Market Analysis and Porter's Framework

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Questions and Answers

Which of the following is NOT one of Porter's five forces that influence market profitability?

Market growth rate (correct)

Rivalry among firms in the industry

Supplier power

Buyer power

What does Porter's value chain model help a firm to identify?

Where value is added and costs are isolated (correct)

Key success factors

Supplier power

Market trends

Access to which of the following is considered a key success factor in achieving marketing objectives?

Essential unique resources (correct)

High customer satisfaction

Competitive pricing

Unique marketing strategies

Which factor may influence the distribution channels available to a firm?

Brand equity Signup and view all the answers

What is a common result of changes in market trends?

New opportunities and threats Signup and view all the answers

How does the threat of substitute products impact market profitability?

Can limit pricing power for firms Signup and view all the answers

Which of the following factors is NOT related to industry cost structure?

Market size Signup and view all the answers

Which of the following might change over time as a product progresses through its life cycle?

Key success factors Signup and view all the answers

What is the primary goal of market analysis in the context of international business?

To determine market attractiveness and understand opportunities and threats Signup and view all the answers

Which of the following is NOT a key factor in market analysis according to David A. Aaker?

Customer satisfaction levels Signup and view all the answers

Which method is suggested for forecasting market growth rate accurately?

Studying growth drivers such as demographic information Signup and view all the answers

What does the term 'market segmentation' refer to in the marketing process?

Identifying bases for segmenting markets and developing segment profiles Signup and view all the answers

What is a significant factor to consider when selecting a foreign market?

The timing of entry into the market Signup and view all the answers

In the context of market size evaluation, which data source is considered relevant?

Government data Signup and view all the answers

What is the main purpose of positioning in marketing?

Developing a unique brand perception in the minds of the target market Signup and view all the answers

Which of the following reflects an aspect of industry cost structure in market analysis?

Cost of raw materials and labor Signup and view all the answers

Which political system is characterized by collective goals and typically involves socialism?

Collectivism Signup and view all the answers

What is a key consideration for marketers when evaluating the economic environment?

The level of inflation and interest rates Signup and view all the answers

Which question is essential when assessing the political environment for international marketing?

How stable is the political environment? Signup and view all the answers

How does technology impact the production of products and services?

It allows for cheaper production and higher quality. Signup and view all the answers

What area does NOT fall under social-cultural considerations in marketing?

Political stability and government systems Signup and view all the answers

Why is it important to study government policies regarding marketing ethics?

To understand regulations that may affect business operations. Signup and view all the answers

Which factor is important in assessing the technological environment?

The existence of new communication methods Signup and view all the answers

What should marketers consider about the population's attitude towards environmental issues?

Whether they have a strong or weak opinion on green issues. Signup and view all the answers

Which of the following is a factor in determining the attractiveness of a foreign market?

Size of the market Signup and view all the answers

What distinguishes common law from civil law?

Common law evolves from judicial decisions. Signup and view all the answers

Which of the following is NOT a PEST analysis modification?

SWOT Signup and view all the answers

What is a potential first-mover advantage in entering a foreign market?

Increased brand loyalty Signup and view all the answers

Which legal system is characterized by strict adherence to a comprehensive set of codes?

Civil law Signup and view all the answers

What does the term 'late entry' refer to in market strategy?

Entering the market after other competitors. Signup and view all the answers

Which of the following factors does NOT influence economic potential in a foreign market?

Cultural factors Signup and view all the answers

What disadvantage might a first mover face in entering a new market?

Higher initial investments Signup and view all the answers

What is one of the challenges of being a first-mover in a market?

Creating new supply and distribution chains Signup and view all the answers

Why is market segmentation important for a company's marketing strategy?

It allows targeting different segments with similar interests more efficiently Signup and view all the answers

What is a potential benefit of effective market segmentation?

Attracting the right customers Signup and view all the answers

Which of the following is NOT a factor to consider when selecting target markets?

Market loyalty programs Signup and view all the answers

What does the PEST model primarily analyze?

External factors influencing a business environment Signup and view all the answers

Which of these is NOT considered a core element of positioning in marketing?

Developing a pricing strategy Signup and view all the answers

Which statement summarizes the outcome of successful market analysis?

It helps to determine market attractiveness and segment identification. Signup and view all the answers

What role do regulators play in the context of pioneering costs?

They create regulatory frameworks and standards. Signup and view all the answers

Study Notes

Market Selection and Segmentation

International business and international management topics include market selection and segmentation.

Content of the Topic

Marketing process and market analysis are included
Basic entry decisions are also included

Marketing Process and Analysis

Selecting markets involves analyzing market and environmental attractiveness.
Market segmentation involves identifying bases for segmenting the market and developing segment profiles.
Market targeting involves selecting target markets based on a strategy.
Positioning involves developing positioning for target markets, building a brand and creating a marketing mix for each segment.

Market Selection

Determining attractive markets for a company's business, and the reasons why.

Basic Entry Decisions

Identifying foreign markets
Timing of entry

Market Analysis by David A. Aaker

Market Size: Assessing current and future market size using government data, trade association information, financial data from major players, and customer surveys.
Market Growth Rate: Forecasting growth rates using historical data and studying influential factors like demographics and sales growth in related products. Average annual growth rate in GDP and purchasing power parity per capita are used as indices.
Market Profitability: A measure of the average profit potential useful for evaluating market attractiveness. Michael Porter's five forces framework examines buyer power, supplier power, barriers to entry, threat of substitute products, and rivalry among firms in the industry to evaluate market profitability.
Industry Cost Structure: Understanding cost structures to identify key success factors using Porter's value chain model to define value addition and costs.
Distribution Channels: Analyzing existing channels—how direct they are to the customer—and emerging channels. Channel power structure involves the negotiating leverage of retailers and how this impacts product margins.
Market Trends: Trends in markets (industry-dependent) that could lead to opportunities or threats. Examples involve price sensitivity, demand for variety, level of emphasis on support services, and regional trends. Tools like Google Trends and Consumer Barometer can be helpful.
Key Success Factors: Identifying elements necessary to achieve marketing objectives, including access to unique resources, achieving economies of scale, and access to distribution channels. Key success factors can change over time.

PEST Analysis

Political: Government type, policies, regulations like tax and trade policies, stability of the political environment
Economic: Economic growth/contraction, inflation rates, interest rates, exchange rates, disposable income and unemployment rates
Social: Literacy, lifestyle trends, cultural values, media views, important social demographics, and company image
Technological: Technological improvements, level of innovation, automation, technological change, R&D activity and how technology supports businesses.
Ethical: Addressing legal ethical standards.
Environmental: Environmental policies, weather, climate change, concerns of stakeholders

Legal System

Common law: Based on traditions, precedents, and customs
Civil law: A detailed set of laws organized into codes (common in more than 80 countries)
Theocratic law: Based on religious teachings (e.g., Islamic law)
Property rights and corruption
Protection of intellectual property (e.g., patents, copyrights, trademarks)
Health and safety laws
Discrimination laws

Timing of Entry

Early entry: Entering a foreign market before other firms.
Late entry: Entering a foreign market after other firms.
First-mover advantages can include brand recognition, stronger brand loyalty, building sales volume, building a reliable brand or controlling resources such as locations or contracts.
First-mover disadvantages can involve high pioneering costs, creating totally new supply and distribution chains (expensive), getting regulators to develop frameworks, and educating the local market which could take time and be risky.

Benefits of Market Segmentation

Growing profits
Strong market messaging
Targeted digital advertising
Developing effective marketing strategies
Attracting the right customers
Increasing brand loyalty
Differentiating the brand from competitors
Product development

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Description

This quiz explores key concepts in market analysis, including Porter's five forces and value chain model. Test your knowledge on factors influencing market profitability and success in achieving marketing objectives. Ideal for students and professionals keen on understanding market dynamics.