International Business The Challenges of Globalization Ninth Edition

Learning Objectives 12. 1 Explain the importance of examining basic appeal and national factors. 12. 2 Describe how companies measure and select a market or site. 12. 3 Identify the main sources of secondary market research data. 12. 4 Describe common methods used to conduct primary market research. Copyright © 2019 Pearson Education Ltd.

Starbucks Causes Global Jitters • Starbucks (www. starbucks. com) – 24, 000 retail stores in 70 countries • Success rooted in market research • Starbucks had struggled in recent years • Rebounded nicely – A renewed focus on its core product and on its image as a socially responsible multinational business Copyright © 2019 Pearson Education Ltd.

Screening Process for Potential Markets and Sites Figure 12. 1 Screening Process for Potential

Basic Appeal and National Factors (1 of 2) Step 1: Identify Basic Appeal •

Basic Appeal and National Factors (2 of 2) Step 2: Assess the National Business Environment • Cultural Forces • Political and Legal Forces • Economic and Financial Forces • Other Forces (Transport Costs and Country Image) Copyright © 2019 Pearson Education Ltd.

Measure and Select the Market or Site (1 of 3) Step 3: Measure Market or Site Potential Measuring Market Potential Market-Potential Indicator • Industrialized Markets • Market Size – Data readily available – Forecasting market demand § Income elasticity • Emerging Markets – Biggest emerging markets are more important today than ever § Large consumer bases and rapid growth rates – Lack of information • Market Growth Rate • Market Intensity • Market Consumption Capacity • Commercial Infrastructure • Economic Freedom • Market Receptivity • Country Risk Copyright © 2019 Pearson Education Ltd.

Measure and Select the Market or Site (2 of 3) • Measuring Site Potential – Labor and management – Productivity – Wage levels – Training needs – Local infrastructure Copyright © 2019 Pearson Education Ltd.

Measure and Select the Market or Site (3 of 3) Step 4: Select the Market or Site • Field Trips • Competitor Analysis—Should address the following issues: – Number of competitors in each market (domestic and international) – Market share of each competitor – Whether each competitor’s product appeals to a small market segment or has mass appeal – Whether each competitor focuses on high quality or low price – Whether competitors tightly control channels of distribution – Customer loyalty commanded by competitors – Potential threat from substitute products – Potential entry of new competitors into the market – Competitors’ control of key production inputs (such as labor, capital, and raw materials) Copyright © 2019 Pearson Education Ltd.

Secondary Market Research • Process of obtaining information that already exists within the company or that can be obtained from outside sources • Relatively inexpensive Copyright © 2019 Pearson Education Ltd.

Main Sources of Secondary Data • International Organizations • Government Agencies • Industry and

Problems with Secondary Research • Availability of Data – In many emerging and developing countries § Information is hard to obtain § Reliability is questionable • Comparability of Data – Terms differ greatly from one country to another – Different ways in which countries measure data Copyright © 2019 Pearson Education Ltd.