Global Marketing Management

Prof. Zillur Rahman

Module - 3
Lecture - 13
Global Marketing Research - Part II

Welcome to this course on Global Marketing Management. And we are talking about
development of competitive strategy. And, to develop any kind of competitive strategy, there
is a need to gather information. And because of that, we have started talking about Global
Marketing Research.
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This Global Marketing Research is spread over 2 modules. That is module number 12 and 13.
We have talked about module number 12. Today we will talk about module number 13. And
these are the things that will be covered there.
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The first is market size assessment. So, as you will appreciate the fact that, a company would
not like to enter a country where the market size is not sufficiently enough sufficiently big.
Therefore, it is the, it is of prime importance that the, that a company should understand what
is the market size in a particular country before it decides to enter that country. Next thing
that we will to talk about today is the new market information technologies, the information
technologies that can be used to gather information about the market.

And then, managing global marketing research. Now, the problem is that, the countries that
are at various level with various levels of per capita income, they may have very different
kind of production and consumption. Therefore, when a company needs to decide whether to
enter a particular country or not,
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One of the key drivers is the market potential. So, if it is big enough, if the market is big
enough, then any company would like to enter that country. And if it is not so, then they will
not like to enter that country. And this big, how big is this, will be determined by the
company’s objectives. So, for 1 company, 10,000 crore market may be big enough. For
another company, 1,000 crore rupees market may be big enough.

So, in most developed countries, there are fairly accurate estimates of market potential that
are available. But the problem is that, they are they come at a cost and the cost can be
prohibitive. Therefore, before investing a substantial amount of money, 1 company needs to
consider less cost less costly ways to gather that information. But in many industries and
countries this information may not simply be available.

So, in that case what is to be done. In that case, there is a need to come up with a market size
assessment. Now, what are the various ways for estimating the market size. When there is
lack of the all that kind of information. When all that information may not be available or all
the information may be costly. So, there are various methods in that case. The first method is
the method of analogy. Then another method is the trade audit. The third is the chain ratio
method. And the fourth one is cross sessional sectional regressional regression analysis.
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The fourth one is cross-section regression analysis. Let us look at each of these methods one
by one. So, in the first technique, it starts by picking a country that is at the same size or same
stage of economic development as the country of interest.
(Refer Slide Time: 03:56)
And for which the market size is known. So, there are 2 countries, A and B which are at the
same stage of economic development. But for A, the size is known. And the B, for B it is
unknown. So, in this, this method is based on the premises that the relationship between the
demand for a product and a particular indicator, for instance the demand for a related product
is similar in both the countries.

Look at this example. So, the DVD player demand in Ukraine upon color TV use in Ukraine.
Because this DVD player and TVs, they are related product. So, let us look at how the, how
much color TV demand is there in Ukraine and what is the demand for DVD players in
Ukraine. Which is be equal to the ratio will carry on with Poland also. So, what is the color
TV usage in Poland; and then you can find out what is the DVD players demand in Poland.
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Another method is that of longitudinal method of analogy. The critical part in finding is
finding a comparable country as a good surrogate measure. So, that is of importance. In some
cases, the analogy exist between different time periods. So, here it was analogy between 2
countries which are, which wear at the same stage of economic development. Here the
analogy is between different time periods.

This variant is sometimes referred to as longitudinal method of analogy. Look at this

And this is how they go about using this formula. In Japan, the current number of restaurants
in 2004 for McDonald's were 3,744. In 1996, the number of restaurants were 2,004. So, the
market potential is 4,284. And similarly, they have calculated the market potential for various
countries.
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Use of either approach may be misleading whenever; so, that the care has to be taken
regarding the usage of this method whenever: consumption patterns are not compatible across
countries due to strong cultural disparities. Then there are certain other factors like
competition, trade barriers that cause actual sales to differ from potential sales. And
technological advances allow use of product use innovation in a country at an earlier stage of
economic development.
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Another method to access market size is the trade audit. That is a plain simple method. So, it
assumes a straightforward logic. Take the local production figures of a particular product, add
imports and subtract exports. So, the market size in country A is will be equal to local
production plus import minus exports. Strictly speaking, why should always make
adjustments for inventory level.
While the procedure is commonsensical, the hard part is finding the input data. So, what is
the local production, how much is are the imports and how much are the imports exports. So,
this data may no may be difficult to obtain. And for many emerging markets and even in
some developed countries, such data are missing or they may be inaccurate or outdated or
collected at a very aggregate level in categories that are often far to brought for the
company's purpose. So, then we can use yet another method that is called as a chain ratio
method. It starts with a very rough base number as an estimate for the market size.
(Refer Slide Time: 08:34)

For example, the entire population of a country. This base estimate is systematically fine-
tuned by applying a string or chain of percentages to come up with the most meaningful
estimate for the total market potential. For example, let us look at market potential market
size in country A, for Nicorette gun gum, a nicotine substitute. So, let us assume that the total
population is 127 million people.

Adult population, that is, those who are supposed to be smoking and it may vary from 15 to
64 years of age is 85.66 million. That is, 0.675 into 127 million people. That is, 67 percent of
the population maybe smoking. And the adult smokers is 26.5 million. That is 0.31 into 85.6.
85 and 31 percent is the smoking rate in that country. So, that will give you a fairly fair
enough estimate of the market size for this kind of product.
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The fourth method is the cross-sectional regressional regression analysis. With regression
analysis, the variable of interest, that is the market size is related to a set of predictor
variables. So, now we have to look for what are the variables that will affect market size. To
apply regression, one should first choose a set of indicators that are closely related to demand
for that product of interest.

Then one should collect data for that variable and market size figures for a set of countries
the cross-section where the product has already been introduced. Given this data, one can fit a
regression that will allow to predict the market size in countries in the consideration pool.
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But when applying regression to produce a market size estimating, one should be careful in
interpreting the results. For example, caution should be taken whenever the range of one of
the predictor for the country of interest is outside the range of the countries used to calibrate
the regression.
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So, when using market size estimate, keep the following rules in mind. The first is, use
several different method. 1 method can may not be sufficient enough, so you have to use
several different methods. And do not be misled by numbers. They can, numbers can be
misleading. Ans do not be misled by fancy methods of collecting the data. Do a sensitivity
analysis by asking what-if questions and look for interval estimate with a lower and upper
limit rather than the point estimates. So, the demand may vary from alpha 1 to alpha 2. So, it
is not only alpha 1.
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Now, let us look at the various types of information technologies available for collecting of
data. So, 1 is the point of sale, which are installed in store scanner data. Consumer panel data,
single-source data, shift from mass to micro marketing, continuous monitoring for brand
sales and market share moments, scanning data are used by manufacturers to support
marketing decisions and scanning data are used to provide merchandising support to retailers.
So, all this data can be used for variety of purposes. And these are some of the major
developments or innovations that can help marketers in making decisions.
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Now, what is point of sale store scanner data. There are various companies, 1 company is
named as AC Nielson. And the information research institute, they obtain sales movement
data from the checkout scanner tapes of retail outlets. This data is then processed to provide
instant information on weekly sales moment and market shares of individual brands sizes and
product variants.

The advantage of using this data over traditional ways of data gathering is obvious, that is, it
is far better quality data. The data collected on weekly basis instead of fortnightly basis and
further they are gathered by a very detailed UPC level, that is Universal Product Code and
not just at the brand level.
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Another data that is collected is consumer panel data. Some market research companies have
consumer panels that record their purchases. So, these panels, they keep on recording
whatever they purchase on a daily, weekly or by fortnightly or monthly basis. So, there are 2
approaches to collect household data. The first approach is panel members present an ID card
when checking out at the cash counter. This information is entered each time the household
shops. Approach 2 is, on returning from each shopping trip, the panel members scans items
bought.
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The third is single-source data. Single-source data are continuous data that combine for any
given household member, TV viewing behavior with purchase transactions. So, these 2
different kind of variables, they are then combined. So, TV viewing behavior is tracked at the
panel member’s home via a instrument that is called as Peoplemeter. Each time the family
member watches a program, he or she has to push a button to identify him or herself.

There are some more advanced systems that involves camera that records which member of
the household are watching television. Single-source data allow companies to measure
among other things, the effectiveness of the advertising policy.
(Refer Slide Time: 14:44)

Then, another development is, 1 development or important development is the shift from
mass marketing to micro marketing. We will talk about mass marketing and micro marketing
also. So, new information technologies, they enable firms to tailor their pricing, product line,
advertising and promotional strategies to particular neighborhood or even an individual. So,
all this information that we have collected from the point of sale data, from consumer panel
data and from single source data.

Now, this data is used to customize the marketing strategies to a particular neighborhood or
even to a particular individual. So, database marketing gives companies an opportunities to
enter into direct contact with the consumers. For example, in Malaysia, Nestle built up a
database with information on consumption patterns, lifestyle, religion, race and feeling about
a specific brand. By building up its database knowledge, Nestle hopes to do a better job in
target marketing and adopted adopting its product to local markets.
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Then, all this information can be used for continuous monitoring of brand sales or market
share movements. Sales measurement based on scanner data are more accurate and timely.
Accurate tracking information on new brand shares and incumbent brand shares is crucial for
manufacturers and the retailers alike.
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Scanning data are also used by manufacturers to support marketing decisions. So, initially,
most scanning database simply used as tracking devices, but this has changed now. Scanning
data are increasingly used for tactical decision support. The databases are used to assist all
sorts of decision in inventory management, consumer trade promotion, pricing, shelf space
allocation and media advertising. And it is also increasingly used for category management.
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Then, scanning data can also be used to provide merchandising support to retailers. Many
manufacturers also employ information distilled from scanning data to help out retailers with
merchandising programs, that is the in-store displays. Such support helps to build up a long-
term relationship with retailers. And scanning data help manufacturers to show the hard facts
to their distributors.
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The various advantages of this new market information technologies are that they provide
richer information to help global marketers to improve marketing decisions that have cross-
border ramifications. They can also be used to monitor competitor activity. And this new
information technology will ultimately allow marketers to enter into one-to-one relationships
with their individual customers.
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But the challenge of using this new information technology are, that despite the promises of
scanner data bases, their full potential is not yet exploited in many countries. Many users still
simply view scanner data as an instrument to track market shares. And there are 2 factors that
are behind this state of affairs. The first is the conservatism of the user of the data and attitude
of local retailers towards data access.

In countries like United Kingdoms, retailers are reluctant to release their data, because they
fear that, by doing so they may they might inform their competitors. But rivals are not just
other retailers, but in many cases, the manufacturers who compete with retailer’s store
brands.
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When there have been certain advances that are happening in computer technology, so state-
of-art marketing research tools are also being developed to track the effectiveness of new
marketing mix media vehicles such as the internet. For instance, the web audit is a package
designed by AC Nielsen, Australia that allows subscribers to evaluate the performance of
their website. Subscribers to the service receive information on user profiles by region, most
requested pages, most downloaded files and so on.
(Refer Slide Time: 19:08)

So, advances in computer technology have also spurred new data collection techniques such
as, computer assisted telephone interview and computer assisted personal interviews.
Benefits derived from such tools include speed, accuracy and the ability to steer data
collection methods on the response. And the international marketing research, other material
advantages of these techniques is that, they can be used to centrally administer and organize
data collection from the international samples.
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The last topic in this module is the management of global marketing research. So, the global
marketing research projects have to cater to the needs of various interest groups. So, there are
the global headquarters, the regional headquarters and the local subsidiaries. So, this global
marketing research projects should provide information to all these constituents. 2 highly
important issues in managing global marketing research are:

Who should conduct the research project and how the coordination of global marketing
research projects will happen. And for that, there is a need to have a criteria for selecting a
research agency, the research agency that will conduct this marketing research across
different countries.
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And the following considerations should be taken into account for choosing the agency. The
first criteria for choosing agency that will conduct global marketing research is their level of
expertise, their qualifications, their track record, their credibility and experience and the
client record. In coordination of multi country research, there is a dilemma that comes in.
That is called as emic versus etic dilemma.
(Refer Slide Time: 21:03)

Now, what is that dilemma. That is the conflict between demands of global or regional
headquarters and local subsidiaries. So, the problem is that the global or regional
headquarters, they require different information, while local subsidiaries they may be
requiring different information. So, the headquarters favor standardized data collection so
that it becomes easier for them to compare the data.

They also want standardized sampling procedures and standardized survey instruments.
While local subsidiaries, they prefer country customized research design that recognize the
peculiarities of that local environment.
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So, in this, the emic school, it focuses on peculiarities in each countries. So, they want that
the differences across countries should come out. How a particular country is different from
the other countries. While the etic approach emphasizes universal behavioral and attitudinal
traits. So, this etic approach, they want to know what are, how the behavior and attitude are
universal across the countries.

And you see that, both these schools, they are important. Because, you cannot standardize
everything and there you cannot customize everything. So, look at what are the differences
that will force us to customize and what are the similarities that will force us to standardize.
So, cultural market research favors the etic paradigm, emphasizing cross-borders similarities
and parallels.

So, here we are looking at peculiarities, the differences. The etic where we are looking at the
similarities. So, several approaches may be used to balance these conflicting demands. So, it
is not the issue of either-or, we may have to do both of them.
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To conclude, the firms must first seek information to help out to understand the countries and
regional environment as well as the consumers and the product. So, we need information, the
companies need information to understand the country and the regional environment, 1. And
second, they also need information on consumers and products. So, all this information is
supposed to be coming from global marketing research.

Either it can be primary or let us, we will talk, either it can be secondary or primary. It must
asses the global competitors that it faces, that it may face in order to compute complete better
with them. So, it is important that they should know the competitors instead of just ignoring
the competitors. Lack of knowledge of world market is the first barrier to overcome in
marketing globally.

So, that is why more and more information is required, so that the companies can overcome
the first barrier to the global marketing. And marketing decisions cannot be made
intelligently without adequate marketing research. But, first look at the secondary data that is
already available. Because that is cheaper and based on those estimates, then the company
may decide which countries to enter and which countries it may not want to enter.

After they decide which countries to enter, then they may go in for more precise estimate by
conducting primary marketing research. So, and these are the books from where the material
for this module is taken. Thank you.
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