INTERNATIONAL MARKETING RESEARCH PROCESS:Problems with data, Comparative Analysis

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International Marketing MKT630

Lesson # 21

INTERNATIONAL MARKETING RESEARCH PROCESS

Analysis, Interpretation and Report Presentation

Analysis, interpretation & report presentation:

Marketers / researchers should ensure that the following aspects are addressed in the research analysis

report;

data source must be identified

data projection must be explained

identify those interviewed

highlight alternative courses of action

for translation of questionnaires and the international marketing research analysis report the

following should be observed;

· equivalence of language

· method of translation (different cultural & linguistic backgrounds lead to different ways of

perceiving the world)

· measurement & instrumentation

Problems in international marketing research:

Problems of numerous markets:

definition error caused by the way problem is defined

instrument error which arises from questionnaire and the interviewer

frame error - occurs when sampling frames are available from different sources in different

countries

selection error which results from the way actual sample is selected from the frames

non-response error - which results when different cultural patterns of non-response are obtained

Problems with data:

secondary data - comparing several markets

primary data

· language

· social organization

· obtaining responses

· infrastructure constraints

· convergence / divergence of consumer behavior across cultures

Research techniques for analyzing international data:

· Demand Pattern Analysis

Industrial growth patterns provide an insight into market demand. Because they generally reveal

consumption patterns, production patterns and are helpful in assessing market opportunities.

International Marketing MKT630

Additionally, 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 such 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. Countries at different levels of per capita income, thus, have

diverse patterns of consumption & production. Such data can be gathered on macro levels for

most countries. This simple technique, known as multiple-factor index approach, allows insights

into consumption-production profiles of many countries. Though relatively crude, it gives a clue

both to a country's present position and the direction it is going. This in turn helps the firm

identify possibilities for export or local production in that market.

· Multiple-Factor Indexes

A multiple-factor index measures market potential indirectly, using as proxies a number of

variables that intuition or statistical analysis reveal to be closely correlated with the potential for

the product in question. A model for forecasting the demand for television sets in international

markets could be a function of the market size for TV and consumer's capacity to by TV. Market

size can be indicated by the proxy variables of number of households, percent of literacy, percent

of urbanization etc. Capacity to buy can be indicated by per capita income, index of standard of

living, price per unit, and price per unit relative to per capita income etc.

· Income Elasticity Measurements

Income elasticity describes the relationship between demand for a good and changes in income.

Studies have shown that basic necessities such as food and clothing are characterized by inelastic

demand. Stated differently, expenditures on products in these categories increase but at a slower

percentage rate than do increase in income. Demand for durable consumer goods such a furniture

and appliances tends to be income elastic, increasing relatively faster than increase in incomes.

· Market Estimation by Analogy

For countries with limited data, estimating market potential can be a precarious exercise. Given

the absence of hard data, one technique - estimation by analogy - can be useful in getting better

feel for market potential in such countries. This estimation is done in two ways:

The cross-section comparison approach involves taking the known market size of a product

in one country and relating it to some economic indication, such as disposable personal

income, to derive a ratio. This ratio (of product consumption to disposable personal income in

above illustration) is then applied to another country where disposable personal income is

known in order to derive the market potential for the product in that country.

The time-series approach estimates the demand in the second country by assuming that it

has the same level of consumption that the first country had at the same level of development

(or per capita income) at a different point in time.

Comparative Analysis

One of the unique opportunities in global marketing analysis is to conduct comparisons of market

potential and market performance in different country markets at the same point in time.

Gap analysis analyzes the difference "gap" between estimated total market potential and a

company's sales. The gap can be divided into four categories: Usage gap, Competitive gap,

Product-line gap, Distribution gap

International Marketing MKT630

Cluster Analysis

The objective of cluster analysis is to group variables into clusters that maximize within-group

similarities and between-group differences. Cluster analysis using macroeconomic and

consumption data is a favored technique for identifying similar markets. The goal here is to

ensure that the countries with the greatest potential make it to the short list for further

investigation.

Countries can also be clustered based on product diffusion patterns - the rate at which new

products are adopted in a market. If such segments can be derived, managers could use

information from the lead market, about variables such as growth in market size, when sales

reach a peak, to make inferences on the same variables for lagging markets.

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