With globalization, multinational companies seek to have a footing in Emerging and Developing Market Economies (EDMEs). The Philippines is one of the larger economies in East Asia that has recently witness double-digit growth lifting millions out of poverty. With a ballooning middle class, the country provides an excellent opportunity for companies looking to expand outside their traditional market. Several multinationals such as AON, American Express, and DHL Express have already set shop in the Rodrigo Duterte led nation. EDMEs are the bedrock of global economic growth. Sudhir et al. (2015) assert that economic powerhouses such as Germany, the US, and Japan only grew on an average of less than one percent while the Philippines and other EDMEs grew by an average of over six percent. However, with such great opportunity, entering EDMEs is not always a smooth ride. Building a corporate strategy on how to conquer such markets on hard facts is not easy. Obtaining and collecting market information that can help in quantifying the opportunity in the Philippines is difficult because of unreliable secondary data, cultural differences, and availability of primary research suppliers.
Challenges in Collecting and Obtaining Market Information
Availability and Reliability of Secondary Data
Secondary data present in developed countries is not readily available in the Philippines. Multinational operating in the US and Europe are used to analyze data available through Nielsen and IRI. Such are not available in EDMEs where a good percentage of the population shop at traditional outlets. According to Rosenberg and Goodwin (2016), the available secondary data is unreliable because of political biasness, use of outdated methodology, lack of technology. The government of the Philippines just like those of other EDMEs do not prioritize national statistics; leading to collection of unreliable data. The unavailability of quality data which executives can use to make informed decision pose a challenge. Using such data can put jobs and the reputation of a company at risk because of they can influence managers to make misguided decisions. For multinational companies to make a worthwhile investment that will strengthen their overseas portfolio; they must have a strong understanding of the market. Such can only be achieved through the use of trusted quality information. With the global growth slowing, the margin of error has substantially reduced requiring companies to use refined data to make informed decisions.
Multinational can use proxies to remedy the unavailability of trusted data. By considering proxies, firms engaged in international business can have a better understanding of the market. For instance, if a company needs to know the size of the middle class, instead of using government published numbers, the firm could use data on number of people with higher education. Such will provide multinational with a clearer estimate. Similarly, a larger percentage of urban population living in slums or without proper sanitation facilities implies that majority of people live below the poverty line. To estimate consumer or the Gross Domestic Product, one can use the annual disposable income.
Importantly, decision makers should pay a close attention to definitions regardless of the level of economic development. A simple indicator such as “washing machine” might have several meanings. The words may be used to define a manual washing which does not use electricity. Cookers in the Philippines include bread cookers. When using toilets as an indicator in an EDME country like the Philippines, one should specify which kind (either pit latrines or flush toilet). For a manufacturer using the above-said definitions out rightly without concentrating on what was implied would lead to an incorrect conclusion. Undertaking due diligence when using the available data in EMDEs is of paramount importance. Decisions should always be based on hard facts.
Cultural barriers are an impediment to the collection of market information. Lesley (2018) states that the difference in the manner research is conducted is more pronounced in countries with a diverse culture. The methodology used and the subsequent results vary significantly. When undertaking research in a multicultural society, researchers are more likely to face communication and cultural difficulties when gathering data. The Philippines is a diverse country with communities that have distinct cultural practices and political beliefs. To conduct a fruitful market research in a multicultural society requires the one to use a professional team that is made of people from different culture. The diverse nature of the Philippine’s culture may be a challenge to a team of researchers as they may fail to integrate the critical aspects into their research.
The biggest risk that cultural difference pose when collecting market information is the possibility of loss of crucial information when translating and uncoordinated communication. Natives of the Philippines speak several languages and have different religions. Thus, it is hard to integrate or communicate objectively or undertake an integrated research. Something that is considered normal in one culture can construe a different meaning in another community. Also, users of the obtained information may construe different meanings because of the influence of their culture.
Researchers can employ several techniques to mitigate the risk of obtaining unreliable data due to cultural differences. International researchers must first interrogate their biasness and ensure that whatever they perceive is free of any kind stereotypes. When conducting market research, it advisable to have a homogeneous group of people who adhere to the same principles and traditions. Researchers should also be ready to deploy different methods of collecting data. In multicultural society, member of a particular group might be reluctant to give information in the presence of video recording. Also, the researching team must be as diverse as possible. Some culture in Philippines only allows women to speak to their fellow women on some matters. Of great importance, researchers should use a language that respondents are comfortable with specifically their native.
Political and Legislative Issues
Government bureaucracy and corruption is a major hindrance to the collection of market information (Cavusgil, Ghauri, and Akcal, 2012). Institutions mandated to gather crucial data are one way or another influenced to cook information to give result that portray the government in a good way. Multinationals are used to analyzing data from local governments which most of the time reflect government’s agenda. Unlike developed countries who have established institutions that can counter government figures, EMDEs’ organizations specifically those in the Philippines are not independent (Engelen, Engelen, and Craig, 2017). They lack the capacity to give credible results. Beside the government, other interested parties can use corrupt means to alter figures in order to drive a specific agenda.
Government bureaucracy in the Philippines leads to use of outdated data which gives incorrect information about the market. For instance, in the majority of developed nation, census is conducted annually while in Philippines it is done after every five years. This implies that the government undertakes development plans once in five years. Such creates information gaps which limits the ability of multinationals to make informed decisions. The inconsistency threatens the accuracy of market research which can make company to make decisions that can lead to massive loss. The use of incorrect data by the government to enact policies can have an indirect negative effect on companies engaged in international trade.
To remedy the effects of government bureaucracy, multinationals that intend to set shop in the Philippines or are already operating in the island nation must ensure that they use data that have been collected with independent parties. In that, the institutions that undertake research have no interest in altering the figures. Additionally, before using such data, the international firm must confirm if the numbers were reviewed and refined by experts with a deep knowledge of the Philippine’s market. When using the data to arrive at conclusion they should give a greater margin of error as forecast data face the same problems as historical information (London and Hart, 2004). Executives and those in charge of making decision should never use the available data at its face value. Instead, they should conduct a background check and establish the sources of data. Multinationals should create organizational standards on the quality of data to use when making decision at whatsoever level.
Lastly, obtaining and collecting market information that can help in quantifying the opportunity in the Philippines is difficult because of unreliable secondary data, cultural differences, and availability of primary research suppliers. For instance, the difference in the manner market research is conducted is more pronounced in countries with a diverse culture. Secondary data present in developed countries is not readily available in the Philippines. Multinational operating in the US and Europe are used to analyze data available through Nielsen and IRI. Such are not available in EDMEs where a good percentage of the population shop at traditional outlets. Also, Institutions mandated to gather crucial data are one way or another influenced to cook information to give result that portray the government in a good way. Multinational can use proxies to remedy the unavailability of trusted data. By considering proxies, firms engaged in international business can have a better understanding of the market. Executives and those in charge of making decision should never use the available data at its face value. Instead, they should conduct a background check and establish the sources of data.
- Cavusgil, S. T., Ghauri, P. N., & Akcal, A. A. (2012). Doing business in emerging markets. Sage.
- Engelen, A., Engelen, M., & Samuel Craig, C. (2017). Challenges in Conducting International Market Research. Handbook of Market Research, 1-25. Retrieved from https://link.springer.com/referenceworkentry/10.1007%2F978-3-319-05542-8_6-1
- Rosenberg & Goodwin (2016, September 14). The Dos and Don'ts of Working with Emerging-Market Data. Retrieved from https://hbr.org/2016/07/the-dos-and-donts-of-working-with-emerging-market-data Accessed 25Aug. 2019
- Lesley, R. (2018, August 13). Overcoming Cultural Differences in Emerging Markets. Retrieved from http://www.loyaltyresearch.com/insights/overcoming-cultural-differences-in-emerging-markets/ Accessed 24 Aug. 2019
- London, T., & Hart, S. L. (2004). Reinventing strategies for emerging markets: beyond the transnational model. Journal of international business studies, 35(5), 350-370.
- Sudhir, K., Priester, J., Shum, M., Atkin, D., Foster, A., Iyer, G., ... & Qian, Y. (2015). Research opportunities in emerging markets: An inter-disciplinary perspective from marketing, economics, and psychology. Customer Needs and Solutions, 2(4), 264-276. Retrieved from //link.springer.com/article/10.1007/s40547-015-0044-1Accessed on 25th Aug. 2019
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