Many companies adopt an incremental approach to marketing—they start local and then go international. For those companies that go international, several distinct evolutionary stages have been identified:
1. Domestic marketing
Companies in this category are primarily preoccupied with their domestic markets and management is typically not interested in exporting. Management is willing to fill unsolicited orders from abroad but makes no effort to explore the feasibility of active exporting or to assign specialized staff to this function.
2. Pre-export stage
This will involve some in-depth international trade research. One of the most important things to determine during this stage is the market segment and therefore audience you will be targeting with your new strategy.
The inherent nature of a specific market segment or geographic market can vary greatly from one target market to another. A key element of the strategic planning process is to identify which target markets are appropriate for the company’s products or services.
Based upon the market intelligence for the particular target market and the customer profile for this market, the company can decide if this market has the potential to meet its objectives. Considerations in the evaluation of a target market are varied, but will typically include the size of the market (number of customers, economic potential, buying power); the proximity and/or ease of access to the market; and the sophistication and/or cultural customs of the market.
Some markets or market segments will not be appropriate for a company’s products or services due to the very nature of the market. For example, attempting to sell energy-efficient heating systems to markets within tropical climates would be a failure. This is an obvious example, but it illustrates the importance of proper target market selection. These factors become even more important when considering international market selections and options.
3. Experimental involvement
4. Active involvement
The company becomes an experienced exporter to that country and adjusts exports to optimize changing exchange rates and tariffs.
5. Committed involvement
Management explores the feasibility of exporting to additional countries and allocates its resources to international opportunities.
Decisions to enter foreign markets and resulting successes are related to the level of management commitment; time, human and financial resources available; and the expectations of satisfactory profits.
Once companies have become familiar with the intricacies of international business—even if they have no obvious cultural links to any market—they may venture into more challenging markets.
They may address markets such as Japan where language, culture and business practices are completely unfamiliar. Alternatively, they may look to complex markets such as India in which many different languages and cultures co-exist. The point is that companies generally tend to tackle challenges that are more complex only when they have gained the insights and experience needed for success in a larger arena.
The importance of a strong marketing plan
The basic principle of marketing revolves around the two-way communication between a company and its customers.
Customer focus is one of the core tenets of marketing. One of the goals of successful marketing is to create value for customers.
There are many methods for creating and recognizing value.
The roadmap for all marketing efforts for any company is set down in the corporate marketing plan. There are several marketing concepts that are applied in the development and implementation of a marketing plan; some are more relevant than others depending upon the nature of the company and the product or service that it is marketing. In addition, there exist many marketing functions within the company and the marketing plan itself.
In order to make this transition successfully, companies must understand the reasons for attempting to enter foreign markets. They must also understand that foreign markets are different and will require a thorough knowledge of the market to develop the appropriate strategies and activities that will form the international marketing plan.