oInternational Market Research Reports
oCountry Market Surveys
c. The EU (Eurostat) publishes External Trade
d. JETRO publishes trade data focusing on Asia and Pacific Rim
3. Imports Do Not Completely Measure Market Potential
a. Import data only indicate that a market buys certain products from abroad and there
are no guarantees imports will continue.
B. Second Screening – Financial and Economic Forces. After the initial screening, there will be
a smaller list of prospects for the second screening. The analyst will look at such factors as
trends in inflation rates, exchange rates, and interest rates. Credit availability, paying habits
of customers and ROI on similar investments are other factors to consider. Two measures of
market demand based on economic data are (1) market indicators, and (2) market factors.
1. Market Indicators
a. Economic data that serve as yardsticks for measuring the relative market strength of
various geographic areas.
b. An example of a multi-country index developed for the needs of a specific industry is
the index of e-commerce potential for Latin America (Table 12.1). This index
contains general economic factors as well as more industry-specific indicators. The
summary e-commerce potential index is composed of three indices: market size,
market growth rate, and e-commerce readiness.
2. Market Factors
a. Market factors are data that tend to correlate highly with market demand for a given
product. These factors allow us to use estimation by analogy when we cannot
estimate demand directly.
b. Example 1: If one-fifth of existing home computers are replaced annually in the U.S.,
in a similar country we can expect similar demand for replacements.
c. Example 2: If each household in a similar country has an average of 1.3 television
sets, then 1.3 x the number of households in the country under study should indicate
the size of market potential.
3. Trend Analysis
If historic growth rates are known, the analyst can construct a time series or use the
arithmetic mean of past growth rates.
4. Cluster Analysis and Other Techniques
Cluster analysis is a data analysis tool for solving classification problems. Its object is to
sort people, things, events, etc. into groups so that the association is strong between
members of the same cluster and weak between members of different clusters.
Multidimensional scaling, factor analysis and conjoint analysis are other techniques for
examining differences and similarities among markets.
5. Periodic Updating
Long-term forecasts need to be modified when market changes occur.
C. Third Screening – Political and Legal Forces
Analyst will look for such elements as:
1. Entry Barriers – can be positive or negative on management’s entry decisions.
2. Profit Remittance Barriers – undue restrictions on repatriation of profits.