Market Definition for Entry Strategy

1
Market Definition for Entry Strategy

• Steps
• Market Characterization and identification
• Definition
• Market segmentation and Product match
• Selection

2
Market Characteristics

• Entry Strategy begins by market characterization.
  The typical characteristics are
• Sales Potential
• Penetration
• Scale
• Input
• Reward
• Risk

3
Firms Capability and Competency

• The market industry- sector and characteristics
  must be matched by firms capability and Product
  Line
• Financial resources
• Production Resources
• Human resources
• RD Experience
• Management Experience
• Synergy in product line and in distribution
• For a detailed list see table in p. 53

4
Economy of Scale and the Experience Curve

• The description in the scale section pp. 48-50
  is mistaken. We need to fix it.
• Hence, in this digression we review the notions
  of
• economics of scale (a characterization of the
  production function at one fixed point in time)
• and
• The experience curve The experience curve is the
  AC (average cost) as a function of time.
• Decisions regarding economy of scale affect
  industrial organization of the firm
  (centralization/ decentralization) at a point in
  time.
• The experience curve affects evaluation of
  product life cycles and competitive pressures
  over time.

5
Market Prospect Evaluation

• Evaluation is based on the distribution of return
  
• Reliance on information given by the first and
  second moments of the distribution is common.
  I.e. a reliance on central tendency and spread of
  the returns
• Example

6
Market Defintion

• Traditional Approaches
• Generic Title followed by physical properties or
  distribution channels characterization
• Product focused
• Consumer Focused Approaches
• Cross Elasticity
• Homogeneous Uses
• Hierarchical Market Definition
• Perceived Similarity
• Perceptual Mapping and Guttmans SSA
  (Multidimensional Scaling.)
• Emerging View

7
Market Segmentation and Targeting

• Segmentation Bases
• Demographics
• Attitudes
• Usage Rate
• Preference/ Choice (benefit Segmentation)
• The list is clearly non-exhaustible
• In Industrial marketing (Business to Business
  Marketing) the most important segmentation is SIC
  based segmentation.
• Targeting group segmentation requires the
  tabulation of relationship between product type
  and consumer segment

8
Market Selection

• Affected by Business and Marketing Strategy
• The need to set priority and a decision making
  process for selection based on multiple criteria
• Focus on a few markets
• Refinements
• Comments
• Oligopolistic Competition and advantages of
  Market Entry
• Entry New and Old Markets
• Summary