Financial markets are the principal media through which corporate value is exchanged, yet this road to success is littered with failed investments and flopped attempts. The smart investor gathers as much information as possible, than analyzes it thoroughly, before placing money on the line.

Marketing plans are the principal way goods are introduced and promoted, yet this road to sales growth is littered with failed ideas and flopped attempts, as well.

Like an investment bank deciding where to put its money, a marketing department must also conduct research in order to gather the information necessary to not only minimize the chances of failure, but to assemble the optimum strategy for growth.

This is especially true in international marketing- an area into which many companies launch themselves without adequate research. Whether due to assumptions of similarity to the home market, or simply not knowing what questions to ask, many a product has been derailed because the marketer did not properly form a picture of the sales environment, creating a fatal strategic flaw.

Data types

There are two types of research available to market researchers: Primary data is specific to the marketing task at hand, and is collected specifically for that task. Secondary data is previously collected information that is also relevant to the current marketing task.

For example, a team introducing a high-tech smartphone to a new country might gather primary data in the form of a questionnaire asking which featurepeople expect from their mobile phone. They might also use secondary data, such as census reports, to determine the average income of their target market demographic. Cross-referencing the two data sources would help the manufacturer decide which feature seat and price point would best position the phone in the market.

Because it is specifically constructed for the problem at hand, primary data can be viewed as highly reliable. However, it is expensive and labor intensive to gather, as it involves manpower and time in the field.

Secondary data is much less expensive, often free, in fact. Government agencies in charge of national economic development and foreign investment are more than happy to publish reams of statistics, research results, and webpages. But in countries lower down on the economic development scale, relevant data may not always be available.

Also, secondary data validity is dependent upon the original gatherer. The aforementioned government agencies use their statistics as sales tools to encourage foreign investment, and that must be taken into account when analyzing the often rosy numbers they provide. In addition, timeliness of the data must be considered.

With both types of data, it is important to apply relevant, statistically sound analysis to avoid misintrepretations or skewed results.

The chief reason many companies rely too heavily on secondary data is cost. Doing primary research, whether in-house or through a market research firm, can be extremely expensive, but often it is the only way to develop a clear picture of the viability of a market, and the best strategy to succeed within it.

Primary data gathering techniques

The text points out that cultural preferences play a large part in determining how data is gathered. US firms go for a more numbers-heavy approach, whereas a Japanese firm might use a more people-oriented method, visiting dealers an talking to them about the consumer behavior they witness first-hand. In any case, triangulation of data, using two very different approaches and comparing the similarity of the results, can be used to ensure validity and accuracy.

Common methods of data gathering are observation, focus groups, personal interviews, experimental techniques and surveys. Each yields a different type of information and has its own up and downsides.

Observation involves sending trained observers into the field to note firsthand how a product is used. The text cites how Nissan did this to research American reaction to its Infiniti line of luxury cars. In this case, the observation of the American preference for 'bells and whistles' as oppostd to the Japanese asthetic of luxurious simplicity prompted a redesign of the cars. As the text metions, the same approach was also used by Volkswagen in their decision to reposition their cars as fun and exciting to drive.

Observation is not always hidden-camera stuff. Best Western's approach involved senior citizen couples agreeing to videotapings of their cross-country drives, allowing the hotel chain to get a firsthand look at how older couples decided where to stay. As a result of this gathered data, the chain decided that raising the senior discount abouve 10% was not necessary, and did not provide additional incentive for seniors to choose Best Western.

This approach can be expensive, especially when using highly educated anthropologists and ethnographers to do the observing,but it can also eliminate the isolation between the boardroom and the customer, showing decision makers how their products are actually purchased and used versus only how the numbers suggest they are consumed.

Focus group research involves sitting down with several people who represent the target market, giving them little sandwiches, and asking them in-depth questions about various aspects of the product or market. Sometimes, they get pizza. Personal interviews are pretty much one-on-one versions of focus groups.

While the small sample size invalidates the focus group or personal interview as a statistical tool, they do provide clues as to customers' motivations, desires, or product understanding. Like observation, they can assist marketers with insight on a personal level, helping to identify triggers and avoid subtle pitfalls along the way.

As you can imagine, focus groups and individual interviews can be time consuming to hold. There's also considerable capital outlay, much of that in the way of little sandwiches or pizza. Group members with stronger personalities can dominate the discussions, or cause more introverted participants to hold back their feelings on the discussion topics. Aditionally, certain cultures might be more reticent when participating in these interviews.

The text explains experimental information gathering techniques as attempts to gather quantitative data using the scientific method to ensure the validity of the data. The survey is a commonly used method of quantitative information gathering.

The big stumbling block with surveying across national boundaries is data incompatibility. The text demonstrates, as an example of functional inequivalence, that hot chocolate, considered by Europeans and Americans as an evening drink, is primarily consumed by Latin Americans in the morning. Thus, testing a sales message for hot chocolate in Europe for cross-compatibility in South America via the survey method would yield functional inequivalence; the two cultures use the product differently.

The other type of data incompatibility is conceptual inequivalence, which is when different cultures have a completely different interperetation of ideas. Citing again from the text, the word "family" generally refers to the nuclear family in the USA, whereas in Mexico it connotes the extended family, and in Japan it often refers to long-dead ancestors.

Undoubtedly, technology has made research easier and cheaper to conduct than ever before. Through the internet, marketing departments conduct passive research, relying on web surfers to answer suvey questiong when they visit the appropriate page. Researchers have instant access to secondary data without setting foot in a library or calling a consulate. Direct internet contact with resellers and potential customers also allows the remote gathering of primary data as well. As an example, visit the website of the Rochester Democrat and Chronicle, which sometimes prompts readers to enter their age, gender, and zip code before displaying articles.

These advances erode, however, when researching developing markets. In the US, Europe and Japan, a household without an internet connection is almost the exception rather than the norm. In Africa, however, there might be one internet connection for 1,000 or more people. Online surveys are of no use when the intended respondents lack the ability or literacy to answer them.

Still, Marketers are confident that the Internet will be the preferred medium of information gathering for the future, especially since developing nations are wiring up at an ever increasing rate.

Control of research
Just as the control of creative strategy can be centralized, decentralized, or coordinated between central and regional, so can market research. In a centralized system, a hedquarters handles all research tasks for each market, whereas in a decentralized approach, research for a particular nation is handled at the branch level.

The primary benefit of centralized research control is that it allows for maximum comparability of data, since all research design is handled and interpreted at the headquarters. On the downside, it is possible for a remote central research office not to take local factors into consideration, which could open flaws in the marketing strategy despite all decisions being based on sound quantitative data.

The benefit of decentralized research is that those local idiosyncrasies do not get ignored, and differentiations can be charted even with product usage in neighboring countries, such as Austria and Germany, that share a common language and, on the surface, a common culture. This is a good methodology for firms who are completely unfamiliar with the new markets they are studying.

A coordinated approach has a central research headquarters relying on the data collected or interpreted by regional offices, yet still conducting quantitative primary research from the central site.