Market Report Argentina

6.1. Market potential, opportunities and threats

In terms of the challenges, the limitations of infrastructure are a common concern shared by all emerging markets, similar to these are the problems with political stability. Thanks to the big market size and dramatic economic growth, huge attractiveness and potential of Argentina's market is given. However, when it comes to opportunities in this market, focus should be set on young, fashionable, well-educated consumers seeking the best possible value for reasonable price. A special opportunity can be seen also in the middle income segment of customers, which is growing larger and getting wealthier over time. Due to the impact of recent crisis, high price sensitivity of average consumers has to be considered in order to be competitive. In addition, the lack of post-purchase service and customer support in Argentina could be turned into an opportunity for firms to provide consumers with more useful information about the product and unique service and distribution as well. Therefore, there is an opportunity to create strong customer relations, resulting in increased loyalty and preference of this product over the other brands. The potential threats could be the well-established local competitors which get various tax benefits and subsidies from state, therefore defeating them in price fights could be really difficult. And since the price leadership strategy is quite unrealistic here, the foreign firms should focus especially on differentiation of their product, in case of MP3 players, they should focus primarily on functionality of the audio device, that means on the one hand focus on the superior quality of sound, on the other hand MP3 producers could innovate their product through embedding some secondary functions desired by consumers. This way, they could defeat also the competition from the side of smartphone producers and big global players focusing on mainstream consumers.

Moreover, since MP3 player is perceived as a highly fashionable product, differentiation through unique design, practical shape, packaging and promotion would be also possible. As a result, the marketers could develop special positioning in the head of local consumers and sustainable competitive advantage as well.

6.2 Recommended strategy and entry mode

According to the previous examination, the best way to enter Argentina's market is to start with exporting as a tool to test the local market potential for the new product. This method is reasonable also from financial standpoint, because it doesn't require such a big investment, the risk is therefore minimized, which is important especially when considering the big psychic distance of this country. Another tool to reduce risk is to enter the market through a joint-venture (JV) with a well-known brand in Argentina and produce locally. JV's disadvantage is that