|
||||||||||||
|
|
Chapter 6: |
|
||||||||||
|
|
|||||||||||
|
|
|||||||||||
 |
The phrase
information technology (IT) refers to an
organization’s processes for creating, storing, exchanging, using, and
managing information.
A management information system (MIS) provides managers and other decision makers with a continuous flow of information about company operations. MIS is a general term that can be used in reference to a system of hardware and software that a company uses to manage information.
An MIS should provide a means for gathering, analyzing, classifying, storing, retrieving, and reporting relevant data. The MIS should also cover important aspects of a company's external environment, including customers and competitors.
One component of a firm’s MIS is a business intelligence (BI) network that helps manages make decisions. Global competition intensifies the need for an effective MIS and BI that is accessible throughout the company.
Unlike the public Internet, an intranet is a private
network that allows authorized company personnel or outsiders to share
information electronically in a secure fashion. Intranets allow a company’s
information system to serve as a 24-hour nerve center, enabling Amazon.com,
Dell, and other companies to operate as real time enterprises (RTEs).
The RTE model is expected to grow in popularity as wireless Internet access
becomes more widely available.
Retailers are using efficient consumer response (ECR) to
work more closely with vendors on stock replenishment. ECR can be defined as
a joint initiative by members of a supply chain to work towards improving
and optimizing aspects of the supply chain to benefit customers. ECR
systems utilize electronic point of sale (EPOS) data gathered by
checkout scanners. EPOS, ECR, and other IT tools are also helping businesses
improve their ability to target consumers and increase loyalty. The trend
among retailers is to develop customer-focused strategies that will
personalize and differentiate the business.
A new business model that helps companies collect, store, and analyze customer data. is customer relationship management (CRM). CRM is a philosophy that values two-way communication between company and customer. A company’s use of CRM can manifest itself in various ways. Some are visible to consumers, others are not: some make extensive use of leading-edge information technology, others do not. One challenge is to integrate data into a complete picture of the customer and his or her relationship to the company and its products or services. This is sometimes referred to as a “360-degree view of the customer”. The challenge is compounded for global marketers. Subsidiaries in different parts of the world may use different customer data formats, and commercial CRM products may not support all the target languages.
Sales force automation (SFA) is defined as
a software system that automates routine aspects of sales and marketing functions such as lead assignment and contact follow-up and opportunity reporting. An SFA system can also analyze the cost of sales and the effectiveness of marketing campaigns.Privacy issues vary widely from country to country. In the European Union, a Directive on Data Collection has been in effect since 1998.
There are restrictions about sharing information across national borders. In 2000, the U.S. Department of Commerce and the EU concluded a Safe Harbor agreement that establishes principles for privacy protection for companies that wish to transfer data to the U.S. from Europe.
The principles include:
• The purposes for which information is collected and used and the means by which individuals can direct inquiries to the company
• An “opt out” option to prevent the disclosure of personal information to third parties
• An agreement that information can only be transferred to third parties which are in compliance with Safe Harbor Principles
• Individuals must have access to information collected about them and must be able to correct or delete inaccurate information.
Databases called data warehouses are frequently an integral part of a CRM system. Behind the familiar interfaces, however, is specialized software capable of performing multidimensional analysis by using sophisticated techniques such as linear programming and regression analysis.
EDI, ECR, EPOS, SFA, CRM, and other aspects of It do not simply represent marketing issues; they are organizational imperatives. The tasks of designing, organizing, and implementing systems for business intelligence and information must be coordinated in a coherent manner that contributes to the overall strategic direction of the organization.
Overall, the, the global organization has the following
needs:
Headquarters executives of global companies obtain as much as two-thirds of
the information they need from personal sources. A great deal
of external information comes from executives based abroad in company
subsidiaries, affiliates, and branches. These executives have established
communication with distributors, consumers, customers, suppliers, and
government officials. Key weakness of a domestic company: Although more
attractive opportunities may be present outside existing areas of operation,
they are likely to go unnoticed by inside sources in a domestic company
because the scanning horizon tends to end at the home-country border. A
company with limited geographical operations may be at risk because internal
sources abroad tend to scan only information about their own countries or
regions.
Direct sensory perception provides a vital background for the information that comes from human and documentary sources. Direct perception gets all the senses involved. gets all the senses involved. It means seeing, felling, hearing, smelling, or tasting for oneself to find out what is going on in a particular country.
Some information may be available from other sources but requires sensory experience to sink in.
For example, Wal-Mart’s first stores in China stocked a number of products— extension ladders and giant bottles of soy sauce, for example—that were inappropriate for local customers. Joe Hatfield, Wal-Mart’s top executive for Asia, began roaming the streets of Shenzhen in search of ideas. His observations paid off; when Wal-Mart’s giant store in Dalian opened in April 2000, a million shoppers passed through its doors in the first week. They snapped up products ranging from lunch boxes to pizza topped with corn and pineapple.
Direct perception can also be important when a global player dominates a company’s domestic market, case in point Microsoft’s Xbox video game system, when Microsoft took the system “on the road” in the US.
Market research is the project-specific, systematic gathering of data.
Marketing Research is defined as “the activity that links the consumer, customer, and public to the marketer through information.”
Global market research is the marketing research activity carried out on a global scale.
The challenge of global marketing research is to recognize and respond to the important national differences that influence the way information can be obtained. These challenges include: cultural, linguistic, economic, political, religious, historical, and market differences.
Michael Czinkota and Illka Ronkainen have identified four specific environmental factors that require international research to be conducted differently than domestic research.
There are two ways to conduct marketing research. One is to design and implement a study with in-house staff; the other is to use an outside market research firm. (Figure6-1).
Discussion Question #3: Outline the basic steps of the market research
process.
The process of collecting data and converting it into useful information includes basic 8 steps:
Formal research is often undertaken after a problem or opportunity has been identified. A truism of market research that a problem well defined is a problem half solved.
· What are the first two questions a marketer should ask?
The first two questions a marketer should ask are:
Step 2: Problem Definition
Marketers must be aware of the impact that SRC and other cross-cultural assumptions can have.
Such awareness can have positive effects:
· It can enhance management’s willingness to conduct market research in the first place.
· An awareness of SRC can help ensure that the research effort is designed with minimal home-country or second-country bias.
· It can enhance management’s receptiveness to accepting research findings.
Step 3: Choose Unit of Analysis
The next step involves the need to identify what part(s) of the world the company should be doing business and finding out as much as possible about the business environment in the area(s) identified.
The unit of analysis may be a single country; it may be a region such as Europe or South America, or it may be global (see Table 6-2).
· Are countrywide data required for all market entry decisions?
Countrywide data are not required for all market entry decisions. Rather, a specific city, state, or province may be the relevant unit of analysis.
The first task at this stage is to answer several questions regarding the availability of data. What type of data should be gathered? Can secondary data – for example data available in company files, a library, industry or trade journals, or online be used??
Using data that are readily available saves both money and time.
A low-cost approach to market research and data collection begins with desk research. Secondary sources are a good place to start. Personal files, company or public libraries, online databases, government census records, and trade associations are just a few of the data sources that can be tapped with minimal effort.
· Give some examples of secondary data sources.
The U.S. government’s most comprehensive source of world trade data is the National Trade Data Base (NTDB), an online resource from the Department of Commerce. Another commerce department Web site, STAT-USA/Internet (www.stat-usa-gov.) is another excellent online source.
The Statistical Abstract of the United States is one of the annual publications issued by the U.S. government that contains myriad facts about international markets.
Most countries compile estimates of gross national product (GNP), gross domestic product (GDP), consumption, investment, government expenditures, and price levels. Demographic data indicating the population size, distribution of population by age category, and rates of population growth are also available.
Many countries have set up Web sites to help small firms find opportunities in world markets.
The Statistical Yearbook of the United Nations, contains global data on agriculture, mining, manufacturing, construction, energy production and consumption, internal and external trade, railroad and air transport, wages and prices, health, housing, education, communication infrastructure, and availability of mass communication media.
The CIA publishes World Factbook, which is revised yearly.
The Economist and Financial Times compile comprehensive surveys of regional and country markets.
· How can such data be useful?
Trends in manufacturing production indicate potential markets for companies that supply manufacturing inputs. At the early stages of growth in a country, when per capita incomes are low, manufacturing centers on necessities as food and beverages, textiles, and other forms of light industry. As incomes rise, the relative importance of these industries declines as heavy industry begins to develop.
A word of caution is in order at this point: Remember that data are compiled from various sources, some of which may not be reliable. Even when the sources are reliable, there is likely to be some variability from source to source.
Syndicated studies published by private research companies are another source of secondary data and information. MarketResearch.com (www. marketresearch.com) sells reports on a wide range of global business sectors.
Step 5: Assess Value of Research
Research requires investment of both money and managerial time, and it is necessary to perform a cost-benefit analysis before proceeding further.
The small markets around the world pose a special problem for the researcher. The relatively low profit potential in smaller markets justifies only modest expenditures for marketing research.
Therefore, the global researcher must devise techniques and methods that keep expenditures in line with the market’s profit potential.
It may also be necessary to use inexpensive survey research that sacrifices some elegance or statistical rigor to achieve results within the constraints of the smaller market research budget.
Step 6: Research Design
Primary data are gathered through original research pertaining to a specific problem when data are not available through published statistics or studies.
Global marketing guru David Arnold offers the following guidelines regarding data gathering:
• Use multiple indicators rather than a single measure.
• Individual companies should develop customized indicators specific to the industry, product market, or business model.
• Always conduct comparative assessments in multiple markets.
• Observation of purchasing patterns and other behavior should be weighted more heavily than reports or opinion regarding purchase intention or price sensitivity.
Next, the decision must be made to use quantitative techniques (numerical data that can be subjected to statistical analysis) or qualitative techniques (non-numerical data).
In global market research, it is advisable for the plan to call for a mix of techniques is typically most advisable.
For consumer products, qualitative research is especially well suited to accomplish the following tasks:
• To provide consumer understanding
• To describe the social and cultural context of consumer behavior, including cultural, religious, and political factors that impact decision making
• Identify core brand equity and “get under the skin” of brands
• To “mine” the consumer and identify what people really feel
Issues in Data Collection
The research problem may be more narrowly focused on marketing issues. Existing markets are those in which customer needs are already being served by one or more companies.
In many countries, data about the size of existing markets-in terms of dollar volume and unit sales – are readily available. In some countries, however, formal market research is relatively new phenomenon and data are scarce.
In such situations, market researchers have two initial objectives:
1. To estimate the market size, the level of demand, or the rate of product purchase or consumption.
2. To assess the company’s overall competitiveness in terms of product appeal, price, distribution, and promotional coverage and effectiveness.
In such situations, and in countries, where such data are not available, researchers must first estimate the market size, the level of demand, or the rate of product purchase or consumption.
Potential markets are those where no market currently exists and can be subdivided into
into latent and incipient markets.
A latent market is in essence, an undiscovered segment. It is a market in which demand would materialize if an appropriate product were made available.
In latent markets, initial success is not based on a company’s competitiveness. Success depends on the prime mover advantage – a company’s ability to uncover the opportunity and launch a marketing program that taps the latent demand.
An incipient market is a market that will emerge if a particular economic, demographic, political, or sociocultural trend continues.
A company is not likely to succeed if it offers a product in an incipient market before the trends have taken root. After the trends have had a chance to unfold, the incipient market will become latent and, later, existing.
Research Methodologies
Survey research, interviews, consumer panels, observation, and focus groups are some of the tools used to collect primary market data.
· Describe Survey Research.
Survey research utilizes questionnaires designed to elicit quantitative data (“How much would you buy?”), qualitative responses ("Why would you buy?"), or both.
Survey research obtains data using a questionnaire distributed by mail, telephone, or in person; a good questionnaire is simple, easy to answer and record, and obtains desired information.
In global marketing research, several survey and design issues arise (e.g., telephone directory lists may not be available). It is important to remember that what is customary in one country may be impossible in others because of infrastructure differences, cultural barriers or other reasons.
At a deeper level, culture shapes attitudes and values in a way that directly affects people’s willingness to respond to interviewer questions.
SRC bias can originate from the cultural background of those designing the questionnaire
.
· What is the difference between Back Translation and Parallel Translation?
A technique known as back translation can help increase comprehension and validity.
Back translation requires that, after a questionnaire is translated into a particular target language, it is translated once again into the original by a different translator.
For even greater accuracy, parallel translations – two versions by different translators – can be used as input to the back translation.
Personal interviews allow researchers to ask “why?” and then explore answers with the respondent on a face-to-face basis.
A consumer panel is a sample of respondents whose behavior is tracked over time.
· What is Observation Research?
When observation is used as a data collection method, one or more trained observers (or a mechanical device such as a video camera) watch and record the behavior of actual or prospective buyers.
Companies using observation as a research methodology must be sensitive to public concerns about privacy issues. A second problem with observation is reactivity, which is the tendency of research subjects to behave differently when they know they are under study.
In focus group research, a trained moderator facilitates discussion of a product concept, a brand’s image and personality, advertisement, social trend, or other topic with a group comprised of 6 to 10 people.
The moderator can utilize a number approaches to elicit reactions and responses, including projective techniques, visualization, and role plays.
In the projective technique, the researcher presents open ended or ambiguous stimuli to a subject. Presumably, when verbalizing a response, the subject will “project”—that is, reveal—his or her unconscious attitudes and biases.
Focus group research yields qualitative data that does not lend itself to statistical projection. Such data is extremely valuable in the exploratory phase of a project and is typically used in conjunction with data gathered via observation and other methods.
Scale Development
Market research requires assigning some type of measure, ranking, or interval to a response. To take a simple example of measurement, a nominal scale is used to establish the identity of a survey element. For example, male respondents could be labeled “1” and female respondents could be labeled “2.”
A Likert scale entail placing each response in some kind of continuum, such as “strongly agree” to “strongly disagree.”
In a multi-country research project, it is important to have a scalar equivalence, which means two respondents in different countries with the same value for a given variable receive equivalent scores on the same survey item.
When collecting data, researchers generally cannot administer a survey to every possible person in the designated group. A sample is a selected subset of a population that is representative of the entire population.
The results of a nonprobability sample cannot be projected with statistical reliability.
One form of nonprobability sample is a convenience sample – researchers select people who are easy to reach. Although data gathered in this way are not subject to statistical inference, they may be adequate to address the problem.
To obtain a quota sample, the researcher divides the population under study into categories; a sample is taken from each category. The term quota refers to the need to make sure that enough people are chosen in each category to reflect the overall makeup of the population.
Step 7: Analyzing Data
The data collected up to this point must be subjected to some form of analysis if it to be useful to decision makers. First, the data must be prepared – the term cleaned is sometimes used – before further analysis is possible. Questionnaires must be coded, and some data adjustment may be required.
Data analysis continues with tabulation, that is, the arrangement of data in tabular form. For nominally scaled variables such as “male” and “female,” a simple cross tabulation may be performed.
If the researcher is interested in the interaction between variables, interdependence techniques such as factor analysis, cluster analysis, and multidimensional scaling (MDS) can be used.
Factor analysis is used to transform large amounts of data into manageable units (see Figure 6-2). Factor analysis is useful in psychographic segmentation studies.
Cluster analysis allows the researcher to group variables into clusters that maximize within-group similarities and between-group differences.
Cluster analysis shares some characteristics of factor analysis: it does not classify variables as dependent or independent, and it can be used in psychographic segmentation.
Cluster analysis is well suited to global marketing research because similarities and difference can be established between local, national, and regional markets of the world.
Multidimensional scaling (MDS) is a technique for creating perceptual maps. MDS is particularly useful when there are many alternatives from which to choose.
Dependence techniques assess the interdependence of two or more dependent variables with one or more independent variables.
Conjoint analysis is a tool that researchers can use to gain insights into the combination of attributes that will be most attractive to consumers; it is assumed that features affect both perception and preferences.
Comparative Analysis and Market Estimation by Analogy
A common form of comparative analysis is the intracompany cross-national comparison.
For example, general market conditions in two or more countries (as measured by income, stage of industrialization, or some other indicator) may be similar. If there is a significant discrepancy between per capita sales of a given product in the countries, the marketer might reasonably wonder about it and determine what actions need to be taken.
Drawing an analogy is simply stating a partial resemblance.
David Arnold notes that there are four possible approaches to forecasting by analogy:
Time-series displacement is an analogy technique based on the assumption that an analogy between markets exists in different time periods.
The report based on the market research must be useful to managers as input to the decision-making process. It is advisable for major findings to be summarized concisely in a memo that indicates the answer or answers to the problem first proposed in Step 1.
HEADQUATERS CONTROL OF MARKETING RESEARCH
In the multinational company, responsibility for research is delegated to the operating subsidiary.
The global company delegates responsibility for research to operating subsidiaries but retains overall responsibility and control of research as a headquarters’ function.
A key difference between single country market research and global market research is the importance of comparability.
Simply put, comparability, means that the results can be used to make valid comparisons between the countries covered by the research. To achieve this, the company must inject a level of control and review of marketing research at the global level.
The research director must pay particular attention to whether data gathered is based on emic analysis or etic analysis.
· Define Emic and Etic.
Emic analysis attempts to study a culture from within, using its own system of meanings and values. Etic analysis is “from the outside”; it is a more detached perspective that is often used in comparative or multicountry studies.
The advent of the transnational enterprise means that boundaries between the firm and the outside world are dissolving.
The boundary between marketing and other functions is also dissolving, and the traditional notion of marketing as a distinct functional area within the firm may be giving way to a new model.
Many global firms are creating flattened organizations with less hierarchical, less centralized decision-making structures. Such organizations facilitate the exchange and flow of information between departments that previously have operated as autonomous “silos”.
Information intensity in the firm has an impact on perceptions of market attractiveness, competitive position, and organizational structure.
The greater a company’s information intensity, the more the traditional product and market boundaries shift. An example is the emergence of the “superindustry,” combining telecommunications, computers, financial services, and retailing into an information industry.
Today, when marketers speak of “value added”, the chances are they are not referring to unique product features. Rather, the emphasis is on the information exchanges as part of customer transactions, much of which cuts across traditional product lines.
|
|
Explain how information technology puts powerful tools in the hands of global marketers.
Click here for hint.
Assume that you have been asked by the president of your organization to devise a systematic approach to scanning. The president does not want to be surprised by major market or competitive developments. What would you recommend?
Click here for hint.
Outline the basic steps of the market research process.
|
1. information requirement, 2. problem definition, 3. choosing unit of analysis, 4. examining data availability, 5. assessing the value of research, 6. research design, 7. data analysis, and 8. presenting the research findings. |
What is the difference between existing, latent, and incipient demand? How might these differences affect the design of a marketing research project?
Click here for hint.
Describe some of the analytical techniques used by global marketers. When is it appropriate to use each technique?
Click here for hint.
Coach has been described as “a textbook lesson on how to revitalize a brand” (see Case 6-1). The same could be said for Burberry, the British fashion goods company discussed in Chapter 1. Locate some articles about Burberry and read about the research its management has conducted and the formula it used to polish the brand. Are the approached evident at the Burberry and Coach similar? Are they competitors?
Click here for hint.
|
|
|
1. |
True |
False |
The global economic crisis vividly illustrates the dynamic, integrated nature of today's economic environment. |
|
2. |
True |
False |
During the past two decades the volume of capital movements has decreased. |
|
3. |
True |
False |
Cars with European nameplates such as Peugeot, Volvo, Renault, and Citroen were originally designed as local cars mostly destined for local or regional markets. |
|
4. |
True |
False |
Global capital movements far exceed the dollar volume of global trade in goods and services. |
|
5. |
True |
False |
The personal computer revolution and the advent of the Internet era have increased the importance of national boundaries. |
|
6. |
True |
False |
Gross domestic product (GDP), a measure of a nation's economic activity, is calculated by adding consumer spending (C), investment spending (I), government purchases (G), and net exports (NX). |
|
7. |
True |
False |
Due to globalization it is easier to categorize economic systems within the confines of a four-cell matrix, i.e., market capitalism, centrally planned socialism, centrally planned capitalism, and market socialism. |
|
8. |
True |
False |
In Sweden, where the government controls two-thirds of all expenditures, resource allocation is more "market" oriented than "command" oriented. |
|
9. |
True |
False |
Russia is so dependent on revenues from the fuel and energy sectors that some feared the major decline in world oil prices that began in 2008 would have a destabilizing effect. |
|
10. |
True |
False |
Market reforms and nascent capitalism in many parts of the world are creating opportunities for large-scale investments by global companies. |
