CHAPTER 3 EXPORT MARKETEXPANSION/SELECTION: DEFINITION AND STRATEGIES
AIM OF THIS CHAPTER: Describe the alternatives of international, especially export, market strategy decisions and the base of export competition. Deals with specifically with the company’s selection of international markets, number and types of countries and market segments.
MARKET DEFINITION & SEGMENTATION Market definition: identify the consumer marketSpecific answers to some strategic questions What geographic area will we operate in? What timeframe do we have in mind? Who are our prospects?Specific answers to some strategic questions What will we offer? In what broad range of price? To whom will we offer it? How will we let them know about our offering? How/where will we engage in exchange with them? Whom will we compete with
MARKET DEFINITION STRATEGIC QUESTIONS MARKET DEFINITIONWhat geographic area will we Eg: domestic USoperate in?What timeframe have we in mind Eg: 2013, MayWhat will we offer? Some version of product category XTo whom will we offer it? Define prospects Eg: people who buy/use product category X or engage in corresponding activity YWhat price will we charge? State price (discount, premium)How will we let them know about State tentative ideas for mediaour offering? typeHow/where will we engage in State tentative ideas for exchangeexchange with them? venue typeWhom will we compete with? State the competitors
MARKET SEGMENTATION The process of defining and subdividing a large homogenous market into clearly identifiable segments having similar needs, wants or demand characteristics.
EXPORT MARKET SEGMENTATION: It is important to note that any decision to segment on a particular basis should be evaluated in terms of following:1) Measurability : segments can be identified.2) Accessibility : segments can be actively reached and served - should be accessible through channels of communication and distribution (internet, transportation etc)3) Profitability : make sure the size of segments are large/profitable enough4) Actionability : effective programs can be formulated for attracting and serving the segments (marketing programs)
BASES OF SEGMENTATION GEOGRAPHIC DEMOGRAPHIC PSYCHOGRAPHIC BEHAVIORAL
MARKET EXPANSION/SELECTION PROCESS, PROCEDURE AND STRATEGY a key strategicThe choice of a market expansion policy isoption in export marketing and provides the foundation fordecisions about the elements of the export marketing mix.Expansion strategies deal with issues on how companyidentifies and analyzes the selection of export markets overtime, determining the number of markets in which to operateand the desired characteristics of these markets. Anexpansion policy can be seen in several dimensions includingthe nature of market research activities in choosing exportmarkets, the procedures of screening export markets and theways of allocating efforts and resources among differentexport markets. The purpose of this section is to present aframework for analysis of alternative market expansionstrategies.
MARKET SELECTION PROCESS: REACTIVE VS PROACTIVE APPROACHES REACTIVE (secondary) Exporter acts passively in choosing markets by filling unsolicited order or awaits initiatives on the part of foreign buyers, foreign representatives or other export agents who individually select the market for company. Selection process is informal, unsystematic and purchase oriented.
PROACTIVE (primary) Exporter acts actively in initiating the selection of foreign markets. Selection process is systematic and formalized