Course Outline 6-1

Marketing Activities of a Firm 6-2

Chapter 5 Global Management Information Systems and Marketing Research (Lecturer: Minli Wan)

6-4 Chapter Learning Objectives Understanding the importance of information technology (IT) and a marketing information system (MIS). Understanding the steps of the marketing research process and issues that should be considered in conducting global marketing research.

6-5 Contents IT and MIS: Introduction to IT and MIS Components of MIS Tools of MIS Importance of IT and MIS Develop a global vision through marketing research: Concept of marketing research The marketing research process Issues that should be considered in global marketing research

6-6 Introduction to IT and MIS Information is a critical ingredient in developing a successful marketing strategy and tactics. IT refers to an organization’s processes for creating, storing, exchanging, using and managing information. An MIS provides a means for gathering, sorting, analyzing, evaluating and reporting the relevant data. It produces a continuous flow of information about company internal operations and external environment for marketing decision makers.

6-7 Components of MIS

6-8 Components of MIS (Cont’d) Internal reporting system ( 内部记录系统 ): Provides internal company records such as sales reports and financial statements. Marketing intelligence system ( 营销情报系统 ): Provides everyday information about the marketing environment such as competitors and development in the marketplace. Marketing research system ( 营销调研系统 ): Allows marketers to collect data in a purposeful way to address a well-defined research problem by conducting formal studies of specific situation; Links marketers to customers and the public through information gathered.

6-9 Tools of MIS Electronic Data Interchange (EDI/ 电子数据交换 ) Efficient Consumer Response (ECR/ 电子卖点 ) Electronic point of sale (EPOS/ 有效的用户反应 ) Customer relationship management (CRM) Data warehouses The establishment and implementation of a company’s MIS is based on its Intranet

6-10 Intranet A Private network that allows authorized company personnel (or outsiders) to share information electronically. Allows a company’s information system to serve as a 24-Hour nerve center. Enables companies like Amazon.com and Dell to operate as real time enterprises.

6-11 Electronic Data Interchange (EDI) Allows a company’s business units to: Submit orders ( 提交订单 ); Issue invoices ( 开具发票 ); Conduct business electronically with other company units and outside companies. Transaction formats are universal. Allows computers at different companies to speak the same language.

6-12 Efficient Customer Response (ECR) In addition to EDI, retailers are increasing using ECR in an effort to work more closely with vendors on stock 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. Supply chain: A system of individuals, organizations, activities, information and resources involved in the creation and sale of a product, from delivering raw materials from the supplier to the manufacturer, and then delivering products from the manufacturer and to the end customer.

6-13 Electronic Point of Sale (EPOS) ECR system utilize EPOS data gathered by checkout scanners to help retailers: Identify product sales trends; Detect how consumer preferences vary geographically.

6-14 CRM A new business model that: is designed to support the sales process; helps companies collect, store and analyze customer data. It is a philosophy that values two-way communication between company and customer. Every point of contact with a customer is an opportunity to collect data. If implemented correctly, CRM can make employees more productive and enhance corporate profitability, simultaneously benefit customers by providing value-added products and services.

6-15 Data Warehouses An integral part of a company’s CRM system. Help retailers fine-tune product assortments with multiple locations; Enhance the ability of manages to respond to changing business conditions by adjusting marketing mix elements.

6-16 Importance of IT and MIS Today, IT is profoundly affecting global marketing activities by allowing managers to access and manipulate data to assist in decision making. Global competition intensifies global companies’ need for an effective MIS to scan the world for information about marketing opportunities and problems.

6-17 Developing a Global Vision through the Marketing Research Without research, a company enters a market like a blind man. ----Philip Kotler (“Father of Marketing”)

6-18 Marketing Research Marketing research is the process of systematic gathering, recording, analyzing and reporting of data to provide useful information in marketing decision making. Research processes and methods are the same whether applied in China or the USA. Global marketing research involves two additional complications: Information must be communicated across cultural boundaries; The environments where research tools are applied are often different in foreign markets.

6-19 The Marketing Research Process The marketing research process for all countries should follow the following five steps:

Defining the Research Problem and Establishing Research Objectives The research process should begin with a definition of the research problem and the establishment of specific research objectives. Problems are barriers that prevent the attainment of organization goals, so a clearly defined problem allows researchers to focus the research process on securing the necessary data for solving problems. Research problems stem from gaps between what is supposed to happen and what did happen and gaps between what did happen and what could happen.

Defining the Research Problem and Establishing Research Objectives Examples: What should be our overall marketing strategy for the new product line? What message should we use in our promotion in foreign markets? “Strategic transformation in the value-added wood products companies: Case study evidence from China”: Research problem: Despite China’s growing importance in the global wood products market, the sources of competitiveness and the strategies in the Chinese wood products companies have not been studied in the international context. Research objective: To fill these gaps by analyzing the strategies in the Chinese companies and identifying the linkages between companies’ internal resources and capabilities and the sources of competitiveness.

6-22 Overcoming the SRC The SRC occurs when a person’s values and beliefs intrude on the assessment of a foreign culture. E.g., When Mattel first introduced Barbie in Japan, managers assumed that Japanese girls would find the doll’s design just as appealing as the American girls did. This may due to the SRC tendency on the part of American managers. Marketers must be aware of the SRC because it can: Enhance management’s willingness to conduct market research; Ensure that research design has minimal home-country bias; Increase management’s receptiveness to research findings.

Developing the Research Plan The second step of the marketing research process is to design an efficient and affordable research plan. This step calls for decisions on: 2.1 Data source 2.2 Research approaches 2.3 Research instruments 2.4 Sampling plan 2.5 Unit of analysis 2.6 Contact methods 2.7 Value of the research

Data Source Primary data: The data collected specifically for a particular purpose or research project; Obtained from primary research. Secondary data: The data that were collected for other purposes and already exist somewhere. Obtained from secondary research. Sources: Internal sources: Company reports, previous company research, salesperson feedback, customer feedback. External sources: Government publication, periodical and books, commercial data, online data.

6-25 Examining Data Availability Can the information be acquired from the existing data? If so, secondary information will be utilized (however, data on foreign markets may be difficult to find); If not, primary research will be necessary.

6-26 Reliability of Secondary Data Sources in Foreign Markets

Research Approaches – Primary Data Collection Methods Often, the market researcher must collect primary data. Market research methods can be grouped into two basic types: Quantitative research Qualitative research

6-28 Quantitative Research Used to quantify the problem via the way of generating numerical data. In quantitative research, usually a large number of respondents are asked to answer structured questions by using a specific response format (such as “yes/no”) or selecting a response from a set of choices. Provides marketers with responses that can be presented with precise estimations. Generalizes results from a large sample population. Survey research is associated with quantitative research.

6-29 Survey A good way of gathering a large amount of data. Often conducted by means of a closed-end questionnaire distributed through mail, , telephone or face-to-face. Used to learn about people’s knowledge, behavior, beliefs, attitudes, opinions, preferences and satisfaction and to measure these magnitudes in the general population. Best suited for descriptive research.

6-30 Qualitative Research Questions are always open-ended, and respondents are supposed to provide unstructured/semi- structured responses that reflect the person’s thoughts, feeling and understanding of a given subject, rather than quantifying relevant aspects. The sample size is typically small. Can be classified in three broad categories: Observation; Personal interviews; Focus groups (group discussions).

6-31 Observation Gathering data by observing the relevant actors and settings: When using observation as a data collection method, one or more trained observers watch and record, e.g., a marketer may” Walk around the supermarket to observe the behavior of buyers there or Observe the people in queue and raise the question: “Will the amount of people in a line affect some people’s waiting patience?”

6-32 Personal Interviews A great way to learn detailed information from an individual: Allow researcher to ask “why?” and then explore answers with the respondent on a face-to-face basis. Can be conducted face-to-face or by phone. Can range from in-depth, semi-structured to unstructured, depending on the information sought. The most versatile, expensive and require more administrative planning and supervision.

6-33 Focus Groups A gathering of 6 to 10 people who are invited to spend a few hours with a trained moderator in discussing a predetermined set of topics. Useful to further explore some topics and gain deeper insights, providing a broader understanding of why the target group may behave or think in a particular way, and assist in determining the reason of attitudes and beliefs. Conducted with a small sample of the target group -> Avoid generalizing the reported perceptions of the focus-group participants to the whole market.

Focus Group Research in Progress 6-34

Research Instruments Questionnaire: The most common instrument to collect primary data: Closed-end questionnaire: Easy to interpret and tabulate; Open-end questionnaire: Provide more and further information. Note: Questionnaire must be worded objectively, clearly and without bias in order to communicate with respondents. Mechanical devices: video, camera.

6-36 After deciding the research approach and instruments, the researcher must design a sampling plan: Sampling unit ­ — Who is to be surveyed? Sampling size — How many people should be surveyed? Sampling procedure — How should the respondents be chosen? 2.4 Sampling Plan

Choosing a Unit of Analysis Will the target market be: Global A region A country A province A state A city

Contact Methods Mailing questionnaire Telephone Face-to-face interviewing On-line interviewing

Assessing Value of Research How much is the marketing information worth verse how much will it cost to collect? How much will it cost if the data are not collected? What will the company gain with this information?

Collecting Data Data collection is very important because regardless of the data analysis methods used, data analysis cannot fix bad data. In marketing research, data collection is the most expensive and the most prone to error. Four problems may arise: Some interviees may not be able to participate in the interview but inform the interviewer too late. Some respondents are not cooperative; Some will give biased or dishonest answers; Some interviews will be biased or dishonest.

6-41 Challenges of Collecting Primary Data in International Marketing Research Most challenges stem from access to foreign markets and cultural differences among countries. Cultural differences offer the best explanation for respondents’: Inability to communicate their opinions; Unwillingness to respond to research surveys (e.g., high-context culture countries).

6-42 Language Barrier

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Analyzing the Information This forth step is to extract findings from the collected data, involving first entering, cleaning, coding and tabulating data in computer files, and then applying appropriate methods and models to analyze the results: Data cleaning is the process by which raw data are checked to verify that the data are correctly input to the computer software program. Statistical techniques for data analysis: ANOVA, regression analysis, factor analysis, cluster analysis, conjoint analysis (Factor analysis is a useful technique for reducing large quantities of data to a few underlying dimensions.)

6-45 Challenges for Analyzing and Interpreting the Information The meaning of words, the customer’s attitudes to a products, the interviewee’s attitude or the situation can distort research findings. The global marketing researcher must possess three talents to generate meaning marketing information: A high degree of cultural understanding of the market in which research is conducted; A creative talent for adapting research methods; A skeptical attitude in handling both primary and secondary data.

Presenting the Research Findings In this last step of the marketing research process, the research presents the major findings that are relevant to the management’s key decisions. Report must: Clearly address problem identified in Step 1 and be effectively communicated to decision makers; Include executive summary of the key findings, a description of research methods, results, discussions and conclusions (incl. recommendations).

6-47 Homework Exercises for Chapter 5 Discuss questions: Differences between supply chain management and value chain management; The advantages and disadvantages of different data collection methods. Preview Chapter 6 Segmentation, Targeting, and Positioning.

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6-49 Questionnaire: flexibility, the most common instrument used to collect primary data. Closed-end: easy to interpret and tabulate; Open-end: more information; explanatory research. Qualitative measures: Qualitative techniques: word associations, visualization, projective techniques, laddering Technological devices Research Instruments

Table 1: Profitability Samples 6-50

Table 2: Nonprofitability Samples 6-51

6-52 Marketing Research Marketing research is the process of systematic gathering, recording, analyzing and reporting of data provide useful information in marketing decision making. Global marketing research is the marketing research conducted on a global basis: Challenge is to recognize and respond to national differences that influence the way information is obtained.

6-53 Define the Problem and Set the Objectives 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?

6-54 Sources of Secondary Information Secondary research, also known as desk research, involves the summary, collation and/or synthesis of existing research rather than primary research.

6-55 Enhancing Comparability of Data Emic analysis Ethnographic in nature Studies culture from within Uses culture’s own meanings and values Etic analysis From the outside Detached perspective that is used in multi- country studies Enhances comparability but minimizes precision

6-56 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

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Collecting Data Data quality : Validity – the extent to which the research measures what it was intended to measure; Reliability – the extent to which research measurement techniques are free of errors; Representativeness.