This chapter covers:
14
•Environmental
analysis and market
screening
•Market indicators and
factors
Assessing and Analyzing
Markets
•Market demand
•Trade missions
•Problems with
marketing research
•Country and segment
screening
•The internet as a
market research tool
International Business
by Ball, McCulloch, Frantz,
Geringer, and Minor
McGraw-Hill/Irwin
Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Objectives
 Discuss environmental analysis and market screening
 Explain market indicators and market factors
 Describe some statistical techniques for estimating market
demand and grouping similar markets
 Appreciate the value to businesspeople of trade missions and
trade fairs
 Discuss some of the problems market researchers encounter in
foreign markets
 Understand the differences between country screening and
segment screening
 Identify sources of information for the screening process
 Appreciate the utility of the Internet as a source of market
research data
14-3
Assessing and Analyzing Markets

Market Screening


A modified version of
environmental scanning in
which the firm identifies
markets by using the
environmental forces to
eliminate the less desirable
markets
Environmental Scanning

14-4
A procedure in which a firm
scans the world for changes
in the environmental forces
that affect it
Market Screening
 Permits management to identify a small number of
desirable markets be eliminating those less
attractive
 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
14-5
Initial Screening

Basic Need Potential


14-6
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
 Foreign Trade and
Investment
 If the need potential
cannot be readily
established for the good
or service, analysts can
use
 U.N.’s International
Trade Statistics
Yearbook, Volume II to
identify export and
import quantities
Foreign Trade and Investment

Other helpful resources include
 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
14-7
Second Screening
Financial and Economic Forces
 Financial Forces
 Trends in inflation
 Exchange rates
 Interest rates
 Credit availability
 Paying habits of
customers
 Rates of return on
similar investments
14-8
Economic Forces
 Measures
of market demand based on
economic data include
 Market indicators
 Market factors
 Trend analysis
 Cluster analysis
14-9
Economic Forces
 Market Indicators
 Economic data used to
measure relative market
strengths of countries or
geographic areas
 Buying Power Index
enables marketers to
compare relative
buying power
14-10

Market Factors

Economic data that
correlate highly with
market demand for a
product
 If the analyst of a
foreign market has no
factor for that market,
he or she can use the
“estimation by
analogy”
Economic Forces

Trend Analysis


A statistical technique by
which successive
observations of a variable
at regular time intervals
are analyzed to establish
future values
Cluster Analysis

14-11
A statistical technique that
divides objects into groups
so that the objects within
each group are similar
Third Screening
Political and Legal Forces

Entry Barriers


Profit Remittance Barriers


Import restrictions, local participation requirements,
local content restrictions, government-owned
competition
Undue restrictions on repatriation of earnings, limits
to FDI, inability to provide foreign exchange
Policy Stability

14-12
Political climate, government stability, public unrest
Fourth Screening
Sociocultural Forces
 Screening on the basis  Sources of assistance to
of sociocultural factors
is challenging
 Sociocultural factors
are fairly subjective
 “Data” are difficult
to assemble,
particularly from a
distance
14-13
analyze and interpret
sociocultural forces
include
 Consultants
 U.S. Department of
Commerce specialists
 Professional
organizations and
universities
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
14-16

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
Competitive Forces
 Countries where strong
competitors make a
profitable operation difficult
are eliminated from list
unless management
 is following a strategy of
being present wherever
its global competitors are
 believes entering a
competitor’s home
market will distract the
competitor’s attention
from its home market
14-15
Final Selection of New Markets
 A personal visit to potential markets is essential is selecting
markets. Visits to potential markets can be through
 A Field Trip
 Should not be hurried
 Government-Sponsored Trade Mission
 A group of business or government people visit markets
in search of business opportunities
 Less cost than going alone and greater impact
 Trade Fairs
 A large exhibition at which companies maintain booths
to promote the same of their products
14-16
Final Selection of New Markets

Research in Local market

Face-to-face interviews
reveal information that
would never be written

Management should hire
a local research group

14-17
The person in charge of
the project must have
experience in that
country on one culturally
similar in the same
geographic area
Local Research Problems

Cultural




Language
Literacy
Social desirability bias
Technical





14-18
No up-to-date maps
Streets have different names
Houses not numbered
Only wealthy have
telephones
Mail deliveries can take
weeks or cost money
Final Selection of New Markets
 Research as Practiced
 Competition is frequently less intense in
developing nations because
 there are fewer competitors
 management is struggling with problems other
than marketing, which keep them from
devoting more time to the marketing function
14-19
Segment Screening

Segment Screening





14-20
Definable
 Identify and measure
Large
 Large enough to be worth the effort needed
Accessible
 Reachable for either promotional or distribution
purposes
Actionable
 Able to control the components of marketing programs
Capturable
 The potential still exists to “capture” the segment
TRADE MISSION CALENDAR
February 15-16, 2005 Explore BC - Vancouver, Canada
March 16-17, 2005 Men's Cosmetics and Skin Care
Trade Mission - Montreal, Canada
March 15-20, 2005 Aerospace Executive Service at the
Australian International Airshow - Avalon Airport,
(Geelong) Australia
June 7-8, 2005 Explore BC - Vancouver, Canada
June 14-15, 2005 REPCAN 2005 - Toronto, Canada
UK Trade Fairs
trade fairs and exhibitions UK offers
a comprehensive listing of all the
consumer, public, industrial and trade
exhibitions to be held in major venues
around the UK