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0273706786_08_media_light.ppt/International
- 1. Svend Hollensen GLOBAL MARKETING 4th Edition 8 The international market selection process
- 2. Hollensen, Global Marketing 4e, © Pearson Education 2008 Learning objectives Define international market selection and identify the problems in achieving it Explore how international marketers screen potential markets/countries using secondary and primary data (criteria) Distinguish been preliminary and ‘fine- grained’ screening 8-2
- 3. Hollensen, Global Marketing 4e, © Pearson Education 2008 Learning objectives (2) Realize the importance of segmentation in the formulation of the global marketing strategy Choose among alternative market expansion strategies Distinguish between concentration and diversification in market expansion 8-3
- 4. Hollensen, Global Marketing 4e, © Pearson Education 2008 Why is it important to identify the ‘right market’ to enter? Influences likelihood of success Influences nature of marketing programmes Affects firm’s ability to coordinate foreign operations 8-4
- 5. Hollensen, Global Marketing 4e, © Pearson Education 2008 International market selection in SMEs Low psychic distance Low cultural distance Low geographic distance 8-5
- 6. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.1 Potential determinants of the firm’s choice of foreign markets The firm The environment International market segmentation INTERNATIONAL MARKET SELECTION (IMS) 8-6
- 7. Hollensen, Global Marketing 4e, © Pearson Education 2008 Determinants of firm’s choice The firm Degree of internationalization Size/amount of resources Type of industry/nature of business Internationalization goals Existing networks of relationships The environment International industry structure Degree of internationalization of the market Host country: Market potential Competition Distance Market similarity 8-7
- 8. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.2 International Market Segmentation The firm Environment Step 1: Selection of segmentation criteria Step 2: Development of segments Step 3: Screening of segments Step 4: Microsegmentation Market entry 8-8
- 9. Hollensen, Global Marketing 4e, © Pearson Education 2008 Criteria for effective segmentation Measurability Accessibility Substantiality/profitability Actionability 8-9
- 10. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.3 The basis of international market segmentation General characteristics Geographic Language Political factors Demography Economy Industrial structure Technology Social organization Religion Education Specific characteristics Culture Lifestyle Personality Attitudes and tastes High degree of measurability, accessibility, and actionability Low degree of measurability, accessibility, and actionability, but high degree of relevance 8-10
- 11. Hollensen, Global Marketing 4e, © Pearson Education 2008 The screening process Stage 1: Preliminary screening Stage 2: Fine-grained screening 8-11
- 12. Hollensen, Global Marketing 4e, © Pearson Education 2008 What is this? The _____ is a useful tool for coarse- grained, macrooriented screening of international markets. Business Environment Risk Index (BERI) 8-12
- 13. Hollensen, Global Marketing 4e, © Pearson Education 2008 Criteria included in the overall BERI index Political stability Economic growth Currency convertibility Labour cost/ productivity Short-term credit Long-term loans/venture capital Attitudes Nationalization Monetary inflation Balance of payments Enforceability of contracts Bureaucratic delays Communications Local management Professional services 8-13
- 14. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.4 The market attractiveness/ competitive strength matrix 8-14
- 15. Hollensen, Global Marketing 4e, © Pearson Education 2008 Dimensions of market/ country attractiveness Market size Market growth Buying power of customers Market seasons Average industry margin Competitive conditions Market prohibitive conditions Government regulations Infrastructure Economic and political stability Psychic distance 8-15
- 16. Hollensen, Global Marketing 4e, © Pearson Education 2008 Dimensions of competitive strength Market share Marketing ability and capacity Products to fit market demands Price Contribution margin Image Technology position Product quality Market support Quality of distributors Financial resources Access to distribution channels 8-16
- 17. Hollensen, Global Marketing 4e, © Pearson Education 2008 Categories of Markets A countries: primary markets offering the best opportunities for long-term strategic development B countries: secondary markets where opportunities are there but risk is high C countries: tertiary markets with high risk 8-17
- 18. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.5 Questionnaire for locating countries on a market attractiveness/ competitive strength matrix 8-18
- 19. Hollensen, Global Marketing 4e, © Pearson Education 2008 Develop subsegments Demographics Lifestyles/ Psychographics Consumer motivations Buyer behaviour 8-19
- 20. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.6 Transnational clustering of the western European market Source: Source: Welford and Prescott, 1996. European Business: An issue-based approach, 3rd Edition. Reprinted by permission of Pearson Education Ltd. 8-20
- 21. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.7 Micromarket segmentation 8-21
- 22. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.8 The IMS screening process 8-22
- 23. Hollensen, Global Marketing 4e, © Pearson Education 2008 Designing market expansion strategy Should we enter markets incrementally or simultaneously? Will entry be concentrated or diversified across international markets? 8-23
- 24. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.11 Market expansion strategies: Waterfall approach Advanced countries Developing countries Less developed countries Gross national product per capita High Low Time Source: Source: Global Marketing Management, by Keegan, Warren J. © Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ. 8-24
- 25. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.11 Market expansion strategies: Shower approach Advanced countries Developing countries Less developed countries Source: Source: Global Marketing Management, by Keegan, Warren J. © Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ. 8-25
- 26. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.12 Appropriate global marketing strategies for SMEs Source: Source: Bradley, 1995. International Marketing Strategy, 2nd Edition. Reproduced by permission of Pearson Education Ltd. 8-26
- 27. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.13 The market expansion matrix 1 3 4 2 Concentration Diversification Country Market/customer target group Concentration Diversification Source: Source: Ayal and Zif, 1979, p. 84. 8-27
- 28. Hollensen, Global Marketing 4e, © Pearson Education 2008 Expansion alternatives Few customer groups/segments in few countries Many customer groups/ segments in few countries Few customer groups/segments in many countries Many customer groups/segments in many countries 8-28
- 29. Hollensen, Global Marketing 4e, © Pearson Education 2008 Company factors Favouring country diversification High management risk consciousness Object of growth through market development Little market knowledge Favouring country concentration Low management risk consciousness Objective of growth through penetration Ability to pick ‘best’ markets Source: Source: Adapted from Ayal and Zif, 1979; Piercy, 1981; Katsikea et al. (2005). 8-29
- 30. Hollensen, Global Marketing 4e, © Pearson Education 2008 Product factors Favouring country diversification Limited specialist uses Low volume Non-repeat Early or late in product life cycle Standard product Radical innovation Favouring country concentration General uses High volume Repeat purchase product Middle of product life cycle Requires adaptation to different markets Incremental innovation Source: Source: Adapted from Ayal and Zif, 1979; Piercy, 1981; Katsikea et al. (2005). 8-30
- 31. Hollensen, Global Marketing 4e, © Pearson Education 2008 Market factors Favouring country diversification Small markets Unstable markets Many similar markets Low growth rate Established competitors with large share Low loyalty High synergy between countries Favouring country concentration Large markets Stable markets Limited number of markets High growth rate Not excessively competitive High loyalty Low synergy effect Source: Source: Adapted from Ayal and Zif, 1979; Piercy, 1981; Katsikea et al. (2005). 8-31
- 32. Hollensen, Global Marketing 4e, © Pearson Education 2008 Marketing factors Favouring country diversification Low communication costs Low order-handling costs Low physical distribution costs Standardized communication Favouring country concentration High communication costs High order-handling costs High physical distribution costs Communication requires adaptation Source: Source: Adapted from Ayal and Zif, 1979; Piercy, 1981; Katsikea et al. (2005). 8-32
- 33. Hollensen, Global Marketing 4e, © Pearson Education 2008 Figure 8.14 Unilever’s global portfolio 8-33
- 34. Hollensen, Global Marketing 4e, © Pearson Education 2008 For discussion (1) Why is screening of foreign markets important? Outline the reasons why many firms do not systematically screen countries/markets. Explore the factors which influence the international market selection process. Discuss the advantages and disadvantages of using only secondary data as screen criteria in the IMS process. 8-34
- 35. Hollensen, Global Marketing 4e, © Pearson Education 2008 For discussion (2) What are the advantages and disadvantages of an opportunistic selection of international markets? What are the differences between a global market segment and a national market segment? What are the marketing implications of these differences for a firm serving segments on a worldwide basis? 8-35
- 36. Hollensen, Global Marketing 4e, © Pearson Education 2008 For discussion (3) Discuss the possible implications that the firm’s choice of geographic expansion strategy may have on the ability of a local marketing manager of a foreign subsidiary to develop and implement marketing programmes. 8-36
- 37. Hollensen, Global Marketing 4e, © Pearson Education 2008 Hasbro: A case study What are the foundations of Hasbro’s global success? What demographic changes and social issues might influence the future global market for toys and games? What are the most important screening criteria for Hasbro in the IMS process? Requires web access 8-37
Editor's Notes
- There follows an explanation of some key terms: Coordinate its marketing activities: coordinating and integrating marketing strategies and implementing them across global markets, which involves centralization, delegation, standardization and local responsiveness. Find global customer needs: this involves carrying out international marketing research and analysing market segments, as well as seeking to understand similarities and differences in customer groups across countries. Satisfy global customers: adapting products, services and elements of the marketing mix to satisfy different customer needs across countries and regions. Being better than the competition: assessing, monitoring and responding to global competition by offering better value, low prices, high quality, superior distribution, great advertising strategies or superior brand image.
- Fundamentally, there are four ways of using information to create business value (Marchand, 1999): 1 Managing risks. In the twentieth century the evolution of risk management stimulated the growth of functions and professions such as finance, accounting, auditing and controlling. These information-intensive functions tend to be major consumers of IT resources and people’s time. 2 Reducing costs. Here the focus is on using information as efficiently as possible to achieve the outputs required from business processes and transactions. This process view of information management is closely linked with the re-engineering and continuous improvement movements of the 1990s. The common elements are focused on eliminating unnecessary and wasteful steps and activities, especially paperwork and information movements, and then simplifying and, if possible, automating the remaining processes. 3 Offering products and services. Here the focus is on knowing one’s customers, and sharing information with partners and suppliers to enhance customer satisfaction. Many service and manufacturing companies focus on building relationships with customers and on demand management as ways of using information. Such strategies have led companies to invest in point-of-sale systems, account management, customer profiling and service management systems. 4 Inventing new products. Finally, companies can use information to innovate – to invent new products, provide different services and use emerging technologies. Companies such as Intel and Microsoft are learning to operate in ‘continuous discovery mode’, inventing new products more quickly and using market intelligence to retain a competitive edge. Here, information management is about mobilizing people and collaborative work processes to share information and promote discovery throughout the company.