Target Market Selectionand Timing Strategies of International Market Entry - Kasey Navita Phifer & Michael GrossThis was a presentation for International Management class (under Helfried Zimmermann) for the HTW-Berlin DEc 2011.
Target Market Selection and Timing Strategies of International Market Entry K. Navi Phifer – Michael Gross International Management WS 2011-2012 – HTW-Berlin 16 Dec 2011
Transcript
1. Target Market Selection and Timing Strategies
ofInternational Market Entry K. Navi Phifer Michael Gross
International Management WS 2011-2012 HTW-Berlin 16 Dec 2011
2. Outline Market Entry Timing Strategies Target Market
Selection - selection process - example Case Study: Groupon - brief
history/facts - entry into Chinese market Conclusion 16 Dec 2011 K.
Navi Phifer - Michael Gross 2
3. Timing Strategies1. Dynamic Timing2. Time of Year3. Wave4.
Sprinkler5. Waterfall 16 Dec 2011 K. Navi Phifer - Michael Gross
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4. Dynamic Timing For new design and market entry of new
products Company should constantly keep knowledge ofproduction
efficiency and potential market up-to-date The product should
continuously be improved untilentering the market, when the design
process stops. Created by Sechan Oh and Ozalp Ozer U of Texas
Dallas (2010) 16 Dec 2011 K. Navi Phifer - Michael Gross 4
5. Time of Year Some industries are busier at certain times of
the year Example: accountants not wanting new software right before
taxes are due Example: childrens toys for Christmas Closely related
to geographical market segmentation 16 Dec 2011 K. Navi Phifer -
Michael Gross 5
6. Wave Developed by management consultant Christoph Lymbersky
(also developed sprinkler & waterfall timing strategies)
Applies to timing entry into international markets New product
introduced simultaneously into countries with similar cultures
& characteristics Example: product launched in Germany, Austria
and Switzerland at 16 Dec 2011 K. Navi Phifer - Michael Gross
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7. Sprinkler Applies to timing entry into international markets
Product is launched into all suitable countries at the same time
Example: countries with same language 16 Dec 2011 K. Navi Phifer -
Michael Gross 7
8. Waterfall Applies to timing entry into international markets
Product is launched in one country at a time New markets entered
only after sales are established in previous market(s) 16 Dec 2011
K. Navi Phifer - Michael Gross 8
9. Target Market SelectionTarget Market: group of individuals
who have similar needs, perceptions and interests; show inclination
towards similar brands and respond equally to market fluctuations.
Understand consumer lifestyle Age group Income Spending capacity
Education & profession Gender Mentality, paradigm & thought
process Social status Environment 16 Dec 2011 K. Navi Phifer -
Michael Gross 9
10. Target Market Selection Example: Selling Soap Need: why do
people use soaps?Segment 1: Against Body Odor Soaps with a strong
and lasting fragrance Marketing professionals Sales Representatives
People exposed to sun for a longer duration Individuals travelling
by public 16 Dec 2011 K. Navi Phifer - Michael Gross 10
11. Target Market Selection Example: Selling Soap Need: why do
people use soaps? Segment 2: Hygiene & Cleanliness To fight
germs and infections - Soaps for a high standard of hygiene
Individuals working in hospitals, nursing homes and research
centres Individuals working in unhygienic conditions 16 Dec 2011 K.
Navi Phifer - Michael Gross 11
12. Target Market SelectionExample:Selling SoapNeed: why do
people use soaps?Segment 3: Anti-aging, beautifying For a whiter,
brighter skin - Soaps to improve your skins natural glow Ages 30
60+ Female 16 Dec 2011 K. Navi Phifer - Michael Gross 12
13. Target Market SelectionExample:Selling SoapNeed: why do
people use soaps?Segment 4: Eco-friendly Environmentally friendly
soaps, sustainably made for a better, greener future Ages teens 40
Larger spending capacity 16 Dec 2011 K. Navi Phifer - Michael Gross
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14. Groupon Case Study: Brief Facts founded November 2008 Its
name blends group and coupon strategy: acquisition and renaming
What is the core of Groupons operation? 16 Dec 2011 K. Navi Phifer
- Michael Gross 14
15. 16 Dec 2011 K. Navi Phifer - Michael Gross 15
16. Groupon Case Study first to offer group buy with massive
discounts unique style of One-Deal-Per-Day-Per- Location they
filled in a niche market in eCommerce, they came and they
conquered. 16 Dec 2011 K. Navi Phifer - Michael Gross 16
17. Groupon Case Study:Acquisition Groupons first deal was a
half-price offer for pizzas for the restaurant on the first floor
of its building in Chicago Groupon serves 500 markets and 44
countries: United States, Canada, Taiwan, Brazil, Germany, Greece,
Finland, France, the Netherlands, Belgium, the United Kingdom,
India, Ireland, Israel, Italy, Poland, Portugal, Spain, Puerto
Rico, Japan, Turkey, Mexico, Peru, Chile, Colombia, South Korea,
Sweden, Argentina, the United Arab Emirates, Norway, Romania,
Singapore, Malaysia, Hong Kong, Mainland China, Russia and South
Africa. K. Navi Phifer - Michael Gross 16 Dec 2011 17
18. Groupon Case Study:Acquisition 16 Dec 2011 K. Navi Phifer -
Michael Gross 18
19. Problems and failureA successful deal could temporarily
swamp a small business with too many customers, risking a
possibility that customers will be unsatisfied, or that there wont
be enough product to meet the demand 16 Dec 2011 K. Navi Phifer -
Michael Gross 19
20. Problems and failure Groupon doesnt charge businesses
upfront to have their ads run on the site Groupon takes half of the
profits generated by the promotion Groupon receives the full amount
from the sales upfront Then they pay the first 33% in five days and
the rest by the end of 55 days 16 Dec 2011 K. Navi Phifer - Michael
Gross 20
21. Market Entry China1) They decided to employ 1000 permanent
staff by the end of March2) top international education
institutions master degree students building a team of local
experts in Beijing by paying above the industry average salaries
local clones, their primary competitors are ready for that and they
took the initiative in playing dirty 16 Dec 2011 K. Navi Phifer -
Michael Gross 21
22. Market Entry China Battle of Clones according to the latest
statistics 1215 Groupon clones with 265 already bankrupt (up till
24th Jan 2011) ready to battle over 1000 clones? owned by local
internet companies equally deep pockets their own territorial
market ready to start a pricing war if their terrioritorys invaded
16 Dec 2011 K. Navi Phifer - Michael Gross 22
23. Market Entry China The differences between Chinese clones
and Groupons traditional business Its not 1 deal per day per
location, its as many deals as possible covering as many locations
as possible Discounts are not enough to attract huge volume of
customers offering free deals is 16 Dec 2011 K. Navi Phifer -
Michael Gross 23
24. Market Entry China Groupon has done one thing right for
their venture in China Groupon in a strategic relationship with
Tencent the Chinese internet giant who dominate IM in China with QQ
(etimated of 640 million users) both companies are reported to
enter a 50/50 stake relationship for Groupons ventures in China
rising a pool of 950 million euros thats believed will be mostly
invested in China. 16 Dec 2011 K. Navi Phifer - Michael Gross
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25. Market Entry China Just two months ago at the end of
August, Groupon closed 13 of its Chinese locations and fired over
400 full-time staff. Groupon is just the latest example of a
Western Internet company to fail in China. four typical mistakes
Western Internet companies make when entering the Middle Kingdom 16
Dec 2011 K. Navi Phifer - Michael Gross 25
26. Failures1. Arrogance Groupon faced an uphill battle from
the very beginning due to its arrogance. Before Groupon entered
China, the US firm proclaimed that it would become Chinas largest
shopping site. In Europe, Groupon had adopted a strategy of using
high salaries to poach competitors top employees and assumed a
similar strategy would work in China as well The company also
thought that it could just pay huge sums to acquire Lashou, the
largest Chinese group- buying site in order to enter the Chinese
market, but was shocked when the Chinese site refused their offer.
16 Dec 2011 K. Navi Phifer - Michael Gross 26
27. Failures2. Lack of Local Understanding Groupons China head
seemed to think that all international markets were alike. At first
Groupon insisted that its partnering vendors split profits 50-50,
without taking into account the realities of Chinas group-buying
environment. Given so many existing players in the market, vendors
have the upper hand when negotiating with group-buying operators
and typically leave their partner only 10 percent of the profits
instead of 50 percent. Local vendors were so taken back by Groupons
aggressive sales tactics that they often told the companys sales
people to calm down and come back later with more realistic
expectations. Groupon insisted on using mass email marketing,
despite being warned that Chinese people seldom read that type of
email. 16 Dec 2011 K. Navi Phifer - Michael Gross 27
28. Failures3. Misaligned Management Structure Groupons failure
to draw more heavily on local talent in its management structure
limited its ability to adapt to local nuances and succeed in the
Chinese market. only two management members were Chinese: one from
mainland China and the other from Hong Kong. Groupons operations in
more remote parts of China were run by foreigners with limited
understanding about the local nuances of the Chinese market.
foreign managers were managing Chinese employees in a Western style
very low efficiency 16 Dec 2011 K. Navi Phifer - Michael Gross
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29. Failures4. Wrong Choice of Local Partner Groupon made a
very smart decision in partnering with Tencent, which next to
Alibaba Group, is a true leader in Chinas Internet space. Where
Groupon went wrong was not making use of the numerous advantages a
partnership with Tencent has to offer. For example rather than rely
on Tencents local market expertise, Groupon instead to chose to
hire expats to run its operations all over the country. 16 Dec 2011
K. Navi Phifer - Michael Gross 29
30. 16 Dec 2011 K. Navi Phifer - Michael Gross 30
31. ReferencesTarget Market & Timing
http://www.managementstudyguide.com/target-market- selection.htm
http://www.donaldmcmichael.com/market_entry_strategy_intr o.htm
http://smallbusiness.chron.com/market-entry-timing-product-
marketing-strategy-5074.html
http://www.outsource2india.com/services/market_researchser
vices.asp?src=hp_mrs Wright State University: Market Entry
Strategies: Pioneers Versus Late Arrivals MSOM: 2010 Manufacturing
and Service Operations Management Annual Conference Abstracts: A
Dynamic Strategy to Optimize Market Entry Timing and Process
Improvement Decisions "Market Entry Strategies"; Christoph
Lymbersky; (2008) 16 Dec 2011 K. Navi Phifer - Michael Gross
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32. ReferencesGroupon
http://www.screenwerk.com/2011/12/02/data-suggest-its-too-early-
to-sell-grpn/
http://www.screenwerk.com/2011/06/03/groupons-numbers-day-2-is-
the-model-broken/
http://www.wordstream.com/blog/ws/2011/06/17/groupon-bad-press
http://businessmodelinstitute.com/is-groupons-business-model-the-
foundation-for-failure/
http://blogs.reuters.com/felix-salmon/2011/08/27/the-future-of-
groupons-business-model/
http://www.wordstream.com/blog/ws/2011/06/17/groupon-bad-press
http://www.penn-olson.com/2011/11/04/4-mistakes-behind-
groupons-failure-in-china/
http://www.retaildoc.com/blog/groupon-worst-marketing-business/
http://techrice.com/2011/02/12/groupon-on-course-for-fail-in-china/
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