Ch5
21
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 5 TH edition ISBN 13: 978-1-84480-763-5 Published by Cengage Learning DOOLE AND LOWE ch5/1 INTERNATIONAL NICHE MARKETING STRATEGIES FOR SMEs Session 5
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Transcript of Ch5
Use with INTERNATIONAL MARKETING STRATEGY:
Analysis, development and implementation 5TH edition ISBN 13: 978-1-84480-763-5Published by Cengage Learning DOOLE AND LOWE
ch5/1
INTERNATIONAL NICHE MARKETING STRATEGIES FOR SMEs
Session 5
Use with INTERNATIONAL MARKETING STRATEGY:
Analysis, development and implementation 5TH edition ISBN 13: 978-1-84480-763-5Published by Cengage Learning DOOLE AND LOWE
ch5/2
STRATEGIES FOR SME INTERNATIONALISATION
• 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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KEY MOTIVATORS TO INTERNATIONAL MARKETING
• Reactive stimuli:– 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
• Proactive stimuli:– attractive profit/growth opportunities– ability to easily modify products for
export markets– public policy programmes for export
promotion– foreign country regulations– possession of unique products– economies from additional orders
• Managerial elements:– presence of export minded manager– opportunity to better utilise
management talent and skills – management belief in value of
exporting
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BARRIERS TO INTERNATIONALISATION
• Too much red tape• Trade barriers• Transportation
difficulties• Lack of trained
personnel• Lack of export
incentives• Lack of coordinated
assistance
• Unfavourable conditions overseas
• Slow payments by buyers• Lack of competitive
products• Payment defaults• Language barriers• Limited information to
locate or analyse markets
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SUSTAINING AND DEVELOPING THE NICHE
• The firm must:– have good information
about the segment needs– have clear understanding
of the important segmentation criteria
– understand the value of the product niche to the targeted segment
– provide high levels of service
– carry out small scale innovations
– seek cost efficiency in the supply chain
– maintain a separate focus
• E.g. by being content to remain relatively small
– concentrate on profit rather than market share
– evaluate and apply appropriate market entry and marketing mix strategies to build market share in each country they wish to become involved in.
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THE DIFFERENCE BETWEEN EXPORTING & INTERNATIONAL NICHE MARKETING
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IMPACT OFELECTRONIC COMMERCE
• Benefits– Real time communication across distance– Levelling of corporate playing field– Leading to more rapid internationalisation
• Sources of competitive advantage– Creating new opportunities– Erect barriers to entry– Cost savings through on-line communication– Facilitates inter-firm collaboration– Marketing and sales promotion– Data transmission
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MULTILATERAL ASPECTS OF THE INTERNATIONALISATION PROCESS
Johannson and Vahlne (1992)
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GEOGRAPHIC DEVELOPMENT OF SMEs
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GROWTH FOR NICHE MARKETERS
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EMERGENCE OF ‘BORN GLOBAL’Trends
• Increasing role of niche markets• Need for small firms to specialise
– to compete with MNE’s
• Growing demand for specialised / customised products– technology permits economical low scale production
• Communication technology advances– Allowing management across borders
• Quick response time, increased flexibility and adaptability• Accessibility of knowledge, tools and assistance
– E.g. funding, joint research programmes, technology transfer
• Growth of international partnerships
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SUPPLY CHAIN INTERNATIONALISATIONMNE OUTSOURCING
• Reasons for outsourcing– reducing capital requirements of
business– Managing difficulty of developing
quickly– improving flexibility– firms reluctant to take risks in
non-core areas– economies of scale of suppliers– expertise of business support
service providers– downsizing may leave
management resources stretched and unfocused
• Disadvantages– loss of know-how– costs of managing
outsourced supplies
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OUTSOURCING FOR SMES
• Advantages – opportunities for
learning from MNE– security through
reliable and predictable ordering
– able to focus on production and technical issues
• Disadvantages– need for dependence on
one/two major customers– internationalisation driven
by demands of MNE– continual pressure to
improve product and operations
– weakening of external marketing
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MCKINSEY 7S FRAMEWORK
Source: McKinsey and Co
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ANSOFF GROWTH MATRIX
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SME generic strategy
Segmentation, targeting and positioning
Competitive advantageGrowth options
SME internationalisationstrategy
SME genericstrategy
Customerbase
Industry structureand competition
Supply chain
Marketfactors
Companyfactors
Stage ofinternationalisation
Ambition, capabilitiesand attitudes to risk
Motivationsand barriers
Country andmarket entry
selection
FACTORS AFFECTING SME INTERNATIONALISATION
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PRODUCT STRUCTURE
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GEOGRAPHIC STRUCTURE
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LEVELS OF INTERNATIONALISATION
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CHARACTERISTICS OF SUCCESSFUL INTERNATIONAL B2B MARKETERS
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REASONS FOR FAILURE
• Failure to effectively scan the international environment
• Over dependence on one product
• Ease with which larger, more powerful competitors or a number of smaller local competitors can copy the idea
• Failure to respond to worldwide changes in customer needs
• Failure to plan financial resources
• Failure to plan for fluctuation in currency values
• Failure to manage and resource both market and operations expansion
• Prohibitive cost of enforcing patents and trademarks in foreign courts which may favour local firms
