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DECIDING WHICHMARKETS TO ENTER

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Waterfall approach(eg:BMW

Matsushita,GE)

Sprinkler

approach(eg:Microsoft)

VARIOUS APPROACHES TOENTER MARKET

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CONTD.

Attractiveness influenced by

Product & geography

Income & population

Political climate

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Marketing leaders rely on

developing markets to fuel their growth Developed nations contribute only

20%

90% of future population growth-

occur in less developed countries

Targeting invisible customers(eg:fiatpalios third world car, grameen phone)

DEVELOPED VSDEVELOPING MARKETS

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CONTD.

Selling in developing areas-business as usual

Reasons

Economic & cultural differences

Local competition

High frequency stores- tiny bodegas, stalls, kiosks, mom-and-pop stores.

Smaller packaging & lower sales price(eg:unilevers rs 1 sachets, Coke 200 ml

bottle)

BRICS- 5 key emerging market areas

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Copyright 2009 Dorling

Kindersley (India) Pvt. Ltd.

21-6

TOP G LOBAL FIR MS BASEDIN DEVELOPING MARKETS

America Movil

Cemex

China Mobile

CNOOC

Embraer

Gazprom

Haier

Huawei Technologies

Infosys Technologies

Koc Holding

Lenovo Group

MMC Norilsk Nickel

Mahindra & Mahindra

Hisense

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REGIONAL FREE TRADEZONES

SAFTA

LDC

NLDC(India, Pakistan,Srilanka)

European union

25 member countries EURO 454 million consumers accounting to 23% of worlds exports

NAFTA

US, Mexico, Canada 360 million people who produce & consume $ 6.7 trillion worth of

goods & services

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CONTD.

Mercosur(Mercosul)

Brazil, Argentina, Paraguay, Uruguay & Venuzuela Associate members: Bolivia, Chile, Peru, Equador & Columbia

APEC

21 countries+NAFTA+Japan+Chinapan-Pacific free trade area

ASEAN

Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia,

Myanmar,Phillipines,Singapore,Thailand & Vietnam

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Copyright 2009 Dorling Kindersley (India) Pvt. Ltd. 21-9

DESIRED COUNTRYCHARACTERISTICS FOR MARKET

ENTRY

Rank high on market

attractiveness

Rank low in market risk

Possess a competitive

advantage

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10

Five Modes of Entry into ForeignMarkets

Indirect

exporting

Direct

exporting LicensingJoint

ventures

Direct

investment

Commitment, Risk, Control, Profit Potential

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INDIRECT EXPORTING

Domestic based export Merchants

Domestic based export Agents

Cooperative Organizations

Export Management Companies

ADVANTAGES:

Less investments

Seller will make fewer mistakes.

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DIRECT EXPORTING

Domestic-based export department

Overseas sales branch or subsidiary

Traveling export sales representatives

Foreign-based distributors or agents

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REVA ELECTRIC CAR

GENERATES 70% OF ITSREVENUE FROM EXPORTS

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LICENSING

License issued on Manufacturing process, trademark, Patent,

trade secret or others of a fee or royalty

Advantage:

Low risk, Easy and fast entry

Disadvantages:

Low control, developing competitors

Types:

Management Contracts

Contract Manufacturing

Franchising

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JOINT VENTURES

Joint ventures share ownership & control

Objectives: Market entry, risk/reward sharing, technology

sharing and Joint product development, and conforming to

government regulations

Advantages:

Financial, Physical & Management Support

Conflicts:

Investments on new Assets

Cultural clashes

Termination of relationship

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DIRECT INVESTMENT

Direct ownership of foreign based assembly and manufacturing

Advantages:

Cost economies

Brand image

Develop relationships

Full control

Disadvantages

Huge investment & efforts