WHAT YOU SHOULD KNOW: INTERNATIONAL MARKETER OR NOT! by Joan Marques
In previous editions of this article series the importance of international awareness for everyone, international marketer or not, has been mentioned several times. However, the reasons why companies go international with their products, and the ways they choose to do so, have only been discussed very briefly. Yet, it may be interesting to look into this aspect a little more extensively, in order to draw our own conclusions regarding the products we purchase and the companies that carry them.
First of all, there are two main reasons for companies to be distincted when it comes to going global: either they do it proactively, or reactively. The ones that operate proactively are usually blessed with a daring top management. This can have its origins in two possible facts: either the management team is new in the company and enters with some previous international experience, or the established management team may have had some eye-opening experiences through courses or visits abroad that triggered their spirit of international adventure.
But there are also other proactive reasons why companies decide to choose the international route, of course. Think of their realization of the increased profitability that market expansion can represent. Or their awareness that the product they bring forth is unique and may be widely desired beyond the borders of the domestic market. Or the nature of the company's product-line that may be of such technological advancement that there is no doubt whatsoever that other markets will need them as well. Or the company's capability to access information about other markets that gives them the opportunity to penetrate into those before competitors do. Or maybe the fact that a company has more production capacity than it uses for the local market, while the entrance into new markets will lead to additional production and, hence, lower costs per product: the economies of scale principle.
But then there are those who only access international markets when they have to: the reactive ones. They only go international when they are forced by the actions of competitors: if they don't follow the international route they will miss the boat. Or they may go international because the local market has no use for their product anymore for some reason, either due to saturation or more attractive alternatives from competitors that made this company's products less desired or maybe even plainly obsolete at home: then the international forum is explored. It can also be that these companies are literally forced by their distributors with international experience to jump into the international caravan. The distributors engage into this job of encouraging for their own benefit in the first place, of course, but the new exporter may also profit from this move if made right. Finally, they may get involved in exporting when there are enduring and persistent requests for their products from potential customers abroad in such a way that turning these orders down would be financially irresponsible.
Now, the companies that are a little cautious of international activities will only explore the foreign waters very carefully: they may start with psychologically close markets first. These are markets that are fairly similar to the domestic one, so that they won't have to apply too many adaptations to the product or the established marketing strategies. An example of psychologically close markets are the U.S. and Canada: countries that have large overlapping in cultural approaches. It's only when these careful exporters have experienced a sufficient amount of success in the new market and feel a little more content in their new operations, that they may dare to explore less psychologically close arena's.
The reactive companies are also very likely to export with the intermediation of either an export management company or a trading company, both reputable sources when it comes to international business experience.
Sometimes a company does not go into export directly, but does so through licensing or franchising. Licensing entails that they permit a foreign company to use their name, process, knowledge, or property against a royalty payment, while franchising involves the use of the entire business operations, name, processes, and appearance against an established fee. Examples of franchises are, as you probably know: McDonalds, Kentucky Fried Chicken, Pizza Hut, etcetera.
Important for anyone who considers going international is to know that there are limitless ways to do this. Some of these ways were discussed in this article. However, there are so much more options possible. However, the most vital piece of information to keep in mind may be that the more directly involved a company is, the more it will learn about international markets, and the more successful it will be in the end. On the other hand: the more cautiousness a company applies, and the less involvement in foreign markets: the more vulnerable this company becomes when things go wrong in the domestic market. That's why it's important to have some kind of global involvement: international marketer or not!
Joan Marques, Burbank, October 14, 2003 --------------------------------------------------- About the Author: Joan Marques, holds an MBA, is a doctoral candidate in Organizational Leadership, and a university instructor in Business and Management in Burbank, California. You may visit her web site at www.joanmarques.com Joan's manual "Feel Good About Yourself," a six part series to get you over the bumps in life and onto success, can be purchased and downloaded at: http://www.non-books.com/FeelGoodSeries.html
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