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International Business : The Challenge of Global Competition, 8/e
Donald Ball
Wendell H. McCulloch, California State University Long Beach
Paul L. Frantz, California State University Long Beach
Michael Geringer, California Polytechnic State University
Michael S. Minor, University of Texas Pan American
Assessing and Analyzing Markets

E Learning Session

  1. Market research for international business PowerPoint (32.0K)
    1. Market screening is a version of environmental scanning in which the firm identifies desirable markets by using the environmental forces to eliminate the less desirable markets Concept Check
    2. Environmental scanning, from which market screening is derived, is a procedure in which the firm scans the world for changes in the environmental forces that might affect it
    3. Market screening
      • Allows firm to identify a small number of desirable markets
      • Two types of screening PowerPoint (30.0K)Concept Check
        1. Country screening
          1. Uses countries as the basis for market selection
        2. Segment screening
          1. Uses market segments as the basis for market selection
      • Initial screening PowerPoint (31.0K)
        1. Basic needs potential
          1. An initial screening is evaluating the basic need for a product or service in a specific market
          2. Evaluate markets relevant to product characteristics
        2. Foreign trade and investment
          1. Published sources suggest which types of products or services are imported and exported by which countries
          2. Analysts can find out where competitors are exporting goods
          3. Imports don't completely measure market potential
            • Even when basic need is identified, research look for current trade flows to see what level of activity is in place
            • Just because goods are currently imported doesn't mean they will always be imported in specific countries
      • Second screening PowerPoint (31.0K)
        1. After initial screening, the researcher will have a short list of possible markets
        2. Market indicators
          1. These are economic data that serve as yardsticks to measure relative market strengths in different geographic areas
          2. Many are published materials
          3. Example is the Latin American e-commerce index
        3. Market factors
          1. Similar to market indicators except that they tend to correlate highly with the market demand for a given product
          2. One tool is estimation by analogy where a market factor that is successful in one market is used to estimate the demand in a second market
        4. Trend analysis
          1. This is a statistical technique by which successive observations of a variable at a regular time interval are analyzed to establish regular patterns that are used to establish future values
          2. Time series models can be constructed in the same way as regression models
          3. Since trend models assume that future performance is constant with past performance, the analyst likely will modify outcome to reflect changes that can be predicted
        5. Cluster analysis and other multivariate techniques
          1. Cluster analysis is the statistical technique that divides objects into groups so that the objects within each group are similar
          2. Groups of markets with similar characteristics can be identified
          3. Periodic updating Concept Check
            • Any modeling to identify markets should be periodically updated to reflect new information or changes in the environment
            • Following updating and review of the results, firms can alter their participation in given markets accordingly
      • Third screening-political and legal forces PowerPoint (32.0K)Concept Check
        1. Entry barriers
          1. Import/export restrictions may be positive or negative
          2. Such restrictions should be reviewed for their impact on the planned business activity
        2. Profit remittance barriers
          1. When no objectionable barriers to market entry are found, management should then look for any restrictions on transferring profits from the host country to the home country
          2. Many countries limit the amount of currency that can be removed from the country
        3. Policy stability
          1. Review a possible market for its surround policy stability
          2. Analyze how long a government has been in place, how it reaches power, what reactions do governments make when new chief executives are named
          3. Distinguish between policy stability and political stability
          4. Rulers may come and go, but if official government policy remains basically the same, the political instability is, perhaps, unimportant
      • Fourth screening-sociocultural forces PowerPoint (32.0K)
        1. Screening of the remaining market candidates then is made on sociocultural characteristics
        2. This is a difficult assess because
          1. Sociocultural factors are fairly subjective
          2. Data are very difficult to assemble, particularly from a distance
      • Fifth screening-competitive forces PowerPoint (31.0K)
        1. Examine markets on the basis of Concept Check
          1. The number, size and financial strength of competitors
          2. Their market shares
          3. Their market strategies
          4. Apparent effectiveness of their promotional programs
          5. Quality levels of their products
          6. Source of their products
          7. Pricing of their products
          8. Levels of after-sales support
          9. Distribution channels
          10. Coverage of market
      • Final selection of new markets PowerPoint (33.0K)
        1. Nothing substitutes for an actual site visit to final candidate countries
        2. Visitation people of teams should familiarize themselves with all data and analysis used to select potential market
        3. Management will want to see confirmation of desk study (five screens) with on-site observations
        4. Field trip
          1. A trip to the proposed market should not be hurried
          2. Preparation before the trip and time during the trip are essential to observing useful information
        5. Government sponsored trade missions and trade fairs
          1. On-site market assessment can be made easier by the trade mission, a group of business people and government officials that visit a market in search of business opportunities
          2. Costs may be reduced though trade missions
          3. Trade fairs are large expositions held at the same place and same time periodically at which companies maintain exhibit areas to demonstrate of promote their products or services
          4. Fairs provide an opportunity to contact prospective buyers, or agents
        6. Sometimes local research is required
          1. In most instances the site visit will be the last component of information to make a final decision
          2. Because commitment is so great in some instances, additional on-site information is sought
          3. Primary research may be performed in specific markets to confirm assessments made by the desk analysis and the field visit
        7. Research in the local market
          1. When a firm's personnel have little or no experience in a specific market then local sources should be contracted for data acquisition
          2. In general, data generation techniques appropriate to home country can be used in host countries, sometimes with slight modifications
          3. Gathering primary data is potentially a problem because of cultural and technical constraints
          4. Cultural problems Concept Check
            • Local language or dialect can make data collection difficult
            • Low levels of literacy may be a problem
            • Family roles and responsibilities may not be fully understood by researchers
            • Some cultures suggest answers to survey questions be responses the research wants to hear resulting in "social desirability bias" to data
            • In some counties people may avoid interview for fear that government action could be called against them
          5. Technical constraints
            • In some countries maps are not up-to-date to help in the research project
            • Telephone surveys in some countries are impossible because of lagging technology
            • Mail surveys are troublesome because of inconsistency in mail service
            • In some counties government permission must be acquired to do surveys and some categories of information are banned
          6. Research as practiced
            • The existence of hindrances doesn't mean that local research cannot be done
            • Secondary data is widely available in developed countries
            • Only developing countries exhibit many of the problems suggested above
              1. In most instances research in these markets is less critical because (1) there a fewer competitors and (2) management is struggling with problems other than marketing
  2. Segment screening
    1. The second of two possible screening approaches
    2. Segment screening seeks to identify common needs and wants across nationalities
    3. People may reside in different countries and speak different languages, but their lifestyles and desires are similar
    4. Managers tend to think of segmenting markets by countries because the separation concept is easier to imagine
    5. Segmenting across desires and needs may be more efficient, however
    6. Characteristics of a segment should be
      • Definable
        1. Segments should be identifiable and measurable
        2. The more segments relay of psychological characteristics the more difficult is the information to acquire but the more accurate it is in predicting behavior
      • Large
        1. Segments should be large enough to be worthwhile to serve
        2. As technology of mass customization develops, the need for large segments is mitigated
      • Accessible
        1. Cannot sell to if you cannot reach the segment
      • Actionable
        1. If the traditional 4Ps of marketing cannot be applied then a segment is not appropriate for targeting
      • Capturable
        1. Regardless of competition, the segment should represent an opportunity to acquire some market share
        2. A market where some competitor has a virtual lock on market share, the segment is not attractive as a target




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