Preparing Market Entry Decisions: Country Market Assessment

Preparing Market Entry Decisions: Country Market Assessment Bonn Office Haydnstraße 36, D-53115 Bonn, Germany Tel. ++49/228/98 43-315, Fax ++49/228/98 43-320 e-mail: tengelsleben@simon-kucher.com Internet: www.simon-kucher.com Bonn, January, 2003 Mc Donald's: Within 25 years, restaurants in more than 60 countries were opened. Simon-Kucher & Partners 6 new offices in 5 countries within 8 years. Management Task: • How can I identify country markets with the most promising conditions? • How can I evaluate country-specific market opportunities and threats? • What are the development factors that influence my market opportunities? (Market Entry Decisions) 1 Dr. Tobias Engelsleben -1- Strategic Context: Analyses of Country Markets Corporate Vision/Mission/Strategy: In which business do we compete? What is the core of our business? International Marketing Strategy: Needs answers to the following questions: Deciding whether to go international Deciding whether to go international Deciding which markets to enter Deciding which markets to enter Deciding how to enter the market Deciding how to enter the market Deciding on the marketing program Deciding on the marketing program Decisions in International Marketing heavily rely on in-depth information on the development factors of markets (Market Entry Decisions) 2 Dr. Tobias Engelsleben -2- Systematic Screening of Country Markets: 3-Step-Approach Marketing Decision: On which Country Markets should I Icompete? Marketing Decision: On which Country Markets should compete? Broad screening of countries • Can start with most of the world's 200 1. according to selected criteria countries • First evaluation based on available statistics on population, GNP, growth rates etc. In-depth screening of selected • Detailed assessment: market attractiveness 2. countries, detailed analyses of and market barriers, decision based on firm- competitive position specific most important criteria • Strategic evaluation of own competitive situation in respective countries • Intense investigation in important evaluation Final selection, based 3. on qualitative and criteria quantitative analyses, • Use of commercial/specialised data sources scoring and rating • Decision according to firm-individual scoring model (Market Entry Decisions) 3 Dr. Tobias Engelsleben -3- Key Factors: Market Attractiveness and Market Barriers International Marketing Decision: On which Country Markets should we compete? International Marketing Decision: On which Country Markets should we compete? Market Attractiveness 1 Product Market/Customer 2 Economic Environment high Promising Political Environment Core Markets 3 Markets 4 Legal Environment 5 Financial Environment 6 Technical Environment Markets of Stay Away low Opportunities Markets 7 Natural Environment Social/Cultural 8 Environment low high adapted from Backhaus,K. et al., Int. Marketing, 4th ed., p. 118 Market Barriers Decisions on market entry rely on combined analyses of market attractiveness, market barriers and risk. Note: The factors mentioned are not independent from each other! (Market Entry Decisions) 4 Dr. Tobias Engelsleben -4- Market Attractiveness and Market Barriers 1 1 Product Market/Customer Part of Strategic assessment/ competitive position ! Market size (turnover, volume /units) input data for, e.g., SWOT Analysis, ! Market potential PORTER's Five Forces Approach. ! Market growth rate ! Product life cycle stage ! Differentiation potential ! Customer loyalty Product Life Cycle: Development stages of markets, ! Price Elasticity young markets - mature markets- ! Number and behaviour of competitors declining markets Substantial differences from ! Entry barriers, exit barriers, substitutes country to country possible! ! Potential partners (Market Entry Decisions) 5 Dr. Tobias Engelsleben -5- Market Attractiveness and Market Barriers 2 2 Economic Environment ! Economic growth Who is my target customer? What is he able to pay? ! Gross national product (GNP), gross domestic product (GDP) ! Distribution of income: share of low - medium - high incomes ! Price level in general Indicator for kind of products that are required most in the ! Maturity of national economy (less respective country developed, ...