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 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 6 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 11 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 14 Copyright © 2011 Pearson Education, Inc. 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 15 Copyright © 2011 Pearson Education, Inc. 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 16 Copyright © 2011 Pearson Education, Inc. 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 Copyright © 2011 Pearson Education, Inc. 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 AACSB: Reflective Thinking 18 Copyright © 2011 Pearson Education, Inc. 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 AACSB: Reflective Thinking 19 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 AACSB: Reflective Thinking 20 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 AACSB: Reflective Thinking 21 Copyright © 2011 Pearson Education, Inc. 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 AACSB: Reflective Thinking 22 Copyright © 2011 Pearson Education, Inc.