Importance of International Marketing Strategy
U.S.companies have taken notice of the accelerating economic growth in countries across the globe and have put a high priority on profiting from these growth trends. International marketing requires thorough market research because customer needs and preferences can be quite different from country to country. Not every product or service labeled “American” is an automatic success overseas. But the basic principles of strategic marketing planning apply -- bring innovations to the marketplace that provide enhanced benefits to your customers and make sure you effectively communicate these benefits to your target customers.
U.S. companies that deploy an international marketing strategy seek to take advantage of the tremendous economic growth taking place in countries such as China and India. In an MSNMoney.com article, Citigroup’s global chief economist predicted that China will have the largest economy in the world by 2020, overtaking the U.S. By 2050, Citigroup predicts, India will emerge as the largest economy followed by China, with the U.S. falling to third place.
Technology -- particularly industrial applications -- is one of the areas where many U.S. companies excel and have a distinct competitive advantage over companies they compete with in other countries. U.S. companies bringing technological solutions to overseas markets find their products and services are received enthusiastically by both consumers and business customers.
Companies in some industries in the U.S. have found that the rate of growth of their traditional markets is slowing or even stagnant. To sustain the revenue growth the company has achieved in the past, it is necessary to build the international side of their business. For publicly traded companies, slower growth in earnings per share can result in a declining price for the company’s stock.
A first-to-market advantage means bringing your company’s goods or services to a new market or market segment in advance of your competitors. Over time a company may lose this advantage domestically as new competitors arise and begin to gain market share. But international markets for these same goods or services may not yet be exploited. The company can be a trailblazer in the new international market and rapidly build revenues there.
Building international sales allows a manufacturing company to increase its factory utilization and lower its unit production costs for the company as a whole, because fixed operating costs are now spread over more units produced. This can be particularly advantageous if the company has overbuilt its domestic capacity in expectation of increased sales opportunities that did not materialize. Without the possibility of international sales, the alternative would be shutting down plants, selling off equipment and laying off workers.
A successful international marketing strategy brings about synergistic benefits that strengthen the organization as a whole. By establishing sales operations overseas, the company may discover opportunities to save costs by having some of the manufacturing or assembly of products done in the foreign country where labor costs are lower. The company’s international presence may open up opportunities to secure raw materials at favorable prices for both its U.S. and international manufacturing activities.