MARKET SELECTION

DONE BY:
S.KIRUBASHINI
TTGI193003
BBA(2019)
 WHAT IS MARKET SELECTION?

▪ Market Selection is the process of deciding which markets to invest

in and pursuing. One of the major criteria to be kept in mind while
doing a market selection is the growth potential of the market i.e.
what is the potential for a company’s revenue to grow by investing
in a particular market.
▪ Another thing to be kept in mind for market selection are the
marketing objectives i.e. the goal of entering a particular market,
say increase in revenue by 5%. It is also important to determine
parameters other than growth potential like market size for market
selection.
 SELECTION PROCESS

Market selection process can be done in the following steps:

1. Determine the objectives or goals of market selection

2. Determine the parameters to be used for market selection
3. Do a preliminary screening of the market
4. Do a detailed investigation of this screening and short list the best fit
5. Evaluate the shortlisted markets and select one or two
 FIRM RELATED FACTORS

▪ A firm whose export objective is only to sell a marginal surplus will

select a foreign market to suited to serve this purpose
▪ The planned business strategy may also influence the market
selection. A company that has plans for large expansion of foreign
business may choose a market, to start with, which can serve as a
hub of international business.
▪ The market selection is also influenced by the international
orientation of the company. The dynamism and philosophy of the
top management and the internal power relations may also
influence the market selection decision.
GENERAL FACTORS OF MARKET SELECTION

1. Economic factors
2. Economic policy
3. Business regulations
4. Currency stability
5. Political factors
6. Ethnic factors
7. Infrastructure
8. Bureaucracy and procedures
9. Market hub
 GENERAL FACTORS

▪ Economic factors: Include factors like economic stability, GDP growth trends
income distribution, per capita income, sectored distribution of GDP and
trends, nature of and trends in foreign trade and Balance of Payments,
indebtedness, etc.
▪ Economic Policy includes industrial policy, foreign investment policy,
commercial policy, monetary policy, fiscal policy and other economic
policies.
▪ Business Regulations: Regulations of business like industrial licensing,
restrictions on growth, takeovers, mergers etc., restrictions on foreign
remittances, repatriations etc; tax laws; import restrictions and local content
stipulations; export obligations and so on
 GENERAL FACTORS

▪ Currency Stability: of the national currency is another very important

consideration in the market selection.
▪ Political factors: Character of the political system including the nature
and behavior of the ruling party/ parties and opposition party/parties,
the government system etc. and political stability are among the most
important determinants of market selection.
▪ Ethnic Factors: Ethnic factors like ethnic characteristics, including
ethnic differences, and their implications for the business, ethnic
harmony etc. should also be analyzed.
 GENERAL FACTORS
▪ Infrastructure: Infrastructural facilities seriously affect business. For example,
power shortage could cause considerable production losses. Shipping and
other communication bottlenecks could cause lot of delays and loss of
business, in addition to high costs.
▪ Bureaucracy and procedures: The nature and behavior of the bureaucracy
and the procedural system or styles are also important factors to be
considered.
▪ Market Hub: The ability of a market to act as a hub, a base from where the
company can operate in a contiguous region or countries, is a very important
factor in the market selection of a company with plans for expansion of
international business. Indian industrialists feel that Sweden could be used
as a base for exporting to third countries, especially the Baltic states.
 SPECIFIC FACTORS OF MARKET SELECTION

 Trends in domestic production and consumption and estimates for the future of
the products concerned
▪ Trends in imports and exports and estimates for the future
▪ Nature of competition
▪ Government policy and regulations pertaining to the industry
▪ Infrastructure relevant to the industry
▪ Supply conditions of raw materials and other inputs
▪ Trade practices and customs
▪ Cultural factors and consumer characteristics
 EVALUATION MATRIX

▪ An evaluation matrix is often used for ranking the markets with reference to their
attractiveness for the company
▪ The evaluation matrix will include the relevant general and specific factor
▪ The countries to be evaluated may be listed on the horizontal axis and the factors
on the vertical axis
▪ Each factor is assigned a raw score and a weightage
▪ The weighted score is obtained by multiplying the raw score with the respective
weightage
▪ Markets are ranked by comparing the total weighted scores