What Marketing Strategy Should the UK Firm Device to Expand Its Exporting - Literature review Example

Export marketing

The advent of globalization is quickly transforming international marketing. With the growing competition from various international firms, each has to come up with the best marketing strategy that can enable them maintain competitive advantage over competitors. In order to come up with an efficient marketing strategy, companies have to increase their efficiency in operations, orientation and competitiveness relative to homogeneity of demand in various cultures in the markets they want to exploit. In developing the marketing strategy, the assumption the firms make is that the world is a single market entity, thus they standardize their products globally and they promote these products through campaigns, understanding the local cultures and equally prices and distribution channels (Doole and Lowe, 1997). Therefore, the easiest marketing strategy should entail product characteristics, brand name, packaging and equally labeling. Nonetheless, market globalization should not be taken as a panacea and although export marketing varies widely, it should often be considered that it boosts profits of most international firms that are have export markets abroad. In order to be successive in exporting, it will require the firm to identify market opportunities and how best it exploits those opportunities.

Exporting requires commitment since it entails expanding the company’s operations and developing relationships into other market territories apart from the domestic market. The first consideration will always be resources; that is, if the markets permit, the company should try exporting. However, one should keep in mind that it is not a quick fix for a shortfall in domestic market turnovers or a squeeze on profit margins (Cavusgil and Zou, 1994, p. 3). Therefore, success is down to a strategy that identifies how the firm can use its strengths to establish a competitive edge in the global markets. To venture into new markets will thus require trials in one market, in order to have a chance of refining the approach before expanding into other new markets. For UK firms that want to export, they can get help in spotting exporting markets from the UK Trade and investment and the chamber of commerce. However, there are some challenges that these firms are likely to face, such as the diversity of cultures, different languages, laws and distribution systems of which they need to come up with appropriate strategies to overcome them (Zou, Kim and Cavusgil, 2009).

Exporting is a strategic response by firms to the interplay of external and internal forces; hence, it can be analyzed within the framework of strategic management. The theoretical concept that firms adopt is the co-alignment principle, which provides that environmental and organizational characteristics determine the firm’s export potential (Zeriti et al., 2014, p. 50). In international market, what the firm should consider is whether its product should be adapted to the conditions of the new market or it should be standardized. The level of standardization versus product adaption is dependent on the market, product organization and environmental characteristics.

Therefore, the fundamental elements to consider are the 5Ps of marketing that is product, price, place, promotion and above all, profit (Emerson, 2014). It is essential to understand to develop a product that is up to the population’s specification, taste, fashion, and design that is within reasonable prices, relative to local regulations. A firm looking to venture into foreign markets will need to make modifications on the product, so that it can meet consumer needs in terms of durability, quality, availability at the right time and place, and equally, accuracy of product information.

Relative to theoretical developments about organization performance, export marketing is viewed as a higher order construct that comprises market performance and profitability of the export venture that taps into local market needs (Moghaddam et al., 2011). Based on this, the contingency theory is the most appropriate when the firm is deciding on whether it will standardize or adapt its product. However, instead of adopting a reductionist theoretical consideration of the most appropriate export marketing strategy, it is acceptable to adopt a holistic perspective that integrates the micro, macro and the internal dimensions of the firm (Vignali, 2001, p.106).

The UK firms that look to export to new markets such as Denmark and Mexico should carry an analysis of the political, economic, social, technological legal and environment factors (PESTLE Analysis), to enable them choose the right marketing strategy (Koumparoulis, 2013, p. 34). Denmark for instance provides a competitive environment for business because of the stable political structure in which attitudes are considered moderate, and any changes that occur are gradual through consensus. The country is ranked among the best places for business because of good infrastructure and economic stability, through political initiatives that are beneficial to entrepreneurs. Equally, it is a global leader in issues concerning inflation policy and ethical behaviors of firms. Its labor markets are very flexible, thus they make it efficient for foreign firms that want to invest there.

Since the country is characterized by small and medium sized companies and its economy depends mostly on imported products, it will thus provide an opening for UK firms to export. Being dependent on foreign trade, the country maintains a liberal trade policy and its high GDP means the standards of living are relatively high (Market Research Reports, 2016) . However, the recent global financial crisis affected Denmark’s GDP considerably, because of the small and open economy of the country. Nevertheless, its steady economic growth and successful economic policy places it at a better position to avoid future financial crisis, which means low economic risks, hence favorable markets.

When considering social issues, the Danes are characterized by coalition and conformity embracing a multilingual system. With over 80% of Danes being English speakers, Denmark provides a better cultural environment for most English firms (Hultman, Robson and Katsikeas, 2009). However, an issue of concern is the labor supply shortage because of the demographic challenges Denmark is facing and the tendency of early retirement (Hultman, Robson and Katsikeas, 2009). Nevertheless, their work culture demonstrates good team work and cooperation base, with group success taking prevalence over individual achievements. The Danes are associated with heavy consumerism for innovative products and equally, the creative industries such as marketing and advertising. And since English is the preferred language in business negotiations, it gives the UK firms that want to export to Denmark an easier task.

In terms of technology, Denmark is in a different level and its infrastructure is highly developed, which makes it easier for research on new products and technologies. It is a leader in biotech, mobile and wireless technology acoustics and software development. Hence, UK firms that deal with such industries should look to exploit that market (Pakarinen, 2012). The country provides many opportunities of creating new technologies in partnership with private firms and companies. Equally, because of the heavy consumerism of new technologies and products by the Danish population, it gives manufacturers a chance of improving their products before expanding to mass markets, making it an ideal market to test new products.

Environmental factors are becoming an issue nowadays and Denmark is moving towards clean and green energy and other green initiatives. The use of wind mill production and power is becoming prominent in Denmark, and it comes with a lot of benefits for employment and export. Initiatives by the government to ensure a green economy provide a safe environment for UK firms that want to take their businesses abroad. Denmark’s legal system is very transparent and predictable; hence, the overall regulatory environment encourages businesses because of transparency and effectiveness (Corstjens and Rajiv, 2012). The strong protection of property rights, application of commercial and bankruptcy regulations, and the recognition and enforcement of secured interests makes it safe for new businesses. Since Denmark is a member of the EU, it is opposed to trade barriers, thus it is open to new market entrants, which makes operation of business more efficient.

However, for a country like Mexico its PESTLE analysis presents a different view of what the UK firms that want to expand their exporting are to expect. Politically, the country has a federal government and each state has different business regulations and practices. Tax rates widely vary and other unionization laws such as the right to work in the states differ greatly. Local governments provide support to businesses and some can provide incentives (Ghauri and Cateora, 2010.). The high poverty levels in Mexico are an issue aggregated by geographic and political factors, and there are no sufficient policies in Mexico to allow market expansion for the UK firms. Economically, Mexico is a middle income country with widespread poverty that requires substantial economic growth, so as to create legitimate opportunities for new market entrants such as UK exporters. Equally, UK exporters are likely to experience competition from the US, which is the main exporter to Mexico and the Free trade area of the Americas.

Being a Spanish speaking nation presents a social challenge to UK firms that will want to expand to Mexico. However, their increasing population presents a market for products and cheap labor for any firm that will want to expand its exporting. Literacy levels in Mexico are considered average with access to basic education improving in the recent past. In terms of technology, most of the population has access to computers which influences their consumer and buying patterns. Most of them engage in business via the internet hence for exporters who want to exploit online markets, Mexico presents an enormous market potential (Koumparoulis, 2013, p. 36). The legal structure in Mexico is bit complicated because of the federal system, hence different states have varied corporate laws and tax regimes. There are other legal implications that can hike consumer prices and the conservative attitudes may affect new businesses. In regard to the environment, Mexico is known to have a history of cooperation when it comes to environmental issues, especially in boarder areas.

In conclusion, any UK firm that wants to expand its exporting should devise a marketing strategy that not only considers price, product, place, profit and promotion, but one that incorporates a PESTLE analysis of these new markets. From this discussion, it is evident that Denmark presents a safe investment haven where UK firms can expand their exports, as compared to Mexico whose structures are not friendly for foreign investors.