least common in developed Asia and Euro
Alturists: (18%) slightly more female, interested in social
class issues and welfare of society, median age 44%, more
live in Latin American and Russia
Intimates: (15%) Values core personal relationships and
family above all else. Equally split gender grouping. One in
four Americans and Europeans are in this grouping
Fun Seekers: (12%) disproportionate numbers in developed
Asia, youngest Group. More males than females
Creatives: 10%, strong interest in education, knowledge
and technology. More common in Latin America and
Europe. Balanced gender Mix
Summary
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Due to heightened levels of uncertainty in
international markets, information is key
Thorough market scanning & building a
sound MkIS can help alleviate risk
Reliable data is needed to segment markets
properly
There are particular problems with data
availability & collection to be overcome