IDENTIFYING AND SELECTING INTERNATIONAL MARKETS. INTRODUCTION Before making an entry in the international market, a firm has to identify those markets.

IDENTIFYING AND SELECTING INTERNATIONAL MARKETS

INTRODUCTION

Before making an entry in the international market, a firm has to identify those markets in which it can sell its products easily. A proper analysis is necessary for selecting the proper and appropriate foreign market. It is important for the firm entering the world market to segment them in such a way that it is able to effectively meet their requirements.

CLASSIFICATION BASIS

CLASSIFICATION BASIS

INDUSTRIALDEVELOPMENT

POPULATIONGROSS NATIONAL

INCOMEOTHER

CHARACTERISTICS

INDUSTRIALLYDEVELOPEDECONOMIES

RAW MATERIALEXPORTINGECONOMIES

MORE DEVELOPED COUNTRIES

SUBSISTENCE ECONOMIES

INDUSTRIAL DEVELOPMENT

1. INDUSTRIALLY DEVELOPED ECONOMIES:- These countries provide a large world market as they have no restrictions on import. They lay more emphasis on the production of more sophisticated products and on research and development.

2. RAW MATERIAL EXPORTING ECONOMIES:- These types of economies are very much rich in minerals and other raw materials but there is lack of production technique, capital, labour etc., for performing productive functions. So these type of economies are exporters of raw material and importer of finished goods.

3. MORE DEVELOPED COUNTRIES:- These economies are growing fastly. Their infrastructure is not very sophisticated but they are progressing by adopting methods like technical advancement to set up their manufacturing units.

4. SUBSISTENCE ECONOMIES:- This type of economy is found in the least developed countries. They produce nothing and depend on imports. As these countries lack infrastructures, there is a much scope for the developing countries to export their products in these countries.

POPULATION

A smart exporter will always search market in a country where population is high. Because commodities are mainly used by the people living in the country. Therefore, higher the population of the country, higher will be the market potential. Segments of population can be made on the basis of age, sex,social class, educational background etc.

GROSS NATIONAL PRODUCT

Gross National Product, growth rate of economy and standard of living of population tell us that what we should produce and what type of price of product will run here.

OTHER CHARACTERISTICS

Markets can be classified on the basis of per capita income, market characteristics,variables like socio- economic variables, cultural groupings and other behavioral patterns.

REQUISITES OF EFFECTIVE SEGMENTATION

STABLE

DIFFERENTIABLE

ACCESIBLE

PROFITABLE

MEASURABLE

IDENTIFIABLE

EFFECTIVESEGMENTATION

PROCESS FOR SELECTING OF FOREIGN MARKET

FIRST STAGE:- While selecting foreign markets, it is necessary that we should analyze the market and following factors must be studied

Geographical factors Economic environment Social and Cultural environment Political environment

SECOND STAGE:- Following factors must be considered

Market Size Growth Rate of other products Government policies and Tax Procedures Acceptability

THIRD STAGE:- This stage focuses on micro level considerations which includes

Competition Cost of entry Possibility of ProfitReliability of information Cost of Test-Marketing

FOURTH STAGE:- The last step of the screening process is an evaluation of potential market which include

Target Market Strategies

CRITERIA FOR ELIMINATING THE MARKET

GOVERNMENTRESTRICTIONS

TECHNICAL ACCESSIBILITY

COMPETITION LEVEL

TARIFF BARRIERS

NON TARIFF BARRIERS

CRITERIA FOR SELECTINGTHE MARKET

POLITICAL ENVIRONMENT

LEGALENVIRONMENT

SOCIAL ANDCULTURAL

ENVIRONMENT

MARKET SIZE

CRITERIA

PREFERENCES AVAILABLE TO INDIAN EXPORTERS1. THE GENERALISED SYSTEM OF PREFERENCES:-

Under this system developed countries, which allow duty free export from developing countries. If exporter want to avail benefits of above preferences he should have full knowledge about it and know whether his goods lies under this system or not.

2. EXCHANGE OF PREFERENCES AMONG DEVELOPING COUNTRIES:- 16 developing countries, including India, have been exchanging preferences among themselves on 93 products under 1972 agreements.

3. IMPORT PROMOTION CENTRES IN SOME COUNTRIES:- These centres are those which are opened in developing countries to encourage imports.

4. OTHER ADVANTAGES:-Existence of rupee payment agreement, Trade dominated by persons of Indian origin, Existence of shipping facilities

SOURCES OF INFORMATION AVAILABLE TO EXPORTERS

Libraries maintained by foreign embassies in India.

Reserve Bank of India Bulletin.

Export-Import Bank

Commercial banks and Export Credit Guarantee Corporation of India.

SUGGESTIONS FOR ENCOURAGING INDIA’S EXPORTGovt should set up control room in the

trade ministry.Govt should set up training institutes.Govt should arrange for the

production of goods that are in demand abroad.

Govt should give priority to the export sector.

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