Assessing Global Market Opportunities
Presented By: Nikita, Gaurang, Mitesh, Bharat M
Global Marketing
Stevens B School Batch 2009-2011
Flow of Presentation
Marketing Information System
Global – MIS
Sources of Market Information
Market Research
Global Marketing Strategy: Entry and Expansion Strategies
Market Expansion Strategies
Stages of Development
Major Concerns with International Alliances
17 March 2011
Stevens B School Batch 2009-2011
Global Marketing Information Systems and Research
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Information
Data: Un-analyzed, raw facts and figures
Information: Data put in a format where it can be analyzed and
inferences can be made out of it, to aid managerial decision making
Scanning: Process of information acquisition
Major problems faced with information are abundance and scarcity.
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Marketing Information System
A continuous flow of information regarding the markets, customers,
competitors, and company operations is called Marketing Information
System.
Points of concern:
Appreciating IT and MIS as strategic assets
Need for a framework for information scanning and opportunity identification
General understanding of market research process
Management of MRIS
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Global - MIS
Types of Marketing Information to look for –
•Demand estimates, consumer behaviour, products, channels, communication media availability & cost, and market responsiveness
Markets
•Corporate, business, and functional strategies and plans
Competition
•Balance of payments, interest rates, attractiveness of country currency, expectations of analysts
Foreign Exchange
•Laws, regulations, ruling concerning taxes, earnings, dividends in both host countries & home country
Prescriptive Information
•Availability of human, financial, information, & physical resource
Resource Information
•Overall review of sociocultural, political, technological environment
General Conditions
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Scanning Modes
Surveillance
Informal information gathering
Viewing: General exposure to information
Monitoring: Particular news story, special reference to a company
Search
Formal activity
Deliberate seeking out of special information
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Sources of Market Information
Human Sources
Personal Sources:
Executives, distributors, customers, prospective
new employees, professional colleagues, consultants
Documentary Sources
Published public
informationUnpublished
private information
Internet Sources
Combines other three information
source types
Direct Perception
Sensory experience
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Marketing Research
Definition
The systematic gathering, recording and analyzing of data to provide
information useful in marketing decision making
Complications in marketing research
Information must be communicated across cultural boundaries
The environments within which the research tools are applied are often in
foreign markets
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Steps in Formal Marketing Research
Identifying the Research Problem
Analyzing Research Data
Presenting the Findings
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Steps in Formal Marketing Research
Identifying the Research Problem
Developing a Research Plan
Collecting Data
Secondary Data
Problems in secondary data
Availability of data
Reliability of data
Comparability of data
Validating secondary data
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Steps in Formal Marketing Research
Primary Data and Survey Research
Sampling Methods
Probability sampling
Random
Stratified
Systematic
Cluster
multistage
Non probability sampling
Convenience
Judgmental
Quota
snowball
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Steps in Formal Marketing Research
Problems in Primary data
Ability to communicate opinions
Willingness to respond
Sampling in field surveys
Language and comprehension
Multicultural research
Research on the internet
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Steps in Formal Marketing Research
Analyzing Research Data
Problems in analyzing and interpreting research information
A high degree of cultural understanding
A creative talent for adapting research findings is necessary
A skeptical attitude in handling both primary and secondary data is helpful
Demand Pattern Analysis
Income Elasticity Measurements
Market Estimation Analogy
Cluster Analysis
Analyzing Results
Presenting the Findings
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Current Issues in Global Marketing Research
Headquarters control of Global Marketing Research
Multinational Company
Global Company
The Marketing Information System as a Strategic Asset
17 March 2011
Stevens B School Batch 2009-2011
Global Marketing Strategy: Entry and Expansion Strategies
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Decision Criteria For International Business
Political Risk
Market Access
Factor Costs and Conditioning
Shipping Considerations
Country Infrastructure
Foreign Exchange
Creating a Product-Market
Profile
Market Selection Criteria
Market Potential
Market Access
Shipping Costs
Potential Competition
Service Requirements
Product Fit
Visits to the Potential Market
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
International Market Entry and Expansion Decision Model
Sourcing: Home, third, or host country?•Cost, market access, country of origin factors
In-country or in-region marketing organizations?•Cost, market impact assessment
Selection, training, and motivation of local distributors
and agents
Marketing Mix Strategy•Goals of objectives in sales, earnings and share of market; positioning
Strategy Implementat
ion
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
International Market Entry
1. Exporting
2. Licensing
3. Franchising
4. Joint Venture
5. FDI – Fully Owned
Manufacturing Facilities
6. M&A
7. Contract Manufacturing
8. Management Contract
9. Turnkey Contract
10. Assembly Operations
11. Counter Trade
a. Barter
b. Buy Back
c. Compensation Deal
d. Counter Purchase
12. Strategic Alliance
13. Third Country Location
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Exporting
When a firm produces its products in the domestic market and/or a
third country and then transfers either directly or indirectly to the host
market, it is called an Export transaction.
1. Indirect Export
2. Direct Export
3. Cooperative Export
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Indirect Export Modes
Using an independent export organization from the domestic country
and not having their own export department is called in-direct export.
Export Buying Agent: Buy and Sell a product
Broker: Buyer-Seller meeting
Export Management Company:
Export dept. for several unrelated companies
Performs market research, channel selection, financing & shipping arrangements, and
documentation
Trading Company – Performs marketing operations
Piggyback – Arrangement whereby one manufacturer obtains distribution
of products through another’s distribution channels
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Direct Export Modes
Manufacturer sells directly to an importer, agent or distributor located
in the foreign target market.
Distributors
Agents
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Licensing
A contractual arrangement whereby one company (the licensor)
makes an asset (patents, inventions, formulas, process, designs,
copyrights & trade marks) available to another company (the
licensee) in exchange for royalties or license fees
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Franchising
The franchisor gives a right to the franchisee against payment, e.g. a
right to use a total business concept/system, including use of trade
marks (brands), against some agreed royalty.
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Joint Venture and Strategic Alliance
17 March 2011
Joint Venture: Allows company to own a stake & play a role in
operations
Eg.: ICICI bank and Prudential Insurance
Strategic Alliance: Understanding or arrangement among the players
in a market to expand to new market, gain quick access to new
technology or avoid competion
Global Marketing
Stevens B School Batch 2009-2011
Joint Ventures and Strategic Alliances
Y-coalitions
17 March 2011
SupplierManufactu
reMarketer Retailer
SupplierManufactu
reMarketer Retailer
Upstream-based collaboration
Downstream-based collaboration
Global Marketing
Stevens B School Batch 2009-2011
Joint Ventures and Strategic Alliances
X-coalitions
17 March 2011
SupplierManufactu
reMarketer Retailer
SupplierManufactu
reMarketer Retailer
Upstream/downstream-based collaboration
Global Marketing
Stevens B School Batch 2009-2011
Other Market Entry Strategies
17 March 2011
•Corporate owns 100% equity in the local subsidiary
FDI – Fully Owned Manufacturing Facilities
•Merger: Mutual Consent, Synergies•Acquisition: Can be friendly or hostileM&A•A firm contacts with foreign country’s firms to manufacture the parts while retaining the responsibility of marketing
Contract Manufacturing
•Supplier brings together a package of skills that will provide an integrated service to the client without incurring risk
Management Contract
•Cross between exporting and overseas manufacturing
Assembly Operations
Global Marketing
Other Market Entry Strategies
17 March 2011Stevens B School Batch 2009-2011
•Agreement by seller to supply with a facility fully equipped & ready to be operated by the buyer’s personnel, who will be trained by the seller
Turnkey Contract
•Barter: Direct exchange of goods of equal amount, with no money
•Buy Back: supplier of equipment purchase goods manufactured with that equipment
•Compensation Deal: Seller receives a part of the payment in cash & the rest in products
•Counter Purchas: Seller receives full payment in cash but spends that money in that country itself within a specified time period
Counter Trade
•One Country has to operate from third country base to enter another country’s market
Third Country Location
Global Marketing
Stevens B School Batch 2009-2011
Market Expansion Strategies
MARKET SEGMENT
CO
UN
TRY
Concentration
Concentration
Diversification
Diversification
1. Narrow Focus
2. Country Focus
4. Global Diversification
3. Country Diversification
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Stages of Development Model
Domestic
International –
Ethnocentric
Multinational –
Polycentric
Global – Mixed
Transnational -
Geocentric
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Stages of Development: Strengths
• Ability to exploit the parent company’s knowledge & capabilities through worldwide diffusion of products
International – Ethnocentric
• Flexible ability to respond to national differences
Multinational – Polycentric
• Global Market or supplier reach, which leverages the home-country organisation, skills, & resources
Global – Mixed
• Combines the strengths of each of the preceding stages in an integrated network, which leverages worldwide learning & experience
Transnational – Geocentric
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
Major Concerns with International Alliances
Objectives
Partner Mindshare
Resources Pooled
Culture
Success Rate
Regulations
Negotiations – Contract renewals
Credibility – Gain or Loss
17 March 2011
Global Marketing
Stevens B School Batch 2009-2011
The Nature of the Global Strategic Partnerships
17 March 2011
Global strategic alliances growing at a rate of 20 to 30 % since the mid
1980s.
The upward trend for GSP ( global Strategic Partnership) comes in
part at the expense of traditional cross-border mergers and acquitions.
Why a firm would enter into GSP?
Roland Smith , Chairman of British aerospace, said “ A partnership is
one of the quickest and cheapest ways to develop a global strategy.
Like traditional joint ventures.
Global Marketing
Stevens B School Batch 2009-2011
Advantages and disadvantages of GSP
17 March 2011
Disadvantages:
Each partner must be willing to sacrifice some control,
There are potential risk associated with strengthening a competitors from another
country.
Advantages:
High product development costs may force a company to seeks partners.
The technology requirements of many contemporary products mean that an individual
company may lack the skills , capital, know- how to go it alone.
Partnership may be the best means of securing access to national and regional
markets.
It also provides learning opportunities and experts regards GSPs as a “ race to learn”.
Prof. Gary Hamel(London Business school) has observed that the partner that proves to
e the fastest learner can ultimately dominate the relationship.
Global Marketing
Stevens B School Batch 2009-2011
Traditional Joint venture and GSP are totally different.
17 March 2011
Traditional joint venture are basically alliance or focusing on a single national market or a
specific problem .
Where, GSP is distinguished by six attributes.
Two or more company develop joint long term strategy aimed at achieving world leadership by
pursuing cost leadership, differentiation, or combination of the two.
The relationship is reciprocal. Each partner possesses specific strengths that it shares with the others:
learning must take place on all sides.
The partners vision and efforts are truly global, extending beyond home countries and home regions to
the rest of the world.
If the relationship is organized along horizontal lines, transfer of laterally between partners and
technology sharing and resource pooling representing norms required.
If relationships is along vertical lines both partner must understand their core strength and be able to
defend their competitive position against the possibility of either a forward or backward integration.
When competition in market excluded from the partnership, the participant retain their national and
ideological identities.
Global Marketing
Stevens B School Batch 2009-2011
Success factor
17 March 2011
Mission
Strategy
Governance
Culture
Organization
Management
Successful collaborators will be guided by the following four principle:
Partners are pursuing mutual goal in some areas, they are competitors in others.
Harmony is not the most important measure of success, some conflict is to be
expected.
All employees understand where cooperation ends and competitive compromise
begins.
Learning from partner is critically important.
Global Marketing
Stevens B School Batch 2009-2011
Alliances and Partnerships
17 March 2011
Alliance between manufacturers and marketers
International partnership in developing countries
Cooperative strategies in Japan
Beyond strategic alliances
Global Marketing
Stevens B School Batch 2009-2011
Thank You
17 March 2011