Transcript International Marketing Strategy

ch6_2
STRATEGIES FOR SME
INTERNATIONALISATION
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Exporting
International niche marketing
Domestically delivered or developed niche
services
Direct marketing including electronic
commerce
Participation in the international supply chain
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ch6_3
KEY MOTIVATORS TO INTERNATIONAL
MARKETING
Source: Katsikeas (1996)
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Reactive stimuli:
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adverse domestic market
conditions
opportunity to reduce
inventories
availability of production
capacity
favourable currency
movements
opportunity to increase the
number of country markets and
reduce market related risk
unsolicited orders from
overseas customers
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Proactive stimuli:
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attractive profit and growth
opportunities
ability to easily modify products for
export markets
public policy programmes for export
promotion
foreign country regulations
possession of unique products
economies resulting from additional
orders
Managerial elements:
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presence of export minded manager
 opportunity to better utilise
management talent and skills
 management believes about the value
of exporting
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ch6_6
THE DIFFERENCE BETWEEN EXPORTING &
INTERNATIONAL NICHE MARKETING
Exporting
International Marketing
Marketing strategy
Selling production capacity
Meeting customer needs
Financial objective
To amortise overheads
To add value
Segmentation
Usually by country and
customer characteristics
By identifying common
international customer benefit
Pricing
Cost based
Market or customer based
Management focus
Efficiency in operations
Meeting market requirements
Distribution
Using existing agents
or distributors
Managing the supply chain
Market information
Relying on agent or
distributor feedback
Analysing the market situation
and customer needs
Customer
relationship
Working through
intermediary
Building multiple level
relationships
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ch6_7
FACTORS AFFECTING SME
INTERNATIONALISATION
Generic
Strategy
Segmentation, Targeting, Positioning
Industry
Competitive
Structure
SME
Internationalisation
Strategy
Stage of
Internationalisation
Motivations
Barriers
Support Network
Market
Factors
Customer
Segment
Country
Selection
Company
Factors
Owner’s ambition,
capabilities and
attitude to risk
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ch6_11
GEOGRAPHIC DEVELOPMENT OF SMEs
Birth
High tech firms,
born globals,
direct marketing,
eCommerce
Global
Domestic
Home market
is trading bloc
Piggybacking on OEM
internationalisation
Regional
Supply
Chain
Contracts through
family, friends,
business &
supply chains
Concentration
Expansion
Network
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ch6_14
OUTSOURCING FOR SMES
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Advantages
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opportunities for
learning from OEM
(Original Equipment
Manufacturer)
 security of reliable and
predictable ordering
 able to focus on
production and
technical issues
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Disadvantages
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need for dependence
on one/two major
customers
 internationalisation
driven by demands of
OEM
 continual pressure to
improve product and
operations
 weakening external
marketing
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ch7_2
MEANING OF ‘GLOBALISATION’
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Market access
Market opportunities
Industry standards
Sourcing
Products & services
Technology
Customer
requirements
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Competition
Co-operation
Distribution
Communication
The company’s
strategy, business
programmes &
processes
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ch7_7
WIDE STRATEGIES
Multi-Domestic
Regional
Global
Individual
Country
Strategy
Region is One
Market
One Global
Segment
Transnational
Strategy
Standardised Identity & Values
With Composite Strategies
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ch7_8
CONTINUUM OF STANDARDISATION
Pricing
Distribution
Sales Force
Sales Promotion
Product
Image
Objectives
Strategy
Differentiation
Standardisation
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ch7_9
GLOBALISATION PUSH & PULL FACTORS
‘Globalisation Pull’
Globalisation of Markets
Homogenisation of demand
Global market segments
Globally active customers
Source: Meffet and Bolz
(1993) in Hallibuton and
Hunerberg (eds) European
Marketing Readings and
Cases Addison Wesley
1993
Marketing Standardisation
Programme standardisation
Process standardisation
Globalisation of Industries
R&D expenses
Reduced pay back cycles
Experience curve effects
Globalisation of Competitors
Market interdependence
Global competitors
Cross subsidisation
‘Globalisation Push’
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ch7_10
FORCES DRIVING
A MULTI-DOMESTIC APPROACH
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Industry standards remain diverse
Customers continue to demand locally
Being an insider remains critically
important
Global organisations are difficult to
manage
Management myopia
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ch7_13
DEMAND FOR CUSTOMISED SOLUTIONS
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customers cannot be classified into simple,
stable segments
the customer in not monodimensional
desires guide consumption
functional and techonolgoical attributes of
products or services are balanced by its
aesthetics and cultural attributes
quality is now more subjective
a wide permanent variety of products is required
the quest for authenticity orientates consumption
Source: Halliburton (1994)
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ch8_2
MARKET ENTRY METHODS & THE LEVELS OF
INVOLVEMENT IN INTERNATIONAL MARKETS
Levels
of
involvement
Wholly-owned subsidiary
Company acquisition
Assembly operations
Joint venture
Strategic alliance
Licensing
Contract manufacture
Direct marketing
Franchising
Distributors and agents
Sales force
Trading companies
Export management companies
Piggyback operations
Domestic purchasing
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ch8_3
SUCCESSFUL MARKET ENTRY #1
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Criteria for Selecting Appropriate Market
Entry Method
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The company objectives and expectations
relating to the size and value of anticipated
business
The size and financial resources of the company
Existing foreign market involvement
The skills, abilities and attitudes of the company
management towards international marketing
The nature and power of the competition with
the market
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ch8_4
SUCCESSFUL MARKET ENTRY #2
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Criteria for Selecting Appropriate Market
Entry Method
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The nature of existing and anticipated tariff and
non-tariff barriers
 The nature of the product itself, particularly any
areas of competitive advantage, such as
trademark or patent protection
 The timing of the move in relation to the market
and competitive situation
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ch8_6
INDIRECT EXPORTING #1
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Domestic Purchasing
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Foreign organisation purchases the product for export to
another country
 Gives access to and limited knowledge of the international
market
 Little control over choice of markets entered
 For longer term, need a more proactive approach
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Export Management Companies (EMCs)
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Specialist companies act as the export department for a
range of companies
Help SMEs to initiate/develop/maintain international sales
Deal with documentation, government regulation
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ch8_7
INDIRECT EXPORTING #2
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Trading Houses
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Their extensive operations and controls enable
operation in more difficult trading areas
 Manage countertrade activities
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Piggy Backing
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An established international distribution network
of one manufacturer used to carry products of a
second
 Particularly good for firms from developing
countries
 Often poorly considered terms and conditions
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ch8_10
IMPORTANT FACTORS FOR SUCCESSFUL
EXPORTING
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commitment of the firm’s management
exporting approach reliant on strong skills
base
good marketing and information
communication system
production capacity & capability, product
superiority, competitive pricing
effective market research
effective national export policy
Source: Katsikeas et al (1996)
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ch8_11
AGENTS #1
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Selection Criteria for Finding a
Suitable Agent
 Financial
strength of the agent
 Their contacts with potential customers
 The nature and extent of their
responsibilities to other organisations
 Their premises, equipment and resources
(including sales representatives)
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ch8_12
AGENTS # 2
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Achieving Satisfactory Manufacturer-agent
Relationship
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Allocate time and resources to find a suitable
agent
Ensure that both understand what each expects
of the other
Ensure that the agent is motivated to improve
performance
Provide adequate support on a continuing basis
Ensure that there is sufficient advice and
information transfer in both directions
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ch8_13
REASONS FOR SETTING UP OVERSEAS
MANUFACTURE
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Nature of product e.g. perishable
Costs of transporting and warehousing
Barriers to trade e.g. tariffs and quotas
Government regulations e.g. local investment
Local manufacture viewed favourable by market
Contributions to local economy
Market information feedback
International culture in firm
Faster response and just-in-time delivery
Lower labour cost
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ch8_16
FOREIGN MANUFACTURING STRATEGIES
WITH DIRECT INVESTMENT
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Reasons for investment in local operations
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To gain new business: local production
demonstrates strong commitment
To defend existing business
To move with an established customer
To save costs: e.g. labour, raw materials and
transport
To avoid government restrictions
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ch8_18
DRIVING FORCES FOR THE FORMATION &
OPERATION OF STRATEGIC ALLIANCES
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Insufficient resources
Pace of innovation and market diffusion
High research and development costs
Concentration of firms in mature industries
Government co-operation
Self protection
Market access
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