GLOBAL MARKETING RESEARCH V Kumar 1 Dr V

GLOBAL MARKETING RESEARCH V. Kumar 1 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

CHAPTER 4 Preliminary Stages of the Research Process 2 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Chapter Outline q Is entering foreign market viable option? q Which markets to enter? q When and how to enter the market? 3 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Challenges in planning GMR q q q Understanding Similarities across countries Lack of accurate secondary information High costs of conducting research Coordinating Research across countries Establishing comparability and equivalence in marketing research instruments 4 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Information Requirements for International Marketing Decisions - Against a background of diversity and change in the strategy and structure of international business, information needs are extremely varied. Three broad areas can be identified in which research inputs can be valuable: q Market Orientation q Strategic Orientation q Problem Orientation 5 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Market Orientation 6 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Globalization Process Success of a firm in international markets depends on the attitude of management and desired course of action. When entering a new market, a mixture of factors results in firms taking steps in a particular direction: Proactive Motivations Represent stimuli to achieve strategic change such as profit advantage, tax benefits, economies of scale 7 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research Come in the form of competitive pressures, overproduction in domestic market, saturation, proximity to customers

Globalization Process In an attempt to expand to foreign markets, companies must undergo a process which consists of multiple steps: • • Market Selection Mode of Entry Forecasting Diffusion of Innovation 8 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Market Selection In order to gain an understanding of a foreign market, data is collected describing the following: • • • Market size and trends Market structure/segmentation Name of companies in market List of products and prices Distribution channels Media availability and rates 9 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Mode of Entry The mode of entry is chosen by the firm and will determine how they choose to operate in a foreign market. 10 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Mode of Entry (contd) • • Modes of Entry into foreign markets can be classified into four major categories: Exporting Licensing Joint Ventures Wholly-owned Subsidiaries 11 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Mode of Entry (contd) The choice of mode of entry can be determined by: • Company’s objective in foreign markets • Preparedness towards taking risks • Amount of capital investment at disposal • Level of control desired 12 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Forecasting A company’s ability to forecast future trends/conditions gives them a great competitive advantage: Qualitative Approaches • Fast, cost efficient and flexible • Ex: Jury of Executive, Sales force Estimate Quantitative Approaches • Robust, time consuming, may require data collection • Ex: Time-Series Extrapolation, Causal Models 13 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Diffusion of Innovation • The diffusion of products/services varies for each country • Advancements in technology allow for faster diffusion process in countries that adopt it at later period • Models have assisted in making sales predictions/ determining which markets to enter 14 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Strategic Orientation 15 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Strategic Orientation There are three critical components which must be considered when entering a new market: • Expansion Strategy • Standardization vs. Adaptation • EPRG Framework 16 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Expansion Strategy The strategies adopted by firms to enter foreign markets falls under two major categories: Sprinkler Strategy Waterfall Strategy Firm will decide on which market it plans to enter and simultaneously enter all of these markets. EX: Microsoft launching Windows 7 in 2009 in 100 countries. 17 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research Firms follow a roll-out policy, where the most profitable market is entered first. EX: Introducing a product in the US, and then Germany.

Standardization vs. Adaptation Deciding on the level of standardization or adaptation of a product is crucial when entering a new market. Each approach has its set of advantages: Standardization • Significant Cost Savings • Price over Culture • One world, One market Adaptation • Law of the Land • Usage Patterns • Infrastructure Issues 18 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Standardization vs. Adaptation (contd) The extent of standardization or adaptation depends on the existing conditions of the foreign markets. The different factors that play a role are: Market Characteristics Industry Conditions Marketing Institutions Legal Restrictions • Physical environment of a climate • Maturity of the market • Practices in distribution systems, availability of outlets • Must follow standards issued by local government 19 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

EPRG Framework Through these four types of orientations directed towards internationalization, through which companies can make informed decisions in their approach towards foreign market expansion: Ethnocentric Orientation • Focus rests on domestic sales and foreign sales are just an extension. Polycentric Orientation • Company understands idiosyncrasies that belong to domestic and foreign markets Regiocentric & Geocentric Orientation • Company views the whole world as one market and seeks to create an integrated marketing approach. 20 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Problem Orientation 21 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Problem Orientation focuses on the research studies that aid companies in making particular decisions. 22 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Problem Definition – Self-Reference Criterion (SRC) The condition where researchers unconsciously refer to their own culture, knowledge, values, lifestyle, and experience in understanding a phenomenon. 23 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Problem Definition – Self-Reference Criterion (contd) Given that SRC impedes the ability of the researcher to define the problem, a method was created to eliminate the problem: Steps to Eliminate SRC • Define problem in terms of home-country cultural traits, habits and norms • Define problem in terms of foreign-country cultural traits, habits and norms • Isolate SRC influence in problem and examine to see how it affects it • Redefine problem without SRC influence and solve foreign market situation 24 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Unit of Analysis 25 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research

Unit of Analysis The Unit of Analysis refers to the basic unit which a particular study will focus on when conducting research. A clear understanding of what the unit of analysis is, can make collecting data a far easier process. Examples of Units: • Study of alcohol consumption in various European Countries ( Unit: Countries) • Hair product use amongst women in Japan and Africa ( Unit: women) 26 © Dr V. Kumar (www. drvkumar. com/gmr) Global Marketing Research