Global Marketing Management A European Perspective

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Strategies for Entry and Expansion
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Decision Criteria for IB

• Political risk
• Market access
• Factor cost conditions
• Shipping consideration
• Country infrastructure
• Foreign Exchange

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Selecting Foreign Markets

• ... should be based on a number of criteria
• market-related characteristics
• cost-related aspects
• the regulatory framework
• tariffs, duties non-tariff trade barriers
• the importance of these selection criteria
  depends upon the industry the markets taken
  into account

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Key Questions

• How much do we know about the markets?
• How much control do we want?
• How much risk and uncertainty can we handle?
• Which markets to target, in which order?
• Which target segments in which countries?

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Market-Driven Stages in the Evolution of a
Global Enterprise
Stage 1 Global Market Assessment
Stage 2 Target Market Strategy, Strategic
Partnership, and Marketing Investment
Stage 3 Marketing investment, exporting,
licensing
Stage 4 Investment in foreign manufacturing and
RD
Stage 5 Integrated global enterprise serve
global markets with global resources
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Elements of a GlobalMarket Entry Strategy
Entry operations
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2
3
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Assess products and foreign markets choose
products and target markets
Choosing the entry mode export, contractual
agreements, licensing, joint ventures, strategic
partnership or investment
Designing the marketing plan productprice,
promotion, place and probe
Setting objectives and goals
Target market
Control system monitor operations, revise or
fine tune entry strategy, and penetrate the market
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Market Selection Criteria

• 1. Market Potential
• 2. Market Access
• 3. Shipping Cost Time
• 4. Appraising Level Quality of Competition
• 5. Service
• 6. Product Fit

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Critical Questions for a Product-Market Profile
The 9 Ws

• 1.Who buys our product?
• 2.Who does not buy our product?
• 3.What need or function does our product serve?
• 4.What problem does our product solve?
• 5.What are customers currently buying to satisfy
  the need and/or solve the problem for which our
  product is targeted?
• 6.What price are they paying for the products
  they are currently buying?
• 7.When is our product purchased?
• 8.Where is our product purchased?
• 9.Why is our product purchased?

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Visiting the Potential Market

• ... is essential after assessment selection of
  potential market(s)
• goals
• to confirm (or contradict) assumptions regarding
  market potential
• to gather additional (primary) data
• to develop a marketing plan in co-operation with
  the local agent or distributor

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Direct Exporting

• Direct market representation
• via wholesalers or retailers or directly to the
  consumers
• Independent representation
• independent distributor
• Piggyback marketing
• distribution through another distributors channel

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Exporting A Developmental Process

• Stages of the firm
• 1. ... is unwilling to export.
• 2. ... fills unsolicited export orders (export
  seller).
• 3. ... explores the feasibility of exporting (may
  bypass stage 2).
• 4. ... exports to one or more markets on a trial
  basis.
• 5. ... is an experienced exporter to one or more
  markets.
• 6. ... pursues country or region focused
  marketing.
• 7. ... evaluates the global market potential. All
  markets, domestic international, are regarded
  as equally worthy of consideration.

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Export-Related Problems

• Logistics
• Legal procedure
• Servicing exports
• Sales promotion
• Foreign market intelligence

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Market Entry Strategy Alternatives

• Cooperation
• Agents, Dealers, Distributors, Importers
• Licensing
• Franchising
• Joint Ventures
• Contract Arrangements
• Turnkey Operations
• Global Strategic Partnerships

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Market Entry Strategy Alternatives

• Direct Investment
• Marketing
• Product
• Price
• Place (Channels)
• Promotion (Communication)
• Manufacturing
• RD Engineering

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Franchising

• A form of licensing
• a company permits its name, logo, cultural
  design and operations to be used in establishing
  a new firm or store.

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Joint Ventures

• Company run by two or more partner firms
• Risk is shared and different value chain
  strengths are combined
• Influence depends on degree of ownership
• Good opportunity to build on local know-how
• JV finds greater acceptance by local authorities

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Wholly-owned Subsidiaries/Acquisition

• Represents the most extensive engagement abroad
• Subsidiary is either established through the
  creation of a new facility or the acquisition of
  an existing firm
• Company has complete decision power control
• Investor achieves greater flexibility
• In many countries majority or 100 ownership by
  foreign companies is forbidden

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Sourcing Decision Factors

• Logistics
• Country infrastructure
• Political risk
• Market access
• Exchange rate, availability convertibility of
  local money

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Product influence on entry mode

• Differentiation
• Service requirements
• Technology intensity
• Adaptation

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Product influence on entry mode

• Differentiation
• high degree provides advantages and price
  discretion
• Service requirements
• if pre/post-services extensive, its difficult
  to market at a distance (bias to branch,
  subsidiary, local production)
• Technology intensity
• option to license, mostly industrial products
  consumer products can license trademark (intl
  reputation)
• Adaptation
• if need is high, bias to branch, subsidiary,
  exporting for assembly, or manufacturing

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Market Expansion Strategies

• Narrow focus concentrated markets/concentrated
  countries
• Country focus diverse markets/concentrated
  countries
• Country diversification concentrated
  markets/diverse countries
• Global diversification diverse markets/diverse
  countries

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Summary

• Decision criteria include risk, strategy and
  logistics
• Best to follow a market entry model that suits
  both the company and the market
• Try to answer questions up front and visit the
  market
• Exporting typical entry mode but also is a
  process
• Need to balance risk, control, commitment and
  knowledge
• Ultimately there are expansion choices

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Cameron Auto Parts
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