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here: Step
7: Selecting and researching potential countries/markets
abroad > Implementing the research brief > Evaluating
the cost/benefit of export marketing research |
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Evaluating the cost/benefit of your export research
You need to weight up research benefits against costs
As export research involves some (or, at times,
even considerable) financial outlay, it is important that
the company evaluate the cost/benefit of such research.
It may be difficult to quantify some of the benefits of
market(ing) research and to weigh them up against a given set
of costs but the export firm should, in general, have certain
criteria against which the effectiveness of the research
effort can be measured.
Deciding on reasonable market research costs
The principal benefit of market research is improved decision-making.
Two possible criteria for judging the reasonableness or
otherwise of the cost of market research are:
- The number of profitable sales that the firm achieves
by acting on the conclusions and recommendations contained
in the research report
- The amount of money that the research study saves the
company by preventing it from making the wrong marketing
decisions
Thus, the value
of market research lies not only in its ability to
save money and identify profitable sales opportunities
but also in its ability to identify problems, competition,
and other threats which might cause the company to
lose money. In other words, it can help make prudent
marketing decisions but can also reduce the possibility
of unwise decisions and investments being made.
The question of what constitutes reasonable cost
will ways be relative to the firm's total resources and
to its involvement (present or proposed) in the particular export market(s)
under investigation. What may appear to be a very high
cost to a small exporter with limited overseas involvement
may constitute but a fraction of the export market research
budget of a large exporter with substantial, long-term
foreign market commitments.
Take all costs into consideration
An important aspect to bear in mind when determining the
cost of market research is that all costs should be taken
into consideration. Even information that is 'free' or can
be acquired at a nominal charge (e.g. government trade statistics)
incurs some expense in terms of analysis, organisation,
or storage. In the light of this, companies that conduct
their own in-house market research must be discerning in
their choice of publications and journals. Not only must
the actual subscription cost be considered but also the
cost of management and researcher time in reading through
an often large number of publications.
A hidden cost in respect of market research is that of
lost opportunities. In some cases, it may be critical to
move quickly into an overseas market in order to forestall
the competition; thus, taking considerable time over an
exhaustive study of the market could result in the market
opportunity actually being missed.
Finally, the returns in terms of hard data must be weighed
up against the costs. It should be noted that there are
areas of research that yield only mediocre results in terms
of accuracy, e.g. information about people's purchasing
intentions. Such research is costly to conduct and difficult
to translate into reliable sales forecasts. Ultimately,
the usefulness of market research can be judged by whether
or not risk is reduced and the results provide an adequate
basis on which effective export marketing decisions can
be made.
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