New Research Provides Better Way to Measure Global Market Potential
arketing research has a problem in the United States, and his name is John Wayne.
Americans glorify the straight-talking machismo that Wayne personified in such films a "The Searchers" and "True Grit." They pride themselves in truth telling and aren’t shy with their opinions.
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Jan-Benedict Steenkamp is Knox Massey Distinguished Professor of Marketing and Area Chair of Marketing | |
People in other countries, particularly those that value community over individuality, aren’t so free and certain in expressing their beliefs. They’re less likely to say what they really think if doing so causes them to break with social norms.
For years, market researchers have recognized this problem, but have been flummoxed in dealing with it, says Jan-Benedict E.M. Steenkamp, the Knox Massey Distinguished Professor of Marketing and area chair of marketing at the University of North Carolina’s Kenan-Flagler Business School.
It complicated cross-country comparisons of marketing survey data. In a world of globalized commerce, it has become even more nettlesome because companies increasingly want to do business and gather data internationally.
"In China, Japan and Korea, the culture is much less openly confrontational than in the United States," Steenkamp says. "That means somebody is not likely to say that he completely disagrees with something. Many surveys in eastern Asia therefore tend to be systematically higher in their evaluations of products and services."
A person in China, when asked about a new cell phone, for example, isn’t likely to say that he hates it, even if he does. Someone in the United States will. Thus the marketer ends up with two different grades, but in reality, the same underlying opinions.
A new model to analyzing cross-country marketing data
In a study, Steenkamp and his co-authors — Martijn de Jong of Erasmus University and Bernard Veldkamp of the University of Twente in the Netherlands — devised a method that enables the economical reconciliation of cross-country marketing data. Their model is mathematically daunting for the uninitiated, but intensely practical in its application, Steenkamp says. It lets marketing practitioners do their jobs faster and more cost-effectively.
"What market-research companies can do with our method is arrive at a more valid idea of the potential market for a product in different countries," Steenkamp says.
Steenkamp offers an example from his own consulting work of the setting in which a marketer might use their new approach. An American packaged-goods company asked him to assess the markets in various European countries. It had projected the likelihood that consumers would embrace its offerings based on results in England, where consumers tend to respond like Americans. Steenkamp showed the company’s executives that they had to factor cultural differences into their analysis: Spanish consumers had less of an appetite for the firm’s goods because they were warier about trying new things.
Without this assessment, the company could have plunged ahead with its England-based estimates and been faced with disappointed by sales in Spain.
"Then the company guys in Spain would have gotten a hard time," Steenkamp says. "But I showed them that the hurdle that the company would have to overcome with the Spanish consumer was higher. So they should either devote more money to Spain or lower their targets there."
The shorter the survey, the better
The method developed by Steenkamp and his colleagues makes these sorts of comparisons even more efficient. One of their goals was devising an approach that permitted marketers to ask as few questions as possible because, for companies, time is money.
"The longer a questionnaire is, the more expensive it is," Steenkamp notes.
Far too many surveys are too long and thus too costly, he says. Many of them depend on techniques and measures developed in academic settings, which favor precision over practicality.
"Much of the groundwork was done with student subjects," Steenkamp explains. "That’s not strange. What’s unfortunate, though, is that student time is free. Cost didn’t matter — the students had to participate. So the measures weren’t developed with costs in mind. They were developed for maximum precision."
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