1. International Marketing Strategy
Chapter 5 – International Niche Marketing Strategies for Small- and Medium-Sized Enterprises
Doole, Lowe and Kenyon
International Marketing Strategy

2. Learning Objectives
Appreciate the nature and types of international marketing undertaken in the SME sector
Compare the different strategic approaches and mindsets of SMEs in international marketing
Understand the factors affecting SME international strategic management
Identify the characteristics of the different stages of international development of SMEs
Be able to evaluate the factors for success and failure in SME international marketing

3. The nature of SME international marketing strategies
Exporting (less risk and less control)
International niche marketing (target a special market segment, the market may be small or large market)
Domestically delivered or developed niche services (e.g. In travel industry domestic firms such as hotels, tour operators generate foreign earning for the country by attracting visitors)
Direct marketing including electronic commerce (e.g. via electronic commerce)
Participation in the international supply chain (e.g. to participate part of Multinational Enterprises’ operation or production (e.g. iPhone)

4. The nature of SME international marketing strategies (cont.)
Barriers to internationalization
Shortage of working capital to finance exports
Inadequate knowledge of overseas markets
Inability to contact overseas customers including finding the right partner
Lack of managerial time, skills and knowledge
You should mention barriers that you will face when marketing your drink or food in the UK market. The barriers may influence the selection of entry mode.

5. The nature of SME international marketing strategies (cont.)
Barriers to internationalization
Risk factors for SMEs:
SME’s have little influence over environmental change and recession
Can extend themselves financially by growing too quickly
In general, even Multinational Enterprises have to face the unexpected or expected changes Marco-environments e.g. changes in PESTEL .

6. The nature of SME international marketing strategies (cont.)
Nice marketing
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
Are the above issues relevant to the drink or food that you want to target UK market?

7. The nature of SME international marketing strategies (cont.)
Direct marketing and electronic commerce
Benefits
− Creating new opportunities
− Erecting barriers to entry
− Making cost savings
− Providing inter-firm collaboration
− Company website
− Fast transmission of data
Can you mention in your assignment how you can make use of electronic commerce (e.g. internet and mobile technologies) to improve efficiency (e.g. low cost, high benefits) to sell your drink or food in the UK?

8. The nature of SME international marketing strategies (cont.)
Direct marketing and electronic commerce
Impact of electronic commerce:
Disadvantages
− Flooded with ‘spam’ ... and orders!
− Feast and famine may be a problem where production is inflexible (e.g. when certain products and services where production volume can easily be increased or decreased)
− May require sophisticated (expensive) technology to compete (e.g. to use search engine to make sure that the firm’s offer is listed on the first page of serach results for key words.)

9. The nature of international development
The internationalization process of a company is more aptly visualized as a series of multilateral cycles rather than a linear process.

10. The nature of international development (cont.)
Where the SME is “born global”
Increasing role of niche markets
Need for small firms to specialize
to compete with MNE’s
Growing demand for specialized / customized 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
It is important to work with the individuals or companies you know. International development through using existing networks of contacts is more typical of Asian firms (e.g. Chinese firms) than SMEs from western countries.

11. The nature of international development (cont.)
Supply chain internationalization
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 of outsourcing
loss of know-how
costs of managing outsourced supplies

12. The nature of international development (cont.)
Supply chain internationalization
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
internationalization driven by demands of MNE
continual pressure to improve product and operations
weakening of external marketing
You should consider to outsource some (or all) marketing activities (Public Relationship) to another firm if the firm can create extra value to your firm (e.g. value may mean to increase your existing and potential customers’ satisfaction and loyalty).

13. International marketing strategic management in SMEs
Think of how MacDonald’s manage the 7S framework across international markets
Strategy, structure and systems are considered to be hardware of successful management and as such can be implemented across international markets without the need for significant adaptation.
Management style, staff and skills and shared values are the software, and are affected by cultural differences.

14. International marketing strategic management in SMEs (cont.)
What is the strategy that you use to sell you drink or food in the UK market?
Market Development?

15. International marketing strategic management in SMEs (cont.)

16. International marketing strategic management in SMEs (cont.)
The 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
How can you solve the above problems in order to ensure the success of selling your drink or food in the UK market?