Contents in this Page
Introduction
International Marketing Strategies that Companies Can Adopt will be analysed in this report. International business refers to the business activities such as: planning, pricing, promoting and directing the movement of the products and services to customers of abroad to gain profit (Terpstra, Foley, and Sarathy, 2012). Blue Inc is a British company which is based on fashion retail stores. It is a local company of UK that was founded in 1912 by Abraham Levy (Blue Inc, 2018). It sales men’s wear, women’s wear, boys wear and accessories with affordable price and unique design across UK. Blue Inc sales branded and own branded denims and young fashion for boys and men. They have 100 stores in 22 locations of UK (Blue Inc, 2018). They also have online service and the customers of the company are from age 11 to 25 (Blue Inc, 2018). The brands they have developed are Twisted soul, Twisted Soul Heritage and Industrialize. The company is growing continuously and have great demand throughout UK. In this business report, the international marketing scopes of the company has been evaluated. Different international marketing entry routes has been also evaluated with the recommendation for Blue Inc.
International Marketing Strategies that Companies Can Adopt: How marketing contributes to business strategies in an international context
The concepts and scopes of international marketing:
International marketing is the process of applying marketing principles to fulfil the demand of different people of different countries (Papadopoulos, and Heslop, 2014). It is also known as global marketing. Products and services are customized according to the partialities of dissimilar customers of different countries.
You may also like to read in below blog posts: Ansoff Matrix for Vodafone Porter’s Five Forces model of Vodafone Stakeholder analysis for Vodafone Strategic planning for Vodafone
Nature of international marketing:
Availability of wider market: The target of international marketing is the population of other countries therefore companies get the chance to enter in the wider market that creates more opportunities than domestic marketing (Onkvisit, and Shaw, 2009). Companies increase their sales highly by utilizing the scopes of the wider market.
Involvement of more uncontrollable variables: In international marketing, companies have to face the uncontrollable variables such as: technology, demographics, society and culture, politics and economics of their own country including host countries (Paliwoda, and Thomas, 2013). All these factors can enrich or hamper an organization when they do international marketing.
Higher level of competence required: Companies compete with the local foreign companies and international companies therefore special management skills and higher level of competence is required in international marketing (Doole, and Lowe, 2008). Otherwise they will not be able to survive in the competition.
Tough competition: Competition in international marketing is very tough because companies have to compete with the domestic and international organizations who have achieved targeted place already (Kotler et al., 2018). As a result, companies have to face many difficulties to make place among them.
More risky and challenging: Companies face political risks, cultural risks, changing rules of government risks, challenges of identifying the fashion and style need of customers and many more risks in international marketing because they do not have full knowledge about the new country’s external factors (Kotler et al., 2018). Even they face communication challenges because of new language.
Need for environmental adjustment: External environment of every country is different from each other such as: economic, legal, ecological and telecommunication environment (Tian, and Borges, 2011). Companies adjust themselves on the new environment in international marketing.
Self-reference criterion: an obstacle: Perception that own values, culture, perceptions is the best one and should be the basis for decision in different culture is not an effective decision (Jean et al., 2016). Host culture is different and the basement of making decision should be adapted as per the values, culture of the host environment.
International marketing orientations: International market is a place of different environment and very competitive therefore companies have to take mental preparation through orientations (Hollensen, 2010). It will encourage them to cope up with all complexities of international market.
Globalization of markets: Globalization has reduced the trade barriers among nations and countries can outsource, export and import products and make different business deals outer own country (Jean et al., 2016). Therefore, companies can expand business without less legal obstacles and increase profitability.
Scopes of International Marketing:
Increased Economies of scale: It refers to the cost advantage attained by an organization while increasing output level. Per unit fixed cost reduces when the quantity of production are increased (Paliwoda, and Thomas, 2013). When companies go for international marketing with domestic, they have to increase production therefore per unit fixed cost decreases.
High profit opportunities than domestic market: Companies can get more profitable by doing international marketing in the countries that are financially strong because customers will be able to afford the products in higher price (Doole, and Lowe, 2008). As a result, the companies will get more revenue by providing service internationally which is not possible in domestic marketing.
Huge Market share: By expanding business internationally, companies have market share both in domestic and international market therefore they will be able to increase market share highly (Kotler et al., 2018).
Extended life of the product: Companies sell their products in domestic market and export it to foreign countries to sale it to the new customers therefore demand of the product remains both domestically and internationally. As a result, the product gets elongated life (Berthon et al., 2012).
Rationale of International marketing and routes to international marketing:
Rationale of International Marketing
A large number of companies of all sizes are going for international marketing because it brings great facilities for the companies. Rationale of international marketing are:
Enhancing Profitability: By distributing products internationally, companies increases their customer base (Czinkota, and Ronkainen, 2010). Blue Inc will construct loyalty in foreign countries therefore the profitability increases by creating new customers. They can reduce per unit fixed cost through international marketing by producing more products. As a result, Blue Inc will be able to increase their profitability.
Challenging for increasing sales: Companies expand business internationally to create new customers to increase sales therefore they revenue become higher (Burgess, and Bothma, 2011). Blue Inc will compete with competitors to enter in the ripe market to hold on the revenue source. By succeeding in international marketing it will also be able to beat strong domestic competitors therefore they should choose international marketing to become more successful in UK market.
Differentiating Business: International expansion can help an organization to diversify their business (Cadogan, 2012). Blue Inc will be able to get connected with suppliers in international market that will help them to be diversified. They will get new suppliers from international market who will supply quality raw materials and resources that they will not get in UK. As a result, their product will be diversified that will increase its demand.
Getting new talent: International marketing can introduce with larger and many diversified new talent who speaks different language and realize dissimilar cultures (Tan, and Sousa, 2013). The talent pool will help to build connection with new customer base. Blue Inc will get new talent pool through international marketing and will be able to build connection with wider customer base. When the company will establish itself in foreign market, they will get top talent employee for their company therefore they will be able to structure global work team that will help them to build a global brand.
Opportunities and challenges to international marketing
Challenges to international marketing:
Foreign laws and regulations: Trading laws, employment laws, official laws etcetera foreign laws are different from one’s domestic law therefore companies faces difficulties while doing international marketing (Phau, and Chao, 2008). Blue Inc will maintain the laws of the host country to operate business without legal obstacles. It will face problems to maintain the laws at the starting because the laws of host countries will be different. They will navigate all legal requirement to prevent all legal obstacle of host country.
Customer dissimilarity: In international marketing, finding out the demand of different customer is one of the major challenges (Samiee, and Chabowski, 2012). Customers’ needs are ever changing and Blue Inc will address their requirement to fulfil. By finding out the requirements of different customers, it will produce product of customers’ choice. The company will take the help of local agents or distributors to know about customers’ demand.
Cultural Challenges: Cultures of every country is different from another and business needs to be aware about the culture of host country ((Nijssen, and van Herk, 2009)). Blue Inc will research about the culture of host country to know about the culture and stay aware about that which help to make good relation. For example, host country have the culture of punctuality and Blue Inc. will work punctually with partnering company according to the culture.
Opportunities to international marketing:
Non-EU deals increased through international marketing: When SMEs decide to enter to global market, it brings major opportunity to make association with new regions (Evers, Andersson, and Hannibal, 2012). Companies get potential market which drives their success highly. Blue Inc will be able to make non-EU deals by entering global market and it will bring major success for them through making relationship with new regions. They will enjoy better and wider market opportunity to increase profitability than domestic market.
Opportunity of AI and Automation: AI and Automation are the great opportunities of international marketing (Ripollés, and Blesa, 2012). AI and Automation will help Blue Inc in managing the difficulties of data management and applying the data to the new regions. It will reduce the problems of manual data management and apply accurately across regions that will assist to gain competitive advantage in global market.
Expanding talent pool: By entering in international market, companies get the opportunity to have talent pool within their company (Zhou, Wu, and Barnes, 2012). Blue Inc will be able to attract talent pool from abroad who will boost up the growth of their business by utilizing their knowledge.
International Marketing Strategies that Companies Can Adopt: Criteria and selection process to evaluate the international market to enter:
International Marketing Strategies that Companies Can Adopt will be identified. In this section, it has been assumed that Blue Inc. will enter the markets of France and Canada. When companies globalize their business, they have to consider some factors before entering in the market.
Criteria to consider while selecting a foreign market:
Economic Factors: Economic factors is one of the major factors that companies should consider while entering the market (Powers, and Loyka, 2010). Blue Inc will not enter the market where the people will not be able to afford their products. The company will evaluate the national indicates such as: gross national product and per capita income (average GDP per capita for both countries is more than $40,000) before starting business of the country to ensure that customers of the market will be able to pay for their products. Canada and France both are economically developed countries with high GDP. This will enable Blue Inc. to ensure that their products will have a lot of customers financially capable to purchase.
Social and cultural factors: The practiced religion, mother language, food habit and other things are different from one to another country and these dissimilarity influences business (Majaro, 2013). Blue Inc will find out that the products of the company will match the practices of life of new customers because it their product will not match to the culture, it will not be accepted. Canada and France both offer a similar type of culture which is closer to those of the UK.
Political and Legal factors: Without knowing the attitude of the government and customers of host country, companies should not decide to commit capitals (Samiee, and Chabowski, 2012). Blue Inc will see the political stability and attitude of government toward foreign investment before investing there. They will not enter any unstable political environment because it will compel the company to change policies continuously that will affect the profitability of Blue Inc. If the legal environment are not strict, the company will face difficulties while implementing and applying their policies and contracts.
Market attractiveness: Market attractiveness have to be judged when an organization want to enter in the market (Fletcher, and Crawford, 2013). Blue Inc will evaluate market attractiveness by identifying the needed initial investment in founding the set-ups, gestation period, industry structure, the obstacles that have to face in the competition and macro environment factors to find out the potentiality of the market. They will select the market with rapid rate of growth that will help to maximize the generated revenue.
Competence of own company: Before going international, an organization have to conduct an audit on its own competence and assets to find that the company will be able to survive in foreign market (Berthon et al., 2012). Blue Inc will consider the market knowledge, technology, portfolio of products, reliable partners to decide that they will be able to perform internationally. The company will have a chief executive with widespread international experience to guide the company for the international journey and it will ensure the success of international marketing.
Demand of foreign market: Demand of foreign market is one of the key consideration that companies should accept while entering new market (Kaynak, and Jansson, 2012). Blue Inc will identify the demand of new target customers’ then try to produce products of their choice. It will help them to increase the demand of their products and increase sales.
Distribution accessibility: Before entering foreign market, organizations should know about the distribution strategy (Samiee, Chabowski, and Hult, 2015). It will help ‘Blue Inc’ to decide about the distribution channel they want to use. The company will select appropriate distribution channel which will suit their business expansion.
Infrastructural development: Infrastructural development refers to the development of communication, transportation, sewage, water, electric system and others (Ghauri et al., 2016). ‘Blue Inc’ will face difficulties while delivering products within undeveloped infrastructure of a country. Therefore, they will consider the infrastructural developed country in order to deliver products to customers without any problem.
International market selection and segmentation:
International market selection process:
Preliminary Screening: It refers to the where the markets are eliminated that are not potential (Wong, and Merrilees, 2008). Blue Inc will not select the market which have no potential of make them profitable.
Short listing of markets: After eliminating market through preliminary screening, the left markets are screened with more information through short listing (Malhotra, 2009). Blue Inc will eliminate rest companies with this approach after preliminary screening.
Evaluation and selection: The markets are eliminated through short listed are evaluated with cost benefit analysis and feasibility analysis (Yeniyurt et al 2009). Blue Inc will be capable of identifying best market to launch their products with this approach.
Test marketing: In this technique, companies launch products on smaller scale to test the response of the market (Samiee et al., 2015). Blue Inc can apply this technique to test the response of their products and it will help them to decide that they want to enter fully or not.
Segmentation:
The method of dividing targeted market by considering the interest, age, gender, religions and other factors is market segmentation (Paetzold, 2010). It helps companies to target customers according to their characteristics. Different types of market segmentation are:
Psychographic segmentation: It divides market on the basis of customers’ hobby, attitudes, morals, interests and daily life (Griffith, Cavusgil, and Xu, 2008). Blue Inc will be able to target broader range of groups through this segment. And the targeted customers will like the products when they will get products which are compatible with their daily life.
Demographic segmentation: Companies divide their market by considering the gender, age, income level, age, nationality and other factors under this approach (Suh et al., 2010). For example, ‘Blue Inc’ will be able to attract the men and women of targeted market with their fashionable clothes and accessories. But these customers are brand conscious therefore it will be tough for Blue Inc to attract toward their products.
Behavioural segmentation: This approach divides market according to the activities, practises and choice making form of customers (Li, and Li, 2010). For example, Blue Inc can make comfortable clothes for the customers who prefer comfort. It will help the company to easily attract the customers to their clothes.
Uppsala Model of Internationalization:
Advantages of applying Uppsala model on Blue Inc: Uppsala model implies a positive correlation between market knowledge and market commitment (Jean et al., 2016). The more market knowledge a company has, the more commitment decision it will make. Such current sequential decision will lead to more market commitment. Uppsala model is a risk averse model therefore it will encourages development of business in international field (Jean et al., 2016). With the application of the model, the company will be able to use experimental knowledge in the enhancement of their business. It will help Blue Inc to achieve strong competitive advantage by utilizing the experimental knowledge. It is a reliable method that will help the company to make effective plan and establish a stable business in international market. As a result, the company will be able to achieve greater success in the field of international market.
Criticism of the model: Uppsala model has some limitations that should consider by organizations (Digipro, 2019). It is a slow method of industrialization and Blue Inc will have slow growth if the company apply this model. This model is not applicable in the country where business and economic system are different from other countries (Jean et al., 2016). Therefore, Blue Inc cannot apply this model where the economic and business structure are different from others.
Routs to international marketing:
Companies planning to expand the business globally have a number of options. They can follow expansion strategy that gives them good control but more risks, at the same time there are strategies with less risks but have less control over the business.
Exporting: Exporting is the way in which companies sales their products directly or indirectly in abroad (Fletcher, and Crawford, 2013). Companies can directly export products or export through trading companies.
Green field investment: It is one type of direct investment in which companies create subsidiary in abroad including construction of new manufacturing opportunities, building of new distribution hubs, offices and living quarters (Nijssen, and van Herk, 2009). This strategy gives a company high level of control on all business operations.
Joint Venture: In joint venture, companies make deal with an organization of abroad for establishing their relationship with local customers (Douglas, and Samuel Craig, 2011). A company following this strategy will have to bear less risk of facing lose at the starting of the business.
Contract Manufacturing: Contract manufacturing is the process in which firms hire another firm of the country they want to enter and manufacture products by the hired firm (Majaro, 2013).
Franchising: In franchising, firm of abroad grants exclusive power to distribute their products and services including use intellectual property right to an organization (Powers, and Loyka, 2010). Franchisee will provide the capital resources to the mother company in this route while starting business therefore they can use the route to speed up their international business growth.
Licensing: It is the way in which an organization gets the permission to use copyrights or patent, copyrights, technology, managerial skills or other resources and produces product of the firm of host country (Samiee, and Chabowski, 2012).
Market entry strategies evaluation:
Importing: Importing is the process of buying products into a jurisdiction of outside a national boarder from outside source (Albaum, Albaum, and Duerr, 2008). Sometimes companies import to improve their production line. Importing products helps to ignore the difficulties that is faced while producing products. Importing can play a significant role for Blue Inc. because the company will soon be doing business in foreign market where it has to import the fast fashion items to make continuous business in the new market. Thus, importing play significant role in international marketing. In fact, international business couldn’t be possible without importing and exporting.
Exporting: Exporting is the way in which products and services are manufactured in one country and bought by citizens of another country (Czinkota, and Ronkainen, 2013). International business happens because companies can export and companies get the goods to sell in the target market. Blue Inc. can use this route to expand the fast fashion business globally. Blue Inc. can export the fashion items which is abundant in UK to its foreign operation. But disadvantage of this strategy is that Blue Inc. will not have any in-depth knowledge on the host market.
Green field investment: This strategy bears high level of investment in which Blue Inc. can have wholly owned subsidiary in the foreign markets. Advantage of this strategy is that it will not have to share any confidential information to anyone, have full control on the foreign business operations. But problem is that it requires huge investment; it carries high level of risks because the market is completely new.
Joint Venture: It is the process in which a local organization become partner with an organization of the host country (Henseler, Ringle, and Sinkovics, 2009). There are many countries where outsider firms are not allowed to operate business and Blue Inc will use the process of joint venture in the country. It will reduce the risk of baring all risk because risks will be divided between the companies including the profit. As a result, Blue Inc will be able to create new customers who are already the customer of the partner company.
Franchising: Blue Inc can give franchise ship to any party in a few country. Thus it can expand business in international market. It needs less financial to have entry into market with lower legal and political risks that will help the company to enter in international market with less risks. Blue Inc can have economies of scale through ordering with the owner and other franchisees.
Licensing: Licensing strategy has less risk because companies enter foreign market with recognised product (Zhou et al., 2012). Blue Inc. will be able to have quick and easy entry into foreign markets by preventing the border and tariff barricades. It needs less capital therefore Blue Inc will be able to have entry with lower capital than other strategy. The company will be able to get high return on investment through licensing.
Appropriate strategies for Blue Inc.: Joint venture will be the appropriate market entry strategy to enter Canada and France for Blue Inc because it will give the opportunity to achieve new expertise and capability which will help them to improve their products. It will face less legal difficulties while entering the business because the existing business partners will help Blue to expand smoothly. Blue Inc will gain access of new technology and the company can sell their partnership when they will want to quit. Blue Inc. should select 2 partners in two target market, the partners should have experience of working in the fashion industry of respective countries.