EXPORT MARKET SELECTION

Export market selection can be defined as the process of opportunity evaluation

leading to the selection of foreign markets in which to compete. So, it is very important for
exporter to identify the right market. Ricinus Global Company (RGC) is using a market
concentration strategy since we are focusing on one country which is Brazil. Market
concentration is a strategic approach in which a business focuses on a single market or
product. This allows the company to invest more resources in production and marketing in
that one area but at the same time it carries the risk of significant losses in the event of a
declination of demand or increase in the level of competition.

We chose Brazil because it is the largest country in both South America and Latin
America with over 208 million people, Brazil is the world's fifth-largest country by area and
the fifth most populous. Brazil takes second place worldwide in the shampoos market
segment, with the US at number one. In Brazil, men and women invest time and money in
their personal grooming. The hot and humid climate leads to many Brazilians showering two
or three times a day and washing their hair daily using styling products developed especially
for this market.

There are some advantages of market concentration strategy. First, the advantage of
market concentration is had a greater market penetration. Our company will utilize a market
penetration strategy to attempt to enter a new market which is Brazil. The goal is to get in
quickly with our Ricinus Shampoo and capture a large share of the market. It may cause
quick diffusion and adoption of our hair product in the market. If our shampoo is cheap
enough and of similar quality to competing other products, it should spread out into the
market and be purchased by customers quickly. It is may create goodwill among the first
customers that purchase the product due to the aggressive pricing. This may create customer
referrals and may discourage competitors from entering the market.

Second, power of specialization. RGC is focusing only on one product which is

Ricinus Shampoo that gains specialization in production and marketing because once
company keep producing one product for long time, the company will find a cheaper and
efficient ways to produce as well as market the product. So, it will save the cost and earn
more profits due to specialization in producing and marketing a product. If the concentration
is low, it simply means that firms are not influencing the market production and the industry
is highly competitive. Third, when we are focusing on one country, we will obtain a greater
market knowledge of that particular country. So, we are enables to choose the best market
and ensure our business sustained for a long term. Forth, market concentration can give us a
higher degree of control because we are just focusing and monitoring on one country only. It
is good because we can fix the business weaknesses in term of quality of product, price,
marketing strategy and services to ensure the consumer achieve high satisfaction when
buying our hair product.

In addition, Ricinus Global Company are using expansive method which divided into
two approaches. First, geographic proximity approaches and second is trade policy proximity
approaches. By geographic proximity approaches, we use a home market, Brazil, as a starting
point to expand our hair product. We also select market based on similarities in terms of
language. So, it requires us a minimum adaptation. We are trying to expand our shampoo to
Brazil’s neighbour country such as Argentina, Uruguay, Peru, Venezuela and Colombia. The
people in those countries are Spanish-speaking. Our company does not need to change the
advertisement even the packaging of the hair product because they use a same language. we
can cut costs and reduce the expenses for marketing and packaging. Moreover, the trade
policy proximity approaches provide us the easiest market access since the neighbour country
of Brazil established a common market, economic union structure and tax condition.