INTERNATIONAL STRATEGY SMALL AND MEDIUM COMPANY Lecture 7 INTERNATIONAL STRATEGY SMALL AND MEDIUM COMPANY

Marketing strategies Exporting; International niche marketing; Ecommerce; Participation in a international supply chain.

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

International niche marketing Segment must be too small or specialized. Product or services must be highly differentiated.

International niche marketing Have a good information about the segments needs. Clear understanding of the segmentation criteria

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

Barriers to internationalization. Fear that their products are not marketable. Believe the domestic market offer best potential.

The Mckinsey 7S Framework Hardware Strategy, structure and systems. Standardization. Software Style, staff, skills and shared value. Adaptation.

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.

Competitive strategies Cost leadership: Requires the firm to establish a lower cost base than international competitors. Countries with lower labor cost.

Competitive strategies Differentiation Customers think are important and significant improvement over competitive offers. Requires systematic incremental innovation to continually add customers value.

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.

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.

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?

Levels of internationalization The passive exporter Tends to lack any international focus and perceives export markets as having a high hassle factor.

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.

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.

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.

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.

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.

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.

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.

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.