Partner Article

International Market Evaluations: Refining Your Approach

Firms are increasing their focus and capitalizing on the enormous growth of international markets. If your firm is looking to expand internationally, below are guidelines on executing an effective market evaluation.

Critical Components of a Market Evaluation

Market evaluations gauge the validity of opportunities within a defined market. For example, an adhesive manufacturer may consider entering Brazil and find the automotive, medical, defense and aerospace markets potentially attractive. In order to validate each opportunity, the manufacturer will thoroughly examine these markets deeper and rank them according to a set of market evaluation factors. This analysis allows the firm to prioritize its resources and improve its strategic initiatives. Market evaluations can take on many forms depending on the type and quantity of evaluation factors, but well-executed ones will address the following five.

Five Important Factors of a Market Evaluation:

1. Market Viability: (a) Size of the Marke (b) Market Growth Rates
2. Regulatory Environment: (a) Tariff Laws (b) Subsidies (c) Import/export Regulations
3. Emerging or Disruptive Technologies: (a) Existing firms with attractive intellectual property (b) New developments that could pose a threat to your product
4. Distribution Channels: (a) Channels to Market (b) Obstacles and solutions to overcome them
5. Market Landscape: (a) Market Structure: Highly Fragmented or Centralized (b) Major Competitors (c) Market Share

A Case Study: Entering the Indian Market

A U.S. firm in the energy sector was exploring new growth markets internationally and tasked Hanover Research with prioritizing high-value opportunities in India. The Hanover Research team explored seven markets and determined that the automobile and aerospace were most attractive. They came to this conclusion after evaluating several factors: for the aerospace market, for example, the team forecasted thin film demand by researching the Indian government’s military expenditures and policies for aviation, growth percentages and future investments in civilian and business aviation, and overall market growth rates. Researchers also conducted a policy analysis to determine if existing regulations could pose barriers to entry. Finally, Hanover Research’s analysts assessed threat of competition by profiling major competitors and determining their market positioning.

A Sampling of Findings from the Indian Aerospace Opportunity:

Is the market a viable opportunity for growth?Is the market a viable opportunity for growth?

(a) India has the 10th largest defense spend in the world (b) Next five years: India will rank in the top five civil aviation markets in the world

How might the political and legal environment impact the firm?

(a) India’s “offset policy” requires 30% of a contract’s value be allocated to domestic firms (b) Development program for small to medium sized aerospace component manufacturers

Are there any emerging or disruptive technologies that could impact the firm?

(a) No current emerging technologies

How are the distribution channels shaped?

(a) OEM’s of small, specialized, components supply the government and private airlines

Who are the major players in the market?

(a) Many small to medium sized firms in the Indian market (b) Joint ventures and partnerships are common among domestic and international firms

Hanover Research determined that the aerospace and automobile markets were most attractive mainly due to favorable regulatory changes and overall market growth. The firm’s executive team used these findings to make informed decisions and avoid investments in low-opportunity markets. This case study is an example of how market evaluations enable firms to see a market with clarity, execute their strategies with conviction, and sell their products with confidence.

A Webinar Aimed to Improve Your Market Evaluation Approach

The guidelines outlined above are just the starting point. The keys to smart market evaluations require collaborative work across firm functions, skilled researchers and analysts, ample resources, and a thorough examining of the right market evaluation factors.

If you would like further expertise on international market evaluations, we encourage you to join Hanover Research’s upcoming International Market Evaluations webinar on Wednesday, June 12th, at 1PM EST. You will learn how to execute market evaluations effectively and hear real case studies on how carefully executed market evaluations shaped entry strategies. This is a free webinar. To register, visit Hanover Research’s website.

This was posted in Bdaily's Members' News section by Hanover Research .