International bussiness the challenge of global competition 11e chapter 15

chapter fifteen Assessing and Analyzing Markets McGraw-Hill/Irwin International Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc All rights reserved Learning Objectives  Discuss environmental analysis and two types of market screening  Explain market indicators and market factors  Describe some statistical techniques for estimating market demand and grouping similar markets  Discuss the value to businesspeople of trade missions and trade fairs 15-3 Learning Objectives  Discuss some of the problems market researchers encounter in foreign markets  Explain the difference between country screening and segment screening  Identify sources of information for the screening process  Discuss the utility of the Internet as a source of market research data 15-4 Assessing and Analyzing Markets • Market Screening – A version of environmental scanning in which the firm identifies desirable markets by using the environmental forces to eliminate the less desirable markets • Environmental Scanning – A procedure in which a firm scans the world for changes in the environmental forces that might affect it 15-5 Market Screening • Permits management to identify a small number of desirable by eliminating those judged to be less attractive 15-6 Market Screening • Two Types of Screening • Country Screening • Using countries as the basis for market selection • Segment Screening • Using market segments as the basis for market selection 15-7 Initial Screening • Basic Need Potential – If the need is lacking, then no reasonable expenditure of effort and money will enable the firm to market its goods and services – Easier for producers of specialized industrial materials or equipment than for widely consumed products 15-8 Initial Screening • Imports Don’t fully measure market potential • Resources to establish need potential – International Trade Administration site on the Internet (www.ita.doc.gov) – U.S Exports of Merchandise on the National Trade Data Bank – U.S International Trade in Goods and Services (FT900) by the Department of Commerce – Annual Worldwide Industry Reviews and International Market Research Reports prepared by various U.S embassies 15-9 Second Screening: Financial and Economic Forces • Measures of market demand based on economic and financial data – Market indicators – Market factors – Trend analysis – Cluster analysis 15-10 Market Indicators • Market Indicators – Economic data used to measure relative market strengths of countries or geographic areas – Possibilities: • Market size • Market growth rate • E-commerce readiness 15-11 Market Factors • Market Factors – Economic data that correlate highly with market demand for a product – Estimation by analogy 15-12 Trend Analysis • Trend Analysis – Statistical technique by which successive observations of a variable at regular time intervals are analyzed to establish regular patterns that are used for establishing future values 15-13 Cluster Analysis • Cluster analysis – Statistical technique that divides objects into groups so that the objects within each group are similar 15-14 Third Screening: Political and Legal Forces • Entry Barriers – Import restrictions, local participation requirements, local content restrictions, government-owned competition • Profit Remittance Barriers – Undue restrictions on repatriation of earnings, limits to FDI, inability to provide foreign exchange • Policy Stability – Political climate, government stability, public unrest 15-15 Fourth Screening: Sociocultural Forces  Screening on the basis of sociocultural factors is challenging  Sociocultural factors are fairly subjective  Data are difficult to assemble, particularly from a distance 15-16 Fifth Screening: Competitive Forces • The number, size, and financial strength of the competitors • Their market shares • Their marketing strategies • The apparent effectiveness of their promotional programs • The quality levels of their product lines 15-17 Fifth Screening: Competitive Forces, cont’d • The source of their products imported or locally produced • Their pricing policies • The levels of their after-sales service • Their distribution channels • Their coverage of the market 15-18 Final Selection of New Markets • Personal visit to potential markets is essential – Field Trip, unhurried – Government-Sponsored Trade Missions – Trade Fairs 15-19 Final Selection of New Markets, cont’d • Research in Local Market – Face-to-face interviews reveal information that would never be written – Hire local research group • Person in charge of the project must have experience in that country or culturally similar one in same geographic area 15-20 Local Research Problems • Cultural – Language – Literacy – Social desirability bias • Technical – – – – – No up-to-date maps Streets have different names Houses not numbered Only wealthy have telephones Mail delivery issues 15-21 Research in Developing Nations • • Less research performed Often a seller’s market • Competition is frequently less intense in developing nations because • fewer competitors • management struggling with problems other than marketing 15-22 Return to Segment Screening • Segment Screening – – – – – Definable: identify and measure Large: to be worth the effort needed Accessible: for promotion and distribution Actionable: have control of marketing programs Capturable: potential exists 15-23 ... The quality levels of their product lines 15- 17 Fifth Screening: Competitive Forces, cont’d • The source of their products imported or locally produced • Their pricing policies • The levels of. .. distance 15- 16 Fifth Screening: Competitive Forces • The number, size, and financial strength of the competitors • Their market shares • Their marketing strategies • The apparent effectiveness of their... sources of information for the screening process  Discuss the utility of the Internet as a source of market research data 15- 4 Assessing and Analyzing Markets • Market Screening – A version of environmental