Lahore School of Economics

Export Marketing
Market Selection: Definition and Strategies

BBA IV with Major in Marketing Minors in Media Studies Section: H

Introduction

This chapter describes the many alternatives for marketing internationally. A number of the examples given regard export marketing, but also apply to other methods of market penetration. The marketer has a key role in the strategic planning process: many planning tools depend upon concepts of market share, market definition, segmentation, positioning, product life cycles and customer relationship management (CRM). Key steps in formulating an international marketing strategy are: Export market selection: determining the markets in which to compete, and the sequence of entries. Export market direction: determining whether to build, hold or divest in markets being served.
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Introduction

External analysis focused on the characteristics of the targeted markets, and their fit with company products. Internal analysis focused on the resources of the company available for supporting increased complexity and differences in foreign markets. The need to recognize that each country is unique, so countryspecific plans are required. The need to develop realistic expectations.
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Market Definition and Segmentation

Market segmentation: a breakdown into segments of customers for particular products in particular countries. Market segmentation is a crucial and complex function: Need to consider countries, channels, customer segments etc. Unique customer groups may be based on countries or consumer types across countries. It is critical that there be careful analysis prior to commitment to international expansion.

Export Market Segmentation

Many possible ways; may use multiple methods. Need to consider:

(a) measurability: ability to identify potential segments (b) accessibility: ability to reach and serve (communicate and deliver) (c) profitability: is market large enough to be worth separate attention (d) actionability: can effective programs be formulated for attracting and

serving
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Export market selection: a market screening procedure

Bases of Segmentation

A study of consumers in 20 countries proposed bases for international segmentation regarding luxury products.

Elitist Democratic Distant

Study done in Middle East based on ethical standards

Principled Purchasers Suspicious Purchasers Corrupt Purchasers

A study of 15,000 adults in 14 countries showed some global similarities. Consumer segments may also be based on ethical beliefs.

Strivers Achievers Pressures Adapters Traditional

Bases of Segmentation
List of Values (LOV) Segmentation

Sense of Belonging Fun & Enjoyment Warm Relationships Self Fulfillment Being Well Respected Sense of Accomplishment Security Self Respect

Bases of Segmentation

Teenagers may provide a global market segment across a number of countries. Business-to-business markets as well as consumer markets can sometimes be segmented.

Women are being concentrated to target as end consumers.

They make approx. 80% of purchases

Office Max Redesigned its notebooks and file holders

Sometimes it can be a failure also e.g. Porsche
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Bases of Segmentation

One model of strategies available to increase sales indicates four methods:

(a) increase penetration: extra market share in existing markets (b) develop additional products: product innovation (c) extend markets: attract new users for existing basic offerings (d) widen activities: develop new products and markets around core

activities
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Market Selection Process: Reactive vs Proactive Approaches

Reactive; responding to inquiries; very common, especially for small or new exporters. Proactive; formal or informal search.

The factors discussed in the text may help to provide initial indications concerning some possible markets to enter and markets to avoid.

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Market Selection Procedures: Expansive vs Contractible Methods

Expansive: working outward from core; to nearest neighbor (nearest in distance or similarities); may adapt products and/or segment markets or neither. Temperature Gradient Approach Super Hot, Hot, Moderate or Cold Contractible: reducing large number of possible candidates looking at general market indicators and specific product indicator. Knock-out factors have to be decided upon and stipulated: as noted

Prohibitive product characteristics in obvious conflict with cultural, religious or other factors. Prohibitive market factors such as prohibitions, boycotts, very high Customs duties or other barriers.

Generally there are three stages in process:

(a) preliminary screening, (b) determining specific country characteristics and weights of factors, and (c) ranking.

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TBases

for export market segmentation

Market Selection Strategies

Market concentration: high levels of effort in a few markets; slow/gradual expansion over time. Market spreading: resources spread over many markets; fast rate of growth in the number of markets served.

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Considerations Affecting the Choice of Export Market Expansion Strategy

Concentration provides advantages in:

power of specialization, scale and market penetration; greater market knowledge; higher degree of control; learning of the export process and the experience curve.

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Considerations Affecting the Choice of Export Market Expansion Strategy

Spreading has advantages in providing:

flexibility; less dependence on particular markets; lower perception of risk.

Differing customer segments for different products in a country may cause a company to set up more than one type of entry method. Any model needs to be supplemented with in-depth information regarding product factors, environmental factors, export marketing factors, political risk assessment etc.

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