TARGET MARKETIN G

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(ENTRY STRATEGY)

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Entry Decisions

Which Foreign Markets to enter? When to enter them? On what scale can you enter them? What choice of entry mode to use?

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Market A place where buyers and sellers make

transactions, directly or via intermediaries. Target Market

is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise .A well-defined target market is the first element to a marketing strategy. The target market and the marketing mix variables of product, place(distribution), promotion and price are the four elements of a marketing mix strategy that determine the success of a product in the marketplace.
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Foreign Market

Part of a nation's internal market, representing the mechanisms for issuing and trading securities of entities domiciled outside that nation.

Foreign Market Entry

expansion by entering an overseas market; the four possible ways 3/25/12

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JCB originally entered the Indian market through a joint venture, primarily because tariff barriers made exporting difficult and government regulations required foreign investors to enter joint ventures with local partners It was based on a favorable outlook for growth in demand
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Which Foreign Markets?

The choice must be based on an assessment of a nations long-run profit potential The attractiveness of a country as a potential market for an international business depends on balancing the benefits, costs, and risks associated with doing business in that country
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Long-run economic benefits of doing business in a country is also a main point, it involves: size of the market present wealth of the consumers in that market future wealth of the consumers

v v

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Another is the value an international business can create in a foreign market, as value depends on the suitability of its product offering to that market and the nature of indigenous competition

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Much likely to be, a firm must rank countries in terms of their attractiveness and long-run profit potential and preferences can also be considered.

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Tar get selection Model

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When to Enter?

Entry is early

-when an international business enters a foreign market before other foreign firms

Entry is late

-when an international business enters after others have already established themselves
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First-mover Advantages
v

The ability to preempt rivals and capture demand by establishing a strong brand name The ability to build sales volume in that country and ride down the experience curve ahead of rivals

The ability to create switching costs that 3/25/12 tie consumers into their products

First-mover disadvantages
v

An early entrant can entail pioneering costs Pioneering costs

-costs that the firm has to bear that a later entrant can avoid it includes:
v v

costs of business failure costs of promoting and establishing a product offering

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Late entrant advantages

v

can learn from the experiences of the first mover firm and may not face such high research and development costs if they are able to create their own similar product using existing technology also does not face the marketing task of having to educate the public about the new project because the first mover has already done so

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Firm can use its resources to focus on making a superior product or out-marketing the first mover

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Late entrant disadvantage

v

If the firm was not able to catch up with pioneers and of other firms, then it will be a big disadvantage for them as they will not benefit and gain as they enter the market

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SCALES OF ENTRY AND STRATEGIC COMMITMENTS

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SCALES OF ENTRY: Large Scale

ADVANTAGES of DISADVANTAGES
Commitment

significant resources.

Fewer

resources to commit elsewhere. lead to indigenous competitive response.

Easier

to attract customers (will remain in market). cause rivals to rethink market entry.

May

May

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SCALES OF ENTRY: Small Scale

ADVANTAGES DISADVANTAGES
Time

to learn about the market. company exposure.

May

be difficult to build market share. to capture first-mover advantages.

Limits

Difficult

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SELECTING AN ENTRY MODE

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ENTRY MODE Exporting

ADVANTAGES Ability to realize location and experience curve economies

DISADVANTAGES High transport costs Trade barriers Problems with local marketing agents Creating efficient competitors Lack of long-term market presence Lack of control over technology Inability to realize location and experience curve economies Inability to engage in global strategic coordination

Turnkey contracts

Ability to earn returns from process technology skills in countries where FDI is restricted Low development costs and risks

Licensing

Franchising

Low development costs and risks

Lack of control over quality Inability to engage in global strategic coordination

Joint Ventures

Access to local partner's knowledge Lack of control over technology Sharing development costs and risks Inability to engage in global strategic Politically acceptable coordination Inability to realize location and experience economies Protection of technology Ability to engage in global strategic coordination Ability to realize location and experience economies High costs and risks

Wholly owned subsidiaries

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