International Market Selection Process PDF

The international market selection process 1 Agenda  International market selection process  Segmentation-targeting-positioning  Steps for the IMS  Entry modes 2 2 possibilities  1) work on an incremental basis (yo...

The international market selection process 1 Agenda  International market selection process  Segmentation-targeting-positioning  Steps for the IMS  Entry modes 2 2 possibilities  1) work on an incremental basis (you move from one to another country only after establishing a presence in the first)  2) enter a number of overseas markets simultaneously  First choice: + elements: gain experience at a measured pace, fewer resources, less risk in term of exposure. - elements: grater competitive risk as competitors may leapfrog into other markets. Moreover, it precludes achiving economies of scale 3 12-4 Phase 1: Preliminary Analysis and Screening  Evaluate potential of foreign markets.  Analyze environment in which company plans to operate.  Company and country needs must be matched.  A complete analysis of the environment within which a company plans to operate is made.  The environment consists of the uncontrollable elements and includes both home-county and host-country restraints, marketing objectives and any other company limitations or strengths. 5 Phase 1: Preliminary Analysis and Screening  First act: rate the  Characteristics of the market (e.g. growth of and sensitivity to imports, extent of customers concentration, sensitivity to quality and performance characteristics, availability of close substitutes)  Competitive conditions (e.g. concentration of domestic industry, other exporters; complexity of the distribution system)  Legislative and socio-political conditions (e.g. political stability, trade legislation) 6 International Macro-Segmentation  Market potential – indicators:  Marketing support infrastructure ▪ Gross domestic product (GDP) per ▪ Availability and reliability of distribution and logistics capita providers ▪ Industrial and agricultural sector ▪ Availability of competent partners for strategic statistics alliances ▪ Market size and potential ▪ Quality of telecommunication and transportation ▪ Consumer buying power infrastructure ▪ Investment figures (FDI, other trade ▪ Availability of other service providers: statistics)  Marketing research firms  Political, legal and financial environment of country  Financial firms ▪ Ethnic conflict  Management consulting firms… ▪ History of war engagement ▪ Antiforeigner sentiment ▪ Recent nationalization activities ▪ Legal ambiguity ▪ Trade barriers ▪ Exchange rate controls Phase 1: Preliminary Analysis and Screening Preliminary screening Restriction in the export of goods from one country to another; Gross national product per capita Car owned per 1.000 of the population Population per hospital bed. Geographic proximity …. ….. https://globaledge.msu.edu/mpi Market Potential Index (MPI) https://globaledge.msu.edu/comparator#fields-selection 8 Phase 1: Preliminary Analysis and Screening 9 OPPORTUNITY MATRIX FOR HENKEL IN ASIA PACIFIC 10 Hellmut Schutte, ‘‘Henkel’s Strategy for Asia Pacific,’’ Long Range Planning, 28 (1), 1995, p. 98 Phase 1: Preliminary Analysis and Screening  A company’s strengths and weaknesses, products, philosophies, modes of operation, and objectives must be matched with a country’s qualities  Second act: rate the  Management characteristics (e.g. adequacy of management resources, degree of institutional support)  Marketing characteristics (e.g. pricing approaches, advertising and promotion campaign)  Technology characteristics (e.g. product design and development, investment in technology)  Production related competencies (e.g. cost competitiveness, scale of operation, logistics capabilities) 11 Phase 1: Preliminary Analysis and Screening Market/country attractiveness Competitive strength Market size (total and segments) Market share Market growth (total and segments) Marketing ability and capacity (country specific know-how) Buying power of customers Products fit to market demands Market season and fluctations Price Avarage industry margin Image Competitive conditions (concentration, Product quality intensity, entry barrieres, ecc.) Government regulations (price Market support controls, local content, ecc.) Infrastructure Quality of distributors and service Market uncontrollables (cultural, legal, Financial resources and political environments) 12 Phase 1: Preliminary Analysis and Screening “Fine grained” screening 13 Micro-Segmentation  Basis for Segmentation ▪ Demographic ▪ Psychographic ▪ behavioural Segmentation ▪ Geographic Micromarket segmentation Global Marketing Management  As global markets homogenize and diversify simultaneously, the best companies will avoid focusing on country as the primary segmentation variable  Other segmentation variables are often important—for example, climate, language group, media habits, age, or income DIFFERENT SEGMENT SCENARIOS  universal or global segments 17 12-18 Phase 2: Defining Target Markets and Adapting the Marketing Mix  A more detailed examination of the components of the marketing mix is the purpose of Phase 2  The primary goal of Phase 2 is to decide on a marketing mix adjusted to the cultural constraints imposed by the uncontrollable elements of the environment that effectively achieves corporate objectives and goals  The answers to three major questions are generated in Phase 2:  Are there identifiable market segments that allow for common marketing mix tactics across countries?  Which cultural/environmental adaptations are necessary for successful acceptance of the marketing mix?  Will adaptation costs allow profitable market entry? 12-20 Phase 3: Developing the Marketing Plan  A marketing plan is developed for the target market— whether it is a single country or a global market set  The marketing plan begins with a situation analysis and culminates in the selection of an entry mode and a specific action program for the market  The specific plan establishes what is to be done, by whom, how it is to be done, and when. Included are budgets and sales and profit expectations Marketing plan  The marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at two levels. 1. The strategic marketing plan lays out the target markets and the firm’s value proposition, based on the best market opportunities 2. The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, services 22 12-23 Phase 4: Implementation and Control  The planning process is a dynamic, continuous set of interacting variables with information continuously building among phases  An evaluation and control system requires performance- objective action; bringing the plan back on track should standards of performance fall short  The system encourages the decision maker to consider all variables that affect the success of a company’s plan  It provides the basis for viewing all country markets and their interrelationships as an integrated global unit  Critical to the success of the Ford’s marketing strategy in China is ‘‘Mei’’ (meaning beautiful in Chinese). Mei represents the twenty-something, single urban, college- educated female, who earns $880 to $1,500 a month and plans to buy her first car. This is Ford’s target market for the rollout of the new Fiesta in China. China’s car market is the second biggest in the world (behind the United States). Yet, although passenger vehicle sales rose almost 7 percent in 2008, sales of Ford brand cars dropped 10 percent. Ford hopes that the new Fiesta will halt the sales decline. The new Ford Fiesta is the first of Ford’s global car strategy that centers on the idea of selling car models worldwide in order to save on development costs and gain economies of scale. The new model was first revealed at the 2008 Geneva car show. Ford planned to launch the car first in Asia in 2009, then in Europe, and ultimately in North America. The new Fiesta has the same size as the old small-car Fiesta that was sold in Europe but it is lighter and more environmentally friendly with its high-fuel efficiency. To prepare for the launch of the Fiesta in China, Ford ran an ‘‘immersion event’’ that was designed to put senior Ford and ad agency executives in touch with the Mei target customers. During the event, these executives spent one afternoon with fifteen women in the Fiesta age group to get insights into their lives, attitudes, and goals. All of the women spent a lot of time on the internet. Guided by the research findings, Ford developed an ad campaign to connect with its prospects that started in March 2009. The campaign centered on lifestyle magazines and the internet, with emphasis on social networking sites. The ads aspired to be edgy without being offensive. The ads featured attractive men and women, bright colors and hipmusic. A second campaign targeting Mei’s parents focused on the Fiesta’s safety. The research also underlined differences between Chinese and European consumers: Chinese car buyers want more options so that they can personalize their vehicles. 25 As a result, Ford decided to offer four color combinations on the Fiesta in China, compared to just two in Europe. Transnational clustering of the western European market