Key Factors in International Market Research Analysis

Types of Market Research Information

• Demographics: Knowing more about the characteristics of your market.
• Economic information
• Social and cultural influences
• Political and legal information and influences
• Consumer buying habits and behavior
• Market size and potential for growth
• Competitor information
• Resources, support, and costs

Psychic Distance

Psychic distance refers to the difference in socio-cultural factors between countries. It is arguably easier to enter a market if the distance is smaller. Therefore, businesses should choose countries that have similarities to their domestic market.

Political and Legal Influences

Two current examples include Brexit and Donald Trump as US President. The importance of these factors lies in their influence on the economic and general stability of countries. What influence will either have on the economic stability of countries? Will changes in the political agenda impact business? These factors shape views on foreign investment, trade barriers, and more.

Technology Influences

How good is the infrastructure and ICT capability within a country or market? This is important because it determines the ease of logistics (e.g., to distribute a product). Furthermore, is there access to and regular use of the internet to develop and manage the business?

Consumer Buying Habits and Behavior

Importance: This relates to how, when, and why consumers buy, which varies from country to country. If a marketer can identify this for their potential market, it would help them get the channel of distribution correct (e.g., selling in small shops or larger retailers, determining the size of the product, packaging, etc.). Also, buying behavior can be learned; for example, wine drinking in the UK, burgers in Japan, luxury cars in Russia, and karaoke in the UK.

Market Size and Potential for Growth

Importance: The market size has to be big enough in sales to justify the entry costs. How much demand is there in the country or market? Is there likely to be growth?

This will depend upon your mode of entry. For instance, exporting has minimum costs and is a good way to test the market, while direct investment is more expensive, requiring certainty regarding market size and growth potential.

Competitor Information

Importance: How many competitors are already in the market, and what are the sales of those competitors? The answers to these questions will influence the decision to enter a market. The nature of the competition is useful in developing a competitive market entry strategy.

• Too many competitors may suggest the market is near saturation.
• This can influence your direction: do you avoid their strength and find your own Unique Selling Proposition (USP) or compete directly?

STP: Segment, Target, and Positioning

• Segment
• Target
• Positioning: Decide on where an organization (or product/service) sits in relation to the rest of the market. You could consider a single theme, such as market share, sales volumes, profit, brand, or a combination.

Micro-segmentation Factors

Incorporate another layer of segmentation through micro-segmentation. Look at these four factors:

• Geographic
• Demographic
• Psychographic
• Behavioral