Chapter 6 Global Information Systems and Market Research

Introduction Understand the importance of information technology and marketing information systems Utilize a framework for information scanning and opportunity identification Understand the formal market research process Know how to manage the marketing information collection system and market research effort Given the variety of languages spoken around the world, along with the cultural differences it could be difficult to conduct global market research. It is the marketer’s good fortune that a veritable cornucopia of market information is available on the Internet. A few keystrokes can yield literally hundreds of articles, research findings, and Web sites that offer a wealth of information about particular country markets. Even so, marketers need to study several important topics to make the most of modern information technology.

Globalisation of brands Re-branding with global brand names Jif - Cif, Marathon - Snickers, etc Unilever reducing portfolio from 1600 to 400 brands e.g., Citibank/corp > Globalisation also = > int’l MR to overcome problems

MASSIVE COST SO WHY BOTHER? > international travel World media channels Regional / global HQ’s Economies of scale packaging, PR, image, signs, etc. International consistency & global reach

Information Technology for Global Marketing Information Technology refers to an organization’s processes for creating, storing, exchanging, using, and managing information. Management Information Systems provide managers and other decision makers with a continuous flow of information about company operations 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. Global competition intensifies the need for an effective MIS that is accessible throughout the company.

Tools of MIS Intranet Electronic Data Interchange (EDI) Efficient Consumer Response (ECR) Electronic Point of Sale (EPOS) Data Warehouses

Customer Relationship Management New business model Philosophy that values two-way communication between company and customer Every point of contact with a consumer is an opportunity to collect data Can make employees more productive and enhance corporate profitability CRM tools allow companies such as Credit Suisse, AT&T, and Hewlett-Packard to determine which customers are most valuable and to react in a timely manner with customized product and service offerings that closely match customer needs. If implemented correctly, CRM can make employees more productive and enhance corporate profitability; it also benefits customers by providing value-added products and services. 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.

Customer Relationship Management The major thing is, ‘One size fits all’ is not true. CRM is designed to support the sales process, and if I develop a system that works in the U.S., it might not work in Europe.” - Jim Dickie, Insight Technology Group 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. In view of such issues, industry experts recommend implementing global CRM programs in phases.

Privacy Safe Harbor Agreement establishes principles for privacy protection for companies that transfer data to the US from Europe Purposes of the information collected and used An ‘opt out’ option to prevent disclosure of personal information Can only transfer information to 3rd parties that are in compliance with Safe Harbor Individuals must have access to information Privacy issues vary from country to country. In the European Union, for example, a Directive on Data Collection has been in effect since 1998. Companies that use CRM to collect data about individual consumers must satisfy the regulations in each of the EU’s 25 member countries.

Information Subject Agenda The starting point for global marketing information system is identifying a list of subjects for which information is desired Should be tailored to the needs and objectives of the company Two essential criteria Is all the information subject areas relevant to a company with global operations Categories should be mutually exclusive

Information Subject Agenda

Scanning Modes: Surveillance and Search Informal information gathering VIEWING – general exposure to information MONITORING – paying special attention and tracking a story as it develops Search Formal information gathering INVESTIGATION – seeking out secondary data RESEARCH – conducting primary research After the subject agenda has been determined, the next step is the actual collection of information. This is accomplished by using either the surveillance or search mode.

Avoiding Information Overload Global organizations need Efficient, effective system to scan and digest published sources of information in all countries in which it conducts business Daily scanning, translating, digesting, abstracting, and electronic input of information into MIS Of all the changes in recent years that have affected the availability of information, perhaps none is more apparent than the explosion of documentary and electronic information. An overabundance of information has created a major problem for anyone attempting to stay abreast of key developments in multiple national markets. too few companies employ a formal system for coordinating scanning activities. This situation results in considerable duplication of effort. The best way to identify unnecessary duplication is to carry out an audit of reading activity by asking each person involved to list the publications he or she reads regularly. A consolidation of the lists will reveal the surveillance coverage. Often, the scope of the group will be limited to a handful of publications to the exclusion of other worthwhile ones

Sources of Market Information Human sources Executives based abroad are likely to have established communication with distributors, consumers, customers, suppliers, and government officials Friends acquaintances, professional colleagues, consultants, and prospective employees

Sources of Market Information Direct perception provides a vital background for the information that comes from human and documentary sources Gets all the senses involved Some information requires sensory experience to interpret it correctly Can be important when the domestic market is dominated by a global player

Formal Market Research Global Marketing Research is the project-specific, systematic gathering of data in the search scanning mode on a global basis Challenge is to recognize and respond to national differences that influence the way information is obtained Information is a critical ingredient in formulating and implementing a successful marketing strategy. As described earlier, a marketing information system should produce a continuous flow of information. Market research, by contrast, is the project-specific, systematic gathering of data in the search scanning mode. The American Marketing Association defines marketing research as “the activity that links the consumer, customer, and public to the marketer through information.”

Steps in the Research Process Identifying the research problem Developing a research plan Collecting data Analyzing data Presenting the research findings

Response rates vary by region

International research characteristics (developed markets) Added costs can be offset by cheaper sourcing: e.g., Continental Europe use UK International data collection MR companies Many countries have well known established research companies… OTHERS do not!

Int’l research considerations (emerging mkts) IN ADDITION TO THE USUAL PITFALLS Research norms may vary Local researchers: availability / quality Secondary data source reliability Totally different infrastructure, e.g., Communications, transport, equipment, etc., Employment: staffing costs / availability of field staff Socio-cultural differences, living standards, literacy, tribalism Political instability Exchange rate fluctuations Security Legislation issues / corruption Sounds wonderful but in addition to normal barriers… other probs too The pitfalls and potential sources for error in MR??? PARTICULARLY FOR EMERGING MARKETS.. MY EXPERIENCES Different research legislation Visas / All foreign staff work permits! All equipment has to be registered / proof of related to job….. 100% duty Research permit Contract with local agency Totally different cost structures, e.g., TKK/Corruption e.g., Authorities… research permits>>> $$ & time Infrastructure, phone/mail/internet service, etc., Secondary / census data sources G’ment massage figures To show improvement… e.g., to get next IMF funding To show diff’t pop’n in diff’t regions for vote rigging v. difficult to make estimates of pop’n Socio-cultural values, standards of living,etc. Language diversity / Women> gender of interviewer, can’t go to FGD venue Literacy>>> can’t test bill boards / Also standard of living…. Tz phone service Exchange rate fluctuations If the rate of the currency you are paid in goes down then margin goes down and all expenditure goes up! ZIM when g’ment sanctions farm invasions> currency bombed + no one interested in giving there views on bank service

Standardised / multi country research Direct comparisons between countries feasible Economies of scale senior management time research development, data processing, etc. Uniform quality control standards data collection, processing/analysis, confidentiality, etc, World monitor……. Surveys 50 countries every 90 days / 4 x per year Because global brand> developed and controlled centrally then need standardised approach to monitor what’s going on

Managing multi-country studies Using own staff only Using local agency only (Preferably international name) Using own staff + local agency Many countries have well known established research companies… OTHERS do not!

Identifying the Information Requirement What information do I need? Existing Markets – customer needs already being served by one or more companies; information may be readily available Potential Markets Latent market – an undiscovered market; demand would be there if product was there Incipient market – market will emerge as macro environmental trends continue Why do I need this information?

¨The successful marketer must be a student of culture¨ Cateora & Graham, 2001

Overcoming the SRC Self-Reference Criterion occurs when a person’s values and beliefs intrude on the assessment of a foreign culture Must be aware of SRC’s Enhances management’s willingness to conduct market research Ensures that research design has minimal home-country bias Increases management’s receptiveness to findings No right or wrong, just different

Are Latin Americans really Americans too? U.S. perception Latin American perception Turkish perception

Organization of free time Perception of Time Organization of work U.S. Latin America Organization of free time

How to avoid SCR: Define the business problem according to culture, habits,norms in home market. Define the business problem according to culture, habits,norms in foreign market. Isolate the SCR influence in the problem and examine it carefully to see how it complicates the problem. Refine the problem without the SCR influence and solve for the optimum business goal situation.

Ten Good Reasons to use export marketing research and take control of your export markets 1) Put yourself in the "driving seat" 2) Develop an efficient market entry strategy 3) Control overseas representatives 4) Increase your profits 5) Familiarize yourself with the market 6) Save time and money 7) Gain favor with potential customers 8) A comprehensive report 9) Expert help at hand 10) Double your budget Put yourself in the "driving seat" With a thorough understanding of the marketplace you will be in a better position to persuade others, both in your company and in the market place, that you know the best way to tackle the market. 2) Develop an efficient market entry strategy The right product in the right place, at the right time. Your increased understanding allows you to manage your time and resources effectively. Avoid costly mistakes. Choose the most appropriate route for each overseas market. 3) Control overseas representatives Armed with the facts, you will be in a strong negotiating position to state your expectations for the local market. 4) Increase your profits Better knowledge leads to a more efficient approach. Higher margins through effective and informed negotiation. Safe investment. 5) Familiarise yourself with the market We encourage you to visit the country and experience the culture without the pressure of having to achieve sales: this gives you time to develop a deeper understanding of how the market works and how to do business there. 6) Save time and money Marketing research helps you to focus your limited time and money upon the most effective overseas markets and sectors within them. 7) Gain favour with potential customers People liked to be asked their opinion. Your efforts to find out about their market will be appreciated. You won't be embarrassed in front of your customers on future visits. 8) A comprehensive report The report helps secure the resources needed to enter the market. Report writing organises your data, consolidates your thoughts and focuses your planning. The knowledge stays with your company and can be revisited as the market develops. 9) Expert help at hand Free advice is available. Contact our Advisers for a quick chat or an in-depth discussion to help you design the best possible research project. Our helpful team will guide you every step of the way. 10) Double your budget We can provide grants to cover up to 50 per cent of your costs.

Developing A Research Plan Do we need quantitative or qualitative data? What is the information worth (versus what will it cost to collect)? What will it cost if we don’t get the information? What can be gained from the information?

Collecting Data Secondary Data Statistical Abstract of the United States Statistical Yearbook of the United Nations World Factbook The Economist The Financial Times Syndicated studies And much more

Availability and Use of Secondary Data Availability of Data 8-4 Reliability of Data Comparability of Data Validating Secondary Data

Collecting Data (cont.) Primary Data Collection Methods Survey research Interviews Consumer panels Observation Focus groups

Special Considerations for Surveys Benefits: Data collection from a large sample Both quantitative and qualitative data possible Can be self-administered Issues Subjects may respond with social desirability Translation may be difficult Use back and parallel translations to ensure accuracy and validity

Sampling A sample is a selected subset of a population that is representative of the entire population. Probability samples Non-probability samples

Analyzing Data Demand Pattern Analysis Income Elasticity Measurements Market Estimation by Analogy Time-series displacement Comparative Analysis Cluster Analysis

Presenting the Findings Report must clearly address problem identified in Step 1 Include a memo or executive summary of the key findings along with main report

Global Issues in Marketing Research Many country markets must be included Markets with low profit potential justifies limited research expenditures Data in developing countries may be inflated or deflated Comparability of international statistics varies greatly Limits created by cultural differences

Enhancing Comparability of Data Emic analysis Ethnographic in nature Studies culture from within Uses cultures’ own meanings and values Etic analysis From the outside Detached perspective that is used in multi-country studies Enhances comparability but minimizes precision

Looking Ahead Chapter 7 Segmentation, Targeting, and Positioning

Intranet A Private network Allows authorized company personnel (or outsiders) to share information electronically 24-Hour Nerve Center Return

Electronic Data Interchange Allows business units to: Submit orders Issue invoices Conduct business electronically Transaction formats are universal Return

Efficient Consumer Response (ECR) This is in addition to EDI An effort for retailers and vendors to work closely on sock replenishment ECR can be defined as a joint initiative by members of a supply chain to work toward improving and optimizing aspects of the supply chain to benefit customers. Return

Electronic Point of Sale Gathers data at checkout scanners Identifies product sales trends Identifies how consumer preferences vary geographically Return

Data Warehouses Can help fine-tune product assortments for multiple locations Enhances the ability of management to respond to changing business conditions Return