Once a company has decided to go international, it has to decide the degree of marketing involvement and commitment it is prepared to make. These decisions should reflect considerable study and analysis of market potential and company capabilities – a process not always followed. Many companies begin tentatively in international marketing, growing as they again experience and gradually changing strategy and tactics as they become more committed. Others enter international marketing after much research and with fully developed long range plans, prepared to make investments to acquire a market position and often evincing bursts of international activities.
Regardless of the means employed to gain entry into foreign market, a company may make little or no actual; market investment – that is, its marketing involvement may be limited to selling a product with little or no thought given to development of market control. Alternatively, a company may become totally involved and invest large sums of money and effort to capture and maintain a permanent, specific position in the market. In general, one of five (sometimes overlapping) stages can describe the international marketing involvement of a company. Although the stages of international are presented here in a linear order, the reader should not infer that a firm progresses from one stage to another; quite to the contrary, a firm may begin its international involvement at any one stage or be in more than one stage simultaneously. For example, because of a short product life cycle and a thin but widespread market for many technology products, many high tech companies large and small see the entire world, including their home market, as a single market and strive to reach all possible customers as rapidly as possible.
No direct foreign marketing:
A company in this stage does not actively cultivate customers outside national boundaries; however this company’s products may reach foreign markets. Sales may be made to trading companies as well as foreign customers who come directly to the firm. Or products may reach foreign markets via domestic wholesalers or distributors who sell abroad without explicit encouragement or even knowledge of the producer. As companies develop web sites on the internet, many receive orders from international Web surfers. Often an unsolicited order from a foreign is what piques the interest of a company to seek additional international sales.
Infrequent Foreign marketing:
Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature; therefore sales to foreign markets are made as goods are available, with little or no intention of maintaining continuous market representation. As domestic demand increases and absorbs surpluses, foreign sales activity is withdrawn. In this stage, little or no change is seen in company organization or product lines. However, few companies today fit this model because customers around the world increasingly seek long term commercial relationships. Further, evidence exists that financial returns from initial international expansions are limited.
Benetton, one of the largest clothing manufacturers in Italy has a global presence across 120 countries and more than 5,000 stores.
While it is initial few years of operation witnessed expansion within Italy, the company ventured outside Italy for the first time in 1969 when it opened its store in Paris.
Benetton entered India in 1991-92 as a joint venture with DCM Group, now a 100 per cent subsidiary. Brand United Colors of Benetton is present across 106 stores in 45 cities and brand Sisley was launched in India in 2006.
Regular Foreign marketing:
At this level, the firm has permanent productive capacity devoted to the production of goods to be marketed in foreign markets. A firm may employ foreign or domestic overseas intermediaries or it may have its own sales force or sales subsidiaries in important markets. The primary focus of operations and production is to service domestic market needs. However, as overseas demand grows, production is allocated for foreign markets, and products may be adapted to meet the needs of individual foreign markets. Profit expectations from foreign markets move from being seen as a bonus to regular domestic profits to a position in which the company becomes dependent on foreign sales and profits to meet its goals.
Meter Man, a small company (25 employees) in southern Minnesota that manufactures agricultural measuring devices, is a good example of a company in this stage. In 1989, the 35 year old company began exploring the idea of exporting; by 1992 the company was shipping product to Europe. Today, a third of Meter Man’s sales are in 365 countries, and soon the company expects international sales to account for about half of its business. When you start exporting you say to yourself this will be icing on the cake, says the director of sales and marketing. But now going international has become critical to existence.