Transcript ch08 Hollensen - Warsaw School of Economics

Svend Hollensen
GLOBAL MARKETING
4th Edition
Lecture by Ewa Baranowska-Prokop, Ph.D.
The international market
selection process
What is this?
What term refers to planning, execution
and evaluation of programmes to
influence the voluntary behaviour of
target audiences in order to improve
their personal welfare?
Social marketing
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For discussion
According to Hofstede and Hall, Asians
are (a) more group oriented, (b) more
family oriented and (c) more concerned
with social status. How might such
orientations affect the way you market
your product to Asian consumers?
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For discussion
 What role does the self-reference criterion play
in international business ethics?
 How do the roles of women in different cultures
affect women’s behaviour as consumers and as
business people?
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Communicating in the global world
 What steps can a company take to
minimize language barriers across borders?
 What characteristics of a country’s culture
need to be researched to ensure business
success across borders?
 What method is most effective for gathering
useful, accurate and up-to-date information
regarding cultural issues?
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IKEA Catalogue: are there any
cultural differences?
 Discuss the advantages and disadvantages
of having the same catalogues around the
world?
 The catalogue is the most important
element in IKEA’s global marketing
planning. Discuss if there could be some
cultural differences in the effectiveness of
the catalogue as a marketing tool?
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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 ‘finegrained’ screening
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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
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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
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International
market selection in SMEs
Low psychic distance
Low cultural distance
Low geographic distance
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Figure 8.1 Potential
determinants of the firm’s
choice of foreign markets
The firm
The environment
International
market segmentation
INTERNATIONAL MARKET SELECTION
(IMS)
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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
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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
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Criteria for
effective segmentation
Measurability
Accessibility
Substantiality/profitability
Actionability
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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
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The screening process
Stage 1:
Preliminary
screening
Stage 2:
Fine-grained
screening
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What is this?
The _____ is a useful tool for coarsegrained, macrooriented screening of
international markets.
Business Environment Risk Index
(BERI)
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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
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Figure 8.4
The market attractiveness/
competitive strength matrix
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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
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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
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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
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Figure 8.5
Questionnaire for
locating countries
on a market
attractiveness/
competitive
strength matrix
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Develop subsegments
Demographics
Lifestyles/ Psychographics
Consumer motivations
Buyer behaviour
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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.
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Figure 8.7 Micromarket
segmentation
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Figure 8.8
The IMS screening process
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Designing market
expansion strategy
 Should we enter markets incrementally or
simultaneously?
 Will entry be concentrated or diversified
across international markets?
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Figure 8.11 Market expansion
strategies: Waterfall approach
Gross national product
per capita
High
Advanced
countries
Developing
countries
Less developed
countries
Low
Source: Source: Global Marketing Management, by Keegan, Warren J. © Reprinted by permission of Pearson Education, Inc., Upper Saddle River, NJ.
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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.
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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.
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Figure 8.13 The market
expansion matrix
Market/customer target group
Concentration
Diversification
Concentration
1
2
Diversification
3
4
Country
Source: Source: Ayal and Zif, 1979, p. 84.
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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).
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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).
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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).
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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).
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Figure 8.14 Unilever’s
global portfolio
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For discussion (1)
 Why is screening of foreign markets important?
Outline the reasons why many firms do not
systematically screen countries/markets.
 Discuss the advantages and disadvantages of
using only secondary data as screen criteria in
the IMS process.
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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?
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Mac Baren Tobacco Company
Internationalizing the water pipe business
 Is it a wise decision for MBTC to enter the
water pipe market?
 Which screening criteria would you
suggest for MBTC’s IMS (International
Market Selection) process?
 Which specific markets would you
suggest MBTC enter?
Requires web access
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