chap 6

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Global Marketing, 6e (Keegan/Green)
Chapter 6 Global Information Systems and Market Research
1) One component of a firm's MIS is a business intelligence (BI) network that helps managers
make decisions; one of its major objectives is to enable manipulation of the data obtained by
interactive access.
Answer: TRUE
Diff: 1
Page Ref: 171
2) Intranet is a private network that allows authorized company personnel or outsiders to share
information electronically in a secure fashion.
Answer: TRUE
Diff: 2
Page Ref: 172
AACSB: Use of IT
3) EDI links with vendors to enable retailers to improve inventory management and restock hotselling products in a timely, cost-effective manner.
Answer: TRUE
Diff: 2
Page Ref: 172
AACSB: Use of IT
4) ECR is a joint initiative by members of the supply chain to work towards improving and
optimizing aspects of the supply chain to benefit managers.
Answer: FALSE
Diff: 2
Page Ref: 172-173
AACSB: Use of IT
5) Supply chain innovations, such as radio frequency identification tags (RFID), are likely to
provide increased momentum for ECR.
Answer: TRUE
Diff: 2
Page Ref: 172-173
AACSB: Use of IT
6) CRM tools allow companies like Credit Suisse, AT&T, and Hewlett-Packard to determine
which customers are most valuable and to react in a timely manner with customized products and
service offerings that closely match customer needs.
Answer: TRUE
Diff: 2
Page Ref: 173
AACSB: Use of IT
7) In the EU companies that use CRM to collect data about individual consumers must satisfy the
regulations in each of the member countries.
Answer: TRUE
Diff: 2
Page Ref: 173
AACSB: Use of IT
1
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8) The term "safe harbor agreement" applies to privacy issues pertaining to the companies that
gather information about consumers.
Answer: TRUE
Diff: 2
Page Ref: 173-174
AACSB: Reflective Thinking
9) Direct sensory perception such as seeing, feeling, hearing, smelling, or tasting is the best way
to know what is going on in a country rather than taking information from secondary sources.
Answer: TRUE
Diff: 2
Page Ref: 175
AACSB: Reflective Thinking
10) Market research is the project-specific, systematic gathering of data and is the activity that
links the consumer, customer, and public to the marketer through information.
Answer: TRUE
Diff: 2
Page Ref: 176
AACSB: Reflective Thinking
11) Market research may prevent psychological overload that may be faced by a company
entering more than one new geographic market.
Answer: TRUE
Diff: 2
Page Ref: 176
AACSB: Reflective Thinking
12) The first step in global marketing research is the collection of data.
Answer: FALSE
Diff: 2
Page Ref: 176
AACSB: Reflective Thinking
13) Market research should focus on finding out how a potential customer can be changed into
an actual customer.
Answer: TRUE
Diff: 2
Page Ref: 178
AACSB: Reflective Thinking
14) Mattel toys thought that Barbie would be as popular in Japan as it is the United States. This
assumption was due to the self-reference criterion (SRC).
Answer: TRUE
Diff: 2
Page Ref: 180
AACSB: Reflective Thinking
15) An awareness of SRC can help ensure that the research effort is designed with minimal
home-country or second-country bias.
Answer: TRUE
Diff: 2
Page Ref: 180
AACSB: Reflective Thinking
2
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16) Global marketing research in countries such as China and India should be conducted mainly
using the entire country as the unit of analysis.
Answer: FALSE
Diff: 2
Page Ref: 180
AACSB: Reflective Thinking
17) By definition, secondary data is data gathered from country markets that rank as "secondary"
in terms of income and population figures.
Answer: FALSE
Diff: 2
Page Ref: 181-182
18) In addition to big, showy, custom motorcycles, Harley-Davidson has a broad range of bikes
that well suit European riding habits.
Answer: TRUE
Diff: 1
Page Ref: 181
19) Companies wishing to minimize the cost and effort associated with market research should
start by collecting and analyzing primary data.
Answer: FALSE
Diff: 2
Page Ref: 181-183
AACSB: Reflective Thinking
20) Industrial growth patterns generally reveal consumption patterns, which in turn can be
helpful in knowing production patterns that can be used in assessing market opportunities.
Answer: TRUE
Diff: 2
Page Ref: 181-183
AACSB: Reflective Thinking
21) If a market researcher would like to know how much the typical Nigerian consumer spends
on soft drinks, the information can be obtained from GNP or GDP.
Answer: FALSE
Diff: 2
Page Ref: 181-183
AACSB: Reflective Thinking
22) Market researchers should be alert to the fact that the quality of government statistics can
vary greatly from country to country.
Answer: TRUE
Diff: 2
Page Ref: 181-183
AACSB: Reflective Thinking
23) The small markets around the world and the relatively low profit potential justifies only
modest expenditures for market research.
Answer: TRUE
Diff: 2
Page Ref: 184
AACSB: Reflective Thinking
3
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24) If Avon would like to sell cosmetics in India, a good estimate can be achieved by researching
the average wage of an office secretary.
Answer: TRUE
Diff: 2
Page Ref: 184
AACSB: Analytic Skills
25) Triangulation is a useful method in global market research where data is collected from three
different sources within the same country.
Answer: FALSE
Diff: 2
Page Ref: 184
AACSB: Reflective Thinking
26) Demand and market potential depend, in part, on whether the market being studied can be
classified as existing or potential.
Answer: TRUE
Diff: 2
Page Ref: 185-186
AACSB: Reflective Thinking
27) Toyota's decision to launch the new Sienna minivan in the United States reflects the
company's understanding of latent and incipient markets.
Answer: FALSE
Diff: 2
Page Ref: 185-186
AACSB: Reflective Thinking
28) Japanese companies relied heavily on traditional survey research in identifying the potential
market for fax machines.
Answer: FALSE
Diff: 2
Page Ref: 185-186
AACSB: Analytic Skills
29) Motorola learned the hard way that there was no latent market for a premium-priced global
satellite telephone service.
Answer: TRUE
Diff: 2
Page Ref: 187
AACSB: Reflective Thinking
30) Volkswagen, Peugeot, Chrysler, and other global automakers have established manufacturing
operations in China since they consider it to be an incipient market.
Answer: TRUE
Diff: 2
Page Ref: 186
AACSB: Analytic Skills
31) It will be convenient to do a telephone survey in rural areas in China since, according to the
Ministry of Information Industry reports, 40 percent households have at least one fixed-line
telephone.
Answer: FALSE
Diff: 2
Page Ref: 186
AACSB: Analytic Skills
4
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32) "Back translation" is a technique used to ensure that currency conversion is performed
correctly when financial statements of foreign subsidiaries are consolidated with financial
statements at headquarters.
Answer: FALSE
Diff: 2
Page Ref: 188
AACSB: Reflective Thinking
33) "Back translation" is a technique whereby a survey or other document that has been
translated is returned (i.e. "sent back") to the translator for corrections.
Answer: FALSE
Diff: 2
Page Ref: 188
AACSB: Reflective Thinking
34) Nielsen now uses an electronic device for getting national audience data, which is known as
a peoplemeter.
Answer: TRUE
Diff: 2
Page Ref: 188
AACSB: Reflective Thinking
35) A marketer of breakfast cereals might send researchers to preselected households at 6 a.m. to
watch families go about their morning routines
Answer: TRUE
Diff: 2
Page Ref: 188-189
36) When using a "projective technique," the researcher presents close-ended or ambiguous
stimuli to a subject in a focus group
Answer: FALSE
Diff: 2
Page Ref: 190
AACSB: Reflective Thinking
37) In global marketing research, it is important to establish scalar equivalence when obtaining
information from different countries.
Answer: TRUE
Diff: 2
Page Ref: 190-191
AACSB: Reflective Thinking
38) In marketing research, factor analysis is a useful technique for reducing large quantities of
data to a few underlying dimensions.
Answer: TRUE
Diff: 2
Page Ref: 191-192
AACSB: Reflective Thinking
39) It is advisable to present marketing research findings, including complex quantitative
analysis and terminology, to executives so that they will fully comprehend the analysis.
Answer: FALSE
Diff: 2
Page Ref: 196
AACSB: Reflective Thinking
5
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40) Many global firms are creating flattened organizations, with less hierarchical, less centralized
decision-making structures, which facilitate the exchange and flow of information.
Answer: TRUE
Diff: 2
Page Ref: 197
AACSB: Reflective Thinking
41) In addition to providing a means for gathering, analyzing, classifying, storing, retrieving, and
reporting relevant data, MIS should also cover:
A) a company's external environment.
B) customers.
C) competitors.
D) strategy.
E) all of the above
Answer: E
Diff: 2
Page Ref: 171
AACSB: Reflective Thinking
42) Reed Krakoff, head designer for Coach Brand handbags and accessories stated "When
something doesn't sell, I never say, 'Well, people didn't understand it.' If people don't understand
it, it doesn't belong in the store." This statement underscores the fact that:
A) consumer preference changes with time.
B) seasonal variation and store displays are important.
C) market research is vital for success.
D) Coach Brand is not very popular.
E) people dislike brands that are newly introduced.
Answer: C
Diff: 2
Page Ref: 171-172
AACSB: Reflective Thinking
43) A(n) ________ is a company's private data network, accessible only by authorized persons
inside the organization
A) electronic data interchange (EDI)
B) internet
C) intranet
D) EPOS
E) EDI
Answer: C
Diff: 1
Page Ref: 172
44) Which of the following is an IT tool designed specifically to help retailers work more closely
with vendors on stock replenishment?
A) BOLD
B) ECR
C) data warehouse
D) projection
E) EDI
Answer: B
Diff: 1
Page Ref: 172-173
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45) Which of the following can be defined as a business philosophy that values two-way
communication between a company and individual customers?
A) ECR
B) CRM
C) EDI
D) EPOS
E) BOLD
Answer: B
Diff: 2
Page Ref: 173
46) One of the key advantages of an EDI (Electronic Data Interchange) system is:
A) it allows easy access to all company data to vendors.
B) its transaction formats are universal.
C) it allows third-party transmission connections to company data.
D) it saves both time and money by using different languages.
E) vendors receive orders by voice mail.
Answer: B
Diff: 2
Page Ref: 172-173
AACSB: Use of IT
47) CRM tools allow companies such as Credit Suisse, AT&T , Hewlett-Packard and others to
determine:
A) warranty of products sold to consumers.
B) amount paid by consumers in different countries.
C) which customers are most valuable.
D) the use of credit cards for payment.
E) the use of laptop computers by customers.
Answer: C
Diff: 3
Page Ref: 172-173
AACSB: Reflective Thinking
48) Direct Sensory Perception provides a vital background for the information that comes from
human and documentary sources since:
A) it provides second-hand information.
B) it is easy and most economical way of collecting data.
C) it means first-hand seeing, feeling, hearing, smelling, and tasting.
D) it involves reading and reviewing documents.
E) top executives are involved in getting first-hand information.
Answer: C
Diff: 3
Page Ref: 175-176
AACSB: Reflective Thinking
7
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49) Which of the following environmental factors may require marketers to adjust their approach
to conducting international as opposed to domestic marketing research?
A) Researchers must be prepared for new parameters of doing business.
B) Company personnel must come to grips with a new set of culture-based assumptions about
conducting business.
C) Research may help reduce psychological overload.
D) Researchers may have to broaden the definition of competitors to include competitive
pressures not present in the domestic market.
E) all of the above
Answer: E
Diff: 2
Page Ref: 176-177
AACSB: Reflective Thinking
50) A vice-president of a shoe company was in India to assess the market. He found that many
people in the southern part of India were walking bare footed. This can be indicative of either the
fact that there is a potential market for shoes or there is no market for shoes in that part of the
world. To formally confirm one instinct or the other the vice-president should:
A) establish an office to start manufacturing shoes in India.
B) give free shoe samples to a selected group of customers.
C) conduct a research to find the potential and actual customers.
D) find out if that is true for other Asian countries.
E) give up the idea of doing business in India.
Answer: C
Diff: 2
Page Ref: 178
AACSB: Analytic Skills
51) When Mattel first introduced Barbie in Japan, managers assumed that Japanese girls would
find the doll's design just as appealing as American girls did. This may be due to:
A) Barbie's physical features such as long legs and blonde hair.
B) Barbie being a symbol of American lifestyle.
C) the SRC tendency on the part of American managers.
D) the SRC tendency on the part of Japanese consumers.
E) the limited competition for dolls in Japan.
Answer: C
Diff: 2
Page Ref: 178-180
AACSB: Reflective Thinking
8
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52) Which of the following lists some of the steps in the market research process in the correct
order?
A) determine information requiremen→problem definition→choose unit of analysis→examine
data availability→assess value of research
B) problem definition→assess value of research→determine information requirement→choose
unit of analysis→examine data availability
C) examine data availability→problem definition→choose unit of analysis→assess value of
research→determine information requirement
D) choose unit of analysis→assess value of research→problem definition→determine
information requirement→examine data availability
E) examine data availability→assess the value of research→problem definition→presentation
Answer: A
Diff: 2
Page Ref: 178-184
53) Anyone undertaking a market research project should understand that the first step is:
A) setting the budget.
B) determining the methodology to use.
C) deciding who will see the final report.
D) defining the problem.
E) determining the information requirement.
Answer: E
Diff: 2
Page Ref: 178
54) For consumer products, qualitative research is especially well suited to:
A) get close to the consumer.
B) describe the cultural context of consumer behavior.
C) identify core brand equity.
D) identify what people really feel.
E) all of the above
Answer: E
Diff: 2
Page Ref: 178-184
AACSB: Reflective Thinking
55) Potential markets can be subdivided into:
A) latent and parallel markets.
B) existing and incipient markets.
C) latent and incipient markets.
D) existing and latent markets.
E) incipient and existing markets.
Answer: C
Diff: 2
Page Ref: 185
AACSB: Reflective Thinking
9
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56) Marketers must be aware of the impact of SRC and other cultural assumptions since:
A) it can have several positive effects on market planning.
B) it enhances management's willingness to pursue market research.
C) it can help ensure that the research effort is designed with minimal home-country bias.
D) it can help ensure that the research effort is designed with minimal second-country bias.
E) All of the above are correct.
Answer: E
Diff: 2
Page Ref: 178-180
AACSB: Reflective Thinking
57) Which of the following is not true of secondary data about global markets?
A) It was not gathered specifically for the research project at hand.
B) It is often so expensive that small companies can't afford to use it.
C) It can be accessed quickly.
D) A great deal is available from government agencies.
E) It cannot be retrieved on-line.
Answer: B
Diff: 1
Page Ref: 181-182
58) Harley-Davidson intentionally limits the production of motorcycles in spite of the high
demand in order to:
A) restrict sales to a limited number of countries.
B) use available resources conservatively.
C) keep the quality high.
D) increase the selling price.
E) sell other bikes manufactured by them.
Answer: C
Diff: 2
Page Ref: 181
59) Which of the following correctly reflects marketing expert David Arnold's recommendations
for companies engaged in global market research?
A) use multiple indicators
B) develop customized measures specific to an industry or product
C) conduct comparative assessments in neighboring countries
D) observation should be weighted more heavily than statements of purchase intention
E) all of the above
Answer: E
Diff: 2
Page Ref: 184
AACSB: Reflective Thinking
10
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60) When the Coca-Cola Company convened focus groups in Europe and Asia to assess potential
market acceptance of a contoured aluminum soft drink can, it was attempting to collect
________ data
A) primary
B) secondary
C) incipient
D) quantitative
E) MIS
Answer: A
Diff: 2
Page Ref: 185-186
AACSB: Reflective Thinking
61) The decision by Toyota executives to introduce the Sienna minivan in the U.S. market was
based on their study of a(n) ________ market
A) existing
B) latent
C) parallel
D) incipient
E) global
Answer: A
Diff: 2
Page Ref: 185
AACSB: Analytic Skills
62) The international marketing manager of an office furniture company ordered a research
report on global telecommunications equipment sales. The report noted that, in the early 1990s,
AT&T was awarded a $4 billion contract to provide communication network products and
services in Saudi Arabia. The manager took this as a cue to put Saudi Arabia on her information
agenda, reasoning that office furniture sales would increase as the country's telephone system
was improved. As described here, the marketing manager is viewing Saudi Arabia as a(n):
A) latent market.
B) incipient market.
C) cluster market.
D) existing market.
E) primary market.
Answer: B
Diff: 2
Page Ref: 186
AACSB: Reflective Thinking
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63) Predicting economic and income growth rates is particularly important when researching
which type of market?
A) existing markets
B) latent markets
C) parallel markets
D) incipient markets
E) local markets
Answer: D
Diff: 3
Page Ref: 186
AACSB: Reflective Thinking
64) Tools that can be used for collecting primary data include:
A) survey research and interviews.
B) consumer panels and observation.
C) focus groups and survey research.
D) interviews and observation.
E) all of the above
Answer: E
Diff: 1
Page Ref: 186-188
65) When a survey questionnaire in English is translated into Korean for use in South Korea and
then translated back into English to check its accuracy it is described as:
A) incipient translation.
B) comparative translation.
C) native translation.
D) parallel translation.
E) back translation.
Answer: E
Diff: 2
Page Ref: 188
AACSB: Reflective Thinking
66) When a trained person is recording the items selected in a grocery cart or basket, the research
method is known as:
A) observation.
B) survey research.
C) focus study.
D) secondary data collection.
E) personal interviews.
Answer: A
Diff: 2
Page Ref: 188-189
AACSB: Reflective Thinking
12
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67) It has been reported by Nielsen that there is a significant drop-off in viewership among
American men aged 18 to 34. This group was found to be spending more time surfing the
internet or playing video games during prime TV viewing hours. In order to get accurate data, a
monitor unit was provided to selected households that detect when a TV set is turned on and the
channel to which it is tuned. This monitoring system is called:
A) focus group study instrument.
B) personal interviews assessor.
C) the pedometer.
D) the consumer panel analyzer.
E) the peoplemeter.
Answer: E
Diff: 2
Page Ref: 188
AACSB: Reflective Thinking
68) Manufacturers of Splenda, a low calorie sugar, wanted to arrange a focus group to find out its
use in different markets. Open-ended questions were used in order to secure the unconscious
attitudes and biases held by the subjects. This type of technique is known as:
A) scaling technique.
B) qualitative technique.
C) projective technique.
D) reactivity technique.
E) MDS technique.
Answer: C
Diff: 3
Page Ref: 190
AACSB: Analytic Skills
69) In Singapore Coca-Cola wanted to develop an advertisement program. They selected a group
of teenagers in a room and a trained moderator facilitated discussion asking questions on brand's
image, advertisement, social trends, TV watching habits, and snack usage. This type of research
is called:
A) survey research.
B) observational studies.
C) comparison studies.
D) focus group research.
E) experimental research.
Answer: D
Diff: 2
Page Ref: 190
AACSB: Analytic Skills
13
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70) In Mexico City, only 55-60% of the population owns a telephone. The number drops to less
than 50% in Guadalajara and Monterey, and 35% or lower in other cities. This will complicate
the task of market researchers hoping to use a telephone survey to obtain a ________ of the
Mexican population.
A) probability sample.
B) convenience sample.
C) secondary sample.
D) focus group sample.
E) quota sample.
Answer: A
Diff: 2
Page Ref: 191
AACSB: Reflective Thinking
71) One study of adult involvement in household tasks revealed greater similarities between the
UK and the U.S. compared with France, Belgium, and French Canada. Thus, the U.S. and UK
were "twins" based on common language. This study is an example of:
A) market latency.
B) conjoint analysis.
C) factor analysis.
D) multidimensional scaling.
E) cluster analysis.
Answer: E
Diff: 3
Page Ref: 193
AACSB: Analytic Skills
72) When consumers have difficulty in verbalizing their perceptions and there are different
alternative brands of toothpaste, what is the best method of judging them in terms of similarity?
A) cluster analysis
B) MDS
C) dependence techniques
D) factor loading
E) focus group
Answer: B
Diff: 3
Page Ref: 193-194
AACSB: Analytic Skills
73) Suppose Apple has collected extensive survey data about its new iPhone and respondents
have rated it on twenty different features and benefits. Now researchers want to reduce the
amount of data to a few underlying dimensions. Which data analysis technique should the
researchers use?
A) analogy
B) conjoint analysis
C) factor analysis
D) multidimensional scaling
E) cluster analysis
Answer: C
Diff: 2
Page Ref: 192
AACSB: Analytic Skills
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74) A market researcher who uses multidimensional scaling (MDS) will:
A) attempt to estimate market size by analogy.
B) ask respondents to rate a particular product or brand in terms of multiple characteristics or
attributes.
C) ask respondents to evaluate product or brand pairs in terms of similarity.
D) attempt to determine the combination of product features that create the greatest utility for
consumers.
E) conduct a focus group
Answer: C
Diff: 3
Page Ref: 193-195
AACSB: Analytic Skills
75) Analyzing global income data, Volkswagen executives noted that Nigeria has approximately
the same per capita income as China. However, if China had the same ratio of cars to people as
Nigeria, there would be 10 million cars in China today, instead of 1.2 million. If this insight were
stated as "925,000 cars are to Nigeria as 10 million cars are to China," Volkswagen executives
would be using which form of data analysis?
A) demand pattern analysis
B) income elastic analysis
C) polycentrism
D) market estimation by analogy
E) multidimensional scaling
Answer: D
Diff: 2
Page Ref: 195-196
AACSB: Reflective Thinking
76) According to David Arnold there are four possible approaches to forecasting by analogy,
which does not include which of the following?
A) Data is available on a comparable product in the same country.
B) Data is available on the same product in a comparable country.
C) Data is available on the same product from an dependent distributor in a neighboring country.
D) Data is available about a comparable company in the same country.
E) Data is available on the same product in every country.
Answer: E
Diff: 2
Page Ref: 195-196
AACSB: Reflective Thinking
77) Catalog sales in the United States represent about 3 percent of overall retail sales; whereas in
Germany they account for 5.8 percent. This suggests that there is a good chance of catalog
marketing in Germany. This type of research is described as:
A) demand pattern analysis.
B) income elastic analysis.
C) time series displacement.
D) polycentrism.
E) comparative analysis.
Answer: E
Diff: 2
Page Ref: 195-196
AACSB: Reflective Thinking
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78) Which of the following is true about etic and emic approaches to country analysis?
A) The etic and emic approaches are identical.
B) An emic approach studies a culture from within; etic analysis is "from the outside."
C) An emic approach studies a culture "from the outside"; etic analysis studies a culture from
within.
D) The emic/etic distinction is not useful in cultural studies.
E) The emic/etic approaches cannot be applied to Asian countries
Answer: B
Diff: 2
Page Ref: 196-197
79) A market research study of soft drink consumption and distribution in Hungary
commissioned by an American company indicated that soft drinks were available in drugstores.
However, Western-style drugstores do not exist in Hungary. This illustrates an important issue in
global marketing research, namely:
A) inflated data.
B) using convenience samples.
C) market estimation by analogy.
D) comparability of data.
E) using multiple dimensional scaling.
Answer: D
Diff: 3
Page Ref: 195
AACSB: Analytic Skills
80) Market research undertaken by Whirlpool helped tremendously by showing that:
A) listening to customers is only possible in America.
B) data collected in the U.S. should be applicable in Europe.
C) consumers in different countries prefer different types of features.
D) in China white colored washers will sell more since colored ones are expensive.
E) in India it is not possible to use washers since "saris" are very long and delicate.
Answer: C
Diff: 3
Page Ref: 200-201
AACSB: Analytic Skills
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81) Globalization puts tremendous pressure on companies to achieve as many economies as
possible. How can IT provide valuable tools in global marketing research?
Answer: There are different IT programs that can provide valuable tools for marketing. EDI
(Electronic data interchange) links with vendors to enable retailers to improve inventory
management and restock popular products in a timely, cost-effective manner. Also, effective
consumer response (ECR) is another program which allows management to work more closely
with vendors on stock replenishment. ECR systems utilize electronic point of sale (EPOS) data
gathered by checkout scanners that help retailers identify product sales patterns as well as record
consumer preferences separated by geographical areas. All these tools are also helpful in
improving the ability of businesses to target consumers and increase loyalty. Customer
relationship management (CRM) is another method by which a relationship is developed with
the customer. It helps in determining which customers are most valuable and to react in a timely
manner with customized product and service offerings that closely match customer needs. It also
makes employees more productive and enhances corporate profitability. It also benefits
customers by providing value-added products and services. Data warehouses store a company's
CRM system as well as other IT systems. These data warehouses can provide multiple uses such
as helping retailers with multiple store locations fine-tune their product assortments. In addition
to internet, intranet can be a valuable tool, which can connect individuals within a company on a
private basis.
Diff: 2
Page Ref: 171-173
AACSB: Use of IT
82) Authors Michael Czinkota and Illka Ronkainen identified four specific environmental factors
that may require international research efforts to be conducted differently than domestic research.
Describe those factors to outline the differences.
Answer: The four specific environmental factors that may require international research efforts
to be conducted differently than domestic research are: (1) researchers must be prepared for new
parameters for doing business. The requirements and ways in which rules are applied may differ
from country to country. (2) A "cultural mega-shock" may occur as company personal come to
grips with a new set of culture-based assumptions about conducting business. (3) a company
entering more than one new geographic market faces a burgeoning network of interacting
factors. Research may help prevent psychological overload in that case. (4) Company researchers
may have to broaden the definition of competitors in international markets to include competitive
pressures that would not be present in the domestic market.
Diff: 2
Page Ref: 176
AACSB: Reflective Thinking
17
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83) The vice president of finance and marketing of a cosmetic company were traveling around
the world to estimate the market potential for their products. They came to a busy metropolitan
area in India and noticed that most of the women were not using mascara and false eyelashes.
The vice president of finance said, "There is no evidence of any market for our products and let
us not waste time." However the vice president of marketing remarked, "We have a great
opportunity to market our products." What do you understand from this and how will you
suggest testing the instinct of either vice president?
Answer: This is a classic example which demonstrates the need to identify the information
required to do market research. To formally confirm the assumptions, organized research is
necessary. Identification of the need will form the first step for conducting this marketing
research in a different country. The need for research also arises when there is a problem, crisis
or opportunity. Local taste preferences vary based on several factors ranging from social, cultural
to economic reasons. Unless a research is conducted formally or informally it is impossible to
arrive at a conclusion. Also, it is quite possible that a potential market can be missed or lost to
competitors on false assumption or instincts. Thus, research should be undertaken to determine
the potential market and how it can be converted into actual market. This should lead to a
stepwise process for conducting marketing research.
Diff: 2
Page Ref: 178
AACSB: Analytic Skills
84) Many of the fast food operations are entering markets in Middle Eastern countries. In the
United States, breakfast items are very popular and are responsible for a bulk of profit from
sales; primarily through drive-in customers. However, to their dismay, managers found that there
was practically no demand for breakfast items. Firstly, due to hot weather conditions, people
sleep late and wake up late. Secondly, they do not eat burgers, and sausage or bacon is prohibited
food. Also, drive-in business is not popular since people go to work at different periods of time.
Explain the possible reason(s) behind such a decision and account for its/their failure.
Answer: When conducting research in a foreign country one has to be completely free from any
kind of bias or prejudice. A person's home-country values and beliefs may consciously or
unconsciously influence the assessment of a foreign culture or country. This is referred to as SRC
(self-reference criterion). The SRC tendency underscores the importance of understanding the
cultural environments of global markets. As in the above case, assumptions based on homecountry marketing success turned out to be wrong when applied in a Middle Eastern country. A
marketing program that is successful in one country does not guarantee success in another
country. Thus, marketers must be aware of the SRC and its impact. Such awareness can have
several positive effects. It can enhance management's willingness to conduct market research in
the first place. Also, an awareness of SRC can help in ensuring the validity of research with
minimal home-country or second-country bias. In other words, the research will have potentially
useful results which managers will be able to accept and implement.
Diff: 2
Page Ref: 178-180
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85) What are the secondary sources of data and how do these sources differ from primary
sources? Give examples of sources from which secondary data can be obtained.
Answer: A low-cost approach to market research and data collection begins with desk research.
There are a lot of secondary sources which are a good place to start. Data from census bureaus;
government and private agencies; trade associations; chamber of commerce; published reports;
academic institutions; and public libraries are not only extensive but can provide valuable
information in a very cost-effective manner. All of these are considered as secondary sources
since the data already exist and is not based on the research conducted by the company. Data
obtained by conducting research by the company is considered as a primary source. This may
also include company's unpublished reports and other financial data. Other secondary sources
include the U.S. Government's National Trade Data Base (NTDB), an online resource from the
Department of Commerce. Similarly there are other data which are published by almost most of
the federal government agencies. Most countries compile data related to the gross national
product (GNP), gross domestic product (GDP), consumption, investment, government
expenditures, price levels, and import/export expenditures. Demographic data are available from
the United Nations' agencies as well as other international agencies. The Statistical Yearbook of
the United Nations contains global data on agriculture, mining, manufacturing, construction,
energy production consumption, internal and external trade, health, housing, education and lot of
other services. Similar data are collected by the U.S. Central intelligence Agency which
publishes World Fact book. Other sources are the World Bank, the International Monetary Fund.
The Economist and Financial Times regularly compile comprehensive surveys of regional and
country markets and include them in their publications. Data from many of these sources are
generally available in both print and electronic forms. There are also different country websites
which also provide some useful information. Syndicated studies published by private research
companies are another source of secondary data and information.
Diff: 2
Page Ref: 181-183
AACSB: Reflective Thinking
86) Discuss the guidelines submitted by David Arnold pertaining to the importance of data
gathering for market research. Indicate the rationale behind each guideline.
Answer: David Arnold has offered certain guidelines for data gathering which are listed as
follows:
(a) Multiple indicators should be used rather than a single measure. This approach will decrease
the level of uncertainty for decision makers.
(b) Individual companies should develop customized indicators specific to the industry, product
market, or business model. Such indicators should leverage a company's previous experience in
global markets.
(c) Comparative assessments should always be conducted in multiple markets. Comparative
assessment enables management to develop a "portfolio" approach in which alternative priorities
and scenarios can be developed.
(d) Observations of purchasing patterns and other behavior should be weighed more heavily than
reports or opinions regarding purchase intention or price sensitivity. Sometimes it is different to
accurately survey consumer perceptions.
Diff: 2
Page Ref: 184-185
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Copyright © 2011 Pearson Education, Inc.
87) Grey China Advertising agency gathers a wealth of information about attitudes and buying
patterns of Chinese in its Grey China Base Annual Consumer Study. Recent findings point to
growing concerns about the future, Westernization of grocery purchases, growing market
saturation, increasingly discerning customers and a rise in consumer willingness to try new
products. These data can be very inconsistent since conflicting findings were reported by
different agencies. For example, data gathered by Euromonitor International estimates soft-drink
consumption at 23 billion liters in China, while Coca- Cola's in-house marketing research team
places the figure at 39 billion liters. Similar differences were noted in other data published by
different agencies. What is the best approach in such situations so that finite decisions can be
made? What are the differences between latent and incipient markets?
Answer: These types of discrepancies are expected due to the research methodology, design,
analyses and scores of other factors. In such situations, and in countries where such data are not
available, researchers must first estimate the market size, the level of demand, or the rate of
product purchase or consumption. A second research objective in existing markets may be
assessment of the company's overall competitiveness in terms of product appeal, price,
distribution, and promotional coverage and effectiveness. Researchers may be able to find out
special aspects or weaknesses in competitors' way of doing business. Unserved market segments
may also be discovered. In some instances, there is no existing market to research. Such potential
markets can be further subdivided into latent and incipient markets. A latent market is, in
essence, an undiscovered market segment. It is a market in which demand would materialize if
an appropriate product or service were made available. In a latent market, demand is zero before
the product is offered. An incipient market is a market that will emerge if a particular economic,
demographic, political, or socio-cultural trend continues. A company is not likely to achieve
satisfactory results if it offers a product in an incipient market before the trends have taken roots.
After the trends have had a chance to unfold, the incipient market will become latent and, later,
existing markets.
Diff: 2
Page Ref: 185-186
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Copyright © 2011 Pearson Education, Inc.
88) How can observational studies and focus groups be used in marketing research? What are the
different methods by which these studies are conducted?
Answer: In observation method one or more trained observers or a mechanical device watch and
record the behavior of actual or prospective buyers. The research results are used to guide
marketing managers in their decision making. For example, observations are done as to how
male or female customers open the door of cars and sit. This simple act can be of tremendous
help in designing the doors of cars and the adjustment of seats. Similarly, observing how
consumers are picking items in a grocery store or observing the items in shopping carts can give
better understanding of the actual purchase behavior of consumers. It should be noted that since
consumers are unaware of being watched, actual behavior can be recorded and interpreted.
Marketers can also observe the eating behavior by observation or the plate wastages after dinner
to assess food preferences of consumers. Companies using observation as a research
methodology must be sensitive to public concerns about privacy issues, particularly if the
subjects know that they are being watched. In focus group research, a trained moderator
facilitates discussion of a product concept, a brand's image and personality, advertisement, social
trends, or other related topic with a group comprised of 6 to 10 people. Selection of focus group
participants has to be done very carefully since the number of participants is very limited. They
should also meet the criteria which closely
fit the overall population under study. Usually focus group meetings are conducted in a specially
equipment room in an undisturbed environment. The questions are carefully framed and answers
are solicited from all participants in an organized manner. Recordings are made of the entire
process and analyzed after the conclusion of the session. A one-way mirror or a video screening
is simultaneously conducted where focus group participants are being watched. Also the trained
moderator is connected by earphones with others including business managers, so that
appropriate instant questions may be prompted to be used in discussion. Focus group research
yields qualitative data that does not lend itself to statistical projection. Such data are extremely
valuable in the exploratory phase of a project and is typically used in conjunction with data
gathered via observation and other methods.
Diff: 2
Page Ref: 190
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89) What are "interdependence techniques" in the analysis of data? What type of measurement is
possible with this technique and what are different methods that are used in marketing research.
Answer: Interdependence techniques show the interaction between variables and comprises of
factor analysis, cluster analysis, and multidimensional scaling (MDS). Factor analysis can be
used to transform large amounts of data into manageable units. Specialized statistical programs
can reduce or group the data by distilling out certain meaningful factors. These factors are
selected by the program on the basis of attitudes and perceptions that can be closely aligned from
a multitude of survey responses.
Factor analysis is useful in psychographic segmentation studies. It can also be used to create
perceptual maps.
Cluster analysis allows the researcher to group variables into clusters that maximize withingroup similarities and between-group differences. Cluster analysis shares some characteristics of
factor analysis in that it does not classify variables as dependent or independent. It can also be
used in psychographic segmentation. It is well suited to global marketing research because
similarities and differences can be established between local, national, and regional markets of
the world. Cluster analysis can also be used to perform benefit segmentation and identify new
product opportunities.
MDS is another technique for creating perceptual maps. When the researcher is using MDS the
respondent is given the task of comparing products or brands, one pair at a time, and judging
them in terms of similarity. The researcher then infers the dimensions that underlie the
judgments. MDS is particularly useful when there are many alternatives from which to choose
and when consumers may have difficulty verbalizing their perceptions. To create a well-defined
spatial map, a minimum of eight products or brands should be used.
Diff: 2
Page Ref: 192-193
AACSB: Analytic Skills
90) What do you understand by Comparative Analysis and Market Estimation by Analogy? How
can these be helpful in marketing research?
Answer: In global marketing research it may be necessary to conduct comparisons of market
potential and marketing performance in different countries or regional markets at the same point
in time. This analysis can be intra-company cross- national comparison. There may be
differences even under similar conditions from one country to another. For example, catalog
sales in the United States represent about 3 percent of overall retail sales. By comparison, catalog
sales in Germany account for 5.8 percent of overall sales. This suggests that there is a catalog
marketing opportunity in Germany. Sometimes data may not be available for a particular country
or regional market. In such cases it is sometimes possible to draw an analogy. In other words the
comparison is based on partial resemblance since data are not available. Time-series
displacement is an analogy technique based on the assumption that an analogy between markets
exists in different time periods. The time displacement method requires a marketer to estimate
when two markets are at similar stages of development.
Diff: 2
Page Ref: 195-196
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Copyright © 2011 Pearson Education, Inc.
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