FACTORS AFFECTING INTERNATIONAL MARKET SELECTION

Which countries should it enters & in what sequence?

How should it enter new markets?

1. GROSS NATIONAL PRODUCT

Means the value of all the goods & services produced by a nation. With the help of GNP we can measure the size of a countrys economy.

But GNP alone does not accurately reflect the market potential; alone it can prove to be misleading.

For e.g. Indias GNP is of $1.7 trillion & that of Austria is $134 billion; yet India is not a good market as compare to Austria. So, GNP should not be considered with population. GNP/ Population = GNP/ Capita = Market Intensity It measures the richness of the market. A country with higher GNP/Capita has a more advanced economy

2. POPULATION
larger the population may look more attractive as large population means more customers to consume our product but actually it can be misleading, when high priced products/ luxuries are involved. When we have to sell low priced product then only population serve as a good indicator of market attractiveness

POPULATION

Population should be studied with market growth rate, rate of increase in resources & income to prove as a better indicator of market potential.

3. POPULATION DENSITY

It determines the ease in reaching the market. More dense the population more easy it is for the marketer to promote and distribute its products.

4. PERSONAL INCOME
Consumption generally rises with the rise in the income. Customers in LDCs may have low income but then also may have ample buying power because of low cost of living.

5. PERSONAL INCOME

Another clue to market potential is how the money is spent; if a large portion of income go towards purchases of essentials; then the market for luxuries may be limited. One of the per capita income is the assumption that every one gets an equal share of nations income. But the reality is totally different. So a marketer should examine the distribution of income in a country, while taking personal income as one of the criterion for market selection.

INCOME ELASTICITIES OF IMPORTS & EXPORTS

This indicates how imports & exports are influenced by consumers income changes in each country.

6. MARKET POTENTIAL

It indicates the profitability of a market. It represents the product absorbing capacity of a market. The more the potential means the more promising the market is.

7. MARKET ACCESS

It is concerned with the entire set of national controls that applies to foreign products and other restrictions. It includes items like export license, import duties, import restrictions, quotas, foreign exchange regulations & preference arrangements.

8. TRANSPORTATION COST
It can affect the market potential for a product. If similar product is manufactured in the target country, transportation cost can make product incompetitive If more time is involved and product competes in a rapidly changing category like computers the result is not favorable

9. POTENTIAL COMPETITION

If potential competition is less then the profitability is more but the greater the degree of potential competition more risk.

10. SERVICE REQUIREMENTS

If a product requires support services at the time of sale and after sale service then the marketer has to decide whether the same can be delivered at a cost that is consistent with the size of the market. if the cost of providing services is a costly affair, then the considered market does not offer favorable market conditions.