Content
- How to Conduct Market Analysis for International Business
- Key Considerations in Using Information Systems to Make International Business Decisions
- The Pest Concept
- Information Gaps
- Market Analysis and Segmentation
- Key Components of the International Market Information System
Market analysis is central to the international strategy being pursued by a company. It is often expensive and is necessary to enable a company to make sound strategic decisions. The market analysis must be focused on the future.
Let’s consider the example of Andersen Consulting, who, in common with their competitors in the 1980s, were busy analyzing the changing market for management consultancy services and products for the forthcoming decade. The aspect that the company was monitoring which was not being followed by the competition was the changing nature of the information technology market, which to all intents and purposes was a different market. Andersen surmised that the customer of the information technology company would be changing and consequently its needs would change. Therefore, a new market was being created and subsequently Andersen Consulting found themselves dominating the new marketplace.
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| Market Analysis and Segmentation |
- An analysis of the market needs to achieve the following successes:
- to determine a new view of emerging markets;
- to establish a long-term focus on how to secure the company’s presence in those new markets;
- to be creative in questioning current definitions of the target market;
- to identify the key factors of success in the target markets;
- to discover opportunities for expansion and market development.
The key focus needs to be on customers and allowing them to define the market and their constantly changing needs and aspirations.
International market segmentation will take place once the initial analysis of the marketplace has been undertaken and the match between the company and the market has been explored. You can then start to segment the market for particular products and services which you have on offer. Segmentation of markets is as old as the concept of marketing itself. It is based on the principle that if you segment a market you can reduce risk and target your ‘products or services at specific areas of a market.
Strategies can be based on market segmentation. Market segmentation can be easily defined as the division of the market into customer groups with very similar needs and wants and the influence these have on their buying decisions. Within the market segment there are often very different value systems at work and these underpin the buying decisions made by customers. For example, Marks & Spencer have decided to exclude the corporate brand of St Michael from its products because it is confusing many international customers, who do not recognize the name as having any relevance to the company name of Marks & Spencer, and consequently informing their buying decisions.
Spotting opportunities through segmentation is not easy, but with the power of hindsight we can examine the success of the following companies:
- The American service company Federal Express has made technology play a leading role in shaping the business and segmented a slice of the document transfer business.
- The American multinational 3M has dominated segments of the adhesives market by careful market analysis and market research.
- The UK travel company Trail-finders developed a stronghold in the marketplace by supplying a niche market with tailored products.
- The Korean car manufacturer Daewoo has taken a strategic decision to enter the market in the compact car sector in order to gain a competitive position in an already saturated marketplace.
Market segmentation is a fundamental step towards developing a market information system. It has four major advantages:
- establishing a marketing strategy that can offer superior value to the customer;
- making management accept that the superior value can be determined only by the customer;
- grouping customers together into sections called markets and then again into market segments (these can form the basis of a competitive marketing strategy);
- introducing a sufficiently flexible approach to meet the ever changing needs of different customer bases and beating the competition in the process.
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