Marketing is about building awareness in a company's products and driving sales and profit growth. It includes driving sales, advertising, designing new products, pricing strategies, building and maintaining distribution channels and providing superior customer service. Although the Internet allows even a small company to sell worldwide by quickly establishing an online store, the reality is that most companies start in their respective local or regional markets before exploring a global marketing strategy.
Facts
A small business looking to expand overseas faces several issues. The first is designing a global marketing strategy, which includes an understanding of the demographic, competitive, regulatory and industry characteristics of the target countries, and the identification and cultivation of local distribution channels. Two related issues are whether to make, buy or import the products and the mode of entry. Export is perhaps the simplest mode of entry because products are shipped to local distributors who take care of the rest. Other market entry strategies include licensing of product manufacturing, joint ventures and acquisition of established local companies.
Pros
The advantages of global marketing include experience, scale, resource utilization and sales and profit growth. Large companies, such as Wal-Mart or Intel, can use their scale to drive down input costs substantially. They can also use their knowledge of global markets to make strategic investment decisions and utilize their resources to implement the strategies faster than smaller players in their respective industries. Global marketing opens up significant new sales opportunities that, combined with low development and input costs, helps drive profit growth.
Companies can also leverage clusters. Global opportunities often exist because of the clustering of market opportunities. India, for example, has several high-tech clusters, including the technology complexes in the southern cities of Hyderabad, Bengaluru and Chennai. China also has several manufacturing and technology clusters. Therefore, a small business in the high-tech area looking to expand into India or China should concentrate its resources on one or two of these technology clusters and grow from there.
Cons
For some companies, especially small businesses, the resource commitment required to understand, develop and compete effectively in global markets may be too daunting. The product and service mix often have to be customized to local tastes and cultures. Although some products are standardized, such as running shoes, most are not. This means a different marketing strategy, including ads and promotional material, for potentially each foreign market. By entering into partnerships or joint ventures with established local businesses, a small business can cost-effectively execute a global marketing strategy. Host country government restrictions, such as minimum local ownership levels or trade barriers, may also hamper global marketing efforts.
Consideration: Outsourcing Marketing
Lead generation and customer database management functions, in addition to ad campaigns, are marketing components that are being outsourced, Harvard Business School professor Gail McGovern said. Benefits include cost savings and access to a qualified and trained workforce.
Tags: global marketing, marketing strategy, profit growth, small business, distribution channels