Chapter Six Market Research in the International … · method to improve the quality of a...

Chapter Six

Market Research in

the International Environment

Copyright 2012, SAGE Publications, Inc.

Learning Objectives

1. How can market researchers effectively employ the scientific method to improve the quality of a marketing program?

2. What are the steps of the marketing research process?

3. What roles do primary data, secondary data, validity, and reliability play in the process of designing an international marketing research program?

4. What techniques can be used when developing samples and collecting data for international marketing research?

5. What factors complicate the analysis and interpretation of data in international marketing research?


Learning Objective #1

1. How can market researchers effectively employ the scientific method to improve the quality of a marketing program?


Market Research • Market research is the systematic gathering,

storing, and analyzing of marketplace information for use in strategic decision making. – The market research process links the

organization with various constituent groups.

• The Scientific Method – How researchers use observations, empirical

evidence, and knowledge to objectively study various phenomena


Components of the Scientific Method

• Objectivity – Researchers try to remain objective when

developing research designs and questions and when collecting data, and when arriving at conclusions based on the outcomes.

– One factor that affects objectivity, the self-reference criterion, occurs when someone applies his or her own cultural values and background to the assessment of the behaviors of others.


Types of International Market Research



2. What are the steps of the marketing research process?


The International Market Research Process


Step 1. Define the Problem or Situation

• First step in the market research process. – An inadequately or hastily defined problem or situation can lead to

flawed data and conclusions.

• Researchers take cultural differences into account early in the

process. – A problem in one culture may simply not exist in another.

• Marketers can define and assess a problem by asking if the problem as stated represents the actual issue or merely a symptom of the problem. – Example: Declining sales may be the symptom of a larger problem

such as negative publicity, a design defect in the product, or an innovation by a competitor.


Step 2. Complete a Cost/Benefit Analysis

• The costs and benefits of engaging in international market research are assessed early in the process.

• Making the decision to proceed with research requires the marketing team to compare the importance of obtaining the required information and the time frame within which the information will be collected, against the value of the benefits of acquiring the information and the overall difficulty in obtaining the data. – The availability and type of data needed to address

the problem can drive up costs. Copyright 2012, SAGE Publications, Inc.


3. When designing an international marketing research program, what roles do primary data, secondary data, validity, and reliability play in the process?


Secondary Data

• Secondary data are collected by an outside agency and are made available free of charge or for a fee.

– Marketers may struggle to find details regarding the collection of data for government statistics.

– When examining international markets, it can be difficult to compare data and information from one country to another.


Secondary Sources of International Market Research


Primary Data • Primary data are gathered

by the researcher or research team.

• They are collected in the form chosen by the researcher and can be gathered in practically any region of the world.


Reliability and Validity

• Reliability refers to the degree to which the items used to measure a concept are internally consistent with each other and the extent to which the findings are repeatable over time.

• Validity refers to the extent to which responses to a measure reflect the actual differences in the concept found across respondents, or the overall level of accuracy of the measure itself.


Types of Validity • Internal validity results when cause-and-

effect relationships have been correctly identified by the research.

• External validity means that the statement of cause and effect would apply to other situations or settings.


Macro-Level Analysis and Political Risk

• Macro-level analysis often occurs at the country level.

• Political risk, or the potential for political forces and governmental activities to obstruct and harm business activities within a country, is a key component of this analysis.


Assessing Political Risk


Legal Risk • Legal risks are those associated with the laws

present in a country, and the enforcement of those laws.

• The extent to which patents, copyrights, and intellectual property rights is an important component.

– Many countries do not offer these protections.

– Others have such laws but fail to enforce them.



Step 3. Develop a Research Design

Qualitative Research • The focus is on obtaining information without

relying on numerical expressions or measurements. – A small number of respondents are typically used.

• This approach is researcher dependent.

– The researcher subjectively analyzes the information that has been collected.

• Cultural norms can preclude the use of many

qualitative research designs. – In some cultures, consumers are hesitant to express

their opinions in front of others.


Qualitative Research Methods • Ethnographic Research Design

– The researcher studies respondents in their native environment by living or interacting with them.

• Observational Studies – The researcher watches consumers as they

exhibit a marketing behavior, such as shopping and making purchases. • Cultural norms may make observational studies

difficult.


Qualitative Research Methods (Cont.) • Focus Groups

– Semistructured or unstructured group discussions that generally take place in groups of eight to twelve.

– Personal Interviews – One-on-one discussions between a researcher and a respondent

– Cultural nuances make the above far more difficult to do

internationally.

• Delphi Technique

– Involves a market researcher who assembles a panel or group of experts on the topic of interest.

– The experts answer a series of questions, typically questions forecasting or predicting future behavior.


Quantitative Research Methods --- Surveys

• Surveys are sets of questions asked in various settings. – Survey instruments can usually be given to large

numbers of consumers with relative ease.

• Administering surveys can be more challenging in international settings, partially due to illiteracy and difficulty in distributing surveys. – Conceptual equivalence problems create

additional difficulties. These occur when a concept in one country has a different meaning in another. • The word “household,” for example, has different

meanings in various countries. Copyright 2012, SAGE Publications, Inc.

Quantitative Research Methods --- Translation

• Back translation is a process in which a survey is translated from an original language into a targeted language—for example, from Italian to Portuguese—and then back into the original language by a different translator. – The second translated document is then compared to the

original version to check for accuracy and meaning.

• Parallel translation is a process in which two or more

translators are used for each step of the back translation process. – If different translations result, the research team

discusses the results and selects one final translation.


Quantitative Research Methods --- Experiments

• Experiments are research techniques that allow researchers to discover cause-and-effect relationships by manipulating certain variables and controlling others. – Researchers seek to identify the effect of independent variables on a

dependent variable.

• Advertisements and marketing materials are tested using portfolio techniques.

• Consumers are exposed to a series of commercials, then researchers test to see if the ad achieved its desired effect.

• A test market is a special type of experiment that is constructed within realistic marketplace conditions. – In essence, results from an experiment in a small area, such as a small

township in South Africa, are used to predict what would happen in a larger area, including all small townships or the entire country.


Online Research: A Hybrid Approach • Exciting growth area for marketing research • Several problems have been associated with

Internet market research programs: – Lack of Internet capabilities and high illiteracy rates

in some countries – Survey must be constructed to meet the cultural

norms of the target audience. – Careful translation will be necessary.

• The Internet offers several online sources of secondary data: – Can be combined with primary online research to

gain a better understanding of a target market.



4. What techniques can be used when developing samples and collecting data for international marketing research?


Step 4. Develop a Sample • Sampling is a process wherein members of a

population are selected for inclusion in a research study because they will be representative of the larger group. – Sampling techniques can be used to survey a small

subgroup rather than the entire population, but at the same time draw inferences about the entire population based on the results.

• Statistical inference means that the research

results obtained from a sample apply to the larger population, a common objective in international marketing research projects.


Probability Sampling • Researchers generally choose between probability

and nonprobability sampling methods. – A probability sample is one in which each element in

the population has a known, nonzero probability of being selected for a study.

• A random sample is a type of probability sample in which each element has an equal chance of being selected for study. – Simple examples of random selection include picking

a name out of a hat or choosing the short straw. Researchers can use computer programs to generate random numbers as the basis for random selection.


Nonprobability Sample • A nonprobability sample is one in which the

probability of an element of the population being included in a sample is unknown, which means a random sample cannot be used. – The goal remains to make the sample as

representative of the larger population as possible.

• Various tactics may be used:

– Snowball techniques are nonprobability techniques in which one respondent refers the researcher to the next respondent, and so on.

– A convenience sample is a nonprobability technique in which researchers sample the respondents who are the easiest to reach.


Sampling Issues in International Research

• International sampling introduces several difficulties for the international market researcher. One issue pertains to the lack of availability of accurate demographic information. For many countries, such lists, or sample frames, are not available. Less-developed countries often do not keep valid demographic information. Collection methods can be severely limited or deliberately altered by the ruling government.

• Obtaining a true probability or random sample in most international settings will be difficult, because methods used to reach people create biases. Some citizens do not own telephones, others do not have access to the Internet, and others still are illiterate and cannot read mail.


Method Issues in International Research

• The descriptive research method allows the researcher to examine attitudes and behaviors that are relevant to one specific country.

• Comparative research takes place when the researchers examine differences between cultures or countries.

• Contextual research may be performed when the research attempts to study cross-national groups and how consumers behave in a selected context. – The focus with contextual research is on how consumers think or

act within a specific context.

• Theoretical research examines the extent to which a theory

garners support across cultures and national boundaries. – The type of research chosen will be based on a specific academic

research question. Copyright 2012, SAGE Publications, Inc.

Calculating Sample Size


Confidence Interval Formula


Step 5. Collecting Data • The ability to collect data depends on local customs and technological

infrastructure. – The proliferation of telephone and Internet communications has changed the

landscape of data collection in many countries, but usage rates still vary widely.

• The recent growth of mobile phone usage in some countries may lead to new marketing research opportunities. – On the African continent, more than 280.7 million subscribers, or about 30.4% of the

overall African market, had signed up for service by 2007.

• Internet access also varies worldwide.

– In Latin American countries, only 30% of consumers have access. – In African countries, only 7% of residents enjoy Internet access.

• Another difficulty occurs when attempting to use maps to find addresses. – Some Western cities, such as London, are famous for being difficult to navigate, even

with a map. – In less-developed countries, the maps themselves may be outdated and incorrect.



5. What factors complicate the analysis and interpretation of data in international marketing research?


Step 6. Analyze and Interpret Data

Linguistic problems, or those associated with different meanings for terms, often complicate international market research.

– Frequently used concepts such as “satisfaction” and “feelings” should be carefully examined to understand how these terms might differ across cultures.

– Any research questions related to time and punctuality in other countries require careful consideration by the marketing team.


Step 6. Analyze and Interpret Data (Cont.)

• Metric equivalence issues arise when respondents from different countries systematically score interview or survey questions differently.

• Cultural differences in response styles can greatly affect research results. – In a culture with strong tendencies toward humane

orientation, respondents may be much more likely to offer favorable answers to questions, always granting the benefit of the doubt.

– American consumers are willing to express extreme positions on measurement scales, which may not be the case for consumers in other cultures.

– In collectivist societies, consumers are less willing to express extreme attitudes.


Step 6. Analyze and Interpret Data (Cont.)

• Socially desirable responses are an additional problem. This occurs when respondents bias their opinions by what they believe are the most culturally acceptable ways in which to respond to a question.

• One problem for data analysis, then, is that even when the researcher selects the proper sample size for a proposed standard deviation level in the population, the true score on the statistic may still deviate from the actual opinions of the respondents, which in turn, would affect any analysis of the data.

• Consequently, the use of multiple methods, including both qualitative and quantitative techniques, becomes critical when performing international market research. – Monitoring cultural differences to the various research approaches

generates results of a better quality.


Step 7. Formulating Conclusions and Writing Reports

• The research report should be written in a direct and informative way that assists the international marketing in making decisions. – The conclusions presented in international market

research reports should be both complete and concise.

• In an international context, this step poses the same communication issues that have been part of the entire process. – Often, one of the difficulties is in re-creating an

environment that many of the readers of the report will never have visited.

– Those readers may be initially reluctant to accept the findings. Copyright 2012, SAGE Publications, Inc.

Ethics and International Market Research

• Researchers who are ethical protect the rights and privacy of research participants. – Keep confidential information from being leaked to outside parties.

• Researchers who engage in experimentation focus on protecting the

safety and well-being of research subjects and ensure that no one is harmed in any way by the research project.

• Ethical researchers also make certain that research activities are not misrepresented in any harmful way.

• One unethical tactic is to engage in “sugging” or selling under the guise of research. – A researcher who suggs begins asking a respondent questions and then

attempt to sell the person a product.


Bottom-of-the-Pyramid and International Market Research

• International market researchers seek to gather the opinions of bottom-of-the-pyramid consumers so that the findings can be incorporated in various marketing efforts. Many of these consumers may be unable to respond to surveys or Internet research programs, because they do not have access to computers, and many more may be illiterate. Data collection techniques may be adapted, relying more on qualitative methods such as personal interviews or ethnographic methods to tap the attitudes and behaviors of this segment.

• Pricing research takes on a new meaning when researching bottom-of-the-pyramid consumers. Rather than studying the effect of a pricing change on purchasing behaviors, researchers should instead seek to identify what price consumers are actually able to pay for a particular product or service.


Bottom-of-the-Pyramid and International Market Research (cont.) • Product research may focus on finding/gauging consumer

responses to cost-saving changes to product design, and may explore differences in purchasing frequency. Smaller quantities per purchase may result in more frequent purchasing of the item. Instead of buying a six-month supply of soap, market research may find that bottom-of-the-pyramid consumers prefer buying single-use sachets as needed.

• Distribution and promotion research also varies in context for bottom-of-the-pyramid consumers. Many bottom-of-the-pyramid consumers are rural; research should highlight how the consumers access the product. Promotion research in these countries should examine the effectiveness of word-of-mouth efforts rather than advertising, mass media, or Internet marketing campaign approaches.


Control of the International Market Research Process

• Should an organization conduct all international research activities from a centralized location, or should the efforts be decentralized? – A centralized structure brings the management of these

tasks “in house” to a corporate headquarters location. – A decentralized structure allows research tasks to be

managed in offices in, or near, the foreign region under investigation. • The main advantage of the decentralized method is that the

researcher will be closer to the subjects being studied and may be more sensitive to market-specific issues.

• Another alternative for the international market researcher is to hire an external research firm to conduct research.


Major Market Research Firms


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