I selected several components for two of my target customers. I selected the Workhorse and the Mercedes target groups. I did this to focus on the high-end as well as the low-end of the market spectrum. Although one could argue that all of the top eight customer needs are important, I gave more weight to different components for each of my customers.

For the Workhorse computer model, I focused more on the top four components of my product: 1) Brand name, 2) lowest price, 3) office applications and 4) ease of use. As a frugal consumer myself, I feel that if I am getting a good product at a low price with all the features I want, then it will be a good bargain. Focusing on these four common denominators would certainly target the frugal consumer.

Conversely, for my top of the line consumer, I focused more on brand features, specifically the name of the product and the company. High end consumers are typically more interested in having the latest technology, something that looks cool and has the brand name behind the product. In China, conformity fuels luxury spending through the concept of “face”, or more specifically, the Chinese notion of “meintzu.” Meintzu is one of two forms of face in Chinese culture and is defined as “a reputation achieved through success and ostentation.” (Ma, 2010) I knew that a high-end consumer, especially one in the Asian market would be more concerned with image. That said, I gave more priority to the following components for the Mercedes product: 1) Brand name, 2) slim design, 3) links with other network and 4) office applications.

As you can see by the market research graphs below, I was able to meet the customers’ needs for each target segment by selecting the top four components that I would include in each of my products.

My original goal for target markets was to direct my sales efforts in Europe (Paris) and North America (New York). This decision was based on the 12-Month Potential Demand Report provided to me in the 1st Quarter of my company. For the Workhorse product, the majority of potential demand pointed to Europe as the highest potential and North America as the second highest demand potential. However, Mercedes showed the highest demand in North America and the second highest demand in Asia, followed closely by Europe.

As I stated above, I have a rather conservative approach to business, so my reasoning for targeting the European and North American markets was to essentially get more bang for my buck. Even though Asia was the second highest potential market demand for the Mercedes consumer, it wasn’t far above the potential in North America and since I was already planning on targeting the North American market for my Workhorse consumer, I decided to choose those Europe and North America as my two markets.
However, I did miss a very critical target market: Asia. By not directing at least some of my products into the Asian market I missed opportunities for revenue by the 4th quarter. My 4th quarter reports showed that my competitors targeted Asia early in their company’s development and although they surpassed my company, I could have caught up, but not for at least two quarters before catching up to my competition. As you can see by the chart below, most of my competitors entered the Asian market early in their company’s startup.

Although I am conservative in my business approach, one area that I would have gladly spent more money is in the area of market research, especially since my company was making a presence in an international market spread out over three continents. The key piece of information that I always look for in my market research is not how my company is doing (although that is important) rather how my competition is doing. My company reports, sales force, financial reports and the like will tell me how we’re doing – it’s the competition that I’m curious about. Unfortunately, $15,000 for market research just simply wasn’t enough. I would have most definitely spent more to understand the markets my competition was targeting, how much market share they are getting as well as other market information.

Although qualitative and quantitative research are important as basic forms of my company’s research, I would have definitely utilized a type of secondary data from a market research company to determine such things as market share of my competitors, market potential and even product research to determine if there is potential saturation in any of my target markets. All of these types of market research come with a price, but the benefits to revenue could far outweigh the costs.

As you can see by the charts below, my competitors had a much bigger presence in the Asian market which gave them a foothold much faster than my products which started in Europe and North America. (My company is highlighted in gray.) Also, the charts show the demand of product for each target market and again, Asia looked much better, by nearly 50%.

For my personal computer company, I would have considered several factors and yes, I would have expanded to international markets. Here are the factors I would have considered in my decision to move to an international market:

1. Lower Labor Costs
It is a fact that manufacturing jobs are much cheaper in foreign countries, which is why the U.S. companies operate a lot of their plants overseas. In some countries, the U.S. actually receives special privileges for employing citizens from the country where plants operate. And these employees provide very inexpensive labor for everything from manufacturing to service industries jobs to skilled workers. Especially for my product, the Athena personal computer, technology components are cheaper in Asian countries and the labor force is one of the lowest especially in China.

2. Reduction or Elimination of Tariffs
It’s not uncommon for countries to impose fees or quota limits on foreign companies and it’s understandable – they’re trying to protect their own domestic industries. However, companies trying to get access into these countries may create subsidiaries within the country. It’s a win-win for everyone, since foreigners still get access to another country but they are establishing the company on terms their host country can take advantage of with jobs and dollars.

3. New Market Opportunities
For companies whose market has been saturated at home, or demand has declined domestically, some companies can still find opportunity in foreign markets. Computer will always be popular worldwide as with any technology, so going into a foreign market is a good back-up if the U.S. economy is sluggish.

4. Raw Materials Availability
For any company, the cheapest way to operate is to go where the materials are. This can reduce shipping costs and manufacturing costs. For my company, it only makes sense to have a target market where technology costs are low and supplies are abundant.

5. Finance Capital Incentives
Some countries welcome foreigners and these international allies sometimes offer tax breaks, subsidies and relaxed laws for companies like mine. I would take advantage of these incentives especially as a start-up company.

All of the above advantages far outweigh any risks of entering a foreign market. My simulation demonstrated that with increased market share, even in lower performing markets such as Europe. However, the market research showed the importance and value of considering other profitable markets. In this global world we live in, it’s important for any company to seriously consider a move to international markets. There are some challenges and risks, but there are ways to mitigate many of these risks and the advantages to expanding into a global market can be far more profitable.

References

Clark, D. (2012). English - The Language of Global Business? Retrieved from www.Forbes.com: http://www.forbes.com/sites/dorieclark/2012/10/26/english-the-language-of-global-business/
Curle, R. L. (1998, May). Expanding Internationally: Grow As You Go. Retrieved from www.inc.com: http://www.inc.com/articles/1998/05/17667.html
Emerging Trends. (2011). Retrieved from www.Accenture.com: http://www.accenture.com/SiteCollectionDocuments/Accenture-Emerging-Trends.pdf
Ma, D. (2010). EU-China. Retrieved from Business Management Training Project: http://www.ceibs.edu/images/bmt/research/2012/02/08/
Thompson, A. (2011). Crafting and Executing Strategy, 18th Edition. McGraw-Hill/Irwin.