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8/3/2019 Ch 4 Export Market Selection
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Ch 4Export Market Selection
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Export Market Selection
The process of opportunity evaluationleading to the selection of foreignmarkets in which to compete.
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Identifying the right market isimportant Target market decisions are antecedent to
the development of foreign marketingprograms and thus, cost of marketing.
The nature and location of its markets willaffect a companys ability to coordinatethem.
Establishing bases at appropriate foreign
markets can be a major dimension in globalpositioning strategy.
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Market Segmentation
Breaking down the market for a particularproduct or service into segments ofcustomers which differ in terms of theirresponse to marketing strategies.
Export Market Segmentation : Because ofdifferences in the economic, cultural andpolitical environments between countries,
international markets tend to be moreheterogeneous than domestic markets
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Export Market Segmentation
Evaluation should be done by means of:
Measurability
AccessibilityProfitability
Actionability
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Measurability
Is the degree to which segments canbe identified and to which the size andpurchasing power of the segments
can be measured
Fx : is there statistic on age 16-26 in
Europe
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Accessibility
Is the degree to which the resultingsegments can be effectively reachedand served
Fx : are there medias to promote ourbusiness
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Profitability
Is the degree to which the resultingsegments are large / profitable enoughto be worth considering for seperate
marketing attention
Fx: Quality standard ,Tax
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Actionability
Is the degree to which seperateeffective programs can be formulatedfor attracting and serving the
segments.
Fx: resource and companies capability
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Market Expansion Policy
Market Selection Process
Market Selection Procedure
Market Selection Strategy
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Cont- Exporter apply the proactive strategyto
what are considered primary markets
- Exporter apply the reactive strategytowhat are considered secondary markets
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Market Selection Procedures
Expansive Methods
Contractible Methods
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MARKET SELECTION PROCEDURES
1. Expansive Method
- Select market based on similarities
- Minimum adaptation
- Approaches:
a. Geographic proximityb. Trade policy proximity
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a. Geographic Proximity
- Nearest neighbor approach
- Similarity in economic, political, sociological and culturalstanding
- Less adaptation needed
- Targeted market can be treated as base market area- Fx : Asian (Malaysia, Singapore, Thailand)
b. Trade Policy Proximity
- Established a common market and economic union structure- The exporter has essentially a home market situation in allmember countries
- Tax conditions
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MARKET SELECTION PROCEDURES
2. Contractible Method
Starting with large number of markets then the marketsare first organised on the basis of general market andproduct by screening and ranking
Steps for market screen Geographic segmentation
Customer segmentation
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MARKET SELECTION STRATEGIES
a. Market Concentration Strategy
b. Market Spreading Strategy
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Market Concentration Strategy
Market A Market B
Marketing resources
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a. Market Concentration Strategy
- Slow and gradual rate of growth in numberof market served by a company
- Channeling available resources in to a small
number of market
- Devoting relatively high levels of marketingeffort and resources
- To win significant market share
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b. Market Spreading Strategy
- Fast rate of growth in the number of marketserved at the early stage of expansion.
- Allocating marketing resources over a large
number of markets
- To reduce risks of concentrating resources
- Exploit the economics of flexibility
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Market Spreading Strategy
Market A Market B Market C Market D Market E
Marketing resources
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Concentration vs. Spreading
Concentration Spreading
Advantages:
- power of specialization,and market penetration;
- greater marketknowledge;
- higher degree of control;- learning of the export
process and theexperience curve
Advantages:
- flexibility;- less dependence on
particular markets;
- lower perception of
risk.
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Marketing FactorsFactors favoring market spreading Factors favoring market concentration
- Low communication costsfor additional markets;
- Low order handling costsfor additional markets
- Low physical distributioncosts for additional
markets- Standardized
communication in manymarkets
- High communicationcosts for additional
markets;- High order handling costs
for additional markets
- High physical distribution
costs for additionalmarkets
- Communication requiresadaptation to different
market
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Market FactorsFactors favoring marketspreading
Factors favoring market concentration
- Small markets-specializedsegments
- Unstable markets
- Many similar markets
- New or declining markets
- Low growth rate in eachmarket
- Established competitorshave large share of keymarkets
- Low source loyalty
- Large markets-high volumesegments
- Stable markets
- Limited number of comparablemarkets
- Mature markets
- High growth rate in each market
- Large markets are notexcessively competitive
- Key markets are divided amongmany competitors
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Company Factors
Factors favoring market spreadingFactors favoring marketconcentration
- High management risk-taker
- Objective of growththrough marketdevelopment;
- Little market knowledge
- Low management risk-consciousness;
- Objective of growththrough marketpenetration;
-Ability to pick bestmarkets.
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Product Factors
Factors favoring market spreadingFactors favoring marketconcentration
- Limited specialist uses;
- Low volume;- Non-repeat;
- Early or late in productlife cycle;
- Standard product salablein many markets
- General uses;
- High volume;- Repeat-purchase
product;
- Middle of product life
cycle;- Product requires
adaptation in differentmarkets
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Foreign market portfolios: techniquesand analysis
Standardized approach to portfolio analysis
Portfolio analysis is to evaluate degree and natureof international involvement.
BCG (Boston Consulting Group) model considersmarket strength and market attractiveness.
Portfolio model to export market selection
decisions
Standardized portfolio models do not include riskdimension.
Advantages: early consideration of companys
strengths/weaknesses helps determine primary
role of each market.
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