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CHAPTER 8
ANALYZING PEOPLE AND MARKETS
Chapter Outline
A. Defining the Issue
B. International and Domestic Research
1. New Parameters
C. Recognizing the Need for Research
D. The Benefits of Research
E. Determining Research Objectives
1. Going International: Exporting
G. The Primary Research Process
1. Determining Information Requirements
2. Industrial versus Consumer Research
3. Determining Research Administration
H. The International Information System
1. Environmental Scanning
2. Delphi Studies
3. Scenario Building
Chapter Objectives
The chapter helps understand the importance and the necessity of research. It further
Suggestions for Teaching
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A good way to let students understand the value and shortcomings of secondary data is to
assign short group projects (with a lead time of one week or less) which require the use of
It is an excellent exercise to require students to prepare a report of one page to the class. This
way, even if vast quantities of data have been found, the students are forced to recognize that
this finding cannot necessarily translate into presentations of extraordinary length.
In most instances, we have not found it useful to ask students to carry out a primary
international research project in the classroom. The time is simply too short to permit
Chapter Summary
A. Defining the Issue
The American Marketing Institute (AMA) defines marketing research as: The function
that links the consumer, customer, and public to the marketer through information—
information used to identify and define marketing opportunities and problems; generate,
B. International and Domestic Research
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The tools and techniques of international marketing research are said by some to be
exactly the same as those of domestic marketing research, and only the environment
differs. However, the environment is precisely what determines how well the tools,
techniques, and concepts apply to the international market. The four primary differences
are:
• New parameters
1. New Parameters
In crossing national borders, a firm encounters parameters not found in domestic
2. New Environments
When deciding to go international in its marketing activities, a firm exposes itself to
an unfamiliar environment. Many of the assumptions on which the firm was founded
3. Number of Factors Involved
Going international often means entering into more than one market. As a result, the
4. Broader Definition of Competition
By entering the international market, the firm exposes itself to a much greater variety
C. Recognizing the Need For Research
To serve a market efficiently, firms must learn what customers want, why they want it,
and how they go about filling their needs. To enter a market without conducting
marketing research places firms, their assets, and their entire operation at risk.
A major reason that firms are reluctant to engage in international marketing activities is
D. The Benefits of Research
To carry out international research, firms require resources in terms of both time and
money.
The value of research in making a particular decision may be determined by applying the
following equation:
E. Determining Research Objectives
Research objectives will vary from firm to firm because of the views of management, the
corporate mission, and the marketing situation.
1. Going International: Exporting
The most frequent objective of international market research is that of foreign–
market opportunity analysis. When a firm launches its international activities, basic
information is needed to identify and compare key alternatives. There are two ways
to evaluate foreign markets:
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2. Going International: Importing
When importing, firms shift their major focus from supplying to sourcing.
Management must identify markets that produce desired supplies or materials or that
3. Market Expansion
Research objectives may include obtaining detailed information for penetrating a
market, for designing and fine-tuning the marketing mix, or for monitoring the
F. Determining Secondary Information Requirements
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Using the research objective as a guide, the researcher will be able to pinpoint the type of
information needed. For the fine-tuning of a marketing mix, very specific detailed
product data may be necessary.
1. Sources of Data
Secondary data for international marketing research purposes are available from a
wide variety of sources:
• Governments: Of all data sources, governments typically have the greatest
variety of data available. This information provided by governments
addresses either macro or micro issues or offers specific data services.
• Service organizations: A wide variety of service organizations that may
provide information include banks, accounting firms, freight forwarders,
airlines, and international trade consultants. Frequently, they are able to
provide data on business practices, legislative or regulatory requirements,
and political stability as well as basic trade data.
• Directories and newsletters: Many industry directories are available on local,
national, and international levels. These directories primarily serve to
identify firms and to provide very general background information such as
the name of the chief executive officer, the address and telephone number,
and some information about a firm’s products.
Many newsletters are devoted to specific international issues such as
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In the United States, “opportunities” and “solutions” are available through
the U.S. Department of Commerce. “Opportunities” gives detailed
information on industries, countries, trade events, trade leads, and market
2. Evaluating Data
Before obtaining secondary data, the researcher needs to evaluate their
3. Analyzing and Interpreting Secondary Data
After the data have been obtained, the researcher must use his/her research creativity
to make good use of them. This often requires the combination and cross-tabulation
of various sets of data or the use of proxy information in order to arrive at
conclusions that address the research objectives. A proxy variable is a substitute for
future projects.
• Data privacy: The attitude of society toward obtaining and using both
secondary and primary data must be taken into account. Many societies are
increasingly sensitive to the issue of data privacy, and the concern has grown
G. Primary Research Process
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1. Determining Information Requirements
Specific research questions must be formulated to determine precisely the
2. Industrial versus Consumer Research
3. Determining Research Administration
• Degree of research centralization: The level of control that corporation
headquarters exercises over international marketing research activities is a
function of the overall organizational structure of the firm and the nature and
importance of the decision to be made. The three major approaches to
international research organization are the:
o Centralized approach: This approach affords the most control to
o Coordinated approach: This approach uses an intermediary such as
an outside research agency to bring headquarters and country
operations together. This provides for more interaction and review of
the international marketing research plan by both headquarters and
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supervision of the specific country operation, and only a final report
is provided to headquarters.
A country’s operations may not be aware of research carried out by
corporate units in other countries and may reinvent the wheel. This problem
can be avoided if a proper intracorporate flow of information exists so that
local units can check whether similar information has already been collected
• Outside research services: One major factor in deciding whether or not to
use outside research services is the size of the international operations of a
firm. No matter how large a firm is, however, it is unlikely to possess
specialized expertise in international marketing research for every single
4. Determining the Research Technique
Selection of the research technique depends on a variety of factors. First, the
objectivity of the data sought must be determined. Whether the data are to be
collected in the real world or in a controlled environment also must be decided.
Finally, a decision needs to be made as to whether the research is to collect historical
facts or gather information about future developments.
Cultural and individual preferences, which vary significantly among nations, play a
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The skill of the group leader in stimulating discussion is crucial to the
success of a focus group. Discussions are often recorded on tape and
subsequently analyzed in detail. They can be helpful in providing
information about perceptions, emotions, and other nonovert factors.
• Observation: Observation techniques require the researcher to play the role
of a nonparticipating observer of activity and behavior. Observation can be
Interviews, focus groups, and observation are useful primarily for gathering
qualitative data.
When quantitative data are desired, surveys are appropriate research instruments.
• Survey: Survey research is useful in providing the opportunity to quantify
concepts. Surveys are usually conducted via questionnaires that are
administered personally, by mail, or by telephone.
5. Designing the Survey Questionnaires
International marketing surveys are usually conducted with questionnaires. These
questionnaires should contain questions that are clear and easy to comprehend by the
respondents, as well as easy for the data collector to administer.
• Question format: Questions can be structured or unstructured. Structured
questions typically allow the respondents only limited choice options.
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• Question content: Major consideration must be given to the ability and
willingness of respondents to supply the answers. The knowledge and
information available to respondents may vary substantially because of
different educational levels and may affect their ability to answer questions.
Further, societal demands and restrictions may influence the willingness of
respondents to answer certain questions. For various reasons, respondents
may also be motivated to supply incorrect answers.
• Question wording: The impact of language and culture is of particular
importance when wording questions. The goal for the international
marketing researcher should be to ensure that the potential for
misunderstandings and misinterpretations of spoken or written words is
minimized. Attention must be paid to the translation equivalence of verbal
6. Developing the Sampling Plan
To obtain representative results, the researcher must reach representative members
7. Data Collection
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8. Analyzing and Interpreting Primary Data
Interpretation and analysis of accumulated information are required to answer the
9. Presenting Research Results
The primary focus in the presentation of research results must be communication. In
10. Follow-Up and Review
Appropriate managerial decisions must be made based on the research, and the
11. Research on the Web
The growing use of technology has given rise to new marketing research approaches
that allow consumers to be heard more often and permit firms to work much more
effectively at their customer-listening skills. The evolution of marketing research on
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networking sites, market researchers can post pop-up and banner ads on these sites
directing particular target audiences to online surveys.
The recent company acquisitions and geographical expansion within the social
H. The International Information System
An information system already in place is needed to provide the decision maker with
basic data for most ongoing decisions. Corporations have responded by developing
marketing decision support systems. Defined as “an integrated system of data, statistical
analysis, modeling, and display formats using computer hardware and software
More international information systems are being developed successfully due to progress
in computer technology in both hardware and software. To build an information system,
corporations use the internal data that are available from divisions such as accounting and
finance and also from their subsidiaries. In addition, many organizations put mechanisms
• Scenario building
1. Environmental Scanning
Corporations should understand the necessity for tracking new developments and
obtaining continuous updates. To carry out this task, some large multinational
organizations have formed environmental scanning groups.
Environmental scanning activities are useful to continuously receive information on:
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2. Delphi Studies:
To enrich the information obtained from factual data, corporations resort to the use
of creative and highly qualitative data-gathering methods. Delphi studies are one
such method. This type of research approach clearly aims at qualitative rather than
quantitative measures by aggregating the information of a group of experts. It seeks
3. Scenario Building
Some companies use scenario analysis to look at different configurations of key
variables in the international market.
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Of major importance in scenario building is the identification of crucial trend
variables and the degree of their variation. Frequently, key experts are used to gain
information about potential variations and the viability of certain scenarios.
Key Terms
Foreign-market opportunity analysis: Basic information needed to identify and compare key
alternatives when a firm plans to launch international activities.
Proxy variable: A substitute for a variable that cannot be measured directly.
Research specifications: Specific details on focus, thrust, and design provided by the home
office to the local country for carrying out research activities.
may mean that questions that can be asked directly in some cultures will have to be asked
indirectly in others.
Social desirability: Degree of sensitivity to certain questions.
Data equivalence: One of the qualities of question format which ensures that the categories used
in questionnaires are comparatively structured.
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1. Discuss the possible shortcomings of secondary data.
The quality of the data source, the purpose and method of the original data collection, and
2. Explore the trade-offs between centralized and decentralized international marketing
research.
The centralized and decentralized approaches are the two extremes of international research
administration.
In the centralized approach, the home office has most control over its research. This in turn
3. What implications does language have for international market research?
International market research is greatly affected by language. The researcher must be
familiar with the local language (which, in some countries may be two or more languages,
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4. Compare and contrast the various research techniques explained in this chapter.
• Interviews:
Interviews with knowledgeable persons can be of great value to a corporation desiring
other nonovert factors.
• Observation:
Observation techniques require the researcher to play the role of a nonparticipating
observer of activity and behavior. Observation can be personal or impersonal.
Observation can be obtrusive or unobtrusive, depending on whether the subject is aware
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5. What effects has information technology had on international marketing research?
Advances in information technology have allowed larger amounts of information to be
stored in more compact formats. This has allowed businesses to streamline the international
Internet Exercises
1. Who are the European Union’s main trade partners? Which of these countries are members of
the Organization for Economic Cooperation and Development? (Check both www.wto.org
6. Against what industries and countries did the United States file antidumping actions last year?
Appendix A Outline
INFORMATION SOURCES FOR MARKETING ISSUES
A. European Union
B. United Nations
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C. U.S. Government
D. Selected Organizations
H. Selected Trade Databases
1. Trade Publication References with Bibliographic Keywords
2. Trade Publication References with Summaries
Appendix B Outline
THE STRUCTURE OF A COUNTRY COMMERCIAL GUIDE