Global market

expansion and
choosing the
right market.
Lecture 2
What we’ll be covering

01 02 03 04
What is Potential
Market
Internal External Summary
company analysis
Assessment and
why is it
perspective of key
• Models for
important? • Vision
• Resources analysis
facts

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Potential Market Assessment

One of the central However it remains difficult and

features of international
business is the process employed
by firms to pick those foreign
countries or regions that will
form their geographic target
markets - and as such it’s an
element of operations that firms
need to get right (Kay, 1993)
contentious because of “the
bewildering array of countries
and markets throughout the
world⋯”
(Keegan and Green, 2012)

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External Analysis and
Potential Market
Assessment
oSequential process
o A comparison of
different markets
o Choosing the most
attractive one to
enter.

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Filter 1 Macro level research: Model for
General market environment. PESTEL
selecting
Preliminary options foreign markets
Similar products,
Filter 2 Macro level growth trends, market size,
research: General market state of development etc.
potential
Rejected
Possible options
countries
Filter 3 Micro level research:
Existing & potential competition
Specific factors affecting product
cost of entry, sales projections,
Probable options profit potential

5 Forces
Filter 4 Target market:
Corporate factors influencing
implementation
Country priority listing (Adapted from Walvoord, 1980)
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Washing Machine Market

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 Filter 1: Macro
market analysis •PESTLE
(General •Risk Assessment models – BERI
•GNP/capita /Education
viability of
Market)

Comrie
•Size, growth, seasonality, infrastructure,
Filter 2: Sector margins, customer power, competitive
Market intensity, entry barriers, comms channels.
• Competencies needed in local market context

and Hunt-
analysis •Competitive strength.

Fraisse Filter 3: Company

competitive •Analysis of company competitive advantage
using models such as Porters value chain

(2015)
advantage relative •Relative competitive advantage compared with
to in market competitors in the market.
competition.

Filter 4: Fit of •Market attractiveness in the light of:

company •Company objectives
offering with •Company experience
•Company resources
market

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 Corporate strategy: Ansoff (1965) matrix

Existing
Market
Penetration Product/ Service
Development
Market

Market
Extension Diversification

New

Existing Product/Service New

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 Salad
Existing I

Market
Penetration Product/ Service
Development

Market

Market Diversification
Extension

New

Existing Product/Service New

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 Coca Cola
Diversification strategy to counteract declining carbonated drinks
market and to become a Total Beverage Company
Changing consumer habits/ brand diversification

• Brand expanded into alcohol

space
• Tapping into growing premium
mixer market.
• Coca-Cola Signature Mixers:
• Launched June 2019
• Four flavours designed to be
mixed with dark spirits
• Served in contemporary
Hutchinson glass bottle
• Coca-Cola heritage of cocktail
culture
• ie Cuba Libre of the 1900s

Coca-Cola moves into alcohol market with premium mixers Marketing Week. Molly Flemming. 2 nd May 2019
Coca Cola – costa RTD

• Coca-Cola paid £3.9bn for Costa Coffee

• 🡪 tap into the coffee market to launch new
products
• Coca-Cola Coffee is the core brand’s coffee
variant that aims to target “mid-day slump”.
It reiterates the company’s desire to
maintain Coca-Cola’s relevancy by expanding
into occasions where sparkling drinks is less
common.
Coca Cola new launches

• Diet Coke new flavours ‘Twisted

Strawberry’ and ‘Exotic Mango’
• Water brand Aquarius
• Own-brand energy drink Coca-
Cola Energy.
• 50% of its revenue growth in
Great Britain will come from
innovation by 2020.
Internal analysis: Corporate Strategy
Ocean Metaphor:
Internal analysis: Corporate Strategy
Ocean Metaphor:

Red oceans – Blue oceans –

mature, intense
rivalry, price, quality,
service.
• Differentiation or low cost
• Beat the competition
uncontested, competition
unstructured, relatively
unknown markets, value
innovations
• Differentiation and low cost
• Make the competition irrelevant

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Think a bit:
Salcombe
• Understand the
basis of your
home success
• Then consider
whether you
can transfer this
success
overseas.

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Gold awarded at the prestigious World Drinks Awards last
December, hand distilled ‘Start Point’ Gin scooped a further
two awards for World’s Best Gin in the Technical
Excellence and Premium Design sub categories. An
impressive accolade for this new brand launched in July
2016, in a category against hundreds of other spirits from
around the world.
 • Ranking potential countries purely on
market size or growth trends - e.g. IKEA
Japan & US. Market attractiveness
must be measured relative to strategy &
Some competitive advantage

common • Underestimating local competition

• e.g. Groupe Danone in central Europe
pitfalls • Blindness to local customer motivations
• Research interpretation/ Self
Referencing Criterion (SRC)/ local insight
Ikea Fails in Japan
• Launched in 1974 – after 4 markets in
Europe.
• Felt proposition would work everywhere.
• Lacked consumer insights
• Japanese consumers the quality of
service is very important 🡪 did not like
self service and “build your own”
concept
• Product Range / Japanese houses
• Tough competition
• Limited transport in Japan 🡪 out of
town stores not popular
• Big store laws

Could you live in a 200 m2 house?

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How many
Tahami mats?
• In Japan, the size of a room is
often measured by the number
of tatami mats (- 畳 -jō)
• 4 ½ mats is about 2.73m x 2.73
m.
• 7.45 m2

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Relaunch
in 2006
• 5 years consumer research
• Large sofas and furniture
etc. popular in Europe
not relevant in Japan
• Providing home delivery
and assembly (even for
an extra charge) is
necessary.

• Educate people about

assembly TVC
• And showcase furniture
in small spaces
• Showrooms small like
Japanese

• Ikea Japan 2008

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 ‘Companies routinely overestimate the
attractiveness of foreign markets’

Requires direct contact/ experience - allow for:

• Cultural distance – religious/ language
differences
Distance does • Administrative distance - regulatory differences

matter – • Geographic distance – further away more

difficult to manage from home
Remember • Economic distance - low development means
Cage? weak infra-structure, payment ability etc.
• Psychic distance - prevents flow of info between
firm & market

(Ghemawat,2001)

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 • More than half our business is in the
developing and emerging markets. The
growth coming from emerging markets is
massive, in China, India and Brazil . We are
already well developed in these countries
and we don’t want to squander that
inheritance. We will grow these markets
and our market share quickly. But we also
Getting the have massive businesses in the US, Europe
and Japan and we would be mad to walk
Balance right away from those. You have to fight harder
again to grow share but you have to do it
There are different strategies in both kinds
of markets.

• Keith Weed – Chief Marketing Officer –

Unilever Marketing Week (2010)

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 How does a • Three options:
Chinese • Target emerging markets with low
automobile cost no frills cars (regional
radiation)
company
globalize ? • Target developed markets with
“Prudent “new energy” cars rather than
conventional gasoline cars.
Action, holistic
plan, steady • Target niche sectors – i.e. Great
growth, major Wall Motor Company – Steed pick
up.
breakthroughs.”
 • Globalisation not mandatory
• Screen to narrow down/ prioritise
country expansion choices
• Clear company vision / resource
• Consider appropriate key variables &
Key Thoughts weight
• Useful research/ models but understand
difficulties/ ‘distances’ involved
• Need ‘face to face’ experience of short-
listed markets

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Key models
References

• Ansoff, H.I. (1965) Corporate Strategy. Wiley.

• Ghemawat, P. (2001) Distance still Matters. The hard reality of global
expansion. Harvard Business Review 79 (8) pp. 137-147
• Kay, J. (2011) Think again : Summer 1993. The structure of strategy.
Business Strategy Review Vol 22. Iss. 2 p. 80-85
• Keegan, W.J. and Green, M.C. (2012) Global Marketing, Global Edition
Pearson
• Kim, W.C. and Mauborgne, R., (2004) Blue Ocean Strategy. Harvard
Business Review. October. Pp 1-9
• Walvoord, W. R., (1980), "Export Market Research", Global Trade
Magazine p.83

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