Global Marketing Research

Introduction

Rarely does a marketing research project rely solely on secondary data. At the same time, rarely does a marketing research project not rely on secondary data at all. Three stages of the marketing research process are especially pertinent to the use of secondary data: problem definition, research design, and report presentation. Within these stages, the use of secondary information pertains to project information, foundation and context, and techniques and tools.

Project Information

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Secondary data generally do not substitute for, or compete with, primary data. Rather, they are complementary. At the same time, there are some marketing situations in which secondary data are the only data required to assist users of marketing research in their
decision making. Users of marketing research are confronted with recurring decisions. It is therefore likely that helpful secondary information will exist.

Foundation and Context

The most frequent application of secondary data in marketing research is not as sole project information, but as groundwork to establish a foundation and context. On this foundation and in this context, primary data are collected, analyzed, and reported. The
groundwork is laid in the form of a literature search. A literature search is a search among existing material for information pertinent to the current marketing research project. It is often an aspect of exploratory research, through which marketing
researchers gain familiarity with the topic of their current marketing research project. Typical materials utilized in a literature search are computer data bases, books, magazines, scholarly journals, newspapers, and company records.

Guiness brewing company

Several years earlier, the chief executives at Guinness Brewing Company had begun their decision process concerning whether to expand operations into the Hong Kong market. The company, with headquarters in Dublin, Ireland, was already marketing its flagship product in over a hundred countries. Its flagship product, Guinness Beer, is accurately categorized as a stout or ale. Such a dark brown, as to be almost black in color, Guinness Stout contrasts with the light-colored American beers, which are categorized in the British Isles and many other parts of the world as lagers. Hoping to avoid reaching an incorrect decision, Guinness Brewing wanted marketing research information to assist their decision making. Their list of questions was long. For example, they wanted to know:

• How many people live in Hong Kong?
• What is their age distribution?
• What is their income?
• What is their education?
• Where are the people located in the city and country?
• What are the demographic characteristics of people by areas within the city and country?
• How do the people live in terms of housing?
• How much beer is consumed, in total and per capita?
• What type of beer is preferred?
• What brands currently exist?
• What are the market shares of the different brands?
• How is beer purchased in Hong Kong? For example, what portion of the beer market is comprised of single servings in restaurants (and what kind of restaurants) and drinking establishments (such as bars, nightclubs, and hotel lounges) and what portion of the beer market is comprised of multiple packs (and what size packs, since the soft drinks sold at grocery stores are sold only as single cans or in packs of
  eight).
• How many tourists visit Hong Kong each year?
• How much beer do these tourists consume?

Much, but not all, of this information already existed in the form of secondary data. For example, from the secondary data it was determined that Hong Kong had a population of about 5.7 million people in an area of about 400 square miles, and is on the doorstep of China with a population of well over I billion people. While over forty brands of beer are marketed in Hong Kong, San Miguel has an overwhelming market share of approximately 80 percent. It was also determined from secondary data that per capita beer consumption was low at about 27.1 liters per year, and that income was around HK
$9,000 per month. The education of most residents did not include “tertiary” school (Patzer: 1995).

The Guinness Brewing company was confronted with both the benefits and detriments of using secondary data. It was beneficial that, since much of the desired information already had been gathered, it could be obtained with minimum expenditures in time and money.

Typically, however, detriments were also present. First, unlike the government system in the United States, which reports substantial census information according to zip code, or in England and Ireland, where an analogous system utilizes postal codes, Hong Kong had no such mail or postal delivery system. Second, much of the data or information had been collected several years earlier, and some even as much as eight to ten years earlier. Third, it seemed possibly that some of the more positive information was too optimistic (and may have been prepared by city promoters hoping to attract industry). Fourth, some critical information was reported only in Chinese (Cantonese, to be exact) rather than English. Fifth, much of the information that was available had to be translated or converted. For example, per capita beer consumption had to be converted from liters to pints and barrels, the Hong Kong dollar had to be translated into Irish pounds (or punts), and the education system referred to as tertiary school had to be interpreted in terms of primary, secondary, college, and university education levels.

The conclusion was that these secondary data substantially helped the Guinness Brewing executives make their decision about expanding into the Hong Kong market. The availability of these secondary data saved time and money and also helped form the foundation and context for conducting a more efficient and effective marketing
research project pertaining to the potential of Guinness Beer in Hong Kong. However, these data were not perfect. Much of the data were not relevant because of their age and how they were reported, while other data were difficult to meaningfully convert into the home country’s system in Ireland.

Shangai: The Opportunity

In 1979, as part of his market reforms, Deng Xiaoping invited foreign companies to return to China. Simple arithmetic, soaring gross domestic product (GDP), a market of 1.3 billion people, and purchasing power magic, foretold the world’s biggest economy as early as 2020. When businesspeople fell under the country’s statistical spell, huge amounts of investment began to arrive. The annual increase in foreign direct investment (FDI) averaged more than 40 percent over the 1990s and peaked in 1993 at 175 percent. A total of more than $270 billion has been invested, by thousands of foreign firms, since 1992. That is nearly half of all investment in the developing economies (Alon: 2003).

One of the problems that international firms first faced in locating to China and other emerging markets is the absence of a business infrastructure to support activities, market research and advertising, distribution channels, technical support for telecommunications, and suitable personnel are all areas of difficulty. The development of infrastructure is undertaken primarily by the private sector, including foreign firms, while physical infrastructure is provided by the government. Reports suggest that young Chinese entrepreneurs are active in providing the commercial infrastructure. It is certainly true, as the research confirmed, that there are many local managers and staff with not only exemplary English-language ability but also an understanding of business processes partly inculcated by overseas education.

In seeking to understand international business, it is essential to understand the countries involved and the particular local market conditions prevailing. This is best achieved by seeking personal, in-depth interviews with leading executives of international businesses, as well as significant government and nongovernmental organization officials.

Identified firms were initially approached by telephone and invited to participate in the study. The interviews were conducted by the researcher. As the interviewing program proceeded, respondents were asked to nominate other potentially important respondents. It soon became clear that good coverage of all the major players had been achieved. Interviews were mostly conducted in English, as many of the international executives that were interviewed had competence in English.

A grounded theory-influenced approach was used (Glaser & Strauss, 1967), which meant the research was not limited by a priori hypotheses. Instead, the data collection and analysis process itself drove the choice of issues. The interviews were guided by, but not confined to, a list of topics and themes derived from a recognized model of strategic management. Moreover, knowledge and understanding of the market context of business conditions in China informed the questioning. The topic list was committed to memory, and each individual was asked the same questions in an identical fashion. However, the sequence varied to reflect the flow of what was constructed to be a conversational interaction. In this way, the interviewees were probed on the difficulties involved in business development in Shanghai in order to identify emergent themes. All interviews were tape-recorded. A total of 36 such interviews, in 30 companies, have to date been completed, transcribed, and analyzed. In addition, extensive experience of the region and familiarity with published sources have been drawn upon (Alon: 2003).

Conducting research in Shanghai entails coping with a number of factors common to research in other East and Southeast Asian countries and some unique ones. The companies in the sample and the nationality of the interviewees comprised a rich combination of backgrounds. Increasingly, the international education of local managers and their exposure to the business environment have reduced, although not eliminated, previous issues of cross-cultural communications difficulty, and proficiency with English makes that language a comfortable medium for both interviewer and respondent.

China`s Haier Group

Restructured in 1985 as a small manufacturer of refrigerators burdened by a debt of RMB1.47 million, the Haier Group not only has survived a series of radical reforms but also has turned out to be one of the most successful companies in China. Its story has been written as a case study by Harvard Business School. Now Haier has become an international organization that generated close to RMB43 billion (U.S.$5.18 billion) in sales in 2000. In 1985, Haier had only one product and a staff of 800. Today more than 20,000 employees are producing a full line of electronic household appliances, including refrigerators, air conditioners, washing machines, freezers, TV sets, computers, cellular phones, furnishing equipment, and many others in 42 main categories and more than 9,000 models. Haier ranks number one in China’s household appliance industry as measured by brand recognition and sales revenues.

According to a survey by Chinese Entrepreneur (2001), Haier was ranked first as measured by industry position, technology and service, market influence, mergers and acquisitions, strategic vision, and financial management. Haier has gained an international reputation by exporting to over 100 countries. In the most recent global survey by Euromonitor, a leading market research institute, Haier was ranked as the world’s top refrigerator brand and the world’s sixth-largest white appliance producer (Xinhua News Agency, 2002). In addition, Financial Times (1999) placed the CEO of Haier, Zhang Ruimin, twenty-sixth on its list of the world’s most respected business leaders (Zhang is the only Chinese person on the list). The Global Excellence in Operations (GEO) Award Program, sponsored by A.T. Kearney and Financial Times, honored Haier as one of 14 finalists for Special Merit Recognition in 1999 (GEO Award, 2000). There have been three key phases in Haier’s development:

• Brand-building phase (1984-1991): It took Haier seven years to build a strong brand in refrigerators through a well-planned TQM (total quality management) program.
• Diversification phase (1992-1998): It took Haier another seven years to diversify and broaden its product offerings.
• Internationalization phase (since 1998): Haier is currently going through a program to internationalize the company. It has about 62 distributors and more than 30,000 outlets around the world. The company’s strategic intent is to become one of the Global Top 500.

The Content of Haier’s E-Business Strategy

The best thing about such market entry was that, the company never followed a strict research pattern, because e-business is less costly and the company was in need of such setup in order to save it self from growing debts.

E-Target

The primary strategic targets for Haier’s e-business are revenue size, market share, and revenue growth rate. These targets are based on Haier’s long-term intent and vision of global brand. However, Haier seems to pay much less attention to profit growth and profit margin. Further, there is no differentiation between core and noncore businesses in Haier with regard to its e-target.

E-Mode

The strategic mode of Haier’s e-business is its e-business platform. This e-business platform is composed of four key elements. The first is supply chain management, including distributor management, supplier management, and other corporate partnership management. The second is customer relationship management, including institutional and individual consumers. The third is the enterprise resources planning system. The fourth is organizational restructuring. The first two elements are the B2B and B2C external networks, while the last two are the typical internal networks. These four elements constitute Haier’s integrated e-business platform or e-business strategy mode.

Haier’s external B2B network is based on iHaier.com. It is an international supply chain. With this platform, Haier can find the best suppliers, set up close partner relationships with their suppliers, and reduce the purchase cost while improving product quality. Haier plans to use this system not only for itself but also for other related companies. This platform has the functions of ordering, automated stock replenishment, payment processing, and production control and processes more directly related to the production process. This platform is open, where information is fully shared. Haier has not been a member of any neutral e-marketplaces yet. Further, up to now, iHaier.com only focuses on the household appliance industry. Finally, Haier’s platform only supports Haier’s own procurement, although Haier states that it will also host third-party procurement in the future.

Haier’s B2C external network is based on eHaier.com. This Web site has the function of taking online orders, but online payment is limited to selective cities only (most consumers pay at the time of delivery). However, Haier’s B2C platform is still only for Haier’s own products. It will be changed to carry other producers’ products in the future. To support its B2C platform, Haier has built one of the best distribution networks in China. Haier has more than 30 call centers in major cities and more than 10,000 distributors that reach more than 60,000 rural areas. Further, Haier’s B2C platform is able to process customized orders (Hackley: 2003).

Conclusion

The research depends on the type of market entry the firm is willing to have, at times the research is not necessary (As we have seen in the case of Haier), but even in that case the data can be available through many sources. Many specific sources of secondary data exist. There are so many, that dealing with them can be confusing and, even, overwhelming. Moreover, while the number of secondary data sources available is already large, it is increasing every moment. Similarly, the technologies to archive, access, and retrieve these sources are changing.

It is important for individuals who conduct marketing research to be as efficient and effective as possible when locating the desired information. Fortunately, the task is becoming easier, even in the midst of an increasing quantity of available information. The reason is due to computerization. Data bases themselves are becoming increasingly computerized, as are the means for searching them. The internationalization itself is turning the things easier.

References

1. Alon I. (2003), “Chinese Economic Transition and International Marketing Strategy. Contributors”, Westport, CT: Praeger.
2. Glaser B.G., Strauss A. (1967), “Discovery of Grounded Theory. Strategies for Qualitative Research”, N.A.: Sociology Press.
3. Hackley C. (2003), “Doing Research Projects in Marketing, Management and Consumer Research”, New York: Routledge.
4. Patzer G.L. (1995), “Using Secondary Data in Marketing Research: United States and Worldwide”, Westport, CT: Quorum Books.

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