Global e-business marketing strategies and implementation

Global eBusiness Marketing

Discussion of International Marketing Issues and Difficulties for an Australian Firm undertaking Market Research in Vietnam

In an increasingly globalized marketplace, it is vitally important for enterprises of all types to have reliable and timely information concerning the markets in which they compete. Moreover, for those companies seeking to expand their operations into foreign countries, obtaining this type of market research data is absolutely essential. Things have changed from years past, though, and many companies may be tempted to use the vast array of market data readily available on the internet or through domestic sources such as university and public libraries or trade journals. Furthermore, many countries seeking additional foreign investment have established trade offices that provide prospective investors with market-related data that is free of charge. Nevertheless, it is reasonable to assume that obtaining real-world and real-time information about a particular country, especially in developing nations where corruption, piracy or other illegal trade practices are rampant but might not be readily discernible from an outsider's perspective, will play a crucial role in an international venture and will assume new levels of importance in the future. To this end, this paper provides a critical review of the peer-reviewed and scholarly literature to determine the best approach to conducting market research in emerging economies such as Vietnam, including whether to use an Australian or locally-based research firm to conduct market research for a given product or service. A summary of the research and salient findings are provided in the conclusion.

Review and Discussion

Background and Overview.

While the authorities may not agree on the specifics, virtually everyone agrees that market research remains an essential ingredient for business success. According to the Oxford University Press's a Dictionary of Business (1996), marketing research can be defined as:

The systematic collection and analysis of data to resolve problems concerning marketing, undertaken to reduce the risk of inappropriate marketing activity. Data is almost always collected from a sample of the target market, by such methods as observation, interviews, and audit of shop sales. Interviews are the most common technique, and can be carried out face-to-face, by telephone, or by post. When the results have been analysed (usually by computer), recommendations regarding the original problem can be made. Market research, which is often used synonymously with the preferred term 'marketing research,' is also sometimes used to refer to techniques with the restricted objective of discovering the size of the market for a particular brand or product. (p. 313)

Today, businesses have a number of options available to them when it comes to conducting market research in other countries, but it quickly becomes clear that some approaches are more appropriate than others, depending on what information is needed and what product or service is involved and what in-house resources are available for this purpose. Some authorities suggest that almost every company can benefit from using some level of marketing research for their various products or services. In this regard, Duboff and Spaeth (2000) report that, "What's needed to take companies to the next level before the competition gets there is the ability to strategically anticipate what's coming while continuing to efficiently manage the business on a day-to-day basis. A tall order? Not really. Others have done it, and definable skills, techniques, and even models can help businesses grasp and implement this concept" (p. 16). Indeed, there are an increasing number of market research firms that specialize in international analyses, and many companies are already using these services to good effect. According to Gerbetz and Scalea (2001), "Among corporations who hire professional services firms for strategic planning, the skills of consultants are much more important than the reputation of the firm. The majority of executives interviewed said they would be more likely to hire a professional services firm with people possessing the global business credential" (emphasis added) (p. 65).

The importance of recent trends in international marketing research is also reflected in the development of new research areas that have emerged in the field concerning market globalization and collaborative business arrangements (including in-country strategic alliances) (Brewer & Rugman 2001). According to these authors, "These trends have imparted added importance to research in international marketing, but it is not clear how research in the field has coped with this broadened responsibility in a fast-changing environment. Past reviews of international marketing research highlighted deficiencies of the discipline in two aspects: that international marketing research was fragmentary and exploratory without a strong theoretical framework, and that it lacked the methodological rigor compared to the generic (or domestic) research in marketing" (Brewer & Rugman 2001, p. 458).

While there are proven approaches that can be followed for domestic or international market research purposes, the question of whether to conduct such market research in-house or to outsource this need to a third-party provider in a host country has become another issue that may not have an easy answer because there are a number of factors to be taken into account in making this determination. For example, if a company outsources their market research needs for a given country to an in-country provider, there may be some fundamental communication issues that will adversely affect the ability of the commissioning company to reap the benefits of such research. According to a study by Scipione (1995), a number of descriptive words and phrases can play a crucial role in creating magnitude or value impressions in the minds of persons who read market research reports and then make business decisions based on them. "This finding is made all the more important by the related finding that those persons who only read but do not write) research reports tend to have many different word-value perceptions than those persons who write (and usually also read) research reports" (Scipione 1995, p. 36).

This means that absent a native speaker (and writer) of the commissioning company's language, managers run a real risk of paying for market research data they will not be able to use effectively, or at all. Furthermore, in his essay, "Entrepreneurial Climate and U.S. State Foreign Trade Offices as Predictors of Export Success," Wilkinson (2006) reports that, "The market-based view posits that a market-knowledge gap exists between home country firms, which lack specific resources and capabilities needed in particular overseas markets, and host country firms, which possess those resources and capabilities because of their knowledge about local market conditions" (p. 99).

This paucity of timely information can be overcome by either ensuring that the in-house marketing staff has this linguistic capability (there is a small contingent of Vietnamese expatriates living in Australia today that could be used for this purpose, for example) or by establishing strategic partnerships with entities that are already operating in the host countries of interest. Further, this gap can also decrease over time as the exporter learns more about the host-country market (Wilkinson 2006). Many companies, though, may not have the luxury of learning about a host country "over time," and will need to hit the ground running when it comes to understanding who their potential customers are, what they want and need, and how they routinely go about getting it, and these issues are discussed further below.

General Market Research Considerations.

According to the definition provided by Morey and Nelson (1995), when it is effectively performed and consumed by those who need the information, market research represents an excellent business tool for gaining the insights and data needed to achieve organizational goals: "Market research is a formalized process for collecting and analyzing information," they advise. "It gives the opinions of all persons equal weight and visibility, not just those of the most vocal and persistent. It also prevents the bias of hearing what one wants to hear. The confidentiality of the process enables persons to express their true feelings" (Morey & Nelson 1995, p. 35). In many ways, conducting timely and effective market research is both a science and an art, but some companies are failing to either conduct such research or are not taking advantage of the findings of such investigations when they are conducted (Duboff & Spaeth 2000).

In their book, Market Research Matters: Tools and Techniques for Aligning Your Business, these authors report that market research is an essential first step, but not the end of the line because something must be done with the research findings: "Not only does an enterprise need to embrace the possibility of continual change, but also the marketing researcher has to be able to employ the tools and communicate their results effectively" (Duboff & Spaeth 2000, p. 13). This level of communication will clearly be facilitated when the market research is conducted by the company itself rather than having a third-party provider in a host country do so, but this does not necessarily mean that one approach is superior to another since every situation is unique. Nevertheless, some general market research considerations can help a company's leadership make the determination as to which approach to use in a given setting. For instance, "Understanding the recent past and present is necessary -- though not sufficient -- to researching the future. You need a stable foothold and insight into the dynamics of the marketplace from which to be able to peer effectively into the future.... Marketing research can provide real value by helping to provide the radar that will alert the enterprise to perils -- and opportunities -- ahead" (Duboff & Spaeth 2000, pp. 3-13). Proponents of market research maintain that these activities help to ensure that companies remain consumer-orientated. According to Fuglsang and Sundbo (2002), the value of market research can depend on what type of service or product is involved, and what destination country is intended for export purposes. "In practice," they advise, "this means that new products are more successful if they are designed to satisfy a perceived need than if they are designed simply to take advantage of a new technology. The approach taken by many companies with regard to market research is that if sufficient research is undertaken the chances of failure are reduced" (p. 115).

According to Fletcher and Smith (2004), the introduction of various technological innovations and a proliferation of international consumer data have resulted in the following trends in market research being experienced in recent years:

Market research is moving away from its roots as a discipline that was detached from the business decision-making process, and is now more actively engaged with decision-facilitation;

This shift has required new methodological thinking: an 'holistic' analysis approach that provides clients with a rounded view of what all their (qualitative and quantitative) marketing evidence is saying;

The new approach also requires analytical frameworks that combine hard market research data with prior management knowledge and intuition;

These new frameworks must be disciplined: intuitive thought can be powerful, but it can also be wrong. The new holistic approach to data analysis therefore needs to be based on the rigorous evaluation of prior management knowledge, as well as drawing on conventional data analysis methods (Fletcher & Smith, 2004).

While the foregoing trends suggest that most companies are increasingly recognizing the importance of effective and timely market research before "taking the plunge" into exporting to a given market, the country involved in such research, as well as the type of product or service involved, may affect the decision as to whether to attempt to acquire this data in-house or to outsource it to a domestic provider in the destination country, and these issues are discussed further below.

Market Research Considerations in Emerging Nations in General and Vietnam in Particular. Emerging countries such as Vietnam enjoy an abundance of pristine natural resources that are amenable to development for tourist purposes, and there has been a significant move on the part of many Asian nations to encourage additional trade through these avenues in recent years (Ghimire 2001). According to this author, "Developing countries considered they had a 'comparative advantage' vis-a-vis the industrialized world as they possessed exceptional tourist resources and attractions, such as warm and sunny weather, attractive beaches, unique wildlife and tropical forests and exotic or authentic cultures. Indeed, in the 1950s and 1960s, newly-independent countries in Asia and Africa frequently inferred tourism development to be a means of 'resource transfer' from the North to the South" (p. 99). As a result, emerging nations such as Vietnam have sought to encourage additional foreign investment by (a) identification and development of new tourism-related sites, (b) promotion and marketing of diversified tourism products, - enactment of favourable labour laws, and (d) provision of subsidized credits and tax exemptions to foreign investors (Ghimire 2001).

These initiatives, though, have only served to reinforce existing disparities between Western and Asian nations, a trend that was only exacerbated by the Asian financial crisis in the early 1990s. In this regard, Ghimire (2001) emphasizes that today, "A thorny issue" remains because "privileged tourist groups, coming mainly from the industrialized countries in the North, tended to respond more to the economic and political circumstances in their respective countries than to needs in Southern countries. In particular, developing countries possessed little capital, technology and know-how to develop tourism. Instead, this situation reinforced 'dependency' relationships with industrialized countries" (p. 99). Despite such "thorns," though, the fact that Asian countries in general and Vietnam in particular has sought to encourage additional foreign investment through the enactment of favourable labour laws and the provision of subsidized credits and tax exemptions for foreign investors means that the time is ripe and Australia companies that take advantage of these opportunities today will be well situated to reap the benefits in the years to come - if they approach their extension into this marketplace correctly.

According to Fields, Gunther, Katahira and Wind (2000), there has been a great deal of attention paid to market research in the emerging Asian marketplace in recent years, which has resulted in some important findings for Western nations seeking to expand their operations there:

Today, marketing is moving from the periphery to the center. Marketing expertise, once an afterthought, is now a central strategic necessity in rapidly changing Japanese and Asian markets. The practice of branding and segmentation, pricing, new product development, advertising, and marketing research have undergone fundamental transformations. These changes have tremendous implications for the critical success factors in entering Japanese and Asian markets. Overall, these many changes have made marketing more central to success. (p. 128)

As noted above, commissioning companies (defined for the purposes of this discussion as those Australian firms seeking to extend their market into Vietnam) have some options available when it comes to conducting market research, but emerging nations may have some special considerations that might go unnoticed or undiscovered without insider assistance from those who are in-country and "in the know." For example, in his essay, "Market Research Is Good Investment," Eckerman (2005) emphasizes that market research is an absolute necessity for companies seeking to gain additional market share through exports to another country, and the process is definitely worth the cost and should be regarded as an investment. This author identifies a number of benefits to be derived from effective and timely market research of an emerging nation today, including:

Effective market research will give provide companies with insight into many things, such as the target market's economy, any political risks, credit terms and recommended payment methods;

Companies will also find out which currency they are likely to be able to invoice in sterling, local currency or euro;

Companies can establish the market size and likely product demand;

Research can identify the location and number of customers/outlets, and can even go as far as establishing credit worthiness of potential customers in the target market;

Market research can also help companies determine who their competitors are and what makes them successful, uncovering the quality and prices of any competitive products already successfully being sold there;

Companies need to know if there are technical standards that may need to be met, as well as packing and packaging requirements for export, especially in relation to labelling regulations;

Before starting to export, companies should also find out which are the most effective distribution channels and methods (e.g., agents, distributors and wholesalers);

Companies will also need to be aware of any tariff or import restrictions within their destination market (e.g., duties, quotas, taxes on imported goods, the knowledge of which is essential for companies to realistically price their product in their target market) (Eckerman 2005).

Some basic facts and figures about Vietnam and its consumers are useful for consideration at this point. Two authorities on the culture, society and market in Vietnam report that today:

Street culture in the cities of Vietnam is one in which street vendors carrying baskets of fresh produce from their farms jostle with young men in crisp, white, business shirts rushing to their offices, where cyclos carry groups of students loudly communicating on their mobile phones, where the pavement noodle shops double as internet cafes and the latest glimmering paintjob on a motorbike is being admired by a group of savvy young consumers. The streets in urban Vietnam are predominantly youth-focused, reflecting the demographic situation in which well over half of the population is under 16 years old. However, it is not so much the age of people that marks the cities as being forward-focused and energetically engaged in the future, but the technologies, music, fashion and leisure activities which symbolise a population urgently acquiring the emblems of modernity. (Drummond & Thomas 2003, p. 1)

While this desperate thirst for all things Western may not be as pronounced as many commission companies in the West might like, the fact remains that the Vietnam market is hot but the country's economy is only lukewarm - but even this is changing quickly as well. For instance, Drummond and Thomas (2003) cite "the slowly increasing levels of wealth" and "the gradual freeing up of state control over the activities of the populace" as indications of these trends today (p. 1).

According to U.S. government analysts, Vietnam is a densely-populated, developing country that in the last 30 years has managed to recover from the (a) the devastation caused by decades of war, (b) the loss of financial support from the former Soviet Bloc, and - the rigidities of a centrally-planned economy (Vietnam 2006). Furthermore, the country's leadership has attempted to implement badly needed structural reforms required to modernize the economy and to produce more competitive, export-driven industries; not surprisingly, Vietnam's membership in the ASEAN Free Trade Area (AFTA) and entry into the U.S.-Vietnam Bilateral Trade Agreement in December 2001 have resulted in even more rapid changes in Vietnam's trade and economic condition today (Vietnam 2006). In fact, exports to the United States from Vietnam doubled in 2002 and doubled again in 2003 (Vietnam 2006).

In addition, Vietnam continues to seek to gain accession as a member of the World Trade Organization this year, an initiative that would provide the country with a number of benefits, including allowing Vietnam to take advantage of the phase out of the Agreement on Textiles and Clothing (which eliminated quotas on textiles and clothing for WTO partners on 1 January 2005). Finally, Vietnam remains committed to facilitating job creation to maintain pace with the country's high population growth rate; high levels of inflation, though, have caused Vietnamese authorities to tighten monetary and fiscal policies (Vietnam 2006).

From Eckerman's (2005) perspective, it may be useful - perhaps even essential -- to employ a market researcher from another country because of the valuable expertise that may not otherwise be available: "Never underestimate the importance of cultural differences. Before spending money on literature and support materials, you should seek the advice of a professional with knowledge of the market as the requirement for translations; the use of certain colours or even the wrong sized paper in some countries may mean the difference between success and failure" (emphasis added) (p. 66). Notwithstanding any other cultural or social differences between Vietnam and Australia, though, and the inherent differences in internal administration for imports and exports, the fact remains that the people of Vietnam are much like consumers in any market.

According to Pham and Tran-Nam (2002), "In a market economy, customer is the king, who should be respected by all successful sellers. Domestic customers are usually less demanding than foreign customers, but that does not mean that producers can afford to ignore and underestimate domestic demand" (p. 202). In this regard, Fletcher and Smith (2004) emphasize that ethnocentristic views or misperceptions on the part of the company seeking reliable and timely market data may adversely affect their ability to conduct such analyses on their own: "Another common problem in successfully undertaking a market research study is the fact that the project may not have been set up based on a full and detailed understanding of the 'customer's world'. Here, we are referring to a failure by the commissioning organization to understand all of the fine details of the critical issues that are important to customers. A failure to do this could mean that the analyst will accurately analyse the data in front of them, but will still never truly get to grips with what customers really think" (p. 45). Likewise, it is essential for commissioning companies to keep in mind that consumers in emerging nations are much like their counterparts anywhere and will seek out those products and services that offer them the best value for their money:

Producers should understand that domestic consumers want to trade their hard-earned money for goods of quality at a reasonable price, and not keep afloat bad producers. That is a principle that foreign businesspeople have mastered when looking at the market with 78 million Vietnamese, all of whom want to buy durable goods at competitive prices. Regardless of trade barriers, local consumers see that foreign goods are more attractive than domestic goods in terms of quality and prices (Pham & Tran-Nam, 2002, p. 202).

Furthermore, in spite of the adversity they have weathered in recent decades, the market in Vietnam today has become increasingly sophisticated and the consumers increasingly sensitive to quality and price issues. For instance, "Foreign customers are usually companies from one country that buy goods from another country to distribute to retailers or for retail sales in their home country or a third country. They are usually very demanding and sophisticated. They are very experienced in the international market and not easily cheated. They have no inclination or reason to buy goods of poorer quality at more unfavorable terms from any country" (Pham and Tran-Nam, 2002, p. 202). These authors suggest that it behooves a foreign enterprise to conduct their own market research of the conditions in Vietnam rather than depend on a domestic provider: "In the market as well as in daily life, everybody has to build trust. Long-term customers, not one-time buyers, are needed. Both buyers and sellers have to follow the commitments in the contract. To do this, from our side, sellers have to study and do market research for both domestic and foreign markets, to be able to understand and analyze market information, to combine knowledge of price trends and climatic conditions in regions that are producing the same items in order to make a forecast on what is likely to happen, and decide on the selling price while signing the contract" (Pham & Tran-Nam, 2002, p. 206).

By sharp contrast, Fields and his colleagues suggest that in-country providers are the only way to go. Citing the results of an interview with Takeo Higuchi, a former senior executive of Mitsui Trading Vietnam, whose advice on entering the Vietnam marketplace included (a) finding a good local partner, (b) understanding government restrictions, - being prepared for a slow response, and (d) speaking the local language (Fields et al. 2000, p. 68). Notwithstanding the fact that Australia already enjoys significant trade relations with Vietnam (as shown in Table 1 below), the foregoing requirements suggest that having a strategic relationship with an in-country provider may be the best approach for developing effective and timely market research in Vietnam today.

Table 1.

Vietnamese Export and Import Partners and Amounts.