Assignment 2: International Market Entry and Development Jimmy Green Professor Williams November 28, 2011 1. Explain the process for market research to assess foreign market potential. The first step would be to identify the problem, which is the buyer, in this foreign market potential. Figuring out the cultural differences and the different wants/demands of the customers is key in determining how well your product/service will do in this foreign market Kumar, V. (2001). After determining the problem, it is necessary to develop an approach, or solution to this problem, like changing the packaging or the script of your commercials.
Once a solution is found, implement the solution and collect data/research to see if the solution works, or needs changes. Report these data and research findings to prove this solution would work, or still needs improvement. 2. Explain the considerations for product adaptation in foreign markets and common approaches to adjusting promotional strategy to fit foreign markets. The product would have to meet the standards of other countries and be able to compete well against companies that are from that country with similar products.
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Some companies have tendencies to incorporate other versions of the products in order to compete in foreign markets Kumar, V. (2001). McDonald’s would be a prime example of this because they have adapted the menu to the countries that they are in. In India they do not have beef on the menu because the cow is a sacred animal in India so they adapted the menu to fit the customs and the culture. 3. Explain the strategic marketing planning process, strategies for entering foreign markets, and considerations for subsequent market expansion.
In most organizations, strategic planning is done every year, and covers the year to come Allen, C. (2010). Rarely, a few organizations may look at a practical plan which covers 3 or four years in advance. But to be most effective, the plan has to be formalized, usually in written form, as a formal marketing plan. The process moves from general to specific information, and encompasses the visions, missions, goals, and objectives of the company, down to the individual action plans for each section of the program.
It is also an interactive process, so that a draft of each stage is checked to see what impact it has on the earlier stages, and is changed accordingly. Strategies for entering a foreign marketplace are things like segmentation, targeting, and positioning Allen, C. (2010). Segmentation is usually done at the customer level. But, in international marketing, it may sometimes be useful to see countries as segments. This allows the company to focus on common aspects of countries and avoid generalization.
Variations within some countries are very large and therefore, averages may not be meaningful. Segmentation may be done on levels such as geography, demographics, or income. Positioning is when firms have to make a tradeoff between adapting their products to the unique demands of a country market or gaining benefits of standardization such as cost savings and the maintenance of a consistent global brand image. Targeting is when a company targets a specific kind of consumer, like senior citizens or children. The actual entry process can vary as well.
Products normally just don’t emerge in foreign markets overnight—a firm has to build up a market over time. Several strategies, which differ in aggressiveness, risk, and the amount of control that the firm is able to maintain, are available Allen, C. (2010). Exporting is a relatively low risk strategy in which few investments are made in the new country. One of the drawbacks is that, because the firm makes few marketing investments in the new country, market share may be below potential. Further, the firm, by not operating in the country, learns less about the market and the consumer’s true needs.
If an importer is willing to do a good job of marketing, this entry method may be a “win-win” situation. Licensing and franchising is also a low exposure method of entry. The company allows a third person to use their trademarks and accumulated expertise. The partner puts up the money and assumes the risk. A problem that often arises is that the original company has little control over how the business is operated. For example, American fast food restaurants have found that foreign franchisers often fail to maintain American standards of cleanliness.
Also, a foreign manufacturer may use lower quality ingredients in manufacturing a brand based on premium contents in the home country. Another entry method, contract manufacturing, involves having someone else manufacture products while you take on some of the marketing efforts yourself. Direct entry strategies, where the firm either acquires a firm or builds operations “from scratch” involve the highest exposure, but also the greatest opportunities for profits. The firm gains more knowledge about the local market and maintains greater control, but now has a huge investment.
In some countries, the government may expropriate assets without compensation, so direct investment entails an additional risk Allen, C. (2010). A variation involves a joint venture, where a local firm puts up some of the money and knowledge about the local market. 4. Address challenges to global product management and branding. One challenge is product innovation and enhancement. Innovation is what drives business. It fuels revenues, brand value and ultimately, competitive advantage.
Although the average company derives 50 percent of annual revenues from products introduced in the last five years, 76 percent of research and development funds are spent on products that either do not make it to market or fail after introduction Kenly, A (2011). Another challenge is keeping and expanding existing customers. Product management today must be more focused than ever on the customer. The balance of power has shifted, and customers know it. To sustain and grow their business they need repeat buyers and therefore must listen to the customers.
This is why we see more and more of the customer loyalty programs, customer feedback surveys, and emphasis on customer satisfaction. Yet another challenge that companies face are product management resources. Product management is an essential discipline that assumes ownership and management of products or services whose primary objective is to ensure an expected return on investment Kotler, P. (2001). In most companies, the product management team identifies market needs, cultivates business opportunities and delivers product innovation to sustain a competitive return on investment.
But, product managers often fall very short of their directive Kotler, P. (2001). They get overwhelmed by emails, customer support, sales support, engineering questions, etc. References Allen, C. (2010) One-to-One Web Marketing; 2nd Ed David A. Aaker; V. Kumar; George Day (2001) Marketing Research Kenly, A. (2011) Innovation management http://www. innovationmanagement. se/2011/08/24/social-media-and-product-development-from-theory-to-practice/ Kotler, P. (2001) A Framework of Marketing Management