1. Identifying International Market Opportunities and Undertaking Market Research International Marketing 463-441 Lecture 4
2. Undertaking Market ResearchIdentifying International Market Opportunities (Various Approaches)
3. Market Research
4. Developing Market Opportunities and Strategies Marketing Managers Analysis Planning Implementation Organisation Control Developing Needed Information Assessing Distribution Internal InformationInformation Information Databases Analysis Needs Market Marketing Intelligence Research Marketing EnvironmentTarget Markets Marketing Channels Competitors Publics Macro environment forces
5. Market Targeting Market PositioningMarket Segmentation Develop Measure of Develop positioning Identify bases for segment attractiveness for market segments segmenting the market Select target segment Develop a marketing mixDevelop segment Profiles for each segment Major Segment Variables for Consumer Markets Existing Product Sales, MarketVariables Geographic share, Growth and Decline, RelativeRegion and/or countryetc. World market sizes, City and/or region Density Climate Demographic Age, gender, family size, family life cycle, income, occupations, education, religion, race, generation, nationality Psychographic Social class, lifestyle, personality Behavioural Types of occasions and festivals, existing market cultures, user status, loyalty status, concept readiness stage, attitude towards products
6. Defining the problem and research objectivesDeveloping the research plan for collecting information Implementing the research plan – collecting and analysing the data Interpreting and reporting the findings
7. Primary Data Collection Research Observation, Survey, Experiment ApproachContact Methods Mail, Telephone, Personal, Online Sampling Plan Sampling unit, Sample size, Sampling Procedure Research Instruments Questionnaire, Mechanical Instruments
8. Strengths and Weaknesses of Each Method Mail Telephone Personal OnlineFlexibility Poor Good Excellent GoodQuantity of data that Good Fair Excellent Goodcan be collectedControl of interviewer Excellent Fair Poor FaireffectsControl of sample Fair Excellent Fair PoorSpeed of data Poor Excellent Good ExcellentcollectionResponse Rate Fair Good Good GoodCost Good Fair Poor Excellent
9. Types of Samples Probability SampleSimple Random Every member of the population has a known and equal chanceSample of selectionStratified Random The population is divided inot mutually exclusive groups (suchSample as age groups) and random samples are drawn from each groupCluster (area) The population is divided into mutually exclusive groups (knownSample as blocks) and the researcher draws a sample of the groups to interview Nonprobability SampleConvenience The researcher selects the easiest population members fromSample which to obtain information, using their own judgment as to which members are good prospects to collect information.Judgment Sample The researcher finds and interviews a prescribed number of people in each of several catagories.
10. Steps in the Market Research Process 1. Define the research problem and establish research objectives2. Determine the sources of information to fulfill the research objectives 3. Consider the costs and benefits of the research effort4. Gather the relevant data from primary or secondary sources, or both 5. Analyse, interpret and summarize the results 6. Effectively communicate the results to the decision makers Cateora and Graham pp. 216-221
11. Measuring Market SegmentsMust attempt to determine how big is the actual market
12. Approaches to Estimating Market Sizes (making assumptions) Technique Method ImpactMultifactor Analysis Analysing the target market A real assessment of the potential by comparing it to target market, subject to the US economy cultural differencesCoefficient of Income Evaluating the target market A good estimate of theSensitivity economy by detecting expected changes in the marginal changes and their target market implicationsTrend Analysis Looking at the performance A simple way of estimating of the target market, the target market growth projecting into the futureMacrosurvey Observing relative level of A crude method of development of the target determining the quality of market to decide how ready the target market and its it is for products potential
13. Multifactor Analysis Evaluate a market on the basis of the size of another market. Utilize indicators like refrigerator ownership, per capita, TV sets Per capita, establishing a quality index for the target market. i.e., US is 100%, target market may have index of 15% Population of target market x as percent of US market. Adjusted market figure x by sales of refrigerator, TV sales in US.If the quality of the market is 15% of the US and population 10% of the US The market potential is 0.15 x 0.10 = 0.015% or 1.5% of the US
14. Coefficient of Income Sensitivity As income of a target market is set to change, the impact of the change is not homogeneous. A 1% change in income may bring a 27%increase in food items and a 2% decline in public transportation.
15. Trend Analysis Using past information about a target market’s income andConsumption patterns, by using trend analysis, this information Can be projected into the future.
16. MacrosurveyIn countries where inadequate data exists, can observe how advancedCommunities are. Then approximate the level of advancement of these Communities.
17. Focus Groups
18. A simple product checklist Is there a need or demand?Can the product be produced in the target market? Can we distribute efficiently? Can we price the product attractively? Can our partner play the needed critical roles? Can we compete with local competition? Can we preempt future competition?
19. Identifying International Market Opportunities
21. The Outcomes (potential targets) Key internal The process of Key external influences on the product/market influences on theSize and depth of change development development development Time process process The base potential for development Where the business is currently performing Gibb & Scott 1988
22. Profile of business in terms of performance:PerformanceBase • Market trends: current product mix, market mix, competition • Production trends: Utilisation, efficiency, quality •Financial and Management: net worth, liquidity, gearing, trendsKey internalinfluences on Administrative, marketing, production and Managerialthe resources and capabilities.developmentprocessKey external Competition, market restrictionsinfluences onthe developmentprocess All influence the type of product and market development that will take place
23. Environmental Analysis: Threats and Opportunities Market: product position and prospects Competition: Traditional, new firms, new industries, profits Technology: Changes and developments The Economy: Growth, inflation, Law Operating Needs Personal Business Strategies Operating & Tactics ProductsObjectives Objectives Budgets Manpower Finance Feedback loops Business Analysis: Strengths and WeaknessesProduct: 4 Ps or 4 customer wants Profit/Cash flow: its sources and usesPeople: Management and Skills Facilities: age, technology and utilisation Burns & Dewhurst 1993
24. Sources of Competitive Advantage (The reason for any product development in a company) Importance of price to customers, distributors, the extend ofCosts: demand elasticityKnowledge: Stage of industry lifecycle, common industry knowledge verses your own specialised knowledge Links with customers, suppliers, distributors, relativeRelationships: power Appropriate organisational structures, Ability to respondStructure: to market, leadership.
25. Many Factors Change Markets and Give rise to Opportunities Social Social and cultural trends and drivers. Reviving historical trends Product Opportunity Gap Economic State of the economy Technology Shift in focus on where State of the art and to spend money emerging Level of disposable technology income Re-evaluating existing technology Cagan, J. and Vogel, C., M., (2002),
26. Areas of Firm Innovation
27. Potential Product Lifecycle IP Value &Profitability Novelty IP Va lue Competitive Concept Risk Taking Risk Taking it of Pr Pioneers Early Early Late Late followers Majority Followers Time Majority
28. Technology/Market Positioning Hotel Coffee Shop Coffee Bean HighStyle Kedai Kopi Fast Food Low Low High Technology
29. Table 6.1. Drucker’s Sources of Innovation Source Explanation Examples The unexpected Success of a revolutionary product or the application of •Apple computer success, failure or technology from one industry to another, sudden or •Rapid decline of Proton’s marketexternal occurrence unnoticed demographic changes caused by wars, share insurgencies, migration, etc. An incongruity A change that is already occurring or can be made to •Sugar free products and sugarbetween reality as occur within an industry. It may be visible to those replacements due to concern for health it actually is and inside the industry, often overlooked or taken for •Increasing demand for travel andwhat it ought to be granted. holidays due to increasing incomes and leisure time Inadequacy of an An improvement in process that makes consumers •Caffeine free productsexisting technology more satisfied based on an improvement or change in •Microwave ovensor business process technology. •Mobile phonesChanges in industry New ways and means of undertaking business based •Health care industryor market structure on identified opportunities or gradual shifting of the •Education industry – private education nature of the industry.Perceptual changes Changes in peoples awareness founded on new •Leisure and exercise industry aerobics knowledge and/or values or growing affluence leading & gyms to new fashions and tastes Demographic Gradual shift of demographics in population by age, •Establishment of more retirement changes income groups or ethnic groups, etc homes New knowledge New knowledge or application of existing theoretical •Video and VCD industry knowledge into an existing industry that can create •Robotics new products not previously in existence •Biotechnology
30. Types of InnovationType Description ExamplesInvention Totally new product Wright Bros – plane Edison – light bulb Bell – telephoneExtension New use or different application Kroc – McDonald’s of an already existing product Bushnell – Atari Wilson – Holiday InnDuplication Creative replication of an Wal Mart – Dept Stores existing concept Pizza Hut – Pizza restaurantSynthesis Combination of existing Smith - Fedex concepts and factors Merryil Lynch – Home equity into new use Financing
31. Dispelling the myths about innovation•Less than 5% of new products launched on the market are successful• Out of 100 new ideas, less than 2 become a commercial reality• Most companies are followers and not innovators (even the Body Shop) • Very few really novel innovations are ever launched commercially • Most new products are incremental steps in enhancement, rather than something completely new (similar to the automobile industry)
32. Sources of InnovationDrucker (1984) Identified seven sources of innovation
33. Unexpected occurrences unexpected success
34. Unexpected failure
36. Process needs
37. Demographic changes
38. Industry and Market Changes
39. Perceptual changes
40. Knowledge based concepts
41. Types of Innovation
42. InventionTotally new product
43. ExtensionNew use or different application of an already existing product
44. DuplicationCreative replication of an existing concept
45. SynthesisCombination of existing concepts and factors into new use
46. Other Examples Teflon Unexpected occurrences
50. Process Needs
51. Industry Changes
53. changes in perceptions
54. New knowledge
55. Principals of Innovation• Scan opportunities through purposeful processes• Be both conceptual and perceptual – get out into industry• To be effective, it has to be simple and focused – has to be used by average people• Pursue ideas that are going to make major change• Market knowledge is important
56. New Knowledge Innovation is the most riskyBetter to focus on other sources of innovation: ie, applications of existing ideas and technologies as new knowledge technology development is extremely long term. Bright ideas are the riskiest source of innovation and rarely succeed. Receptability is always the problem (look at patents files but never commercialised)
57. Opportunity Feasibility Technical – feasibility of product or service Market- Determination of market opportunities and risks DeterminationNew Market Financial – Analysis of financial of Feasibility Feasibility and resources Organisational – Analysis of organisational Capabilities and personnel requirements Competitive – analysis of the competition
58. Competitive Advantage What specific competitive advantages does the product offer?What are the competitive advantages of companies/products already in the market? How are competitors likely to respond? How will the initial advantage be maintained? Buyers Who will the customers be? How much will each customer buy? How many customers will there be? How will the customers be located? How will they be serviced?
59. Marketing of Goods and Services How much will be spent on advertising and promotion?What share of the market will the company be able to capture? Time frame? Who will perform the selling functions? How will prices be set? How will they compare to the competitors prices? How important is location and how will it be determined? What distribution channels will be used? What are the sales targets? Production Will the company make or buy? What are the sources available at reasonable prices?
60. StaffingHow will competence in each area of the business be developed and maintained? Who will need to be hired? How will they be found and maintained? Financing How much will be needed for the development of the product or service? How much will be needed for setting up operations? How much will be needed for working capital? What assumptions are sales (financial) forecasts made?
61. Specific Activities of a Feasibility AnalysisTechnical Feasibility Analysis Crucial technical specifications Design Durability Reliability Market Feasibility Analysis Product safety Market potential Standardisation Identification of potential customers Engineering requirements Potential customer dominant characteristics Machines Potential market share Tools Potential sales volume Instruments Sales price projections Work flow Market testing Product development Analysis of market Prototypes Market planning issues Product testing Preferred channels of distribution Field testing Impact of promotional issues Plant location Distribution costs Desirable characteristics Suppliers Environment
62. Specific Activities of a Feasibility Analysis Financial Feasibility Study Competitive Analysis Required financial resources Existing competitors size Available financial resources Financial resources Market entrenchment Potential reaction of competitors to Newcomers by means of Price cutting, advertising, Organisational Capability Introduction of new products and Other Analysis Potential new competitors Personnel requirements Required skill levels Managerial requirementsDetermination of individual responsibilities Potential organisation development
63. Opportunities are a product of our mindand these visions can become thedesign of our future with skilful andcreative utilisation of scattered existingand forgotten resources to create greatunimagined synergies. This is the truepower of creativity that God has givenhumankind.
64. A Creative Personenthusiastic, but risk assessor, who can thinkboth serially and laterally, good at assessingopportunities, friendly, has good technical know-how, able to access what he or she doesn’tknow, broad vision, an eye for detail, strongmotivation to overcome hurdles, can give honestassessments and is aware of their personalstrengths and weaknesses
65. “Too much focus onprocess, on a static agenda, while it may get a lot done initially, will tend to drivecore competencies towards core rigidity.”
66. Practice/Process Trade-offInnovation Optimal Innovation Area Organisation Ideas becomes rigid Little gets done Practice Process
67. Industry Today is Looking for the “Innovation” SolutionHow does a company becomeinnovative and competitive?
68. The replacement of existing technologies is happening so fast that 40% of the Fortune 500 companies that existed in 1975 do not exist today. Griffin, A., (1997), The Drivers of NPD Success: The PDMA Report, Chicago, Product Development & Management Association Now, on average new products launched in the last five years make up 33% of most successful companies profits.Foster, R., N., (2000), ‘Managing Technological Innovation for the Next 25 Years’, Research-Technology Management, 43, 1., Jan/Feb., P. 20. The cost of new technology is a powerful driver for firms to expand product distribution over a large number of international markets to recover investment costs quicker. New technologies are thus a push factor for the globalisation of companies due to the need to obtain greater economies of scale.
69. To be effective requires a shared sense of purpose
70. The elements of innovationTempera Strategic Skills-ment Thinking Creativity Focus Innovation Culture Ego Learning Ability Interpersonal Interactions Hunter, Baharuddin (OUM) & Rozhan (UIA): Alpha Model of Innovation
71. Creativity Ideas Education Group Creativity Culture Solutions Opportunities Lateral thinking Serial Strategic Personality Thinking ThinkingHunter, Baharuddin (OUM) & Rozhan (UIA): AlphaModel of Innovation
73. CultureTheories in action Stories, myths, heroes, artifacts, informal behavioursverses EspousedNorms and Producti Values Organisationalgroup behaviour vity & learning (single or effective double looped ness Leadership Beliefs Assumptions
74. Effect of Factors on InnovationVariable Absent ExtremeFocus Random Tunnel visionStrategic Thinking Switched off UnfocusedCreativity Unimaginative Over-imaginative, lose sight of big pictureEgo Purposelessness Self-deludedInterpersonal Individualistic and Hesitant to takeRelationships independent responsibilityCulture Self centered and Fanatical moraless
75. Optimum InnovationInnovation Qualities (at mean spectrum)ComponentFocus •Have control of the situation •Put the project firstStrategic Thinking •Able to spot and work towards exploiting the opportunity •Able to secure resources (beg, borrow or steal)Creativity •Able to create both laterally and serially •Spot and exploit opportunitiesEgo •Inner need to make a difference •Able to take risksInterpersonal relationships •Able to network effectivelyCulture •Spot and exploit causes •Create social capital
76. Optimum InnovationInnovation Qualities (at mean spectrum)ComponentFocus •Have control of the situation •Put the project firstStrategic Thinking •Able to spot and work towards exploiting the opportunity •Able to secure resources (beg, borrow or steal)Creativity •Able to create both laterally and serially •Spot and exploit opportunitiesEgo •Inner need to make a difference •Able to take risksInterpersonal relationships •Able to network effectivelyCulture •Spot and exploit causes •Create social capital
77. The Creative Thinking Process Incubation Knowledge Creative IdeasAccumulation Process Evaluation & Implementation
78. Two Approaches to Creative Problem SolvingAdaptor InnovatorEmploys a disciplined approach, Approaches tasks from unusualPrecise, methodical approach anglesIs concerned with problem solving, Discovers problems and avenuesRather than finding problems of solutionsTends to be means orientated Questions basic assumptionsIs capable of extended details work related to current practicesIs sensitive to group cohesion and Has little regard for means; isCooperation more interested in ends Has little tolerance for routine work Has no need for consensus; often insensitive to othersAdapted from: Kirton, M. (October 1976) Adaptors and Innovators: A description and Measure, Journal of Applied Psychology
79. Processes Associated with the Two Brain Hemispheres Left Right Verbal Non verbal Analytical Synthesizing Abstract Seeing analogies Rational Non-rational Logical Spatial Linear Intuitive Imaginative
80. Ways to Develop Left and Right Hemisphere Skills Left Hemisphere Skills Right Hemisphere Skills1. Step by step planning 1. Using metaphors & of your work and life activities analogies to describe things2. Reading philosophy 2. Taking off your watch3. Establishing timetables when you are not working for all your activities 3. Listening to music4. Using and working with 4. Suspending your a computer program initial judgment of ideas, people TV shows etc 5. Recording your hunches, feelings, and intuitions and calculating their accuracy 6. Detailed fantasizing and visualising things and situations in the future 7. Drawing faces, caricatures and landscapes
81. Field Dependence-Independence Perception Embedded Figures Test (EFT) Witkin 1954, 1973, 1977
82. Field Dependent (unable to see figures) ● Favour Social science & education● strong social skills, gravitate towards others, more contextual in approaches● Good at seeing connections between categories of information, look at environment holistically● Process information in chunks● Tend to rely on social information Holistic Approach to IssuesField Independent (able to see figures)● Favour Maths, engineering, science● Function with more autonomy & display a more detached approach,● Focus on individual issues in the scanned environment● Can isolate issues in a complex setting (block out what is not important) Specific Issue Analysis