Basic Needs Potential
This is the very first step in market screening. The world, being an ‘oyster’, has lots of potential regions where firms are likely to thrive well. After the identification of UK as a target region, the Justice still has a lot at hand to refine its target. According to Anantachart, (2005), the firm needs to establish conformity between its product offering and the market needs. In other words, Justice needs to screen the market based on the need potential. Being a cloth retailer in the USA, it is significant to determine what kinds of cloth need the consumers from the UK have. Justice can decide which places it wants to establish its subsidiaries. However, successful global expansion requires that firms generate a complete knowledge of the kind of consumers they are dealing with (Atkinson, 2006). As such, it is vital to determine the needs potential that different areas in the targeted region have.
Anantachart, (2005) argues that the process allows the generation of a holistic overview of the entire region as well as the specific areas that make up the region. This stage is the most basic stage as it concerns how well the market needs might fit with what the firm is offering. For instance, if Justice specializes in the production of intensive weather attires, then it should identify regions in the UK where the same products would fit effectively. Notably, this process involves identifying a simple match that puts the firm and the target market on one line. Notably, the process is not about determining the market characteristics of a region but rather, how well the identified regions are fit for what Justice is offering. Being a preliminary process, it is one of the most crucial indicators of whether the firm will be successful or not.
In essence, ensuring a successful market orientation will be first based on the basic needs assessment of the market. Justice specifically has to determine regions in the UK where their products can be consumed effectively basing on the consumer’s potential needs. This search is however generalized to cover all regions in the selected area. This is because the overview of potential markets is broad at this stage and it would be irrational to rule out specific areas without the subsequent in-depth screening. Long & Schiffman, (2000) acknowledge that market research indicates that this process is the most straightforward and direct procedure of the entire market screening process. It is because; Justice has got only one responsibility, identifying markets which need the specific products that the firm is offering.
However, it is significant to note that potential markets are likely to be discarded or otherwise included on any basis identified by the firm. It is paramount to note that, apart from the potentiality of a region, there are other major factors that are always put into consideration before a firm makes a move to expand globally. In fact, Solberg, & Durrieu, (2008) agree that some of these factors may well be beyond the firm’s legal capacity. It is, therefore, crucial that the firm considers all these factors at this stage to guarantee that the final target market is the refined audience that will move sales as well as profit margins in the most desired direction. To some extent, a small mistake at this stage could make the entire market screening process a big failure of the firm. It, therefore, requires precision and meticulousness.
The firm needs to be quite specific to the exact needs that they address. Further, the product offering should as well be particular to generate conformity. Studies indicate that firms which fail to establish the conformity between what they are offering and what the market requires always finding themselves losing out and, later on, blaming on other factors for their failure. The UK for instance, may be characterized by different regions which have different cloth needs based on culture and other factors. In essence, if the firm sells specific cloths then it should identify areas in the UK where consumers need the kind of products they sell.
Foreign Trade and Investment
Foreign trade and investment are such broad areas, though the prospects at this stage are few just like the first stage. This process involves taking a serious look at the regions chosen in the first stage. Justice needs to look at what other firms are doing in the same regions and why they are doing so. For instance, Justice could establish where other cloth retailers are setting up their stores or distribution centers and hence, identify an outlook of these regions. Apart from precision, the manager will have to be more serious focused on foreign trade activity and investment in the identified regions in the UK. However, foreign trade and investment are not just about that. After the different regions have been established based on their basic needs potential, Justice will have to take scores, weigh and also rank the regions based on some factors (Long & Schiffman, 2000). Although much detail is not required at this stage, statistical as well as inferential data may be crucial at this stage. This scores, weights, and rankings are to be used solely for marketing purposes and not any other intention.
In most cases, significant macroeconomic factors are considered in this stage. In particular, the firm needs to establish the level of domestic consumption exchange rates and the stability of the currency. In some cases, marketers review the reception that foreign investors get when they open up ventures in targeted regions. In the USA, Justice conducts its transactions using the US dollar. However, in the UK, the firm will have to transact using the Euro. Establishing the exchange rate between the two is part of this analysis and assessment. Furthermore, it is a great determinant of how the subsidiary will operate if started in the region (Atkinson, 2006). Additionally, determining the strength of the local currency is part of the procedure. Studies indicate that the strength of the local currency is a major determinant of foreign trade. A firm which has a subsidiary in a region with an unstable currency is likely to perform poorly because of the lack of balance between operational costs and sales revenues. In foreign trade and investment, the host’s domestic currency versus the home country currency of a firm is a center of focus. Stability, as well as the strength of the currency, has always influenced the prices of products (Anantachart, 2005). The stronger a currency is, the cheaper the products will be. Hence, this stage calls for accuracy and prudence to guarantee that the identified regions are the optimal choices that Justice has before making a move to invest there.
According to Long & Schiffman, (2000) this assessment will provide the firm with a basis of calculating the nature and amount of market entry costs that it is likely to incur. Market research indicates that in some regions such as South Asia, foreign firms have to be owned partially by domestic investors. In some other regions, political instability does not support business activities implying that starting a business in such an area would be a risky decision that calls for high rewards. Apart from these two factors, there are other major elements in the operating environment that also require close attention. All these may be specific to a particular region or general to the identified region. Therefore, the marketing manager at this stage will come up with a shorter list of the targeted regions.
In essence, after considering all the factors surrounding foreign trade and investment the manager at Justice should refine the first list of potential regions to some up with a summary of the most viable regions (Solberg, & Durrieu, 2008). This process lays the basis for the second screening which is more in-depth compared to the first stage. More importantly, the success of this stage influences the success of the entire market screening process. The firm’s successful venture into the UK is largely a subject of efficiency and precision in the screening process. Notably, the UK and the USA have almost completely different market needs with different purchasing behavior as well as consumption rates.
References
Anantachart, S., (2005). Integrated Marketing Communications and Marketing Planning. Journal of Promotion Management. 11(1), 101-125.
Atkinson, H., (2006). Strategy Implementation: A Role for the Balanced Scorecard? Management Decision, 44(10), 1441-1460.
Long, M. M., & Schiffman, L. G. (2000). Consumption values and relationships: Segmenting the market for frequency programs. The Journal of Consumer Marketing, 17(3), 214-232.
Solberg, C.A., & Durrieu, F., (2008). Strategy Development in International Markets: A Two-Tier Approach. International Marketing Review, 25(5), 520-543.
