Market Selection

Topics: Marketing, Risk, Markets Pages: 14 (711 words) Published: February 5, 2015
CHAPTER 5

MARKET SELECTION: DEFINITION
AND STRATEGIES

INTRODUCTION
 The marketer has a key role in the strategic planning process:

many planning tools depend upon concepts of market share,
market definition, segmentation, positioning, product life
cycles and customer relationship management (CRM).

 Key steps in formulating an international marketing strategy

are:
 Export market selection: determining the markets in which to compete, and the sequence of entries.
 Export market direction: determining whether to build, hold or divest in markets being served

MARKET DEFINITION AND
SEGMENTATION

 Market segmentation: a breakdown into segments of

customers for particular products in particular countries.

 Market segmentation is a crucial and complex function:
 Need to consider countries, channels, customer

segments etc.
 Unique customer groups may be based on countries or
consumer types across countries.
 It is critical that there be careful analysis prior to
commitment to international expansion

EXPORT MARKET SEGMENTATION
 Many possible ways; may use multiple methods.

Need to consider:
 (a) measurability: ability to identify potential segments  (b) accessibility: ability to reach and serve
(communicate and deliver)
 (c) profitability: is market large enough to be worth
separate attention
 (d) actionability: can effective programs be
formulated for attracting and serving

MARKET SELECTION PROCESS:
REACTIVE vs PROACTIVE

 Reactive; responding to inquiries; very common, especially

for small or new exporters.

 Proactive; formal or informal search.
 Before actually deciding which market(s) to enter, in-depth

research must be carried out regarding all differences
between the home and country and foreign country that may
affect the desirability, costs, and potential benefits of
marketing, and how to do business there.

MARKET SELECTION PROCEDURES
EXPANSIVE vs CONTRACTIBLE

 Expansive: working outward from core; to

nearest neighbor (nearest in distance or
similarities); may adapt products and/or segment
markets or neither.
 Contractible: reducing large number of possible
candidates looking at general market indicators
and specific product indicator.

 ‘Knock-out’ factors have to be decided upon and






stipulated: as noted further in the text these
include:
Prohibitive product characteristics in obvious
conflict with cultural, religious or other factors.
Prohibitive market factors such as prohibitions,
boycotts, very high Customs duties or other
barriers.
Generally there are three stages in process: (a)
preliminary screening, (b) determining specific
country characteristics and weights of factors,
and (c) ranking.

MARKET SELECTION STRATEGIES
 Market concentration:

high levels of effort in a few markets;

slow/gradual expansion over time.

 Market spreading:

resources spread over many markets;

fast rate of growth in the number of markets
served.

CONSIDERATIONS AFFECTING CHOICE OF
EXPORT MARKET EXPANSION STRATEGY

CONCENTRATION

SPREADING

 power of specialization,

scale and market
penetration;
 greater market knowledge;
 higher degree of control;
 learning of the export
process and the experience
curve

 flexibility;
 less dependence on

particular markets;
 lower perception of risk.

 Differing customer segments for different

products in a country may cause a company to
set up more than one type of entry method.
 Any model needs to be supplemented with indepth information regarding product factors, environmental factors, export marketing factors,
political risk assessment etc.
 The Internet is making it easier for ‘patriotic
shoppers’ in some countries to find domestically
produced goods suppliers where imported
goods dominate.

FOREIGN MARKET PORTFOLIOS: TECHNIQUES AND
ANALYSIS : STANDARDIZED APPROACH
 Portfolio analysis to...
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