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Using Marketing Research for International Business Development John Watters. School of Business at McKentro Diversity Many marketing research professionals encounter skepticism from executives and other business decision makers when presenting their findings or even whether to conduct research in the first place. This occurs today much as it has throughout business history, However, more on than not, the benefits of the insights and knowledge gained from marketing research more than outweigh the costs of the resources to conduct it In my own experience. This was particularly true when considering new business opportunities in international markets. A firm should be especially interested in conducting marketing research when the market territory is unknown. When the product is still relatively new, it makes the case even more compelling In this article. I discuss three examples of interational business development opportunities in the telecommunications industry from the 1990s. These examples may now be a bit dated, but the lessons still hold true todaythere's substantial value in doing marketing research and a company faces huge potential financial loss by failing to do so. Three Stories. To illustrate the importance of international marketing research, relate three stories of our experience at Southwestern Bel Corporation (SSC). The first serves as an example of why pursing a business opportunity without conducting research can be risky for a firm. The second example shows why business executives and decision makers should at least consider the information a credible marketing research team can provide. The third example shows why credible marketing research can help a firm avoid making investments in what turns out to be a poor opportunity First Story - United Kingdom. In the early 1990s, S8C purchased a large cable television provider in the United Kingdom. The company primarily served customers in the middle part of England. The purchase was based on the assumption that demand for cable television in the United Kingdom would mirror that of the United States (cable television household penetration in the US had increased substantially from the late 1970s to the early 1990s). If cable television was as popular in the United Kingdom as it had been in the US, the market was set to explode The explosion never happened, the demand for cable television has not approached the level experienced in the US. The assumption that the demand for cable television in the United Kingdom would be similar to the U.S. was not based on marketing research conducted by SBC SBC leamed an important lesson. Even though the United Kingdom has similar language. culture and incomes to the US, the tastes for cable television are widely different. To enter an international market even a familiar one, without conducting marketing research increases the risk of misunderstanding and miscalculating the financial opportunity Second Story - South Korea- In the early 1990s, SBC was evaluating an opportunity to join a South Korean cellular operator. In this case. S8C conducted marketing research to help measure the potential value. The research determined that there was a huge opportunity in the South Korea cellular market. The research team forecasted early and significant growth in the number of people who would buy cellular service. The results seemed too good, however, for some executives at SBC. To paraphrase, one executive incredulously said, "You mean to tell me that South Korea will have higher cellular penetration than Dallas, Texas?" Fortunately, SBC accepted the results and proceeded to invest in the opportunity. Good thing they did. South Korea has indeed been a market leader throughout the history of cellular market penetration (see chart on the bottom of the previous page). The investment was very lucrative for SBC The lesson here is that, even though the marketing research seems to contradict consensus opinion, the research should be evaluated on its own merits. Was it conducted objectively? Did the researchers take care when analyzing the results? In this example, the research was valid, the results were proven historically and the company benefitted by paying attention to the researchers. Third Story - India- In the mid-1990s, SBC conducted marketing research in India. SBC was evaluating an opportunity to bid on a cellular license as the second operator competing against the incumbent provider. Market penetration of cellular service had been slower in India than other developing countries but SBC wanted to investigate directly to see for themselves. Our marketing research concluded that cellular market penetration was indeed going to continue to lag other developing countries. SBC, in following the research, concluded that the opportunity was not going to be a strong financial gain, so it passed on the bid. A member of the bid team told me, "That was the best money we've ever spent on market research. The executives were determined to bid on India, but the market research told them to back off. Thanks for the great information!" Five years later the cellular market penetration was still among the lowest internationally The marketing research results were validated historically and SBC avoided a costly mistake by heeding the research results. To enter an international market, even a familiar one, without conducting market research increases the risk of misunderstanding and miscalculating the financial opportunity. Conclusion- In this short summary of my experiences with using marketing research, I've tried to demonstrate the value of conducting research, especially in international markets when conditions are unknown. It is well worth the time, money and effort to use marketing research to investigate the potential opportunity of an unknown market with new products and/or new competitors. I've learned critical lessons about the value of doing research, doing it well and paying attention to the results. I've had experience with conducting useful research only to have it fall on deaf ears at the executive level. I've had experience with decision makers asking for information after the fact..when it's too late to conduct marketing research and learn anything useful. I urge businesses and researchers to conduct marketing research, do it well and pay attention to the results. Decisions based on faulty or missing information are decisions that can't be undone-to the company's loss