mktg 376 market decision making lars perner, instructor 1 decision making in international markets...

MKTG 376 MARKET DECISION MAKING Lars Perner, Instructor 1

DECISION MAKING ININTERNATIONAL MARKETS

• Market Distance

• Segmentation

– Of countries

– Of consumers within countries

– Approaches

• Country screening

• Evaluation of market potential


Market Distances

DOMESTICFIRM

TARGETMARKET

ECONOMICDISTANCE

GEOGRAPHICALDISTANCE

POLITICALDISTANCE

PSYCHICDISTANCE


Identifying International Markets

• Reactive approach– Accidental entry through foreign orders not

anticipated– Economic pressure for sales increases

• Systematic approach– Proactive– Concentration of resources as needed– Based on market scanning and research


Country Segmentation

• Geographic• Demographic• Income


Segmentation Within Countries

• Averages of countries are often not meaningful

• Implications of demographic factors will depend on country context—e.g., family income of $20,000 would be very affluent in India– Will be able to pay for

a lot of local service and manufacturing

– Able to hire others

• Example: Segmentation of Indian consumer families by income– Rich (benefit

maximizers--$4840/yr)

– Consumers (cost-benefit optimizers--$1,030-4,839)

– Climbers (cash-limited benefit seekers--$495-1029)

– Aspirants ($360-494)– Destitutes ($0-359)


More Within-Country Segmentation Examples

• China by age– Generation I (45-59)

• Some received education

• Usually work or worked for State firms

– Generation II (30-44)• Limited education

opportunities• Married, 1 “little

emperor”– Generation III (18-29)

• Better education• Prospects for better,

market economy

• Indian youth—psychographic– Homebodies—traditional,

low individuality– Two-faced—”outwardly

traditional; outwardly modern”

– Wannabes--“Materialistic mainstream;” “show-offs;” part of crowd

– Rebels—traditional parents; often first generation professionals; understood by friends, not parents

– Cool guys—”work hard-play hard;” confident, westernized


Country Market Segmentation by “Overall Market Attractiveness”

• “Platform” countries—for gathering intelligence and market info

• Emerging markets—current minimal markets but growing potential over time

• Growth markets—already experiencing high levels of growth

• Maturing markets—well entrenched competitors; often have sizable middle class

• Established markets—mature, usually fewer growth prospects; high competition but quite affluent


Selection of Foreign Markets

• Preliminary screening– Market size

• Population• Income

– Accessibility—barriers:• Tariff

– Import– Export

• Non-tariff

– Government participation

– Procedures– Product

requirements

– Profitability• Cost of barriers• Risks

– Exchange rate– Political– Legal

• Selection and targeting– Trade analysis– Analogy—estimation

based on performing of “leading” country (e.g., using China to estimate Vietnamese potential)


International Market Analytical Tools

• Boston Consulting Group (Growth-Share) Matrix• Market Attractiveness/Company Strength

– Primary markets– Secondary markets– Tertiary markets


The Japanese Keiretsu

• Collection of firms with informal cross-ownership of stock

Preference for buying within the keiretsu• Benefits

– Assures demand for product– Able to pool resources over the Product Life Cycle

(bank in center)• May keep inefficient firms in business too long


Example of a Keiretsu

BANK

ELECTRO-NICS

AGRI-CULTUREAUTO

CHEMICALSTEEL

REST-AURANT

FOOD PRO-

CESSINGTRANS-PORTA-

TION

HEAVYMACHI-NERY


Some Economic Concepts

• “Permanent” income—expected average over lifetime

– Retirement expectations

– Employment expectations

• Conspicuous consumption


Approaches to International Market Segmentation

• Countries as segments (Macro-level segmentation]--country aggregate characteristics are used to classify country--e.g.,– demographics (age distribution, urbanization, ethnic

composition)– socioeconomic (level of development]

• Segments within countries:– intramarket segmentation (unique segmentation scheme for

each country]– intermarket segmentation [some segments overlap between

countries]


COUNTRY 1

INTRAMARKET VS. INTERMARKET SEGMENTATION

INTRAMARKET INTERMARKET

BC

A

D

G

F

E

H

B

C

A

DCB

A

HMKT 440Lars Perner, Instrucror Rev. 2/98

•No overlap between countries

COUNTRY 1COUNTRY 2 COUNTRY 2

•Some, but not all,segments overlap between the two countries•Comparable segments may differ in size between countries


Intermarket vs. Intramarket Differences, Part I

• (Compare to Analysis of Variance [ANOVA] in statistics)

• Average differences between countries but also significant differences within countries

• Segment structure may be similar, but segment sizes are likely to differ

• Relative vs. absolute differences--what is “upscale” in a given country?


Intermarket vs. Intramarket Differences, Part II

• Global brands can serve similar consumers across borders --> possible economies of scale

• Product life cycle--segments in one country may follow or lead those of other country


Positioning Across Markets:Not an Easy Choice!

• Uniform or differential positioning across markets?

• Optimal position for product across countries may differ due to

– Country-of-origin effects – Competitive and cost

structure within country markets

• However, consistent image may be desirable due to

– spillover of advertising and promotional efforts (e.g., satellite TV, cross-country circulation of periodicals, portrayal in film/media)

– consumption by individuals who cross boundaries


Marketing Mix Issues

• Need to address markets with

– Entrenched competitors

– High consumer expectations

– Discretionary income for new products

• Marketing mix decisions

– Product

– Price

– Distribution

– Promotion

mktg 376 market decision making lars perner, instructor 1 decision making in international markets...

Documents

country market segmentation

market scanning

affluent slide

westernized slide

research slide

vietnamese potential

country contexte

leading country