Research is very important when marketing in your own country, but it is even more important in foreign markets. This is because in your own country you can rely on some combination of research results and your own intuition (i.e. your sense of how people think, how they use your products, and how they will respond to certain messages). In foreign markets, you do not have the same kind of personal familiarity with the markets, and therefore need to make up for it with more extensive research.
The results of this research should then be considered in light of what the firm can deliver.
Doing detailed research is costly; a firm would typically only do detailed research on the countries believed to be the most promising.
A. Demand Analysis
The firm needs to analyze and segment its customers. It should clearly identify who are the accessible, target customers. It should understand how the country's culture might affect demand for its product. Consider income levels, demographics, education levels, distribution of incomes, urbanization, consumption patterns. Moreover, consider trends in each of these issues. (e.g. How fast are income levels rising? Is the population aging? etc.) Essentially, you want to spot an emerging demand for your product. It is often easier to break into emerging markets than into saturated markets. Determine existing demand (based on the data and on expert opinion). Determine future demand (based on trends).
Determine latent demand (demand for products not currently available in the country).
Determine responsiveness to marketing.
Determine spillover effects to neighboring countries.
Determine what adaptations to the product customers may prefer. Determine customer bargaining power. (The fewer or larger the customers, the more they will be able to bargain down the selling price)
B. Competitor Analysis
Identify existing competitors.
Identify potential competitors.
Identify close substitutes to your own product.
Anticipate competitors' responses. Price war? Calls for government intervention?
C. How to Collect Data
Ideally, data should be collected by people who know the firm and industry, and who have a strong familiarity with the country of study.
Often such people are not available, so there is a risk that the data is misinterpreted or misdirected.
There are many external sources of data: home government, other governments, international organizations, service organizations, trade associations, databases, other firms.
D. Issues Internal to the Firm
The firm should consider its own competencies. How will the firm's competencies fare in the foreign market?
How transferable are the firm's competencies? If a key function must be done overseas, can the firm's advantages be transferred to that location? What risk is there of giving away competencies if marketing can only be done through a joint venture or licensing?
Can you think of any examples of poor research in foreign markets? Can you think of any foreign products that failed in our markets (or in your country’s markets if you are an international student)? Do you think the foreign company could have avoided its mistakes through better research?
“Product design” refers to the characteristics of the product. We think of a product in broad terms to include the service and warranty elements.
One of the issues often considered is whether to use a standard product or to adapt the product to the local market. This perhaps unduly simplifies the question of what product the firm should sell in the foreign market, but for the purposes of a general discussion we’ll focus on this issue.
There are some important reasons why a company might want to sell a standardized product. One is that standardized products typically cost less, because this strategy exploits economies of scale more. A second reason is that the firm's competency may be in that...