Question

Explain the global market selection process

Answer 1

For an international marketer the selection of an overseas market where it would like to expand its business is one of the most difficult decisions. Many researchers have stressed on the importance and need for having a systematic evaluation and selecting model for picking up potential oversees market. Many researchers have also developed several models for selecting global markets.  

To Identify the 'best' market(s) to enter is very important for many of the following reasons:

-It can be a major factor for the success or failure of an organization, especially in the beginning stages of globalization.

-The decision can influence the nature of marketing programs in the selected global market.

-The nature and location of the selected markets has its impact on the organization's ability to coordinate its global operations.

Although there can be many ways to select a global market for expansion, one of the best practices is listed below. It is a five stage process described in detail.

Stage 1 : Identification of the country/market

A general overview of the potential new market is undertaken. At this stage, any small detail can be the reason of selection or rejection of the potential market. For e.g: language familiarity and similarity, distance of the market, the trading practices and zones, cultural similarity etc.

Stage 2 : Preliminary Screening

This is the second stage where a firm takes a more serious look at those countries selected/rejected after the first round. Numbers come into picture and the firms give scores, weight-age and rank to the markets based on factors like stability of currency, foreign exchange rates, tax slabs and incentives etc. This forms the base to calculate the nature of market and its cost of entry. After the preliminary screening process the firms are left with a shorter list of market that they wish to enter.

Step 3 : In-Depth Screening

The markets that make it to this stage have potential for a market entry. A more detailed analysis is performed with the help of local agencies about the nature of the markets, the consumers in the market, the buying and spending capacity of the market etc. The companies also analyze how their products will fare in the market with the local competition.

Step 4 : Final Selection

Depending on the results based on the previous stages, a firm creates a shortlist of the potential global markets. The firm then tries to create a forecast model for the market and analyze the risk and rewards related to the global market that it is trying to enter.

Step 5 : Direct Experience

Personal experience plays a very vital role. Marketing managers of the firm need to travel to the particular market to experience the nation’s culture and business practices and try to formulate the firm's entry and expansion policies based on their experience.

Following these steps helps to assure that the selection process of the global market is successful. and the selected global market is suitable for launching the products/services of business.