Why Most Organisations Sell and Persuade Internationally - Term Paper Example

Sales and Marketing Table of Contents Introduction 2 Importance of Overseas sales and marketing 2 i). Unlimited cash flow 2 ii) Provision of outsourcing services 5 iii) Creation of jobs and wealth and ensure productivity growth 5 Marketing Principles a company needs to Utilize before embarking on Overseas Business 6 i) Market segmentation 6 ii) Specification of a product 7 iii) Provision of both Local and International Quality 7 iv) Ensuring Asymmetry in the products 8 v) Mergers 8 vi) Preliminary market research 8 Conclusion 9 Recommendations 10 List of References 11 Introduction The success of a business regardless of its size vests much on the level of sales such a business makes. With the versatile economy and the high competition for the limited resources, business enterprises must therefore seek to diversify their markets. This will not only ensure an increased client base, but also allows diversification of product due to different taste and market preferences. With the limited markets and high level of competition in the local markets, many investors have preferred selling abroad as a way of improving their business. Shaver (2011) observes that geographical diversification of sales lowers investment constraint. Such a strategy is beneficial for it makes firms access clients it otherwise could not. Importance of Overseas sales and marketing i). Unlimited cash flow Businesses that engage in exports as a sales strategy experience unlimited revenue flow and invariable cycles. This is because their sales are not determined by the market factors of the country of production. This means internal inflation or price regulation does affect to a very little extent their revenue and profit. Secondly, the businesses cycle is not consistent with the internal markets cycle. This means their sales are determined by multiple economic variables. Shaver (2011) observes that because of this uncorrelation, businesses can adjust their sales both in internal and external markets to match the dynamics or changes in these markets. This ensures viability in operations. It should however, be observed that investing in oversee markets in costly at the start. Much capital must be invested in oversee marketing and management of sales. To this end, it is difficult for enterprises will little investment capital to engage in this trade. Fortunately, the long term benefits are favourable with overseas markets. Exporting goods is also beneficial in revealing on one end, customers preference from a wider perspective, and on the other end, the business performance and efficiency. This knowledge is vital in managing sales strategy and for planning in line with market development. Customers are principal stakeholders in a business. Their interest and approval of a good or service is reflective of the value that product has in the market. Successful businesses must therefore seek to utilize feedbacks from their clients. With the advent of technology, investing in wider and foreign markets offers a better understanding of customer ratings of a product. Globalization offers shared interests among different groups. Thus a good or service which booms in a local market at one point and declines after some period can proliferate in another geographical area. In addition, the efficiency of a business is better shown by foreign business partners. By exporting products, a business attracts “foreign customers”. These are customers who do not share cultures and ideals with the native business environment. They, therefore, can potentially provide a perfect evaluation of the product or business efficiency from a different perspective. Reports of this kind are valuable to a business since it enables it to expand its service to reach the satisfaction of many clients. Nagasawa (2008) shows that there exists a paradigm shift in marketing. Businesses today must focus on service delivery to the clients rather than production. That is to say, the design of products, the sales system and the marketing techniques must be consistent with clients’ demands. When this state is attained, businesses can then flourish. It should be emphasized that products today have very short life cycles, while the life cycles are determined by the business’s attention on the client’s needs. Thirdly, companies invest in export or global businesses to evade high taxation rates in the local markets. In most states, imported goods are subjected to little tax (Sauvant, 2009). This strategy is employed by governments in order to attract investors and businessmen. The businessmen then take advantage of this provision. In foreign markets, the markets are less competitive since very few trades with similar goods exist. This means sales are higher that the domestic markets. The low taxation on imported goods creates another advantage. The overall result is high revenue against low expenditure. The business therefore becomes efficient. It should also be note that online business is the cheapest of all. Most states do not apply taxation to businesses conducted online thus creating a free market for entrepreneurs. The internet provides a virtual meeting point for businesses and their clients without the need to travel (massey.ac.nz, 2012). This means that products can be sold abroad without the involvement of travelling. Orders can be made promptly, goods delivered in a short period of time online. Additionally, the use of internet marketing allows businesses to reach out to many potential customers and middlemen in a very short span of time and at minimal expense. Fortunately, the internet offers market for international market rather than local markets. This means that, those investing in foreign sales are offered an edge over their local competitors. ii) Provision of outsourcing services Investors in overseas sales engage outsourcing services in their trade. Outsourcing services involve middlemen, who either seek markets on behalf of other businesses, or provide services and sales to goods on behalf of the business. In simple terms, the middlemen mediate between the local seller and the potential clients. This means the entrepreneur needs not to meet his/her customers directly. Currently, there are several companies at stake offering outsourcing services in nearly all areas of the economy. A business owner therefore, needs not to make overseas travels or invest much in marketing but he/she engages the outsourcing personnel. Outsourcing provides a business will a cheaper investment in terms of labour. This is because companies or freelancers engaged in such jobs are only paid at the approval of their service. This means there is a guarantee of success before a business invests its funds in paying contractors. The outsourcing kind of engagement is the most modern and effective way of trading overseas. iii) Creation of jobs and wealth and ensure productivity growth Foreign trade engages several middlemen. From transporters, travelling agents, to security personnel, several people take part in the movement of the goods from the supplier to the consumer. At every stage a service is offered in handling the good, the service provider is paid while the business generates income by directing the goods and services to their predetermined client. This creates wealth to the business. The engagement of many people in the production process also ensures wider access of the product. This means great approval rates. The producer can therefore increase production of related goods. For instance, Google Inc. provides an internet mail manager, Gmail (google.com, 2012). This service is used by several people and companies in communication. In its use, third parties who interact with the users of this service are lured into its use. Through this market mix, the Google Company is encouraged to increase production of Gmail related services, improve its efficiency since the market has diversified. The client base keeps on increasing as the handlers of the product increase. Marketing Principles a company needs to Utilize before embarking on Overseas Business Retseptor (2005) suggests an array of sales and marketing principles that a business should undertake before engaging in overseas or foreign undertakings. They include: market segmentation, specification of a product, providing both local and international quality in the products, creating imbalance(Asymmetry) in the products, merging similar products, nesting of products, reduce weight in the product, preliminary market research, after sales actions, dynamism, providing for more than one dimension, mechanical vibration, and use of intermediary. i) Market segmentation This means the sales areas should be diversified as much as possible. The products, advertisements and other marketing tools should be divided among the sales areas of target. Market splitting is very beneficial in a number of ways: it ensures that sales are not limited by performance of a specific market; secondly, it buffers the products from competition with similar products since the product is not concentrated in one area, additionally, it expands client base ensuring huge sales in a given time frame (Entrepreneurship.com, 2012). Market segmentation is a prerequisite action done at the planning stage of business establishment. Nagasawa (2008) emphasizes that for a business to ensure success, a business should split its resources according to market strengths. That is, offer more services to customer-rich areas and less effort to customer- deficient areas. ii) Specification of a product The product to be introduced in the market should be specific. This is in terms of quantity, name and brands. Such specifications ensure effective study of the market performance of individual product. A product not viable in the market can then be substituted or removed completely from the market. It should be recognized that some product sell by their brand names and are preferred either as an independent entity or when associated with others. This knowledge should be collected prior to introducing sales to ensure that products sent to market satisfy demands of the customers. iii) Provision of both Local and International Quality Goods must meet both local and international standards. Why? Production is meant to offset market demands both at the local level and internationally, in the case of exported brands. This means that the preferences of domestic and international markets together with government legislation/policies need be considered. In some states the governments restrict production for local consumption and exports to meet its laid down standard. This therefore means that businesses must ensure compliance with the laid down production procedures by the respective governments. iv) Ensuring Asymmetry in the products According to Retsepto(2005), asymmetry in sales can be ensure through ensuring “Market of buyer vs. market of seller, Male and female product or service orientation,[and] Left and right side handling products”. He adds, where a product is asymmetrical, it necessary to enhance the degree of asymmetry. This kind of imbalance will provide a competitive advantage of one product over the other by appealing to specific class, interest or group of people. This is a mini- specialization is business, where products sold attract clients of a given category more than the other. Asymmetry of sales promotes customer preference of a product. v) Mergers Mergers are necessary in cases where products are related or where one product performs dismally in the market and needs to be promoted. Products can be merged before introduction in the market or while they are already in sales. It is best done at the planning stage after customer interests have been sought and integrated with company’s interests. This is possible from a piloting study on the good. It is embarrassing to introduce a good, especially to a foreign market, when the clients’ preference is very low. vi) Preliminary market research This is the most important aspect of planning done prior to introducing a product to the market. Market research should be done using a large sample of market and of prospective products. According to Ilkeratalay.com (2000), in the study, the market trends, performance of individual product, the cost effectiveness of trading in each sampled market, and the efficiency of the business in terms of input output relations should be carefully studied. In such research operations, various stakeholders such as consumers, policy regulators, transporters among other need be consulted. Cook (2012) asserts that the results of the market study must then be analysed in line with prevailing economic trends, production costs, and other expenditure to determine feasibility in a business. With a properly undertaken market study, it is possible that the product introduced in the market will appeal to customers’ demands. This will ensure increased sales and better revenues for the business. Conclusion This paper exploited the importance of overseas trade as opposed to local business. It considered the factors that motivate organizations to engage in across the border or foreign trades. It also reviewed the sales and marketing principles a business should consider before engaging in overseas business. The findings of the study reveal that overseas trade appears more lucrative and more rewarding than local trade. There are numerous middlemen available to facilitate the trade; there little taxation on imported good, marketing is enhanced by the free internet market that has enabled globalization. However, the study observes that such a business needs strong investment capital to initiate hence not favourable for low income entrepreneurs. Regarding sales and marketing principles, the study observes that various strategies may be employed prior to deciding on starting an overseas business to ensure success of such an undertaking. Top in the list is market research and market diversification. Others are product mergers, specification of products, and provision of both domestic and international standards in the products. Recommendations This study recommends that prospective entrepreneurs anticipating to engage in international trade should consider the array of pre-business activities. These include strategic planning in which the stakeholders are engaged, consider market diversification and blending of products. They should also acknowledge that such businesses require a large quantity of initial capital, though are rewarding in the long term. List of References Cook C (2012). The 5 Fundamental Principles of Small Business Marketing. December 13, 2012. [Online]: http://www.marketingforsuccess.com/marketing-plan/fundamental-principles/# Entrepreneurship.com (2012). Marketing Strategies & Ideas For Your Business. Decembner 13, 2012. [Online]: www.entrepreneur.com/marketing/index.html Google.com.2012.Google Company. December 12, 2012. [Online]: http://www.google.com/about/company/ Ilkeratalay.com (2000). Evaluating a Venture Capital Firm To Meet Your Company's Needs. December 13, 20-12. [Online]: http://www.ilkeratalay.com/download/venture_eval.pdf Kaleka, A (2011). When Exporting Manufacturers Compete on the Basis of Service: Resources and Marketing Capabilities Driving Service Advantage and Performance Journal of International Marketing, American Marketing Association Vol. 19, No. 1, 2011, pp. 40–58 ISSN 1069-0031X (print). December 12, 2012. Massey.ac.nz. (2012). Why Do Companies Invest Overseas? - Massey University. December 133, 2012. [Online]: www.massey.ac.nz/~wwcppe/schools/Iyer.ppt Nagasawa S (2008). Marketing Principles of Louis Vuitton. Waseda Business & Economic Studies 2008 No.44. December 13, 2012. Retseptor, G. (2005). 40 Inventive Principles in Marketing, Sales and Advertising. December 12, 2012. [Online]: http://www.triz-journal.com/archives/2005/04/01.pdf Sauvant, K, P (2009). International Investment Law and Policy 2008/2009: Overview. World Investment Report 2008 (New York and Geneva, United Nations, 2008), p. 10. December 13, 2012. [Online]: http://www.vcc.columbia.edu/pubs/documents/KPSYearbookIntro-forwebsite.pdf Shaver J, M. The Benefits of Geographic Sales Diversification: How Exporting Facilitates Capital Investment. Strat. Mgmt. J., 32: 1046–1060 (2011) DOI: 10.1002/smj.924. December 13, 2012. Read More