chapter fifteen

Assessing and Analyzing

Markets

McGraw-Hill/Irwin
International Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives

 Discuss environmental analysis and two types of market

screening

 Explain market indicators and market factors

 Describe some statistical techniques for estimating market

demand and grouping similar markets

 Discuss the value to businesspeople of trade missions and

trade fairs

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 Learning Objectives

 Discuss some of the problems market researchers

encounter in foreign markets

 Explain the difference between country screening and

segment screening

 Identify sources of information for the screening process

 Discuss the utility of the Internet as a source of market

research data

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 Assessing and Analyzing Markets

• Market Screening
– A version of environmental scanning in
which the firm identifies desirable markets
by using the environmental forces to
eliminate the less desirable markets
• Environmental Scanning
– A procedure in which a firm scans the world
for changes in the environmental forces that
might affect it

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 Market Screening

• Permits management to identify a small

number of desirable by eliminating those
judged to be less attractive

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 Market Screening

• Two Types of Screening

• Country Screening
• Using countries as the basis for
market selection
• Segment Screening
• Using market segments as the basis
for market selection

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 Initial Screening

• Basic Need Potential

– If the need is lacking, then no reasonable
expenditure of effort and money will enable
the firm to market its goods and services
– Easier for producers of specialized industrial
materials or equipment than for widely
consumed products

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 Initial Screening
• Imports Don’t fully measure market potential
• Resources to establish need potential
– International Trade Administration site on the
Internet (www.ita.doc.gov)
– U.S. Exports of Merchandise on the National
Trade Data Bank
– U.S. International Trade in Goods and Services
(FT900) by the Department of Commerce
– Annual Worldwide Industry Reviews and
International Market Research Reports prepared
by various U.S. embassies

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Second Screening: Financial and
Economic Forces
• Measures of market demand based on
economic and financial data
– Market indicators

– Market factors

– Trend analysis

– Cluster analysis

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 Market Indicators

• Market Indicators
– Economic data used to measure relative market
strengths of countries or geographic areas
– Possibilities:
• Market size

• Market growth rate

• E-commerce readiness

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 Market Factors

• Market Factors

– Economic data that correlate highly with market demand for a

product

– Estimation by analogy

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 Trend Analysis

• Trend Analysis

– Statistical technique by which successive observations

of a variable at regular time intervals are analyzed to
establish regular patterns that are used for establishing
future values

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 Cluster Analysis

• Cluster analysis

– Statistical technique that divides objects into

groups so that the objects within each group are
similar

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 Third Screening:
Political and Legal Forces
• Entry Barriers
– Import restrictions, local participation
requirements, local content restrictions,
government-owned competition
• Profit Remittance Barriers
– Undue restrictions on repatriation of earnings,
limits to FDI, inability to provide foreign exchange
• Policy Stability
– Political climate, government stability, public
unrest

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 Fourth Screening:
Sociocultural Forces

 Screening on the basis of sociocultural factors

is challenging

 Sociocultural factors are fairly subjective

 Data are difficult to assemble, particularly from a

distance

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Fifth Screening: Competitive Forces

• The number, size, and financial strength

of the competitors
• Their market shares
• Their marketing strategies
• The apparent effectiveness of their
promotional programs
• The quality levels of their product lines

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Fifth Screening: Competitive Forces, cont’d.

• The source of their products--imported or

locally produced
• Their pricing policies
• The levels of their after-sales service
• Their distribution channels
• Their coverage of the market

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 Final Selection of New Markets

• Personal visit to potential markets is essential

– Field Trip, unhurried

– Government-Sponsored Trade Missions

– Trade Fairs

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Final Selection of New Markets, cont’d

• Research in Local Market

– Face-to-face interviews reveal information that
would never be written

– Hire local research group

• Person in charge of the project must have
experience in that country or culturally similar
one in same geographic area

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 Local Research Problems

• Cultural
– Language
– Literacy
– Social desirability bias
• Technical
– No up-to-date maps
– Streets have different names
– Houses not numbered
– Only wealthy have telephones
– Mail delivery issues
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Research in Developing Nations

• Less research performed

• Often a seller’s market
• Competition is frequently less intense in
developing nations because
• fewer competitors
• management struggling with problems
other than marketing

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 Return to Segment Screening
• Segment Screening

– Definable: identify and measure

– Large: to be worth the effort needed
– Accessible: for promotion and distribution
– Actionable: have control of marketing programs
– Capturable: potential exists

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