ANALYZING MARKETS

1. chapter fifteen
Assessing and Analyzing Markets
McGraw-Hill/Irwin
International Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

2. Learning Objectives
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
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3. Learning Objectives
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
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4. Assessing and Analyzing Markets
•Market Screening
• A version of environmental scanning in which the firm identifies desirable
markets by using the environmental forces to eliminate the less desirable
markets
•Environmental Scanning
• A procedure in which a firm scans the world for changes in the
environmental forces that might affect it
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5. Market Screening
•Permits management to identify a small number of desirable by
eliminating those judged to be less attractive
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6. Market Screening
•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
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7. Initial Screening
• 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
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8. Initial Screening
• 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
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9. Second Screening: Financial and
Economic Forces
•Measures of market demand based on economic
and financial data
• Market indicators
• Market factors
• Trend analysis
• Cluster analysis
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10. Market Indicators
•Market Indicators
• Economic data used to measure relative market strengths
of countries or geographic areas
• Possibilities:
• Market size
• Market growth rate
• E-commerce readiness
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11. Market Factors
•Market Factors
• Economic data that correlate highly with market demand for a
product
• Estimation by analogy
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12. Trend Analysis
• 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
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13. Cluster Analysis
•Cluster analysis
• Statistical technique that divides objects into groups so
that the objects within each group are similar
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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
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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
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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
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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
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18. Final Selection of New Markets
• Personal visit to potential markets is essential
• Field Trip, unhurried
• Government-Sponsored Trade Missions
• Trade Fairs
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19. Final Selection of New Markets, cont’d
•Research in Local Market
• 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
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20. Local Research Problems
• 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
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21. Research in Developing Nations
•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
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22. Return to Segment Screening
• 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
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