Methods for selecting target markets in the strategy of internationalization of the company

Abstract

A very important strategic decision in the process of internationalization of the company is the selection of target markets based on the results of the segmentation analysis. Segmentation studies should be treated as a basic determinant of market orientation of an international company. The need for this kind of research results from a huge variety of determinants concerning the activity in foreign markets. International market segmentation is a much more complex task than the segmentation of the domestic market, including appropriate actions under macrosegmentation (referred to as primary segmentation) and microsegmentation (secondary segmentation). Macrosegmentation is based on identifying specific segments in the form of groups of countries, whereas the focus of the subsequent microsegmentation is on identifying groups of buyers of homogeneous properties and similar behaviour in selected countries. The final result of international market segmentation should be recognition of the so-called transnational segments, including homogeneous groups of buyers in the international section. In the process of international market segmentation different methods of selecting target markets can be used, e.g., analytical methods and the methods of portfolio. Analytical methods rely on selection of indicators characterizing the compared countries, determination of the limits of these indicators and elimination from further analysis the least attractive countries in the view of the company's strategy. Portfolio methods, aimed at grouping the foreign markets in terms of their attractiveness, can also be widely applied as they describe specific portfolios (sets) of the company's activities in foreign markets, such as the structure of production and the structure of markets.