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Market Definition for Entry Strategy

Market Definition for Entry Strategy. Steps: Market Characterization and identification Definition Market segmentation and Product match Selection. Market Characteristics. Entry Strategy begins by market characterization. The typical characteristics are: Sales Potential Penetration Scale

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Market Definition for Entry Strategy

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  1. Market Definition for Entry Strategy Steps: • Market Characterization and identification • Definition • Market segmentation and Product match • Selection

  2. Market Characteristics Entry Strategy begins by market characterization. The typical characteristics are: • Sales Potential • Penetration • Scale • Input • Reward • Risk

  3. Firm’s Capability and Competency The market industry- sector and characteristics must be matched by firm’s capability and Product Line: • Financial resources • Production Resources • Human resources • R&D Experience • Management Experience • Synergy in product line and in distribution For a detailed list see table in p. 53

  4. Economy of Scale and the Experience Curve The description in the “scale” section pp. 48-50 is mistaken. We need to fix it. Hence, in this digression we review the notions of: • economics of scale (a characterization of the production function at one fixed point in time) and • The experience curve The experience curve is the AC (average cost) as a function of time. • Decisions regarding economy of scale affect industrial organization of the firm (centralization/ decentralization) at a point in time. • The experience curve affects evaluation of product life cycles and competitive pressures over time.

  5. Market Prospect Evaluation Evaluation is based on the distribution of return • Reliance on information given by the first and second moments of the distribution is common. I.e. a reliance on central tendency and spread of the returns • Example

  6. Market Defintion • Traditional Approaches • Generic Title followed by physical properties or distribution channels characterization • Product focused • Consumer Focused Approaches • Cross Elasticity • Homogeneous Uses • Hierarchical Market Definition • Perceived Similarity • Perceptual Mapping and Guttman’s SSA (Multidimensional Scaling.) • Emerging View

  7. Market Segmentation and Targeting • Segmentation Bases • Demographics • Attitudes • Usage Rate • Preference/ Choice (benefit Segmentation) • The list is clearly non-exhaustible • In Industrial marketing (Business to Business Marketing) the most important segmentation is SIC based segmentation. • Targeting group segmentation requires the tabulation of relationship between product type and consumer segment

  8. Market Selection • Affected by Business and Marketing Strategy • The need to set priority and a decision making process for selection based on multiple criteria • Focus on a few markets • Refinements • Comments: • Oligopolistic Competition and advantages of Market Entry • Entry New and Old Markets Summary

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