As advisors to the CEO of a new (mid-priced) Canadian electric vehicle manufacturer, you have been assigned to assess the macro environments of Nigeria and Turkey. And, based on your assessment, come up with a suggestion for which market to enter with regards to setting up a new manufacturing facility and sales office. The CEO wants an overall assessment that takes into account both the potential future customer base and for potentially moving manufacturing.

Using a PESTEL Analysis...

•Make a PowerPoint (or equivalent) slide deck consisting of maximum 20 slides showing your analysis and final suggestion (1 extra page with references is allowed)

Macroenvironmental analysis

Political forces

Economic forces

Sociocultural forces

Technological forces

Environmental forces

Legal forces

Lecture 4 - International market selection

LEARNING OBJECTIVES

•Identify the need for a screening process in selecting international markets

•Familiarise yourselves with international market selection models

•Be able to understand and evaluate market expansion and targeting strategies

Why is it important to select and identify the ‘right’ market to enter?

•There are 193 sovereign states in the world (based on full UN membership)

•Influences the likelihood of international marketing success

•Influences the nature of marketing programs

•Affects a firm’s ability to coordinate foreign operations

The traditional market selection process

Successful market selection...

•Is not arbitrary or haphazard

•Must be logical and based on factual appraisal

•Appraisal is preferably based on market research

•But, full market research in all the countries is not possible

•What is required is a systematic procedure

This procedure should be..

•Based principally on relatively inexpensive desk research

•Initially cover all markets worthy of consideration

•Then eliminate markets in successive stages as soon as desk research indicates they do not have significant potential

•Arrange for limited original primary research to be undertaken in the small number of countries still under consideration

•Then rank the countries still regarded as possible target markets in some reasonable order or priority

•Decide to enter one or more of these countries

The market selection process

Determinants of firm’s choice

The firm

•Degree of internationalization

•Size/amount of resources

•Type of industry/nature of business

•Internationalization goals

•Existing networks of relationships

The environment

•International industry structure

•Degree of internationalization of the market

•Host country:

•Market potential

•Competition

•Distance

•Market similarity

The market selection process

Step 1: Criteria for effective market segmentation: key step

•Measurability

•The degree to which the market segment can be measured

•Accessibility

•The degree to which the market can be effectively reached and served

•Substantiality/profitability

•The degree to which the market is sufficiently large and/or profitable

•Actionability

•The degree to which the organization has sufficient resources to take action

The basis of international market segmentation –

General & Specific Characteristics

Step 2: Develop potential segments:

•Always start with relatively inexpensive macro level segmentation and complete preliminary screening

•Political risk, per capita income, market size, level of competition, cosmopolitanism, etc. (PESTEL) (Porter’s 5 forces)

•Develop micro segments in each of the countries that are still in your consideration set

•either derive micro segments in each country individually, or...

•Jointly group the individuals in all prospective countries to identify cross-boarder segments

Step 3 and 4: Screen your segments against your predetermined criteria and select market(s)

Market A

Market B

Step 3 and 4: cont.

Dimensions of market/country attractiveness and competitive strength

Market expansion strategies

Waterfall approach

Shower approach

International targeting strategies

Factors favoring diversification vs concentration

Factors favoring diversification vs concentration

Factors favoring diversification vs concentration

LECTURE SUMMARY

•The need for a screening process in selecting international markets

•Has a great influence on subsequent international marketing decisions and performance

•International market selection models

•Understand and evaluate market expansion and targeting strategies