The nature and scope of International market research-01.02.2011

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The Nature and Scope of International Marketing Research

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The impact of the globalization of businesses is so profound that it has been described as the second Industrial Revolution Globalization not only means bigger businesses, but also more complex businesses Understandably, this increase in complexity means the information needs of organizations are also becoming more complex. An established multinational company, operating in multiple markets around the world, wants to study its brand image in the various global markets How can this company conduct such a study?

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A US cake manufacturer introduced its new cake mix in England based on the success of the product with homemakers in the United States The British, however, thought the cakes were too fancy The product did not sell very well in England Could the company have known about this before the product launch in England? The answer to these international marketing problems can be obtained from information collected through international marketing research The complexity of the international marketplace, the extreme national differences, and lack of knowledge of foreign markets add to the importance of international marketing research

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Before making market entry, product position, or market mix decisions, accurate information about the market size, market needs, and competition must be available Research helps avoid costly mistakes related to poor strategies or lost opportunities and also helps product development in foreign markets the American Marketing Association defines marketing research as the function that links an organization to its market through information This information is used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve the understanding of marketing as a process

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Marketing research specifies the information required to address these issues; designs the method for collecting information; manages and implements the data collection process; interprets the results; and communicates the findings and their implications Marketing research can be thought of as the application of scientific disciplines to the collection of market data for use in making marketing decisions It is the means by which marketers obtain consumer and trade responses to their marketing activities It is a critical marketing function and a useful managerial tool and can be viewed as management’s attempt to bring science to marketing

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International marketing research is any one or more of the previous activities conducted in one or more foreign countries Traditionally, international marketing research has been defined as research conducted to assist decision making in more than one country At the simplest level, international marketing research involves research studies in a single market outside the firm’s domestic market More elaborate and complex are multi-country research programs, which often concern establishing both inter-country priorities and optimizing the intra-country marketing approaches International marketing research can be defined as market research conducted either simultaneously or sequentially to facilitate marketing decisions in more than one country.

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International Marketing Research: Is it a Valid Concept? There is a certain tendency among academicians and practitioners to challenge the very concept of international marketing research The critics of this concept maintain that there is no such thing as international marketing research; that all marketing research is essentially national, and the circumstance that a survey might be carried out in several countries does not essentially alter its national character While not necessarily agreeing with the challenge to the concept of international research, there

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are many researchers who handle it as if it were a number of separate national surveys that just happen to be similar in nature and take place at the same time It is not surprising, therefore, that they believe that if you can handle research in one country you can handle it anywhere and that no specific skill or experience is needed These researchers argue that no particular experience or insight is required for market research overseas and that the basic techniques of doing research internationally are no different from those of doing research in the domestic market

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International marketing involves decisions concerning several countries Many of these decisions concern priorities and the allocation f resources between countries While some of the information obtained will be of purely national relevance, an international (or multi-national or multi-country) survey is distinguished from a national survey, or a collection of national surveys, by the fact that it is undertaken to aid an international marketing decision.

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There are two ways that international marketing research can be defined: By simply looking at any research activity begun by an entity in one country that wishes to obtain information from another country, and By considering an activity begun by an entity in one country to gather information from many countries simultaneously or sequentially in a coordinated multi-country effort.

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What’s Different About International Marketing Research? The process of international marketing research is not totally different from domestic marketing research All the same disciplines that apply to domestic research apply to international research also The major differences between international marketing research and domestic (single country) research are: a). That international research involves national differences between countries arising out of political, legal, economic, social, and cultural differences, and

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b). That the problem of comparability of research results arises due to these differences.

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Importance of National Differences An international researcher, in contrast to a researcher concerned with only one country, has to deal with a number of countries that may differ considerably in a number of important ways In contrast to the developed markets in the United States, people in Europe and other regions are used to smaller companies and localized markets In the United States, the Census Bureau and private vendors provide highly reliable demographic data The quality of statistics generated in some other countries is very poor

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Census geographies and area definitions change very frequently, according to the whims of the national governments or social service organizations Some other problems include absence f computers and language differences Language differences make it necessary for a questionnaire t be translated into the foreign language and translated back to English to detect differences in meaning.

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The main factors that affect the way in which people from different cultures behave are: Cultural Differences Racial Differences Climatic Differences Economic Differences Religious Differences Historical Differences Differences in Consumption Patterns Differences in Marketing Conditions Differences in Actual and Potential Target Groups

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Cultural Differences Culture refers to widely shared norms or patterns of behavior within a large group of people Buyer behavior is largely determined by culture Family structure and the role played by each member of the family determines the decision-making process and the family members who influence the decision For example, Belgium is divided in half, between Flanders in the North and Wallonia in the South The North uses only margarine while the South consumes butter Thus, there are differences within a single nation Culture also shapes the attitudes that consumers have toward certain products and concepts

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During the process of researching an advertisement copy contained an abundance of information; however, a deeper probe showed polar differences The Germans, traditionally, known to be more rational, reacted positively to the copy The French, who have always been swayed by emotions and more abstract forces, were turned off by the ad copy.

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Racial Differences Differences in culture mean differences in physical features as well For example, people from China have a different type of hair compared to those from Africa; therefore, the types of hair care products needed in each place would differ.

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Climatic Differences The presence of different climates in different parts of the world account for a lot of the differences between cultures For example, the reason why the British drink beer instead of wine is that the climate in the United Kingdom is too cold to grow grapes’ therefore, they make alcohol from grain.

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Economic Differences The levels of wealth and taxation also affect consumer behavior in different countries For example, the reason why the Norwegians consume very little alcohol is that it is prohibitively expensive due to high taxation, not for moralistic reasons, as one may be inclined to assume.

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Religious Differences Certain religions have laid down very specific behavioral patterns The Jewish rules on dietary behavior is an example Also, Middle Eastern countries prohibit consumption of alcohol This national rule must be respected or the offender may be imprisoned or even publicly flogged.

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Historical Differences Historical differences help explain facts, such as the playing of cricket in England, as opposed to the game of boules in France These differences have slowly evolved over time but have a profound effect on consumer behavior For example, drinking Scotch whiskey is considered prestigious and trendy in Italy, but old-fashioned and almost boring in Scotland.

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Differences in Consumption Patterns There are vast differences in consumption patterns between regions For example, there is a vast difference in the way different European nations consume alcohol The French prefer wine, the Germans like beer, and the Spanish drink aperitivos There are more subtle differences, such as the English drink port after a meal, while in Portugal, port is consumed before a meal.

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Differences in Marketing Conditions If research is being conducted in Hong Kong, people will have to be interviewed through the grill in their front doors because they will not let strangers into their houses The Japanese are not keen on being contacted over the telephone The rich in Latin America are hard to interview because they are difficult to approach Researchers will have to make not of such small differences in different cultures.

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Differences in Actual and Potential Target Groups In countries like England and Germany it is possible to do national samples Small towns and villages can be included because distances are not very great In Spain, interviews can be conducted only in cities with populations of over 100,000 people, as the cost of interviewing people in small towns and villages is prohibitively high.

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In addition, the international marketing research may also have to deal with the following: Language differences Differences in the way that products or services are used Differences in the criteria for assessing products or services Differences in market research facilities Differences in market research capabilities. These differences would, of course, be reflected in the results of multi-country research, just as differences between sex, age, and social class groups would be reflected in the results of single- country research

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If national differences were relevant only to the outcome of multi-country research, then the procedures involved would be very similar to those pertaining to single-country research; however, national differences can and do have a considerable effect on the formulation of the initial design of a multi-country survey Unless these differences are understood and appreciated at the planning stage, and allowed for in the design of the survey, the survey may completely fail to achieve its objectives While many researchers comment on national differences, the importance of their relevance at the planning stage of international research is frequently not realized

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However, it is very easy for a marketing researcher to ignore the differences and get trapped by some of the pitfalls of obtaining marketing intelligence in a foreign country.

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Culture Variations in cultures and cultural values, language barriers, and mistrust of strangers are common Marketing planning mistakes can result when cultural differences are not recognized, and these mistakes can be appalling, as illustrated by the following: Product Promotion Place Selection of Target Market

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Product Pepsodent toothpaste failed in Southeast Asia because it promised white teeth in a culture where black or yellow teeth used to be symbols of status

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Promotion In Mexico, a Braniff Airlines campaign advertising that passengers could sit in comfortable leather seats was a failure The translation amounted to “sit naked”.

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Place US food manufacturers doing business in the United Kingdom discovered that British culture assigns a different role to supermarkets Instead of the large American visions they were constructing, the British prefer substantially smaller stores, consistent with values of British housewives who view shopping as a social experience, done in local stores within walking distance of home.

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Selection of Target Market There is little demand in Europe for fabric softener sheets (used in the dryer) because most people use clotheslines.

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It is important to understand the definition and the scope of international marketing research because cultural differences play a very important role in distinguishing international marketing research from domestic research In the world of marketing, culture is defined as the values, attitudes, beliefs, artifacts and other meaningful symbols represented in the pattern of life adopted by people that help them interpret, evaluate, and communicate as members of society. Culture plays a major role in influencing human behavior, and understanding human behavior in a given situation is the job of a marketing researcher

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Culture is not a characteristic of individuals; rather, it is an attribute of a society and encompasses all members of that society who have been conditioned by similar education and life experiences Cultures is learned behavior and not inherited The term can be applied to groups of individuals in a country, society, profession, or social organization Culture is also an important factor in determine how information processing occurs.

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A practitioner’s view of the Key Pitfalls in Conducting International Research The key pitfalls to avoid when conducting an international marketing research project are: Selecting a domestic research company to do your international research Rigidly standardizing methodologies across countries Interviewing in English around the world Setting inappropriate sampling requirements Lock of consideration given to language Lack of systematic international communication procedures

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Misinterpreting multi-country data across countries Not understanding international differences in conducting qualitative research.

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Hofsted identified five dimensions of culture: Power Distance Individualism versus Collectivism Masculinity versus Femininity Uncertainty Avoidance Long-term Orientation

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Power Distance The power distance dimension can be defined as the extent to which less powerful members of a society accept and expect that power is distributed unequally In societies where the power distance index is high, everyone has a rightful place in the society Exercising authority by powerful people and accepting this authority by the less powerful comes naturally Japan can be considered as an example of a culture with a very high power distance index The Japanese recognize and accept hierarchy in their personal and professional lives

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In many other cultures, like the United States, where the power distance index is very low, authority is not easily accepted and, in fact, the term has a negative connotation This impacts the way decisions are made and hence impacts the manner in which various groups are targeted or marketing a specific product.

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Individualism vs Collectivism Hofstede defines the contrast between individualism and collectivism (IDV) as people looking after only themselves and their immediate family versus people belonging to in-groups that look after them in exchange for loyalty Individualistic cultures place a lot of emphasis on the identity of individuals, expression of private opinions, and self-actualization Collectivistic societies stress identities based on the group or social class to which they belong Individualistic cultures draw a sharp distinction between private and professional lives, whereas in collectivistic societies there is very little distinctions

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This makes marketing very different in these cultures Consider the case of a computer manufacturer targeting the home-computer market in Japan and the United States The Japanese are very collectivistic and do not believe in working out of their homes; hence, the number of homes in Japan that have computers is very low In contrast, the United States has a tremendous market for home computers because of the tendency of a lot of people to work out of their homes An offshoot of this is the definition of high-context and low-context cultures, which distinguishes

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cultures according to the degree of context in their communication Low-context cultures place very high importance on explicit, direct, and unambiguous verbal messages Most of the Western cultures could be classified as low-context In contrast, communication in high-context cultures is internalized in the person There is very little explicit communication Most high-context communication is economical, fast, and efficient and nonverbal communication plays a major role The Japanese society is an example of a high- context culture, where people do not appreciate verbosity and eloquence

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Understanding this is very important to an international marketing researcher because the research design has to be suitably modified to give an accurate picture of the culture.

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Masculinity versus Femaininity Represented as MAS, this dimension can be defined as follows: The dominant values in a masculine society are achievement and success, the dominant values in a feminine society are caring for others and quality of life Masculine cultures promote an admiration of the strong and the importance of winning Feminine cultures, on the other hand, advocate sympathy and caring The scandinavian cultures, such as Sweden and Denmark, and the Netherlands are

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predominantly feminine cultures and give importance to sensitivity and not being devious The United States, Japan, and most countries in Latin American score very high on the masculine aspect, with Japan scoring the highest There is a big difference between the way people in these cultures perceive winning, success, and status and this creates an important dimension for marketing For instance, many cultures that score high on femininity do not appreciate hard sell Marketing researchers must bear this in mind when designing the study.

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Uncertainty Avoidance This is defined as the extent to which people feel threatened by uncertainty and ambiguity and try to avoid these situations People belonging to cultures that score very high on uncertainty avoidance, experience higher levels of anxiety and tend to express their emotions more freely Cultures that are weak in uncertainty avoidance believe in having fewer rules to define their lives and are not threatened by competition and conflict Some countries that score high on uncertainty avoidance are Germany, Austria, and Japan

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In contrast, Great Britain, Sweden, and Denmark score very low on this dimension This could probably explain the famous British stoicism, coolness, and lack of emotional display.

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Long-term Orientation Long-term orientation is the extent to which a society exhibit a pragmatic future-oriented perspective rather than a conventional historic or short-term point of view Any culture that has long-term orientation places a lot of importance on characteristics like persistence, respect for status and position in society, thrift, and a sense of shame Most Asian countries, China in particular, score very high on this dimension This could be contrasted with the short-term orientation of many Western countries

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These cultures focus on instant gratification and pursuit of material pleasures Time is another variable that is culturally sensitive One of the most important differences faced by researchers in international marketing research is the friction that occurs between parties because their understanding of time is completely out of sync The marketing researcher is concerned with the impact that each of these five dimensions has on the perceptions, attitudes, and ultimately on the behavior of consumers in various countries These factors play an extremely important role in international marketing research simply because it is very difficult for a researcher to comprehend all

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all these aspects and translate them into variables that will aid the marketing function For the most part, researchers are bound by their own culture and mindsets, which influence the way they view the research problem in different countries This phenomenon is called the self-reference criterion.

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Alternative Types of International Marketing Research International marketing research can be conducted through descriptive research, comparative research, or theoretical research In descriptive research, the researcher examines in depth the attitudes and behavior of consumers in another country or culture Comparative research, on the other hand, involves comparing attitudes and behavior in two or more countries or cultural contexts, with a view to identifying similarities and differences between them

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In theoretical research, the researcher has a predetermined theory or model and it is possible to examine cross-cultural generalizability of these theories or models Many international marketing problems can be solved by the use of a single questionnaire or by one sampling and data collection method in all of the countries covered However, a researcher working on an international problem must consider right at the outset of each survey whether or not it can be dealt with in this way This alone makes the task different from that of the researcher concerned with one country only

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A single-country survey usually involves the use of one set of survey techniques, a sample design applying to the whole area of the survey, and a uniform questionnaire, and produces a homogeneous set of results A multi-country survey may necessitate the use of more than one data collection technique, a number of different questionnaires, and sample designs varying from one country to another It also involves the coordination and supervision of work in countries with different languages and differing economic and cultural environments Moreover, it involves the interpretation an synthesis of sets of individual country results and the very different national factors that may influence these results

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Based on these facts, an international researcher – in contrast to a research operation in one country only – needs considerable skill and experience in three basic areas: Experience and knowledge about individual countries and international conditions, and the ability to obtain and assimilate new information about them when faced with a specific research problem The ability to relate this experience and knowledge to a specific research problem and incorporate it into the survey design The ability to synthesize data from different countries and interpret the factors on from both a national and an international point of view.

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Consumer Types A survey conducted by Roper Starch Worldwide Inc. indicates that four major types of consumers dominate the world The four consumer types are: 1. Deal makers: who constitute 29% of the 37,743 respondents from 40 countries This group concentrates on the buying process It is a well-educated group with a median age of 32, average affluence and employment. Price Seekers: Place primary value on the product and make up 27% They largely consist of retirees, the lowest educational level, females, and have an average level of affluence.

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Brand Loyalists: 23% of the group – are the least affluent Largely constituted of males, whose median age is 36, this group has average education and employment. Luxury Innovators: Who make-up 21%, seek new and prestigious brands They are the most educated and affluent shoppers and are largely made up of executives and other professionals This group is mostly male with a median age of 32. It was found that consumer type was influenced more by the state of development of the nations than by the price, quality, or brand of goods Prices in competitive markets like Europe and Japan are fixed

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Shoppers cannot negotiate and are hence Price Seekers In developing markets, there is less brand competition and more open markets and bazaars where bargaining is rampant Deal Makers hold the sway in such markets as Asia, the Middle East, and Latin America The US market, being more heterogeneous, is dominated by both categories In the United States the constitution is as follows: Deal Makers 37% Price Seekers 36% Luxury Innovators 17% Brand Loyalists 11%

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Ask the Right Question A survey conducted by Reader’s Digest in the 1970s, among a wealth of other information, gave the impression that the consumption of spaghetti and macaroni was significantly higher in France and West Germany than in Italy The results for spaghetti and macaroni consumption in the home were: France 90% West Germany 71% Italy 63% Luxembourg 61% Belgium 45% Netherlands 45%

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Taken a face value, these results suggest that popular notions about Italian habits are quite mistaken, and that spaghetti is really the national dish of France or Germany rather than of Italy In fact, the public press seized on this particular result as one of the surprising items of information to come out of the survey However, the relevant question in all countries was concerned with packaged and branded spaghetti loose In a footnote, the Reader’s Digest report quite properly estimates that if the question had been asked in a different way the result for Italy would have been 98% to 100% The trouble was that the question as asked did not provide, as was intended, valid comparison between the food habits of the six nations.

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Importance of Comparability It seems to be widely agreed that the most important problem that a researcher dealing with two or more countries has to face is to achieve results that are comparable The achievement of comparability is absolutely essential to any research that has been set up to provide a basis for an international marketing decision Whatever the purpose for which it is initiated, the research must be structured in such a way that the results can be used to make valid comparisons between the countries covered

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In other words, a multi-country survey must be able to provide answers to marketing problems, such as “Which country or countries provide the best opportunities?”, “How should marketing expenditure be distributed between various countries?”, or “To what extent should the product, or the pack, or the advertising be varied between one country and another?”. Research can help in the solution of these or similar problems only if the results are comparable This means that any differences that emerge are genuine differences and not merely the results of differences in research approaches or capabilities The job of a research coordinator is not merely to instructed people, give orders, or show maximum precision in the definition of research requirements

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but also to ensure that the following differences have been accounted for: Availability of resources and expertise in the respective fields Working habits and corporate cultures Organizational aspects Comparability is often confused with standardization, and its achievement believed to involve the exact replication of research methods, assuming that comparability of results depends on comparability of techniques There is a very clear distinction between comparability at the data-collection stage and comparability at the interpretation stage

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Of these two, comparability at the interpretation stage is mandatory for multi-country research and something the researcher should strive to achieve On the other hand, in a number of cases the replication of data collection techniques is neither practical nor necessary for the achievement of comparability at the interpretation stage There are many examples to show that for information from two or more countries to have the same validity and be comparable, it does not necessarily have to be collected in exactly the same way. The achievement of comparability with different instruments of measurements does, of course, put a greater strain on the skill and experience of the

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than the achievement of comparability with the same instrument of measurement It is because of the overriding importance of the achievement of comparability, and the many complications involved, that make this the main criterion by which international marketing research differs from domestic marketing research and by which the advantages and disadvantages of organizing international marketing research is examined.

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Classification of International Marketing Research Single-country Research Multi-country Research

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Single-country Research In several situations in international marketing there arises a need for organization to conduct research to assist in the formulation and implementation of marketing strategies in a single foreign country market Typically, this need arises when a marketer based in country X wants to know whether the marketing strategies that work well in the domestic environment can be translated to a country market Y If the country market of Y has unique characteristics that require adapting the marketing mix strategies to serve the needs of the local consumers better, research will help determine the strategy.

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Multi-country Research Multi-country research studies, as the name indicates; involves research conducted in more than one country market Multi-country research studies can be further classified into three broad categories: B1. Similar research conducted Independently in several countries B2. Research projects conducted Sequentially in several countries B3. Research projects conducted Simultaneously in several countries.

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B1. Independent Multi-country Research This is perhaps, the most common form of international marketing research that can be seen in the industry today Independent multi-country research studies occur when subsidiaries or branches of multi-national companies independently conduct similar research on the same products in a number of countries Common examples are awareness/penetration checks on international brands and the test marketing of new products

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The major disadvantages of this type of international research study are: a). It often leads to duplication of effort (such as questionnaires, etc. and hence is not very efficient b). Because such studies are conducted in isolation, it makes comparisons of results across countries more difficult. Despite these drawbacks, such independent multi-country studies are prevalent because, even in the largest multi-national businesses, most market research funds are derived from local budgets If there is no international marketing research manager, these budgets may be spent entirely independently of each other

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Often, no agreed system exists whereby research managers can inform their foreign colleagues of their activities Where no formal market research position exists in some, or all, of the individual subsidiaries, the position is even worse.

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B2. Sequential Multi-country Research A very attractive way in which to research a range of geographical markets involves a sequential approach It is attractive in the sense that lessons can be learned in the first one or two markets to be researched and then can be applied to the other countries subsequently involved in the research program This procedure is often valuable in helping to: Define the limits of the subject matter to be covered Ensure that operational problems arising with countries researched early in the programme are avoided or overcome more easily elsewhere

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Ensure that key findings in the earlier studies influence the focus of later ones Spread the costs of conducting the research over a longer time period Most typically, the sequential approach is used when a product or service is the subject of a rolling launch across countries The greatest benefits is derived from this type of study when the research company (if an outside supplier is used) is informed of the total program at the outset and can plan to avoid variations in research procedure from country to country that might give rise to spurious international differences.

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B3. Simultaneous Multi-country Research Simultaneous multi-country research involves conducting marketing research studies in multiple country markets simultaneously, and is, perhaps, the “purest” form of international marketing research studies It provides the toughest tests of research supplier capability and also raises in its most acute from the question of comparability Because simultaneous multi-country research is the most complex and involves handling unique problems, having such a form of research study as the focus will ensure that the problems that an international researcher might encounter in conducting other forms of international research are also addressed.

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The Marketing Researcher of the Twenty-first Century The marketing researcher of the future will be affected by four main factors; speed, the Internet, globalization, and data overload Speed is becoming increasingly necessary to provide marketing intelligence and insight much more rapidly The Internet, overnight delivery services, and facsimile transmissions have speeded up delivery of information This places heavy emphasis on collecting data and getting it to the end users more quickly

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Most consumers and all professionals will have access to the Internet by the start of the twenty-first century This represents a new data collection tool that the market researcher must master to stay competitive In terms of globalization, researchers are required to learn more about foreign markets, as well as the values and cultural differences represented in the world economy Lastly, the researcher should be able to add value and insight to number without creating confusion for the user by data overload The marketing researcher for the twenty-first century should be better trained, must work

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smarter, and have more varied skills than the researcher of today Comfort with cyberspace, excellent computer skills, proficiency in statistical methods, and the ability to communicate with speed and precision are necessary traits.

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The ethical issues that are dealt with in domestic marketing research also apply to international marketing research Some of the important issues are the following: Respondents’ Rights: Respondents should be allowed to participate voluntarily and there should be no coercion from the firm conducting the research It is also equally important that respondents be informed accurately of the purpose of the study, and where permitted, the sponsors’ identity This becomes vital in cases where telemarketers call up potential customers and try to sell their product on the pretext of conducting surveys This has created general mistrust of researchers among a vast majority of the population, leading to very high non-response ratios

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The other aspect is ensuring that the respondent does not come to harm because of taking part in the survey If confidentiality or anonymity are guaranteed, it is the onus of the researcher to see to it that these are fulfilled, especially if the topic of the research is socially or politically controversial. Sponsors’ Rights: The researcher is morally bound to conduct research in the manner that has been agreed upon with the sponsor This means the researcher has to ensure that data collection is done in a legitimate manner and that the analysis is unbiased and not affected by the needs of the sponsor or any other agency This becomes particularly important in cases where the research is being conducted to justify some decision or to get some project approved It is entirely possible that the sponsor or representatives

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of the sponsoring company may try to influence the research findings It is the researcher’s ethical responsibility to ignore such influences and present the true findings.