Market research

Within this context, market research becomes the crucial tool with which to understand the customer. Thus market research has the following goals:

■ It helps create accurate judgements

■ It provides an understanding of customers' needs

■ It allows marketers to identify and analyze potential markets

■ It provides an assessment of global demand.

The key aims of international market research are to provide reliable information, insight and consistency. These will change little - however, in the future it is likely that through the introduction of new technology the means by which the information is gathered, organized, analyzed and presented will change radically. For example, companies who supply electronic point of sale data to companies have an enormous wealth of information at hand. They know what consumers buy - not what they say they buy. In the future the research organization may be bypassed as the brand owner talks directly with their customers, for example, Toyota car owners can visit a website, register their car, and talk to designers and tell them what they like and dislike about their car and what they would like to see in their next car. While purists will argue about the importance of sampling in such information gathering, it may well be that such conversations will take the place of traditional market research, which tends to be a snapshot at one point in time rather than an ongoing dialogue between a company and its customers.

How this will develop in the household market will depend on the penetration of PCs into the home, and how they form part of a communications package, integrated, perhaps, with the next generation of televisions and the activities of cable/ satellite operators.

Most companies will acknowledge the need to undertake market research before they rush off into foreign markets. However, sometimes for reasons of arrogance or cost, less research is undertaken than is necessary, or the wrong questions are asked. This can have disastrous results in the end (see Box 6.1 for an example) which can put an end, even if only temporarily, to international activity.

BOX S.!: SIZF DOES MATTFR

1 liiii ompan\, based in Uradinid. I K lvi;an as a mjikel Uadei -ellin". l.idn-. sn ojli-ij., \i !hlIi u lvni>hi Hum u hoiosaleis. iiadualk a- the business i'.ieu aiul ile* eloped the o\\ 'iei — deeh led lo diM«_;[i .ind maniil.li tine then iiimi raiii;e ol pi oil in I "ihr . Ie\(| i«1 >iiii-ill \\ ■!>■ a Mm ess, .Mid the business (.onlmued lo t'.iow In tune it u .1- tell lli.i! theie u.is i ippoj! 1111 i t \ to e- ¡'nit thill prodiu.s to a.i.'lher 101. ¡'.iv, .in.: Moll, .id iv.it, i ho -eii ,i > the mi lull e\poil m.ii'koi 1 he m\ net-, ueu- i ouliden! ol simcs ,ind attei ¡lie i'i-t deliver) lo the 1 'uti h inaitei :hf\ s.U kick ind mailed lor the sales lo lako .ill Lntoi ii ■-■alelv 'lu \ ne\i" d'd, and uas o-A m hiid - :;ht tin: 'ht>\ be. -i, lo mm ,,uisk look .11 the inaikel wiiii h lhe\ had entered It eiiiei;;ed that the .-olouis popul.ii in I lol'and \\ i"o dilleiuil 'O I'lo-.e popular ill the I K at the time anil i,> addition tin eiii",.' Hulili women v\as larger ill.in the aseiai'e LK wonum llvs in U"'iii ol si 'in.; inik pai I ol the i nnip.im - i.injie iva.s ot mteiest lo the I Vili h i on-.unier, ,ind llien the olli line, vv.is luilhei disadvantaged h« nut lvni", av ailahle in the piefeire.i mloin IsUliei than tlv to put thill;',s ri^hl I he i omp.lin look tlli'iMl louie Horn (lie inieirMiioii.il inaikel ano ona i;',ain hei.une a soloiv uonu'sln' opeialoi

Methods and what to ask

Traditional approaches to market research have concentrated on qualitative and quantitative methodologies. There has been for many years a heated debate between proponents of qualitative and quantitative research methodologies. Unfortunately they are often seen as being diametrically opposed to each other, and that research can only follow one particular methodological path. This is very much an error, and rather like looking at the world with one eye closed, making judgements of depth very difficult. Both approaches do different things but they can complement each other. Quantitative is good for the what and where questions related to purchasing habits, while qualitative deals with the why and how people buy. Pawle (1999) argues that we need to assimilate both approaches and that one without the other is unbalanced. To illustrate his point he draws on a gender metaphor (Table 6.1).

There can be a tendency, particularly in smaller companies, to rush into research without proper planning. This is almost worse than not doing any market research at all! Prior planning can help avoid poor performance. Laflin (1999) suggests that two key questions should be asked during the planning phase: 'How will I tell if the project has been a success?'; and 'Why am I conducting this research?'. In answer to the first question, measures such as whether the project was completed on time and within budget will be relevant, as will an assessment of whether the right information was collected from the right people. The real answer to the second question comes in the future and varies with the objectives of the research; was a damaging decision avoided or a good decision made, did revenues increase?

Certainly before embarking on any research, you should have a clear idea of what you are trying to achieve, how you will go about collecting data, how it will be analyzed, and how the outcomes will be addressed. In more detail, as part of the planning process you will need to address:

■ What questions will be asked?

■ Who will be interviewed?

■ How will you get contact information for potential respondents?

■ When and where will data be collected?

■ Which parts of the work will be done internally and which will be done externally?

Table 6.1 Contrasting contributions of qualitative and quantitative approaches

Qualitative

Feminine in nature intuitive and understanding Taps the rich veins of experience Extends quantitative and drives quantitative analyses More conclusions

Quantitative

More masculine

Aggressive (more shallow but concrete) Shallower interpretation Agencies revert back to 'results' not 'findings'

■ What statistical analysis will be performed?

■ How will the results be communicated in the organization?

While the above can be generally applied to market research activities, it is worth developing these ideas a little further within the context of international market research. Recommended steps are to:

1. Profile your target segments and clients, not just from secondary statistical data but from first hand observation and discussion. How do the customers in the target market(s) behave in the sector you wish to enter? How do their buying tastes and preferences differ to those in your domestic market where you have experience?

2. Interview members of the target segments to see how well they fit your preconceived ideas about them. It may be that little refinement is necessary, and you can sell existing products or services without adaptation. On the other hand such interviews can reveal the need for a modification which will enhance your chances of success. Stewart-Allen (1999) notes the case of Hansen Soft Drinks, a California-based carbonated drinks maker, who found that European consumers found their white plastic screw-on top conveyed cheapness.

3. Use local researchers who appreciate the methods which work best in respective markets.

4. Use a variety of methods to get a well-rounded understanding of the market. A mixture of quantitative and qualitative can provide information on preferences and strength of beliefs, but also the anecdotes which can be used in communication campaigns.

5. When looking at the data produced by research, focus on outcomes, the actions to follow from the data. Ask yourself, 'What do I do as a result of this data? What will I do that will be different to the pattern in existing domestic markets?'

In-house or bought in?

It is suggested, by many observers, that much of market research can be undertaken by the company itself rather than buying in assistance. However, this will require a time and resource commitment, as rarely is there a short cut to everything the company needs to know. It is easy to see how a company would be motivated to the DIY approach on grounds of cost. It is generally more expensive to conduct research in foreign markets because of the additional travel, co-ordination and translation costs which are often involved. A typical usage and attitude survey can cost between 75 and 120% more in terms of the price paid to a research organization. Crucially, the relative impact of this cost on the smaller company is much greater if the strategy subsequently developed is the wrong one. Failure in one international market can easily lead to the whole exporting adventure being abandoned.

MacFarlane (1991) outlines the types of activities undertaken by a consultancy before any primary research is undertaken. This process involved seven steps and these are outlined below. They provide an insight into the services offered by such organizations to exporters.

1. Check reference information on countries, products, markets and competitors.

2. Conduct secondary research online and in the library.

3. Select any studies which appear to be of interest. Contact the publishers and request an abstract/contents page in order to see if it is worth purchasing.

4. Select a foreign firm or firms to assist in the study or perform most of the work

5. Ask for proposals for foreign field work and analysis, particularly where language skills are required.

6. Finalize the client proposal, including business reference information, secondary research, multi-client studies, subcontracted fieldwork and analysis.

7. Begin the primary research study, working closely with the client and arranging for frequent interim meetings to ensure that work is progressing at a good rate and in line with the proposal.

New directions: using the Internet

The evolving nature of the global economy (discussed in Chapter 2) in itself creates new challenges for market research. Markets emerge where little formal statistical information exists, and so for companies interested in doing business in these new markets, the challenge to market researchers can be quite great.

Already we are experiencing the boom in accessibility of information as, for example, the Internet makes downloading a bizarre range of details possible. This can only be expected to continue in the 21st Century. McKie (1996) states that "The average weekday edition of the New York Times contains more information than most people in 17th century England would have seen in an entire lifetime'. The distinction which will become increasingly important, if marketers and researchers are to avoid information gridlock, will be the capability to unbundle data and knowledge, i.e. to be able to see the story behind the reams of tables which the computer database will make available. Anyone who has used the Internet to search for information will understand how easy it is to become side-tracked by link after link, whilst losing sight of what the search was about!

As more companies become involved in selling across international boundaries, particularly as more SMEs enter the arena, so too will the demand for international market research increase. McKie states that some companies are rejecting the traditional route of test marketing or piloting products in new markets. Examples are quoted of companies in the youth or fashion markets who claim not to use research because they have their finger on the pulse. However, in reality these companies have informants on the ground observing and talking to people, and feeding the information gained back to the centre. Thus, this is not a total rejection of research, but an change in emphasis from the conventional methods to less formal and controlled methods (see Box 6.2 for an example).

BOX G.2: DOT COM RESEARCh liem \ slim I oi KidjV-t tn i undid l mm rniii>n<il rese.m li one < niiip.im i jiiii1 up itli ,ip itiiiii\.it'M solution u-i- the Intelnet. 1 lieielore, in in del to .ippm.iiji .noulnun ili >» I" lind iml what u ,iL. i Di>l oi iiiil llit- i imi| i.iiiv \ i«sili\l \ .iiinus siic- ini'iinn hooiihiii, i ni.iili'il people .inil usi- iIu- (.ilk sites In set up intoim.il ¡jriuip iiis( ussinns. 'i'liii' \ .iki,iiili insifjit.s iM'iv.1 gained .i' well .is sonic ll.imiii;'. lor the • ■ nimicievl

I ¡rUnui'ioilh in Hie in In 11' Ihrir u ill he e\ i n gte.iu'i polnili.il lo set up \ u lu.ii im us ,',iiH-ps mi tin' net. ululi- i' niiiil lould .tllnw ior v.ist Jisliihutuni til '-eli 11mipk'tm-: • j 11> iKiiiu.uie- I his is <iiie.id\ happening v\ itliin organization - and i on Id he ,, w ,u oi i iindi. dinn I'lv-'Mp inlein.iii. n>il m.'iUel usiMiiii.

James (1999) reports that Avon Products, who previously dispatched interviewers to 17 US cities to survey Avon representatives at local shopping malls, attempted a parallel survey in 1997 with representatives online. The data correlation was so high, and the online approach so much more cost effective, that mall based meetings were dropped.

The Internet is cheaper, faster, easier than traditional telephone, personal interviews or postal surveys, and the revenues generated are increasing (Table 6.2). The companies can conduct wide open polls, opt-in polls, invitation only polls, password protected sites and Internet based panels. There are some concerns in the industry that proper social science methods are followed where required, for example, random sampling, respondent privacy. Some companies are using quota sampling to allow for differences between the online population and the general population - here addressing concern of social exclusion and the creation of an offline underclass. Others bar access, once an individual has participated in a survey, for 3 months. Clearly these methods are an additional tool in markets where online access is high and growing, but many markets exist around the world were such techniques would not be possible.

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