Export Strategy: Markets and Competition (RLE Marketing)

Nigel Piercy

• Publisher: Taylor & Francis
• Year: 2014
• eBook ISBN: 9781317654001
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book offers management students and managers new insights by approaching exporting from the perspective of marketing planning, rather than the mechanics of export practice. The author evaluates the widely recommended strategy of key market concentration, showing its weaknesses and the flaws in the supporting evidence. The book provides the reader with a framework for making an explicit and informed choice between the real market options faced in practical export situations, which takes into account the many company and market factors shaping such strategies. Closely related to market strategy is the competitive base for a company's exporting, particularly in balancing price and non-price forms of competition, and this is assessed in the second part of the book.

PART I

Export management

1

Introduction

Objectives of the book

The approach to export marketing taken in this book is intentionally unorthodox, when compared to other, apparently similar, attempts to study export problems. No suggestion is made that there is anything inherently wrong with such other approaches – indeed, substantial reference will be made to some of them. However, the reason for writing this text is that a gap exists between the theoretical analyses of corporate and marketing strategy and the mechanics of export practice and operational management.

The aim of this book is to fill the gap in the market, by meeting the needs of managers for a systematic attack on the export strategy choices to be made and on the alternative ways of competing internationally.

Attaining this goal involves the study and analysis of market concentration and market spreading strategies in a way that has not been attempted before, which established guidelines for making choices between alternatives in specific, practical circumstances.

Closely related to the export strategy adopted, in the choice of market targets, is the question of how the exporter competes, or what competitive differentiation exists to attract and hold export business. The debate in this area has been between the traditional reliance on price competition in exporting, and the development of non-price aspects of export marketing.

The approach to these problems which will be taken in this volume is one which has been described as a situational or contingency view, which relies on the analysis of the specific surrounding factors in particular cases, rather than producing general rules to be followed inflexibly (or perhaps more probably ignored as being unrealistic).

The underlying need for this type of view in marketing – at home as well as abroad – arises from the fact that we really do not have a single, universally valid way of looking at the world and making decisions, so what we offer the manager has to consist of methods of analysing situations and theories that predict the implications of the various options faced.

The objectives of the book are as follows: (a) to build a framework which fully identifies the options faced in export market strategy and isolates the factors which determine the relative attractiveness of the strategic options in different situations, and (b) to construct guidelines to the major aspects of export competition – price and non-price factors – and the problems in managing change from one form of competition to another, and the factors favouring the alternative competitive bases.

Exporting and export marketing

In defining the precise meaning of exporting and the scope of this book about exporting, we find that the terms used to describe international trading are often applied relatively loosely, so there is a need to reach some agreement, however arbitrary, on the meaning of exporting and export marketing to be used.

To begin, while the distinction between domestic sales and overseas sales is reasonably straightforward, it is less easy to draw the dividing line between exporting and international business on a broader scale. Summarising the positions taken by established authorities in the area (Tookey, 1969; Kotler, 1972) allows the inclusion of direct sales from the home market to foreign users, distributors or agents, and the use of the various forms of joint venturing to establish overseas marketing subsidiaries, as export. On the other hand, international business involves the investment overseas in factory facilities for assembly or manufacture, leading at the extreme to the full multinational corporation operating globally.

Accepting the above definition places the scope of this book firmly in the export area, where the problems and opportunities are different from those of the international business. In broad terms these differences arise from the respective size of firms and their consequent impact on the business environment – hence we could point to typical differences in the availability of resources ranging from finance to information, the degree of management specialisation, and the vulnerability to such factors as competitive attacks, government controls and economic recession.

Ignoring the exceptions which might be found to such generalisations – such as the existence of large exporters and small international firms – we can state the assumptions made about the target audience for the book, to make this clear from the outset. Since the problems and opportunities are (arguably) different for the exporter as compared to the international business, the thesis here is that the analysis of strategy and competition should reflect this differentiation. The rules and guidelines which direct the large international business may not merely be irrelevant to the smaller exporting business, but may actually be misleading and harmful (Hackett, 1977).

This is of particular significance to the later discussion of the popular recommendations to exporters, by various theorists, to concentrate on key export markets and to use non-price competition in exporting.

In essence, to identify the scope of this book, and the main type of reader to whom it is addressed, it must be borne in mind that exporting is frequently the province of the smaller business. This is important for the resource reasons mentioned above, and also to make the point that the smaller business can be extremely successful in this area. For example, Martin van Mesdag (1981) argues: ‘There are two myths about exporting which need to be abolished. The first is that you have to be a large company to be able to export. Fortunately, actual fact belies this myth.’

Indeed, recent Canadian research found that managers of smaller firms were not constrained in their export involvement by the lack of resources or conservative attitudes, as has often been suggested (Abdel-Malek, 1978).

Closer to home, the same point is made by the following recent cases in the UK.

Merryweather is a company having a new factory in Ebbw Vale with a work-force of 100 and sales of £ 2m, selling turntable ladders and fire fighting equipment throughout the world, but especially to the emergent nations where the demand for such products expands in line with building and transport development (Tucker, 1981).

Tyrone Crystal is a producer of the highest quality cut-glass crystal, in Northern Ireland, owned by a farmers’ co-operative. Tyrone employs sixty-five people and has a weekly output of £ 25 000 worth of crystal. Fifty per cent of production is sold outside the UK and Eire. The US market has been penetrated by a link with an up-market retail chain, Hong Kong is served by mail order, and the products are sold in the UK by the Japanese Noritake company (Rodwell, 1981).

Feedback is a company which makes electronic teaching aids and an Attendance Terminal, i.e. an electronic clocking-on machine, having been established by a group of scientists. Profitability is strong and the firm has grown to a turnover of £ 6m in 1981, but only because sixty per cent of sales are exports (Kay, 1981b). This indicates the main target for the book, although it is hoped that the content will be of some interest to larger firms as well.

A last point of clarification is concerned with the difference between exporting and export marketing, as the terms are to be used here.

For these purposes, exporting is taken to describe the whole managerial process of selling and distributing goods overseas, including such factors as the financial arrangements made, the documentation and office procedures necessary, and the organisational structures used.

On the other hand, export marketing is made up of the marketing decisions necessary to direct the flow of goods and communications overseas. We have been warned of the dangers in seeing all decisions as marketing decisions (Spillard, 1974), so to clarify the operational meaning of the term ‘marketing’, a useful structure is one which distinguishes three levels or facets of marketing (Hague, 1971): product-market strategy, the broad view of the direction the company should take for growth and survival; marketing mix decisions, the management of the variables of product policy, pricing, marketing communications (including advertising, personal selling and promotion), and distribution; and marketing information, the generation and organisation of data for making marketing decisions and monitoring progress.

As well as recognising these different aspects of marketing, there are other important implications for exporting. First, the marketing viewpoint is one of integrating all company efforts in relation to the marketplace, into customer orientation, as described in the classic marketing treatise by Kotler (1972).

That strands of this orientation are described as follows:

(a)Generic need definition – identifying the needs the company intends to satisfy

(b)Target group definition – the processes of market analysis and segmentation

(c)Differentiated products and messages – developing specialised offerings for the target groups chosen

(d)Customer research – measuring and evaluating the important characteristics of target groups

(e)Differential advantage strategy – adapting the values offered (both tangible and intangible) to distinguish what a firm sells from competitors’ offerings.

Each of these strands is important to the thesis of the book regarding market strategy and competition, and will provide a point of reference as we proceed.

Of course, the marketing concept is not a panacea for all export ills, any more than it has cured all problems in domestic operations, but the richness of the concept is increasingly relevant to export business, and to individual companies as their internationalisation grows (Meidan, 1975).

The process of generic need definition – asking the classic question, ‘What business are we in?’ – and market targeting are central to export market choices, as analysed in Chapters 4, 5 and 6.

The concepts of differentiated products and competitive advantage are the key to realism in Chapters 7-10, which are devoted to assessing the competitive choices faced by the exporter.

It will be seen that customer orientation and the marketing concept are live tools for action, not merely dry, te...

Table of contents

• Cover Page
• Half Title page
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Contents
• Preface
• Half Title page
• Part I Export Management
• Part II Export Market Strategy
• Part III Competitive Strategy in Exporting
• Part IV Implications and Overview
• References and bibliography
• Index