Export - Import Marketing Notes Section E: Export Market Selection, Market Research, Product and Promotion

Measuring Sales Potential

Total population
Potential market
Forecast market size Forecast your products sales

Sales Forecasts
1.
Estimates by analogy - by similar countries - by similar categories - by time delays Direct Forecasts a) Quantitative - Market build up - Time series b) Judgmental - Survey of expert opinion (Focus group or Delphi) - Buyer intention - Sales force

2.

Sources of Data to Assess Market Potential

Internal data External data

Microeconomic (Firm) Size Product lines Secondary data Financial situation Problem

Macroeconomic Balance of Payments Currency stability Inflation, etc. Industry Growth patterns Analysis of imports Local production Competitors Strategies Intermediate Purchasing behavior Financial capabilities Distribution channels Secondary data

Is there a market for the firms product in an export market? How large is it and what is the possible market share?

Primary Strengthsweaknesses data Compared competitors: Corporate Product-line Specific product Internal data

End customers Buying behavior Substitutes

Primary data

External data

Market Research for Export Markets

The first task is to determine what you want to
know before you design the research.

Generally, the most important task of a market analyst is

to determine the market potential of a particular product.

The basic principles of Market Research are no different

than domestic market research the execution of the research, however, often varies greatly from market to market.

Market Research Sequence

1. 2. 3. 4. Define the market Make a preliminary investigation Plan the research Primary data Secondary data Distinguish between Exploratory and conclusive research Qualitative and quantitative research Secure relevant facts Interpretation of data Draw logical conclusion
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5. 6. 7.

Secondary Data
Research already done for another purpose
Availability of Data Reliability of Data Comparability of Data Validating Secondary Data

Problems of Gathering Primary Data

Unwillingness to respond
Sampling in field surveys Language and comprehension

Cost

The trade off is between quantitative and qualitative research

Quantitative research Variable no. 1 2 3 4 - - 1 2 3 Respondent 4 no. Qualitative research Variable no. 1 2 3 4 - - 1 2 3 Respondent 4 no. -

Quantitative vs. Qualitative Research

Comparison Objective Type Flexibility Sample size Respondents Information per respondent Data analysis Ability to replicate with same result Interviewer skills Time consumption Quantitative (e.g. questionnaire) To quantify the data Definitive Low (one-way communication) Large Representative Low Statistical High Low Qualitative (e.g. focus group) To gain an initial understanding Exploratory High (two-way communication) Small Target market or experts High Subjective, interpretive Low High

Design phase: high Analysis phase: low

Design phase: low Analysis phase: high

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Strengths and weaknesses of the three contact methods

Questions/questionnaire Mail Poor Fair Good Poor Excellent Poor Low Telephone Good Fair Poor Good Fair Excellent Low Personal

Flexibility (ability to clarify problems)

Possibility of in-depth information (use of open-ended questions) Use of visual aids Response rates Control of interviewer effects (no interviewer bias) Speed of data collection Costs

Excellent
Excellent Good Good Poor Good High

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Export Product Strategy

Product orientation low cost strategy

Marketing orientation involves cost of
modification

research and product

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Elements of a product
Core product Functional features, performance and technology Product attributes Quality Brand name Packaging Size, color, taste or flavor variants Support services Delivery Installation After sale service Standardization Probability High

Low

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Imported Consumer Products Convenience goods Shopping goods Specialty goods

Imported Industrial Products Level of technology Level of economic development Preferential tariff treatment

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Product Development Process

SEQUENTIAL Market research Product characteristics Design Engineering Supplier pricing Design TEAM BASED Market research Product characteristics TARGET COST Engineering Supplier Price

Cost
If cost too high, return to design phase Outcome Lower cost but slower

Target costs for each component forces marketers, designers, and engineers from all departments and suppliers to negotiate tradeoffs Higher cost but faster
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Product and Promotions

Product Line vs. Product Mix Depth of Line vs. Width of Line Export Promotional Mix Personal Selling (direct or through intermediaries) Advertising (direct mail, commercial media, Internet) Sales Promotion Publicity Sales Strategy Push vs. Pull Use of Trade Fairs General or Horizontal Trade Fairs Specialized or Vertical Trade Fairs Use of Trade Missions Invite foreign buyers to specified location Sellers go to buyers location
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The three brand options

Private branding 100% externalizing external partner takes over branding of product) Brand alliance between two partners

Co-branding/ ingredient branding

Manufacturers brand

100% internalizing (manufacturer keeps

control of branding

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Illustrations of cobranding

Bacardi Rum Distributor Coca-Cola End user

Co-branding alliance

Intel micro- Ingredient Compaq Processor computers supplies

Final product

Distributor

End user

Co-branding an ingredient

Pull
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Retail Supermarket Private Label Share

%
Northern Europe (Germany, France, UK, Holland, Switzerland) North America (U.S.A. & Canada) Scandinavia & Finland Australia & New Zealand Southern Europe (Iberia, Italy, Greece) South Africa Latin America Eastern Europe Japan 24.4 18.7 14.5 13.7 11.7 5.8 2.0 1.4 1.2

Source: El Nuevo Herald Nov. 2000

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Packaging for Export

Protection
Pilferage Costs

Labeling

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Labeling of Export Products

1. Retail Packages Imports are generally less regulated than domestic production. Local language usually a plus. International System of Units requires metric units. Health registration must appear on the outside of the package. Shipping Boxes Country of origin Consignee Port of export and import Sequence number

2.

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Differences between services and goods

Definitions and distinctions
- Goods are tangible objects - Services are performances or actions - Goods are fixed in form requiring distribution and services are intangible problem solutions - The main difference between goods and services in

intangibility. Services are generally more intangible, personalized, and perishable.

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Marketing of Service Exports

Key differences compared to Merchandise
1. 2. Intangibility (cannot touch or feel or see before purchase)

Inconsistency (delivered service not the same each time)

3.
4.

Inseparability (between service and service giver)

Inventory (idle capacity and carrying costs)

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Service Continuum
Servicedominated Air travel Teaching The theater

Balanced

Fast food restaurant Automobile Gooddominated Dog food

Salt

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Service classifications
Equipment based
Unskilled operators Skilled operators
Excavat-

People based
Unskilled labor Skilled labor

Automated

Professionals

Vending machines
Automated car washes

Motion picture theaters

Dry cleaning Taxis

ing Airlines
Computer
timesharing

Lawn care
Guards Janitorial services

Appliance
repair Plumbing Catering

Lawyers
Management consultants Accountant

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Typical International Services

Banking and financial services Construction, design, and engineering services Legal and accounting services Communication services Teaching and training services Management consulting

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Largest Services Industries

International tourism is the largest - $64 Billion

spent in the USA; $400 Billion world wide Transportation Financial Services Education Business Services Telecommunications and information Healthcare

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The International Communication Process

Differences: Language Economic Sociocultural Legal/regulatory Competitive

HOME COUNTRY
Sender Firm offers Message Translated to market

FOREIGN COUNTRY
Channel or
medium Media Personal selling Customer receives

Feedback (sales, positive brand recall, etc.)

Noise Competitor Communications - Distractions

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Advertising decisions
Set Objective
Budget and Agency decisions Percentage of sales/affordable approach Competitive parity approach Objective and task approach Message decisions (creative strategy Unique selling proposition Standardization versus adaptation Media decisions Reach / Frequency Types (TV, radio, etc.)

Advertising evaluation Pretest and sales impact

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Global Advertising Challenges

Legal and Tax Considerations
Language Limitations

Cultural Diversity
Media Limitations Production Cost

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Global Advertising
Will be resisted by local advertising agencies, distributors, importers and subsidiaries
Is not proven to increase impact of selling messages in all markets Will reduce advertising production costs Does not change media expenditures
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Regulations regarding premiums, gifts, and competitions in selected countries

Country
Australia Austria Denmark Germany

Category
Premiums Gifts Competitions Premiums Gifts Competitions Premiums Gifts Competitions Premiums Gifts Competitions

No Authorestrictions rized with or minor major ones restrictions

X X

General ban with Almost important total exceptions prohibition

X X X X X X

X X

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