Lecture 7

INTERNATIONAL STRATEGY

SMALL AND MEDIUM COMPANY

Marketing strategies

Exporting; International niche marketing; Ecommerce; Participation in a international supply

chain.

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Difference

Exporting Niche marketing

Strategy Selling domestic product

Customer needs

Objective To amortize To add value

Segmentation Country Customer benefits

Pricing Cost based Market based

Distribution Using agents Managing supply chain.

Customer relationship Working with intermediaries

Building multiple level relationship

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International niche marketing

Segment must be too small or specialized.

Product or services must be highly differentiated.

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International niche marketing

Have a good information about the segments needs.

Clear understanding of the segmentation criteria

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Barriers to internationalization.

Too much red tape. Transportation difficulties. Lack of personal. Language barriers. Limited information.

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Barriers to internationalization.

Fear that their products are not marketable.

Believe the domestic market offer best potential.

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The Mckinsey 7S Framework

Hardware Strategy, structure and systems.

Standardization.

Software Style, staff, skills and shared value.

Adaptation.

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Marketing strategic

First step: Segmentation: Target: segments which appear to be most

attractive. Positioning: Firms needs to position its

products or services in a way that will distinguish them from others international competitors.

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Competitive strategies

Cost leadership: Requires the firm to establish a lower cost

base than international competitors. Countries with lower labor cost.

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Competitive strategies

Differentiation Customers think are important and significant

improvement over competitive offers. Requires systematic incremental innovation to

continually add customers value.

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Competitive strategies

Focus The firm concentrates on one or more narrow

segments thus built relationship with the customer is strong.

This strategy require high level of customer and technical service support.

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The secret of high growth

Slower growth firms typically focus upon the competition by benchmarking and seeking to meet the customers.

By offering a little more value for a little less cost.

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The secret of high growth

High growth firms leave the competitors to fight amongst themselves.

Seek to offer customers a quantum leap value.

Lead to a step change in value they will be perceived as such by customers all round the world.

What is customer value? 14

Levels of internationalization

The passive exporter Tends to lack any international focus and

perceives export markets as having a high hassle factor.

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Levels of internationalization

The reactive exporter See export market as secondary to the

domestic. But once they have done business with a

foreign customer they will follow up for repeat orders.

Low invest in attracting export orders. Basic knowledge of their markets. Still undecided about their future role as an

exporter.16

Levels of internationalization

The experimental exporter Is beginning to develop a commitment to

exporting. Regular contact with key accounts. Although they would prefer not to, such firms

are prepared to make product adaptations to suit overseas customers needs and may have appointed dedicated export staff to look after this part of the business.

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Levels of internationalization

The proactive exporter Focus on export markets. Devotes substantial amounts of time and

resources to entering and developing new markets.

Exporting may account for up to 50 per cent of turnover.

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Levels of internationalization

The well-established exporter Exporting is integral to the business. See the domestic market as just another

market. The majority of the turnover is generated

through international trade. Significant amounts of resources are spent

on this activity.

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Country selection

Fast growing markets appear to offer the most attractive opportunities.

It is important the need to be an early in the market.

To avoid high levels of competition.

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Networking

Many times the selection of the market is not made on the relative attractiveness of one country.

The country selection tend to be a result of a network approach.

Reduction of the risk of entering unknown markets by working with companies they know.

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Niche marketing of domestically delivered services

In the past this category has been dominated by travel industry, hotels or tour operators.

With increased international travel the role of small and business companies is becoming increasingly important.

Customer demand a wider ranger of services as education, specialized training, medical treatment, sports, etc.

The strategy is the same as for companies to sell to foreign countries.

They must meet the requirements to international markets. Consequently issues of standardization or adaptation of the

marketing mix elements are equally important.

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Reasons for failure

Failure to scan the international environment. Overdependence on one product. Powerful competitor copy the idea. Failure to respond to worldwide changes. Failure to financial plan. Failure to manage and resources both market and

operation expansion. Failure to plan for fluctuation in currency values.

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