Transcript Choosing products and markets

Choosing products and markets
Which market to enter?
• Arbitrage: markets of different income
levels
– But potential product adaptation
• Replication: markets of similar income
levels
– But no price advantage
Which product to sell?
Given advantage of incumbents,
most foreign firms choose
undefended/poorly served
niches
Acer Aspire in the US
• Acer-branded multimedia desk family PC
with design look
• Priced 8-10% below top brands
• Targeted to first time non-business buyers
• Sold through specialist stores
Acer Aspire in US
• Design does not allow scale economies
• Design does not allow mix and match
• Design problems
• Priced too high given low brand reputation
• Service support insufficient
• Competition fierce
= Poor product/market decision
Haier in US
• Initial target poorly served niches (dorm
mini fridges and wine coolers)
• Imported from China (now made in US)
• Priced low
• Distributed through large US retailers
(Home Depot, Sears, Wal-Mart)
A method for selecting product
and market
1. Choosing the candidate product
2. Preliminary screening of market size
3. Estimating industry market potential of
prospective target countries
4. Estimating company sales potential for
high market potential countries
1. Choosing the candidate
product
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Price/quality OK for target market?
Meets target market needs?
Target market competition?
Complementary services or products
available?
• Need for product adaptation?
2. Preliminary screening of market
size: consumer/user profile
• Consumer product
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Income
Social class
Lifestyle
Age and Sex
• Industrial product
– Input/output relationship
– Customer type
2. Preliminary screening of market
size
• Direct estimates of market size
• Indirect estimates of market size
= preliminary list of countries
Insurance Premiums (life and non-life) in 2000
as percent of GDP (2000)
United Kingdom
Korea
Japan
France
United States
Canada
Germany
Italy
China (PRC)
Vietnam
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3. Estimating industry sales
potential of prospective target
countries
• Top-down
• Bottom-up
= high market potential countries
4. Estimating company sales potential
for high market potential countries
• Entry conditions
• Competitive audit
– Product comparisons
– Potential competitors
• Distribution access
• Consumers
= target country(ies)