Global Marketing -- Country Penetration Strategies
Global marketing refers to the degree to which a business organization strategizes to operate in an international market in a competitive way. This paper focuses on the Country Penetration strategies that are formulated to ensure a potential entry and a sustainable future into a new international market (Lord & Ranft, 2000). The increasing trend towards Globalization has opened attractive opportunities for large-size organizations to expand their business operations in potential international markets. In order to thrive and develop their strong presence in those markets, organizations need to perform a comprehensive situational analysis and formulate marketing strategies so that they can avail the attractive opportunities and encounter the possible threats (Lord & Ranft, 2000).
This paper covers all those country penetration strategies that are devised by large MNCs when they target some international market as a part of their expansion or growth strategy. These include; a comprehensive analysis of the economic, social, cultural, political, and technological factors; mission and objectives of the organization; strengths, weaknesses, opportunities, and threats; and the marketing and promotional efforts for their products or services (Helsen, Jedidi, & DeSarbo, 1993).
The Marketing department in an organization is responsible to perform this analysis of internal and external environment and formulate effective marketing strategies for the business. The following sections discuss the major Country Penetration strategies and give explanation to how these strategies are important to the expanding organization and how they can help to meet the organization's objectives given the complexities of today's markets.
Observe the Country's Profile:
Before making the strategic decision to target a specific country for international expansion, the very first step for the organization is to take a bird's eye view on that country's profile. It includes country's history, its current ranking on the world's economic indicators, political grounds, and industrial growth (Lord & Ranft, 2000). These major factors help the Company's Top Management in making an effective decision on whether to invest in that country or not. Although company performs the economic, political, and the complete market analysis in the later phases, but the initial look at the country's profile enables it to choose the most attractive business environment among different alternative options (Helsen, Jedidi, & DeSarbo, 1993).
Situational Analysis as a part of the Country Penetration Strategies
Situational analysis consists of both internal and external environment analysis. This analysis is the most complex process in the country penetration strategies because it forms the basis for which the organization finally decides its next target market (Achrol, 1991).
A. External Environment Analysis and its importance for the Organization in Penetrating a Country:
This analysis consists of the evaluation of all those factors that are present in the external environment of the business and may affect the company's business in one way or another. The company may have been performing excellent in its home country, but the external environment of the target country is totally different from that of home country (Helsen, Jedidi, & DeSarbo, 1993). Therefore, a complete external environment analysis is essential to be performed to evaluate the intensity of all the present forces in the target market. The external environment consists of economic, socio-cultural, political and legal, technological, and competitive forces (Lord & Ranft, 2000). These forces are now discussed below:
1. Economic Forces:
Economic forces include; inflationary pressures, industrial growth, unemployment, GDP, GNP, population growth rate, exchange rate, interest rates, literacy level, access to financing facilities, and the like (Tellis, Stremersch, & Yin, 2003). A deep analysis of these forces is crucial as they may turn in favor or against the company's business and impact its profitability. Typically, MNCs prefer to penetrate in the markets where all or most of the aforementioned factors are in favor of their business (Lord & Ranft, 2000).
2. Socio-Cultural and Demographical Forces:
These factors portray the earning, spending, and living patterns of the general public in the target market. The analysis of these forces is done more carefully as compared to other forces. Reason being, it gives the most important information to the marketing department, that is; the customer preferences (Helsen, Jedidi, & DeSarbo, 1993). A company wishing to expand in some other country carefully analyzes whether its products will be liked by the target country's public or not. The major socio-cultural factors include; life styles and preferences in life, population shift from rural to urban areas, language, eating habits, etc. These factors are also examined to screen out the most potential target customers from the whole general public (Dickson, & Ginter, 1987).
3. Political, Legal, and Governmental Forces:
Government behavior is also a big force that may favor the new entrants in the country or hamper the whole business expansion with just one new regulation or law (Tellis, Stremersch, & Yin, 2003). Companies need to analyze the political situation in the target country, the law and order situation, and the major Governmental policies, for example taxation system, fiscal policy, trade policies, behavior towards industrial sector, and the like. In the complexities of the global business environment, organizations analyze these forces to find the most favorable ways to do their business in the target country (Lord & Ranft, 2000).
4. Technological Forces:
In today's business environment, Information Technology is the biggest factor that distinguishes a competitive and dynamic organization from a non-competitive and static organization. The use of advanced technological products and machinery in the business processes is the key to achieving cost efficiency and establishing a brand image. Therefore, organizations essentially need to institute the latest technology in their business processes as a part of their country penetration strategies.
5. Competitive Forces:
Global marketing also brings some big challenges for MNCs. A stiff competition with top market leaders in the target country is the biggest challenge of all. The company analyzes the intensity of competition, the market share possessed by each large competitor, the core strengths and distinctive competencies of those competitors, and the strategies they use to compete in the market. The analysis of the competitive environment is essential because it acquaints the Management with the possible threats that may arise due to the stiffness of competition in the target market.
B. Internal Environment Analysis and its importance for the Organization in Penetrating a Country:
The analysis of external environment just gives information about the factors that are out of the control of the organization, but the analysis of internal environment tells the Management what the company intends to achieve and what are its core strengths and major weaknesses. This analysis is important for the Management to make it familiar with the competencies the organization possesses and the strategies it has espoused in its life to reach the current position (Tellis, Stremersch, & Yin, 2003). For the country penetration strategies, the internal environment gives useful information to the Management on how it can use its current strengths to compete in the new country in an effective way (Helsen, Jedidi, & DeSarbo, 1993).
1. Mission and Vision Statement:
The mission statement expresses the company's objectives; what it intends to achieve and what contributions it wants to make to the society it serves. The vision statement tells the company's long-term commitments to its stakeholders and the Community at large. These statements act as a framework for the Management on what quality and commitments it will maintain when it will enter in a new market.
2. The SWOT Analysis:
SWOT analysis is important for the organization when it penetrates in the new country because it entails the important information on its biggest strengths with which it can compete effectively and strengthen its position in a short period of time; the weaknesses which it has to overcome; the opportunities which it should avail; and the threats which it has to encounter. SWOT analysis is also useful for the investors from the target country as it helps them in making their investment decisions in favor or against this organization.
Marketing Strategies as a part of the Country Penetration Strategies
After the organization has performed a situational analysis, the next step is to formulate marketing strategies for its products. These strategies are important for the organization to attract the potential customers and snatch the market share from the existing competitors in the industry.
Defining Target Market:
A product cannot target all the segments of the society; the organization must define a specific class of customers that will or can be made to buy its products (Gronroos, 1994). Defining a specific target market is important in the country penetration strategies because it serves as the basis for all the other marketing strategies, which are; product, price, promotional, and distribution strategies (Waterschoot & Bulte, 1992). Generally, a target market is defined on the basis of general consumers' life style, income level, age and gender, demographics, and religious beliefs (Dickson, & Ginter, 1987).
Marketing Mix and its importance for the Organization in Penetrating a Country:
1. Product Strategies:
A product that is successful among the people in one country may not be acceptable by…