Deciding Which Markets to inter

Before going abroad, the company should try to define its international marketing objectives and policies. It should decide what volume of foreign sales it wants. Most companies start small when they go abroad. Some plan to stay small, seeing international sales as a small part of their business. Other companies have bigger plans, seeing international business as equal to or even more important than their domestic business.

The company also needs to choose in how many countries it wants to market. Companies must be careful not to spread themselves too thin or to expand beyond their capabilities by operating in too many countries too soon. Next, the company needs to decide on the types of countries to enter. A country's attractiveness depends on the product, geographical factors, income and population, political climate, and other factors. The seller may prefer certain country groups or parts of the world. In recent years, many major new markets have emerged, offering both substantial opportunities and daunting challenges.

After listing possible international markets, the company must carefully evaluate each one. It must consider many factors. AFor example, P&G's decision to enter the Chinese toothpaste market with its Crest brand is a no-brainer: China's huge population makes it the world's largest toothpaste market. And given that only 20 percent of China's rural dwellers now brush daily, this already huge market can grow even larger. Yet P&G must still question whether market size alone is reason enough for investing heavily in China.

P&G should ask some important questions: Can Crest compete effectively with dozens of local competitors, Colgate brand, and a state-owned brand managed by Unilever? Will the Chinese government remain stable and supportive? Does China provide for the

P&G's decision to enter the Chinese toothpaste market with Crest is a no-brainer: China is the world's largest toothpaste market. But P&G must still question whether market size alone is reason enough for investing heavily in China.

"Just 10 years ago, Procter & Gamble's Crest brand was unknown to China's population, most of whom seldom—if ever—brushed their teeth," says one analyst. "Now P&G . . . sells more tubes of toothpaste there than it does in America, where Crest has been on store shelves for 52 years." P&G achieved this by sending researchers to get a feel for what urban and rural Chinese were willing to spend and what flavors they preferred. It discovered that urban Chinese are happy to pay more than $1 for tubes of Crest with exotic flavors such as Icy Mountain Spring and Morning Lotus

Fragrance. But Chinese living in the countryside prefer the 50-cent Crest Salt White, since many rural Chinese believe that salt whitens the teeth. Armed with such insights, Crest now leads all competitors in China with a 25 percent market share.

Geographic characteristics Political and legal factors

Climate Country size

Population density—urban, rural Transportation structure and market accessibility

National priorities Political stability

Government attitudes toward global trade Government bureaucracy Monetary and trade regulations needed production and distribution technologies? Can the company master China's vastly different cultural and buying differences? Crest's current success in China suggests that it could answer yes to all of these questions.30

Possible global markets should be ranked on several factors, including market size, market growth, cost of doing business, competitive advantage, and risk level. The goal is to determine the potential of each market, using indicators such as those shown in • Ta b I e 19.1. Then the marketer must decide which markets offer the greatest long-run return on investment.

• table 19.1 Indicators of Market Potential

Demographic characteristics

Education Consumer lifestyles, beliefs, and values

Population size and growth Business norms and approaches

Population age composition Cultural and social norms

Languages

Bilrtiomic factors;

GDP size and growth Income distribution Industrial infrastructure Natural resources Financial and human resources

Author I a company has many Comment | options for entering an international market, from simply exporting its products to working jointly with foreign companies to holding its own foreign-based operations.

Exporting

Entering a foreign market by selling goods produced in the company's home country, often with little modification.

Joint venturing

Entering foreign markets by joining with foreign companies to produce or market a product or service.

Licensing

A method of entering a foreign market in which the company enters into an agreement with a licensee in the foreign market.

Market Entry Strategies

Exporting is the simplest way to enter a foreign market, but it usually offers less control and profit potential.

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