Market selection:

definition and strategies

Chapter objectives

• Discuss the process for determining what foreign

markets to enter
• Market selection: what product(s) for what potential
market(s)
• Marketing direction for existing products
• Evaluating overall foreign market portfolios
Big questions for entry

• Where? - Export market selection

• How? - Export market direction
Major implications of selecting export
markets
• To ensure an effective international and export marketing
strategy the manager must:
1.Not focus individual products or one international market but
evaluate all the company’s products and all markets
2.Focus on strategic importance of market in addition to its
attractiveness for the individual product
3.Play a role in educating strategy team on international markets
on one hand and communicate effectively with them on
marketing mix
External factors discriminating between
entry / non-entry decision

• Developed economy
• Good market information
• Unsympathetic government attitude
• Geocultural/political similarity
• Attractive market
Analysis for international expansion

• External analysis
• Internal analysis
• Blend of internal/external balance
• Have realistic expectations
Market definition and segmentation

• Crucial component of strategy to ensure correct

measurement of share and other performance indicators
• Lead to issues of market segmentation
• Balancing segmentation to ensure effective marketing vs.
over-segmentation and creating inefficiencies
• Analysis of potential competition
• Impact of product/product-mix on selection of segments
• Impact of market potential on strategy to export or direct
investment/strategic alliance
Export market segmentation

• More heterogeneous than domestic markets

• Given limited financial and organizational resources to deal
with a large spectrum of alternatives the selection, has to be
precise for optimum returns
• Generic segmentation bases:
• Measurability
• Accessibility
• Profitability
• Actionability
Other segmentation bases
Core values segmentation

• Nationality or culture or personality?

• Answer: Combination
• Strivers – 25 to 33% Largest group, dominated by
males
• Devouts – 22% more females
• Altruists – 18% more females
• Intimates – 15% equal gender split
• Fun seekers – 12% more males
• Creatives – 10%
Market expansion/selection process
reactive vs proactive
• Reactive
• Passive actions, unsolicited orders, informal, purchase oriented
unsystematic
• Proactive
• Marketing oriented, active initiatives, systematic and formalized
selection
• Influences in selection for marketers
• Psychic distance – Difference in perception of a product or idea
• Cultural distance – Difference between manager’s and target
culture
• Geographic distance – Proximity
Market selection procedures
expansive vs contractible
• Expansive
• Home market as the point of reference
• Experience based market selection
• Also referred to as “nearest neighbor” approach
• Contractible
• Systematic screening of markets for attractiveness
• “Knock-out” factors are general market indicators and individual
product indicators
• Three stage procedure:
1. Preliminary screening criteria is identified
2. Examining characteristics like market potential, operating risks,
costs etc.
3. Ranking of countries on the basis of stage 2
Market selection procedures-
contractible
Model for selecting a target country
Important indicators for evaluating
foreign markets
• Physical geography
• Population
• Cultural factors
• Resources
• Industry
• Foreign trade
• Competition
• Basic infrastructure
• Financial matters and credit conditions
• Marketing channels
• Government influence and legal factors
Market selection strategies
market concentration vs market
spreading
• Market concentration
• Slow and gradual rate of growth

• Market spreading
• Rapid rate of growth
Factors influencing choice of market selection
strategy
Foreign market portfolio techniques and
analysis (BCG application to international
markets)
Foreign market portfolio techniques and
analysis (BCG application to international
markets)