INTERNATIONAL MARKET ASSESSMENT
Its a form of environmental scanning that permits a firm to select a small number of desirable markets on the bases of broad variables. companies must determine where to sell their products or services because they seldom have have enough resources to take advantage of all opportunities . Not using scanning techniques may create the tendency of overlooking gowning markets . Assessment of foreign markets involve subjective countries to a series of environmental analysis with a view of selecting handful of desirable markets for export. In early stages secondary data are used to establish market size at the level of trade as well as investment and other economic and finance information.
(1) PRIMARY SCREENING ( BASIC NEEDS AND POTENTIAL )
The first step in market assessment is to establish whether there is basic need for the company's product or services in the foreign market . Basic needs potential is often determine by the environmental conditions such as climate , topography, or natural resources . In situations in which its difficult to determine potential needs , firms can resort to foreign trade and investment data to establish whether the product or service has been previously imported , its value , its monetary value and exporting conditions.
After establishing the basic needs potential , its important to determine whether the need for the product or service has been satisfied . Needs may be local production by competitors , imports may cease or may be subject to high tariffs or other barriers . Market opportunities still exist for competitive firms if a growing demand for the product cannot be freely be met by local production in so far as government do not apply trade restrictions in favour of local producers or import from certain countries . If the research indicates that market opportunities exist , its a pertinent to consider the market overall buying power by examining countries' specific factors such as population, gross domestic product , per capital income , distribution of wealth , export and import . While considering these factors one should note that :
(a) PER CAPITA INCOME:
per capital income might not be a good measure of buying unless the country has a large middle class and low profound regional disparities .
(b) IMPORTS :
Imports do not always indicate market potential . Availability of foreign currency as well as change in duties and trade policies should be mentioned to ensure that they are conducive for growth of import in the country .
(2) SECONDARY SCREENING ( FINANCIAL AND ECONOMIC CONDITIONS )
Secondary screening involves financial and economic conditions such as trends in inflation, interest rates , exchange rates stability , and the availability of credit and financing . countries with high inflation rate ( as well as control and low interest rates) should be carefully considered because they may limit volume of imports by restricting the availability of foreign exchange . There is also a need to verify the availability of commercial banks that can finance overseas transactions and handle collection of payment and money transfer .
Economic data are also used to measure certain indicators such as market size ( relative size of each market and percentage of total world market ) . market intensity ( the degree of purchasing power ) and the growth of the market ( the annual increase in sales ) . Countries with advance economy such as united state of America or Germany account for large percentage of the world market of automobile , computers and televisions . Their high per capita income reflect their attractiveness of the market and degree of purchasing power such as information will help the selecting countries and rapidly growing markets and high concentration of purchasing power.
(3) THIRD SCREENING ( POLITICAL AND LEGAL FORCES)
It is important to assess the type of government ( democratic / non democratic ) and its stability . countries with democratic government tend to be politically stable and favour open trade policies and are less likely to resort to measures that restrict imports and impede ( hinder or stop ) companies' ability to take certain action . political instability may also lead to damage of properties and / or disrupt supplies and sales , it could be as a result of war, insurrection , take over of property and or change of rules . consideration should also be given to legal forces in these countries that affect export /imports operations . These include the following :
(a) ENTRY BARRIERS
product restrictions , high import tariffs, restrictive quotas, import licenses, special taxes on imports , product labeling and other restrictive trade laws should be assess
(b) LIMIT ON PROFIT REMITTANCE AND / ON OWNERSHIP
Imposition of strict limits on capital overflow in foreign currencies , restrictions on or delay on remittance of profits and ownership requirements to establish a business.
(c) TAXES AND PRICE CONTROL AND PROTECTION OF INTELLECTUAL PROPERTY RIGHTS
The existence of high taxes , price control and lack of adequate protection of intellectual property rights should be considered .
(4) FOURTH SCREENING ( SOCIO- CULTURAL FORCES )
This involves consideration of socio -cultural forces such as custom , religion and values that may have an adverse effects on the purchase or consumption of certain products . Example includes sales of pork and its derivatives, and alcohol to muslim countries is wrong choice
(5) FIFTH SCREENING (COMPETITIVE FORCES )
Its important to appraise the level and quality of competition in the potential market . The exporter has to identify companies competing in the market , the level of their technology , the quality and price of their product or services and their estimated market share as well as other pertinent matters
(6) FINAL SELECTION ( FIELD TRIP)
This stage involves a visit to the markets that appear to be promising in light of the market assessment techniques \. Such visit could be in a form of trade missions ( a group of business and government officials that visit a market in search of business opportunities ) or trade faire ( a public display of products and services by firms to several countries to prospective customers . The purpose of such visit is to corroborate the facts gathered during the various stages of market assessment and to supplement currently available information by doing research to the local market including face to face interview with potential consumers , distributors , agents and government officials.
These will facilitate final selection of desirable market as well as development of marketing plan , product modification , pricing , promotion and distribution
