DECIDING WHICH MARKETS TO ENTER

VARIOUS APPROACHES TO ENTER MARKET

 Waterfall approach(eg:BMW Matsushita,GE)  Sprinkler approach(eg:Microsoft)

CONTD.
Attractiveness influenced by  Product & geography  Income & population  Political climate

DEVELOPED VS DEVELOPING MARKETS

 Marketing leaders rely on developing markets to fuel their growth  Developed nations contribute only 20%  90% of future population growthoccur in less developed countries  Targeting invisible customers(eg:fiat palios third world car, grameen phone)

CONTD.
 Selling in developing areas-business as usual  Reasons
Economic & cultural differences Local competition

 High frequency stores- tiny bodegas, stalls, kiosks, mom-and-pop stores.  Smaller packaging & lower sales price(eg:unilevers rs 1 sachets, Coke 200 ml bottle)  BRICS- 5 key emerging market areas

T O P G L O BA L F I R M S BA S E D IN DEVELOPING MARKETS
 America Movil  Cemex  China Mobile  CNOOC  Embraer  Gazprom  Haier  Huawei Technologies  Infosys Technologies  Koc Holding  Lenovo Group  MMC Norilsk Nickel  Mahindra & Mahindra  Hisense

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REGIONAL FREE TRADE ZONES

 SAFTA
LDC NLDC(India, Pakistan,Srilanka)

 European union
25 member countries EURO 454 million consumers accounting to 23% of worlds exports

 NAFTA
US, Mexico, Canada 360 million people who produce & consume $ 6.7 trillion worth of goods & services

CONTD.
 Mercosur(Mercosul)
Brazil, Argentina, Paraguay, Uruguay & Venuzuela Associate members: Bolivia, Chile, Peru, Equador & Columbia

 APEC
21 countries+NAFTA+Japan+China pan-Pacific free trade area

 ASEAN
Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar,Phillipines,Singapore,Thailand & Vietnam

D E S I R E D C O U N T RY C H A R AC T E R I S T I C S F O R M A R K E T E N T RY
 Rank high on market attractiveness  Rank low in market risk  Possess a competitive advantage

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Five Modes of Entry into Foreign Markets

Indirect exporting Direct exporting Licensing Joint ventures Direct investment

Commitment, Risk, Control, Profit Potential

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INDIRECT EXPORTING
    Domestic based export Merchants Domestic based export Agents Cooperative Organizations Export Management Companies

ADVANTAGES:   Less investments Seller will make fewer mistakes.

DIRECT EXPORTING
   

Domestic-based export department Overseas sales branch or subsidiary Traveling export sales representatives Foreign-based distributors or agents

REVA ELECTRIC CAR GENERATES 70% OF ITS REVENUE FROM EXPORTS

LICENSING
License issued on Manufacturing process, trademark, Patent, trade secret or others of a fee or royalty Advantage: Low risk, Easy and fast entry Disadvantages: Low control, developing competitors Types: Management Contracts Contract Manufacturing Franchising

JOINT VENTURES
Joint ventures share ownership & control Objectives: Market entry, risk/reward sharing, technology sharing and Joint product development, and conforming to government regulations Advantages: Financial, Physical & Management Support Conflicts: Investments on new Assets Cultural clashes Termination of relationship

DIRECT INVESTMENT
Direct ownership of foreign based assembly and manufacturing Advantages: Cost economies Brand image Develop relationships Full control Disadvantages Huge investment & efforts