Assignment 2 Market Segmentation Derived demand Customer description Competitive Situation Market Potential

Market Conditions favoring U.S. entry into UAE pc market Law requiring compulsory IT education in schools expected shortly Growth in construction, hotel, oil & gas industries; pc’s are used by all. U.S. made pc’s are perceived as top quality in UAE U.S. companies currently have 21% share of all pc imports (not including imports from U.S. factories located in non-U.S. locations). UAE market has a per capita income of US $ 19,700. U.S. has strong trade history & relationship with UAE. Foreigners account for approx. 85% of the UAE population UAE imposes no income taxes, no corporate taxes, and no foreign exchange controls

Table A-2. Macroenvironment, Country A List of ThreatsList of Opportunities Socio-demographic and cultural environment U.S. products = high quality Economic environment Growth in oil, construction, gas U.S. pcs=21% of imports Natural environment UAE viewed as gateway to other Arab countries Technological environment Political environment Middle East region is generally hostile to U.S.Strong U.S. – UAE trade history Legal environment IT education is compulsory

Derived demand Demand for pcs in UAE Growth in the businesses & industries that use pcs

Bases for Global Segmentation Market Size & Growth –GDP –Rate of projected growth in income –Population size and growth Demographics Cultural/Psychological characteristics Usage/Consumption patterns Benefits – needs people have for the product vs. comparable products (substitutes)

Customer Profile: pc usage in the UAE Usage data for network software provides a rough profile of UAE pc users… There are 52,000 internet subscribers, and 143,000 internet users User base composition (internet connections): –Individuals (40%) –Universities/schools (20%) –Companies (30%) –Government (10%) Officials estimate that 20% of all UAE HHs will be connected by 2000.

Market Segmentation for PCs in UAE Industrial Sector Oil & Gas Industry Hotel & Tourism Industry Education Companies Home Sector Expatriate professionals (85% of pop) Nationals – with kids (compulsory IT) University Students

How to select target market(s): Criteria for targeting (9 W’s) Segment size & growth potential Potential competition Company/market fit Select one or more segment to target based on above criteria.

Customer Characteristics Strong preference for U.S. computer products Price important, but will pay for quality (U.S. perceived as higher quality than European; Asian countries viewed as lowest quality) Low value placed on after-sales service. *Source: Computer Networking, Industry Sector Analysis, April 1, 2000, U.S. Department of State, Brent Greenfield, author

Nine W’s: Customer description 1.Who buys our product? 2.Who doesn’t? 3.What need or function does our product serve? 4.What problem does our product solve? 5.What competing products address same problems/needs. 6.What price are customers paying? 7.When is product purchased? 8.Where is it purchased? 9.Why is it purchased?

Competitive Situation Similar and substitute products U.S. companies + Mexican Name your top competitors Will top competitors represent a threat? Strong, moderate, weak? What characteristics must YOUR company have in order to compete with other companies