International Marketing Strategies

Session 3-4

The International Marketing Task

(Controllable)

Firm Characteristics

Price

ProductPromotion

Research

Channel of Distribution

Domestic Environment(Uncontrollable

Competitive Structure

Economic Climate

Political/Legal Forces

Political/Legal Forces

Cultural Forces

GeographyAnd Infrastructure

Structure of Distribution

Level of Technology

CompetitiveForces

EconomicForces

Foreign Environment(Uncontrollable

AB C

A B C

Environmental uncontrollable elements

Country Markets

Marketing Decision Factors

• These factors are found within the company environment where the marketer has control over them.

• These factors are:• Price

• Promotion

• Product

• Place (Channels of Distribution)

The Value Chain

Simplified Version of the Value Chain

Centralizing Upstream activities and Decentralizing downstream activities (Global + International Orientation)

Virtual Value Chain as Supplement to Physical Value Chain

ANALYSIS LEVELS

• MACRO (COUNTRY) LEVEL:• PEST / PESTL• PORTER’S DIAMOND• SWOT

• MEZZO (INDUSTRY) LEVEL:• PORTER’S 5 FORCES• COMPETITIVE POSITIONING• C-ANALYSIS

• MICRO (COMPANY) LEVEL:• INTERNAL COMPANY ANALYSIS (capabilities, resources, etc)• DUE DILLIGENCE…

3 KEY ISSUES:

1. APPLICABILITY &

RELEVANCE

2. RISK MITIGATION

3. SUPPORT FOR

DECISION-MAKING

EXAMPLE: PORTER’S DIAMOND

Apply the data so it is relevant to your company and line of business!

What drives

demand?

Decision-making

factors

Elasticity?

Which factors are

key for your

business

venture?

http://globaledge.msu.edu/tools-and-data/diagnostic-tools/core

PEST ANALYSIS 1/3

PEST ANALYSIS 2/3

PEST ANALYSIS 3/3

PORTER’S 5 FORCES ( Business Strategy)

Stages of Researching Foreign Market Potential

Stage One

Preliminary Screening for Attractive Country Markets

(Which foreign Markets warrant detailed Investigation?)

Stage Two

Assessment of Industry Market Potential

(What is the aggregate demand in each of the selected

Markets?)

Stage Three

Company Sales Potential Analysis

(How Attractive is the potential demand for company

Products and services?)

Using Trade Databases

• Trade Map

• WITS

• World Bank

Prospects for Diversification

Political Risk AnalysisFactors Examples

Level 1 General Instability Revolution, external aggression

Level 2 Expropriation Nationalization, contract revocation

Level 3 Operations Import restrictions, local content rules, taxes, export requirements

Level 4 Finance Repatriation restrictions, exchange rates

Governance Index• http://info.worldbank.org/governance/wgi/index.asp

x#reports

CURRENT PREVIOUS

RATINGS SCORES RATINGS SCORES

Rwanda C 51C 52

Niger D 63D 64

Chad D 67D 67

Ecuador C 60C 60

Mozambique C 54C 54

Somalia E 86E 86

South Africa C 41C 41

Sudan D 78D 78

Researching the Industry

• India’s export to world

• India’s export to country X

• Country X’s import from world

Existing and potential trade between India and World in 2014

Product: 8703 Cars (incl. station wagon)

Product Code

Product Label

India's exports to world

Indicative potential trade, USD thousand

Value in 2014, USD thousand

Annual growth in value between

2010-2014, %, p.a.

Share in world

exports, %

'870310Snowmobiles, golf cars and similar vehicles 730 -13 0 730

'870321

Automobiles w reciprocatg piston engine displacg not more than 1000 cc 1199772 -11 6.1 1199772

'870322

Automobiles w reciprocatg piston engine displacg > 1000 cc to 1500 cc 3236803 14 4.3 3236803

'870323

Automobiles w reciprocatg piston engine displacg > 1500 cc to 3000 cc 835521 69 0.3 835521

'870324Automobiles with reciprocating piston engine displacing > 3000 cc 288 -49 0 288

'870331Automobiles with diesel engine displacing not more than 1500 cc 389435 70 1.8 389435

'870332

Automobiles with diesel engine displacing more than 1500 cc to 2500 cc 93024 19 0.1 93024

'870333Automobiles with diesel engine displacing more than 2500 cc 11517 2 0 11517

'870390Automobiles nes including gas turbine powered 1887 -47 0 1887

List of importing markets for the product exported by India in 2014

Existing and potential trade between India and Mexico in 2014

Preliminary Screening

• This involves rating the countries on the macro level indicators

Country Identification

• Candidate countries could be: • Angola

• Mexico

• South Africa

• Nigeria

https://atlas.media.mit.edu/en/

Environmental Research

• Physical

• Sociocultural

• Economic

• Regulatory

http://www.countryreports.org/

http://geert-hofstede.com/albania.html

http://www.tradingeconomics.com

http://hdr.undp.org/en/countries/profiles/IND

Market Size= (Local Production-Export)+Imports

In-Depth Screening

• Market Size• http://data.un.org/

Indirect measure: GNP, Population size, growth in GNP and imports of relevant goods

In Depth Screening

• Market Growth • Growth estimates obtained by getting the market size measures for different

years and computing the growth rate

In Depth Screening

• Competitive Intensity • Level of competition can be measured by the number of competitors in the

market and relative size distribution of market shares.

In Depth Screening

• Trade Barriers• Tariffs, taxes, duties and transportation costs can be ascertained from official

government publications.

Final Selection

• Forecasted revenues and costs are compared to find the country market that best leverages the resources available.

• Importance /Weights are assigned to various variables in the country report

• The weighted sum may be chosen as a criteria to get the final list of two-three countries.

Forecasting Country Sales

• Sales = Industry Sales X Market Share (Expected)

Industry Sales (Build up Method)

1.Build-up method- market sales are estimated on the basis of separate estimates from individuals knowledgeable about certain segments of the market.

2.These single estimates of various parts of the market are aggregated (build-up) into an evaluation of total market size.

Industry Sales: Forecasting Analogy

• The basic premise underlying forecasting by analogy is that the sales in one “lagging” country will show similarities in another “leading” country where product is already marketed.

Sb (2015)=[Sa(2000)/GNPa(2000)]xGNPb(2015)

To account the difference between the countries, the sales figures are usually weighted by a measure such as GNP or population size,

S = Unit sales, subscript a=leading country, subscript b= lagging country and there is a lag of 15 years.

[Sa(2000)/GNPa(2000)]= Unit sales per dollar (or the currency equivalent)

By multiplying the above to lagging country GNP a sales forecast is arrived to

Judgmental Forecasts

• Jury technique

• Expert pooling

• Panel Consensus

• Delphi Method

Forecasting Market Size for the firm

• Armstrong's Regression Model:R (Average Sales per potential Buyer)

=f(E, P, B, T, W, C, G)E= Standard of living IndexP= Price of the goodB= Buying unit index (household per adult) T= TemperatureW=RainfallC=Proportion of children in the populationG= Growth of per capita income per year

Forecasting Market Size for the firm

The second step is to get the size of the potential market using a multicaptive chain

• M=(T)x(L)X(A)X(N)M= Number of potential buyersT=Total populationL= Literacy rate (proportion)A= Proportion of population in the desired age group (e.g., 18-64)N= Proportion of nonagricultural employment

Forecasting final Size

• S= (R) X (M)

• S= forecasted sales in unit per year in a given country.

Sources of Secondary Data

• www.stat-usa.gov

• www.ita.doc.gov

• www.ustradeonline.gov

• www.census.gov/foreign-trade.gov

• www.cia.gov/cia/publications/factbook

• www.customs.ustreas.gov

• www.opic.gov