Global Marketing Management Global Market Research, & Emerging Markets

1. Global Marketing ManagementGlobal Market Research, & Emerging Markets MKTG 3215-090 Spring 2013 Mrs. Tamara L. Cohen Class #6

2. Global Market Research

3. KEY TERMS • Marketing research= systematic gathering, recording, & analyzing of data to provide info useful to marketing decision-making • International marketing research = systematic gathering, recording and analyzing data+ communication across cultural boundaries + research operations often different in foreign markets • Multicultural research= inquiry, analysis & study of countries & cultures that takes into account differences in language, economic structure, behavior, & attitude patterns. • Back translation:translation of document then back again • Parallel translation:using 2 translators to make a Back translation • Decentering:successive process of translation & retranslation

4. KEY CONCEPTS The basic objective of market research function is providing management with information for more accurate decision making. • problem definition • secondary data • sources of secondary data • language • quantitative & qualitative research methods • multicultural sampling • analyzing & using research info.

5. Research Process Steps • Define research PROBLEM & establish research OBJECTIVES. • Determine SOURCES of info to fulfill research objectives. • Consider COSTS & BENEFITS of research effort. • Gather relevant DATA from secondary or primary sources, or both. • ANALYZE, interpret, summarize results. • COMMUNICATE results to decision makers. Research steps are similar for all countries.Variations & problems can occur in implementation. Differences in cultural & economic development. No short cuts!

6. What’s the PROBLEM ???? “A problem well-defined is a problem half solved.”

7. Types of research info needed • General infoabout country, area, and/or market • Info to forecastfuture marketing requirements • by anticipating social, economic, consumer, & industry trends within specific markets / countries • Specific market infoused to make and develop marketing plans • product • promotion • place (i.e. distribution) • price decisions

8. The International Marketing Task

9. Marketing Research Techniques

10. Secondary Data Problems: Availability & Reliability • Most countries do not have government agencies that regularly collect kinds of secondary data readily available in U.S. • Researchers’ language skills may hinder access to information • requires native speaker of language • Official statistics sometimes too optimistic, reflecting national pride rather than practical reality. Tax structures & fear of tax collector can adversely affect data. • less-developed countries prone to optimism • willful errors • “adjusted reporting”

11. Secondary Data Problem: Comparability • Data can be many years out of date • Data collected on an infrequent & unpredictable schedule 3. Data reported in different categories or in categories too broad to be useful 4. Terminology

12. Gathering Primary Data –QUANTITATIVE Research • Primary data = data collected specifically for particular research project • Quantitative research • usually large number of respondents • respondents answer structured oral or written questions using specific response format (e.g. yes/no) or select response from set of choices • responses summarized in %, averages, or other statistics

13. Gathering Primary Data –QUALITATIVE Research • Questions if asked are almost always open-ended or in-depth • looking for unstructured responses that reflect person’s thoughts & feelings on subject • Interprets people in sample • Reveals impact of socio-cultural factors on behavior patterns and in developing research hypotheses

14. Ability to COMMUNICATE opinions Formulating opinions about product or concept Difficult to design research for complex concepts Gerber has more experience in trying to understand consumers with limitations: Babies can neither answer questions nor fill out questionnaires. Unwillingness to respond can be due to cultural conditioning (e.g. gender, unfamiliarity, modesty issues) Field sampling limitations(lack of demographic data, & lack of detailed social & economic info) Primary Data Problems

15. Ability to COMMUNICATE opinions Formulating opinions about product or concept Difficult to design research for complex concepts Gerber has more experience in trying to understand consumers with limitations: Babies can neither answer questions nor fill out questionnaires. Unwillingness to respond can be due to cultural conditioning (e.g. gender, unfamiliarity, modesty issues) Field sampling limitations(lack of demographic data, & lack of detailed social & economic info) Primary Data Problems

16. Gerber’s own limitations . . . . When Gerber started selling baby food in Africa, they used the same packaging as in the US, with the smiling baby on the label. Later they learned that in many African countries, companies routinely put pictures on the labels of what's inside, since many people can't read.

17. Ability to COMMUNICATE opinions Formulating opinions about product or concept Difficult to design research for complex concepts Gerber has more experience in trying to understand consumers with limitations: Babies can neither answer questions nor fill out questionnaires. Unwillingness to respond can be due to cultural conditioning (e.g. gender, unfamiliarity, modesty issues) Field sampling limitations(lack of demographic data, & lack of detailed social & economic info) Primary Data Problems

18. Japan - test market for the world • 100 million cell phone users represent most diverse and discriminating pool of mobile subscribers in world (Google) • Some savvy foreign companies use Japan as testing ground for new concepts: “Japan has established a presence as a pilot market.”

19. Biggest Challenge in Int’l Research Language & Comprehension Most universal survey research problem in foreign countries is language barrier. • Literacy is another problem (no written questionnaires) • 3 techniques to find translation errors ahead of time: • Back translation • Parallel translation • Decentering + USE NATIVES

20. Beware of assumptions when gathering data

21. Assumptions can be Dangerous • SETUP: An elderly Italian farmer is sleeping on the side of the road on a pile of hay. He is awakened by a man on a motorcycle who asks him what time it is. The farmer has a donkey next to him and by simply feeling the donkey's testicles, he tells the man on the motorcycle the time. • This gentleman on his return trip spots the farmer again and, thinking the old man was just lucky, asks him the time again. To the motorcyclist's surprise, the old man is exactly correct again about the time. • Now watch the video ...

22. Scandinavian vacuum cleaner manufacturer Electrolux tested its slogan for an ad campaign in the USA: “Nothing sucks like an Electrolux” LanguageFollies BEFORE TRIANGULATION: Coors translated its slogan, "Turn It Loose," into Spanish, where it was read as "Suffer From Diarrhea”

23. Research on the Internet

24. Research on the Internet Uses for Internet in (international) research: • online surveys & buyer panels • online focus groups • web visitor tracking • advertising measurement • customer ID systems • e-mail marketing lists • embedded research • observational research

25. Estimating Market Demand When desired usage statistics aren’t available, GESTIMATE 2 methods of forecasting demand: • Expert opinion - key is triangulation • Analogy - assumes demand for product develops similarly in all countries as comparable economic development occurs in each country BEWARE of the Self Reference Criterion

26. Cultural understanding of market in which research is being conducted. Creative talent for adapting research methods. Skeptical attitude in handling both primary & secondary data. Researcher talents to generate meaningful international marketing info

27. Keys to Success Using Global Market Research Include natives on research teams in each country. Use multiple methods & triangulation. (Triangulation compares estimates from different sources.) Decision makers (top execs/managers) should be directly involved not only in problem definition & question formulation, but also in fieldwork. Communication can be challenging.Even when both managers & customers speak same language & are from same culture, communication can become garbled in either direction.

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29. Emerging Markets

30. Course Pack Reading #4 for this class: EITHER read summary of The World is Flat OR watch Thomas Friedman’s speech Homework #6: Summarize key concepts in The World is Flat Emerging Markets

31. The World is Flat Thomas Friedman • Suggests world is flat as metaphor for level playing field • Globalization has leveled playing fields between industrial and emerging market countries

32. KEY TERMS Economic Development= increase in national production that results in increase in average per capita GDP Emerging Markets = economies in the process of rapid industrialization • between less developed and more developed • term coined in 1980s Bottom-of-the-Pyramid Markets (BoPMs) - clusters of markets defined by pockets of poverty, usually in LDCs & LLDCs; relatively ignored by marketers due to misconceptions about resources & appropriate products

33. KEY CONCEPTS U.N. stages of economic development based on industrialization: • MDCs (more-developed countries) • e.g. Canada, England, France, Germany, USA • LDCs (less-developed countries) industrialized countries just entering world trade; most in Asia & Latin America • LLDCs (least-developed countries) industrially underdeveloped, agrarian, subsistence societies with rural populations; little world trade • Static economy(consumption is rigid) • Dynamic economy(ever-changing market needs & wants)

34. Who are these Emerging Markets? developed emerging

35. Who cares about Emerging Markets? • car companies • food & beverage manufacturers • cell phone companies • advertising companies • EVERYONE Strong economic growth disposable income

36. Emerging Markets BUZZZZ • 28 - 150 emerging markets worldwide • 4 Tigers = Hong Kong, Singapore, South Korea, Taiwan • 4 Lions = Egypt, Morocco, Tunisia, South Africa BRIC = Brazil, Russia, India, China CIVETS = Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa

37. The latest Emerging Markets BUZZZZ MIST countries: • México • Indonesia • South Korea • Turkey

38. Marketing & Economic Development • Stage of economic growthaffects • attitudes toward foreign business activity • demand for goods • distribution systems within country • entire marketing process • Economic development • GDP • implies widespread distribution of increased income

39. Standards of Living for Selected Countries * at PPP A M E R I C A E U R O P E A F R I C A A S I A

40. Political stability in policies affecting development Economic & legal reforms Entrepreneurship Planning Outward orientation Factors of production Strategic industries targeted for growth Incentives to save & update infrastructure Privatization of state-owned enterprises Recipe for Economic Growth of Emerging Markets Chile Brazil Mexico S.Korea Singapore Taiwan

41. BEMs =Big Emerging Markets • have > ½ world’s population • have ½ industrial world’s GDP (2010) • all geographically large • significant populations • represent sizeable markets for wide range of products • strong growth rates or potential growth rates • significant economic reforms • major regional political importance • “regional economic drivers” • stimulate expansion in neighboring markets • import > economies of similar size (differ from other developing countries) e.g. India, China, Brazil, Mexico, South Africa, Poland, Turkey Up-and-coming BEMs = Egypt, Colombia, Venezuela

42. Latin America • Most countries moved from military dictatorships to democratically elected governments. • Trend toward privatization of state-owned enterprises followed period when governments dominated economic life for most of 20th century. • Today many Latin American countries are at roughly same stage of liberalization that launched dynamic growth in Asia during 1980s and 1990s. • In a positive response to these reforms, investors have invested billions of dollars.

43. Eastern Europe Baltic States

44. Eastern Europe and the Baltic States Countries that rapidly instituted broadest free-market policies + implemented most radical reforms prospered most • Eastern Europe • privatizing state-owned enterprises • establishing free market pricing systems • relaxing import controls • wrestling with inflation • The Baltic States = Estonia, Latvia, & Lithuania • all started off with roughly same legacy of inefficient industry and Soviet-style command economics • all are WTO members & EU members (since 2004)

45. Asia • Asian-Pacific Rim fastest-growing area in world for past 30 years • Four Tigers (Hong Kong, Singapore, South Korea, Taiwan) • 1st countries in Asia (besides Japan) to move from status of developing countries to Newly Industrialized Countries (NICs) • China • after USA, most important single market is China • 2 major events in 2000 had profound effect on China’s economy • admission to WTO • U.S. granting China normal trade relations on a permanent basis

46. 1997: Hong Kong reverted to China - became a special administrative region (SAR) of People’s Republic of China Hong Kong government negotiates bilateral agreements and makes major economic decisions on its own Asia - Hong Kong

47. Asia - Hong Kong Keys to Hong Kong’s economic success: “one country, two systems” • free market philosophy • entrepreneurial drive • no trade barriers • well-established rule of law • low and predictable taxes • transparent regulations • complete freedom of capital movement

48. Asia - Taiwan • Mainland-Taiwan economic ties approached crossroads as both countries entered WTO • “Three direct links” must be faced because WTO rules insist members communicate over trade disputes and other issues

49. “Three Direct Links” Between 1949 and 1979 there was military conflict across the Taiwan Straits, between mainland China and island of Taiwan. People-to-people contacts and direct links in mail, transport & tradewere suspended completely. In 1979 China initiated an effort to link mail, transport and trade (the “Three Direct Links”) across the Straits. In 1987 Taiwan began allowing people-to-people contact (visits). Economic and cultural contacts have since developed.

50. Asia - India 5-point agenda to promote trade: • Improve investment climate • Develop a comprehensive WTO strategy • Reform agriculture, food processing & small scale industry • Eliminate red-tape • Institute better corporate government $1,800