Conceptual Fit-Risk Model

Food for thought #1

During my master studies, colleagues of mine and I were tasked at the seminar "Strategies and Practices in International Direct Marketing" with the development of an assessment of a country from a marketing entry point perspective. The biggest challenge at hand was not only to research all the necessary information about given country, but rather the conceptualization of such assessment in a quick to grasp manner.

How should you assess whether to enter a new market from a marketing perspective?

In literature, there are many models that already provide you with the necessary knowledge on how to tackle such task. For example, Porter's Five Forces (1979) is a great example for analyzing the competitive surroundings of a given business endeavour. But in our masters seminar, we wanted to create a visual concept that highlights a fit versus risk view.

How did we approach this problem? Well, in my bachelor studies especially in economics theory, the concept of the Edgeworth Box (1881, Pareto 1906) stuck with me. Although this concept was not created to assess the risks of entering a new market from a marketing managers point of view, but it provided me with a spark. Some food for thought. The concept of a visual representation for a problem to solve, while having different dimensions that stand in contrast to each other.

That is how I combined theoretical country risk assessment research methods with a concept from a different field of study. And it opened up a new way of visualizing the risk marketing has to bear, when thinking of entering a new market.

Things you learn, keep it in mind, you never know when it may be part of a solution for a situation you find yourself in

In the end, the result was the creation of a marketing country risk box, as shown in figure 1. Where you have 4 dimensions, 4 criteria that is, which lend themselves for the evaluation of a given problem. 2 dimensions that provide a positive outcome for ones situation or plan, and 2 dimensions opposing them, which represent risk factors, that influence the planned outcome in a negative way. Through a research and a scoring model methodology, where you assess each dimension and give them a score from zero to five, you are then able, with the help of the marketing risk box model, to visually identify three possible zones. A low risk, a high risk and the actual risk zone.

Figure 1: The Marketing Country-Risk Box (MCR-Box) Source: Jia, Schumm, Sitter (2013)

I know that this methodology is heavily static in itself, but, and that is what I wanted to highlight with this post, through combining different concepts sometimes, good things come out of it. In this case, it is a new and structured way of modeling risk factors in a business decision to help managers decide on how to proceed.

Therefore, keep an open mind, and try to see the hidden potential in the processes of thinking through several concepts.

Sincerely, Mario