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Assessing and AnalyzingAssessing and AnalyzingMarketsMarkets

International Businessby Ball, McCulloch, Frantz,

Geringer, and Minor McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

This chapter covers:

•Environmental analysis and market screening

•Market indicators and factors

•Market demand

•Trade missions

•Problems with marketing research

•Country and segment screening

•The internet as a market research tool

Chapter ObjectivesChapter Objectives Discuss environmental analysis and market

screening Explain market indicators and market factors Describe some statistical techniques for estimating

market demand and grouping similar markets Appreciate the value to businesspeople of trade

missions and trade fairs Discuss some of the problems market researchers

encounter in foreign markets Understand the differences between country

screening and segment screening Identify sources of information for the screening

process Appreciate the utility of the Internet as a source of

market research data14-3

Assessing and Analyzing MarketsAssessing and Analyzing Markets

Market Screening A modified version of

environmental scanning in which the firm identifies markets by using the environmental forces to eliminate the less desirable markets

Environmental Scanning A procedure in which a

firm scans the world for changes in the environmental forces that affect it

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Market ScreeningMarket Screening

Permits management to identify a small number of desirable markets be eliminating those less attractive Two Types of Screening

Country Screening Using countries as the basis for market

selection Segment Screening

Using market segments as the basis for market selection

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Initial ScreeningInitial Screening

Basic Need Potential If the need is lacking,

then no reasonable expenditure of effort and money will enable the firm to market its goods and services

Easier for producers of specialized industrial materials or equipment than for widely consumed products

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Foreign Trade and Investment If the need potential

cannot be readily established for the good or service, analysts can use U.N.’s

International Trade Statistics Yearbook, Volume II to identify export and import quantities

Foreign Trade and InvestmentForeign Trade and Investment

Other helpful resources include International Trade Administration site on

the Internet (www.ita.doc.gov) U.S. Exports of Merchandise on the

National Trade Data Bank U.S. International Trade in Goods and

Services (FT900) by the Department of Commerce

Annual Worldwide Industry Reviews and International Market Research Reports prepared by various U.S. embassies

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Second ScreeningSecond Screening Financial and Economic ForcesFinancial and Economic Forces

Financial Forces Trends in

inflation Exchange rates Interest rates Credit availability Paying habits of

customers Rates of return

on similar investments14-8

Economic ForcesEconomic Forces

Measures of market demand based on economic data includeMarket indicatorsMarket factorsTrend analysis Cluster analysis

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Economic ForcesEconomic Forces

Market Indicators Economic data used to

measure relative market strengths of countries or geographic areas

Buying Power Index enables marketers to compare relative buying power

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Market Factors Economic data that

correlate highly with market demand for a product If the analyst of a

foreign market has no factor for that market, he or she can use the “estimation by analogy”

Economic ForcesEconomic Forces

Trend Analysis A statistical technique

by which successive observations of a variable at regular time intervals are analyzed to establish future values

Cluster Analysis A statistical technique

that divides objects into groups so that the objects within each group are similar

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Third ScreeningThird Screening Political and Legal Forces Political and Legal Forces

Entry Barriers Import restrictions, local participation

requirements, local content restrictions, government-owned competition

Profit Remittance Barriers Undue restrictions on repatriation of earnings,

limits to FDI, inability to provide foreign exchange

Policy Stability Political climate, government stability, public

unrest

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Fourth ScreeningFourth ScreeningSociocultural ForcesSociocultural Forces

Screening on the basis of sociocultural factors is challenging Sociocultural

factors are fairly subjective

“Data” are difficult to assemble, particularly from a distance

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Sources of assistance to analyze and interpret sociocultural forces include Consultants U.S. Department of

Commerce specialists

Professional organizations and universities

Fifth Screening - Competitive ForcesFifth Screening - Competitive Forces

The number, size, and financial strength of the competitors

Their market shares Their marketing

strategies The apparent

effectiveness of their promotional programs

The quality levels of their product lines

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The source of their products--imported or locally produced

Their pricing policies

The levels of their after-sales service

Their distribution channels

Their coverage of the market

Competitive ForcesCompetitive Forces

Countries where strong competitors make a profitable operation difficult are eliminated from list unless management is following a strategy

of being present wherever its global competitors are

believes entering a competitor’s home market will distract the competitor’s attention from its home market

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Final Selection of New MarketsFinal Selection of New Markets

A personal visit to potential markets is essential is selecting markets. Visits to potential markets can be throughA Field Trip

Should not be hurriedGovernment-Sponsored Trade Mission

A group of business or government people visit markets in search of business opportunities

Less cost than going alone and greater impact Trade Fairs

A large exhibition at which companies maintain booths to promote the same of their products

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Final Selection of New MarketsFinal Selection of New Markets

Research in Local market Face-to-face interviews

reveal information that would never be written

Management should hire a local research group The person in charge

of the project must have experience in that country on one culturally similar in the same geographic area14-17

Local Research ProblemsLocal Research Problems

Cultural Language Literacy Social desirability bias

Technical No up-to-date maps Streets have different

names Houses not numbered Only wealthy have

telephones Mail deliveries can take

weeks or cost money14-18

Final Selection of New MarketsFinal Selection of New Markets

Research as Practiced Competition is frequently less intense

in developing nations because there are fewer competitors management is struggling with

problems other than marketing, which keep them from devoting more time to the marketing function

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Segment ScreeningSegment Screening Segment Screening

Definable Identify and measure

Large Large enough to be worth the effort needed

Accessible Reachable for either promotional or distribution

purposes Actionable

Able to control the components of marketing programs

Capturable The potential still exists to “capture” the

segment

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TRADE MISSION CALENDARTRADE MISSION CALENDAR

February 15-16, 2005 Explore BC - Vancouver, Canada

March 16-17, 2005 Men's Cosmetics and Skin Care Trade Mission - Montreal, Canada

March 15-20, 2005 Aerospace Executive Service at the Australian International Airshow - Avalon Airport, (Geelong) Australia

June 7-8, 2005 Explore BC - Vancouver, Canada

June 14-15, 2005 REPCAN 2005 - Toronto, Canada

UK Trade FairsUK Trade Fairs

trade fairs and exhibitions UK offers a comprehensive listing of all the consumer, public, industrial and trade exhibitions to be held in major venues around the UK