Market entry strategies

                                           introduction

                  Potential determinants of the firm´s
                           choice of foreign markets

Factors influencing choice of entry mode

•             TARGET MARKET

- nature, size and geographical distribution of customers

-              needs, requirements and preferences of customers (+ frequencies and amount of
purchases)

-              level of economic development of the market  (availability of suitable marketing
organizations)

-              market access (competitive situation, infrastructure development, intermediary
availability, political stability, legal barriers)

-              governmental policies

•             PRODUCT

-              nature (unit value, weight and bulk, technical complexity, perishability…)

-              use

-              selling job requirement

-              stage of development (PLC)

•             COMPANY RELATED FACTORS

-              marketing management capability and know-how

-              international market know-how

-              financial strength

-              extent of control



Importance of entry decisions

•           Price that final users or consumers will  pay (margins, efficiency…) ?

•           Product decisions (location of production base, fluctuation of production – production
stability    problems of inventory, security of employment…)?

•           Speed and costs of international channel development (+ time)?

•           Forecasting of structural changes in distribution?

•           The offer and selection of suppliers?

•           Organization of company?

•           Strengths and weaknesses of every link in channel?

•           Objectives, resources and policies + the control system to monitor the performance





Entry mode and involvement

BERI Business Environment Risk Index

                  BCG gowth-share matrix
               (applied to international marketing)

Dimensions of BCG matrix

MARKET/COUNTRY ATTRACTIVENESS



Market size (total and segments

Market growth (total and segments)

Buying power of customers

Market seasons and fluctuations

Average industry margin

Comp. conditions

Market prohibitive conditions

Government regulations

Infrastructure

Economic and political stability

Psychic distance



      COMPETITIVE STRENGTH

                  (relative)

Market share

Marketing ability and capacity

(country-specific know-how)

Product fits to market demands

Price

Contribution margin

Image

Technology position

Product quality

Market support

Quality of distributors and service

Financial resources

Access to distribution channels





Managing the channel

•             RELATIONS WITH INTERMEDIARIES:

-             Gravity policy (selling to the intermediary and „let it be“)

-             Push policy (promotion through the marketing channel – aggressive sale and promotion
the product to other channel members at lower levels)

-             Pull policy (mass advertising of the company – end users demand the product from
intermediaries)

•             COMMUNICATION GAPS:

-             Cultural (values, social norms, attitudes)

-             Nationality (loyalty)

-             Environmental (knowledge and fitness – one country versus the foreign country)

-             Distance (geographic  inperfections on existing communication media)

Alternative basic international channels