McGraw-Hill/Irwin
International Business, 11/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.


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


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
•
– A version of environmental scanning in which the firm identifies desirable markets by using the environmental forces to eliminate the less desirable markets
•
– A procedure in which a firm scans the world for changes in the environmental forces that might affect it
15-5

•
Permits management to identify a small number of desirable by eliminating those judged to be less attractive
15-6

•
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

• 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

• 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

• Measures of market demand based on economic and financial data
– Market indicators
– Market factors
– Trend analysis
– Cluster analysis
15-10

• 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
– Economic data that correlate highly with market demand for a product
– Estimation by analogy
15-12

• 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
– 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

• P ersonal visit to potential markets is essential
– Field Trip, unhurried
– Government-Sponsored Trade Missions
– Trade Fairs
15-19

cont’d
•
– 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

• 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

•
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

• 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