276  Part II  Deciding which markets to enter

are based on the transnational clustering in Figure 8.6. The further down in the model, the
greater the use of primary data (personal interviews, field research, etc.), as well as screening
from internal criteria. Furthermore, the firm may discover a high market potential in some
geographic segments. However, this is not the same as a high sales potential for the firm’s
product. There may be some restrictions (e.g. trade barriers) on the exporting of products
to a particular country. Also the management of the company may have a policy of selecting
only markets that are culturally similar to the home market. This may exclude very distant
countries from being selected as target markets, although they may have a high market
potential. Furthermore, to be able to transform a high market potential into a high sales
potential, there must be a harmony between the firm’s competences (internal criteria) and
the value chain functions that customers rate as important to them. Only in this situation
will a customer regard the firm as a possible supplier, equal to other possible suppliers. In
other words, in making the IMS, the firm must seek synergy between the possible new target
market and its own strengths, objectives and strategy. The firm’s choice of new international
markets is very much influenced by the existence of complementary markets and marketing
skills gained in these markets.
In general, Figure 8.8 is based on proactive and systematic decision-making behaviour by
the firm. This is not always a realistic condition, especially not in SMEs, where a pragmatic
approach is required. Often firms are not able to segment from their own criteria but must
expect to be evaluated and chosen (as subsuppliers) by much larger firms. The pragmatic
approach to IMS can also give rise to the firm choosing customers and markets with a back-
ground similar to the managers’ own personal network and cultural background. Contingen-
cies, serendipity and ‘management feel’ play an important role in both early and late phases
of IMS. In a qualitative study of Australian firms, Rahman (2003) found that an important
factor taken into consideration by firms at the final stage of evaluating the attractiveness of
foreign markets is ‘management feel’. One of the companies said (Rahman, 2003, p. 124):
At the end of the day much of the decision depends on the management’s feel about
the market. There will always be some uncertainties in the market, particularly when you
are deciding about the future, and international markets are no exception in this regard.
So, we managers will have to make the decision within the limited information available
to us, and ‘gut feel’ plays a big role in that.

Exhibit 8.1
Bosch Security Systems: IMS in the Middle East for fire detection systems

Involving market screening of eight leading countries
in the Middle East: Egypt, Iran, Jordan, Kuwait, Oman,
Qatar (QA), Saudi Arabia (SA) and the United Arab
Emirates (UAE), the following is the result of an inter-
national market selection (IMS) process that Bosch
Security Systems (www.boschsecurity.com) did back
in 2006.a Up to then, the export efforts of Bosch
Security Systems in the Middle East had been rather
sporadic. The firm wanted to increase its overall mar-
ket share and total sales in the region. This growth
strategy would require concentration of marketing
resources, and consequently a systematic and proac-
tive approach to IMS that would end up with a rank-
ing of the most attractive market(s) for Bosch Security
Systems within ‘fire detection’ in the Middle East.
The fire systems for buildings are generally char-
acterized by the following:
• Safety market where lives are involved
• Law driven market – most countries have very
strict laws requiring fire safety systems
• Very large markets.

a
Some of the original data that was used in the IMS process may have been changed in this explanation of the process.
The outcome of the IMS process may not reflect the current Bosch strategy for fire detection systems in the Middle East
and is solely the responsibility of the author.
 Chapter 8  The international market selection process   277
Typically the buildings’ fire systems require the
following:
• Fire detection – smoke and heat detection, signal-
ling devices, fire sound alarms, manual call points
• Alarm follow-up – dialler for external alarm; fire
paging system (SMS) for alerting, for example, the
hearing-impaired
• Evacuation of the building – recorded messages,
LED indicators for emergency exits, etc.
• Fire-fighting – sprinkler systems, fire doors.
Bosch Security Systems is involved in all of these
functions except the fire-fighting.
The overall process that the management of
Bosch Security Systems went through together with
the local Middle East sales managers can be illus-
trated as Figure 8.9 (which is similar to Figure 8.8).
The IMS process resulting in the final ranking list
was quite time-consuming (several days of meet-
ings), but these market analysis costs should be
measured against the massive negative conse-
quences of making the wrong selection. Bosch Secu-
rity Systems concluded that it would be better to do
Figure 8.9  International market screening for Bosch Security System: Fire Detection Systems in the Mid-
dle East
Egypt Iran Kuwait Oman Jordan
Knocked out
Saudi
Kuwait Oman Jordan
Arabia
Screened out
Saudi
UAE
Arabia
Ranking
1. UAE
2. Saudi Arabia
3. Qatar
its ‘homework’ properly. Bosch was following the
IMS process (outlined in this chapter) very closely.
First screening
At this stage some knock-out criteria were estab-
lished and, if the countries did not meet these, they
were ‘kicked out’ of the further screening process.
In the first screening process, two major knock-out
criteria were established:
• The country must be politically stable and not too
‘conservative’ with regard to politics and religion
(Iran was ‘kicked out’ on this criterion).
• The country must not already be an established
export market for Bosch fire detection (Egypt was
‘kicked out’ on this criterion).
The remaining six countries went on to the sec-
ond screening process.
Second screening
Here Bosch determined how to ‘measure’ the variables.
For this purpose, they use the MACS model: Market
Saudi
UAE Qatar
Arabia
First screening
Preliminary screening based on
rules and regulations and political
UAE Qatar
conditions = knock-out criteria
not shown here in detail
Second screening
Fine-grained screening based on
the MACS model: market
Qatar
attractiveness/competitive
strengths
278  Part II  Deciding which markets to enter

attractiveness/competitive strengths (this model is
similar to Figure 8.4 and Table 8.2):
MA screening variables – market
attractiveness
• economic position – GDP (gross domestic prod-
uct) per capita;
• growth in construction industry – number of
planned billion-dollar construction projects.
CS screening variables – competitive strengths
• strong local network – assess the quality of your
local contacts;
• sufficient local sales and technical support –
­ umber of Bosch sales advisers who are present
n Security Systems sat down (in long meetings) with
locally.
The process then continued with:
• determining how much each screening variable
affects the attractiveness of a country and the
competitive strengths of your company, attaching
a ‘weight’ per screening variable;
• researching every screening variable regarding
‘performance’ for each country individually and
providing them with ‘scores’.
The weights of the screening variables added up
to 100 per cent or to 1.0.
Before measuring the variables, it was important
for Bosch Security Systems to classify the screening
variables. The ‘scores’ were measured on a scale
from 1 to 5, but it was only possible to give the scores
1, 3 or 5. Table 8.3 shows the requirements that need
to be fulfilled in order to assign 1, 3 or 5. Only the
scores 1, 3 and 5 are used to get a bigger ‘spread’ on
the countries’ resulting positions. Table 8.4 shows
the specific scoring for the different countries.
After the classification of the different variables was
made, the next stage was to evaluate each country on
each screening variable. During this process, Bosch
the local market specialists from the Middle East to
determine a ‘score’ for each variable for each country.
The score given to each criterion per coun-
try is not shown in Table  8.4, only the result of
weight * score. So, for example, for economic
position for Saudi Arabia, a score of 3 was assigned,
giving 0.05 * 3 = 0.15.
The outcomes of Table 8.4 are the centres of the
‘bubbles’ in Figure 8.10 (similar to the generic MACS
model in Figure 8.4). Thus, Saudi Arabia (SA in the

Table 8.3  Classification variables in the MACS model

Market attractiveness (MA)

Score 1 3 5

Economic position (GDP per capita, 0–10,000 11,000–20,000 7 20,000

US$)

Market focus (quality or price) Price 50/50 Quality

Construction – planned construction 0–5 projects 6–10 projects Ú 11 projects

projects (billion-dollar projects)

Market size fire business (€) 0–10 million 11–20 million 7 20

Market growth fire business 0–4% 5–9% 7 9%

Number of fire installers/dealers 0–15 dealers 16–30 dealers Ú 31 dealers

Fire safety awareness (scale 1–10) 1, 2, 3, 4 5, 6, 7 8, 9, 10

Top verticalsa that comply with EN 1–2 verticals 2–3 verticals 7 3 verticals
standardb

Percentage of the market that can be 0–33% 34–66% 67–100%

served with CEc-certified products

Exclusiveness of partnerships 1 exclusive dealer 1 premium No exclusive

dealer + supporting dealers regulations
 Chapter 8  The international market selection process   279

Table 8.3  (Continued)

Market attractiveness (MA)

Competitive strengths (CS)

Score 1 3 5

Local fire experience (€ sales in fire) 6 10,000 10,000–100,000 7 100,000

Local market knowledge (scale 1–10) 1, 2, 3, 4 5, 6, 7 8, 9, 10

Quality of the local business network/ Bad Moderate Good

contact with authorities

Presence of a local Bosch fire sales No On short term 6 1 yeard Yes

representative

Local technical support (front office No On short term 6 1 year Yes

present)

Contact details available of potential No Partially Yes

local fire partners
a
Verticals: Industry verticals such as tourism (hotels), media, banking, fashion, healthcare, government.
b
EN standards (European norms): European standards maintained by the CEN (European Committee for Standardization).
c
CE, conformité Européenne, which means that the product meets the applicable European Directives.
d
Local person available within 1 year (3) as opposed to already available (5).

Table 8.4  Measurement/evaluation of screening variables

Market attractiveness

Weight * Score

Saudi
Jordan Kuwait Oman Qatar Arabia UAE

Economic position 0.05 0.05 0.05 0.05 0.25 0.15 0.25

Market focus (quality/price) 0.05 0.15 0.15 0.05 0.15 0.15 0.25

Construction 0.10 0.10 0.30 0.10 0.30 0.50 0.50

Market size fire business 0.15 0.15 0.45 0.15 0.45 0.75 0.75

Market growth fire business 0.15 0.75 0.45 0.45 0.75 0.75 0.75

Number of fire installers/dealers 0.10 0.10 0.30 0.10 0.30 0.50 0.50

Fire safety awareness 0.05 0.05 0.15 0.05 0.25 0.25 0.25

Top verticals that comply with 0.15 0.45 0.45 0.75 0.75 0.45 0.75
EN standards

Percentage of the market for CE 0.15 0.75 0.45 0.45 0.75 0.45 0.75
certified Bosch fire products

Exclusiveness of partnerships 0.05 0.15 0.25 0.05 0.15 0.25 0.25

Total 1.00 2.70 3.00 2.20 4.10 4.20 5.00

280  Part II  Deciding which markets to enter

Table 8.4  (Continued)

Competitive strength (CS)

Weight * Score

Saudi
Jordan Kuwait Oman Qatar Arabia UAE

Local experience 0.15 0.45 0.15 0.15 0.15 0.45 0.75

Market knowledge 0.15 0.15 0.15 0.15 0.15 0.45 0.45

Quality of the local business 0.20 0.20 0.20 0.20 0.20 0.60 0.60
network

Presence of a local Bosch fire 0.20 0.20 0.20 0.20 0.60 0.60 0.60
expert

Local technical support 0.20 0.20 0.20 0.20 0.60 0.60 1.00

Contact details potential partners 0.10 0.30 0.50 0.10 0.50 0.10 0.30

Total 1.00 1.50 1.40 1.00 2.20 2.80 3.70

Figure 8.10  Bosch Fire Detection Systems MACS matrix

Market attractiveness (MA) of Bosch fire detection systems

High 5

1. UAE
4.2 2. SA 3. QA

Moderate 3 KUW

JO

OM

Low 1
5 3 2.8 1
Direct investment Strong Moderate Low
Competitive strength (CS) of Bosch fire
Partial investment detection systems

No investment
 Chapter 8  The international market selection process   281

figure) gets (x, y) = (2.8, 4.2). The sizes of the bub- These rankings are only the start for the ‘real’
bles represent the market size of fire detection sys- international marketing plan. The principal proce-
tems in different countries. dure is that the company chooses country number
1 in the list and decides about:

Outcome of the IMS process • Entry mode (Part III of this book)
• Marketing plan for the specific country (Part IV of
The result of the project work and all the analysis was
this book).
the following ranking of the most attractive coun-
tries for Bosch Security Systems (fire detection) in the After penetrating the country ranked number 1, the
Middle East: company can choose to do the same procedure for
the countries ranked number 2, 3 and so on.
1. United Arabic Emirates (UAE) At some point, an overall cross-border coordina-
2. Saudi Arabia (SA) tion of all marketing activities can be initiated. This
3. Qatar (QA) stage is discussed in Part V of this book.

The company also has to consider the competitors’ current positions in the potential
market. Even in situations where the potential market is very large and apparently attractive,
the competitors may be so strong that it would be too resource-demanding for the company
to enter the market in an attempt to gain market shares from the competitors.

8.4  Market expansion strategies

The choice of a market expansion strategy is a key decision in export marketing. First,
different patterns are likely to cause development of different competitive conditions in dif-
ferent markets over time. For example, a fast rate of growth into new markets characterized
by short product life cycles can create entry barriers towards competitors and give rise to
higher profitability. On the other hand, a purposeful selection of relatively few markets for
more intensive development can create higher market shares, implying stronger competitive
positions.

Exhibit 8.2
Sunquick’s waterfall approach

CO-RO, the manufacturer of Sunquick, is one of Den-
mark’s leading companies in the development of fruit
and juice-based super-concentrates. The company is
focusing on developing close relationships with its
licensing bottling partners, as shown in Figure 8.11.
When Sunquick was introduced in the 1960s, the
maker concentrated mainly on the domestic mar-
ket and the European markets. During the 1970s
and 1980s, Sunquick was sold mainly in the rest of
Europe. In the 1980s, 1990s and the 2000s, Sunquick
expanded mainly in emerging markets and less
developed countries, as shown in Figure 8.12.
By 2018, Sunquick had become the market leader
in Malaysia and China, with its market position con-
stantly being expanded in less developed countries.
(compare Figure 8.12 with a similar product life cycle
(PLC) concept in Chapter  14 (Figure  14.9), which
shows different PLCs in different countries).