International Marketing Screening
The expansion of business to foreign locations is a strategy that enhances additional growth and revenue. At the same time, the decision to move to the international market poses challenges for the management. The choice of an appropriate market requires extensive information research and proper data processing to ensure that the offered product satisfies consumer needs. Therefore, international market screening is a comprehensive and extensive process based on numerous theories of decision-making mapping. The current paper reviews the available literature in the field of market screening and target market selection while offering a critical evaluation of the proposed models. Additionally, it applies the reported ideas to the case of Apple iWatch.
Models of International Expansion
The international market consists of abstract elements that management needs to recognize and evaluate. The models for international market screening consist of many different approaches. Researchers in social studies transfer their knowledge into the business field due to behavioural uncertainty in marketing management. Therefore, creation of mental maps to identify the threats and opportunities is one of the methods used in international market screening (Andersen & Strandskov 1998). Cognitive mapping is a powerful tool in international expansion as it provides resources to update obsolete information, create a unified explanation of different characteristics, and arrive at a single decision supported by team members. Moreover, it is an easily accessible and commonly understandable model of decision-making. The process starts with identifying the relevant pieces of information, coding them into sub-groups to tackle the problems by topic and capitalise on benefits. The groundwork for information search allows the management to create algorithms of responding to particular issues that are likely to arise in new destinations (Hodgkinson, Maule & Bown 2005). As a result, the uncertain market is disseminated into familiar responses and concepts, which improves the decision-making and comprehension. The theory is practical and relevant due to its time and resource efficiency. Moreover, it ensures that all team members understand peculiarities of the venue.
Through the international market screening, the companies get an opportunity to learn about the prospective regions and make a sensible decision about the strategy of entrance. Another popular international market screening technique is the three-step model that requires management to identify the deciding factors, assess the proposed countries, and select an applicable venue (Marchi, et al. 2014). Upon the validation of the selected expansion region, the management starts building a marketing strategy to meet the demands. Therefore, the model has value for management in terms of downward market selection (Doherty 2009). Contrary to cognitive mapping, the three-step model starts with the planned objectives. The company identifies the objective of expansion, establishes long-term goals, and checks the country profiles. Similar to other screening approaches, it is an information-intense process that starts from projected outcomes and moves backwards (Contractor, Kundu & Hsu 2003). The benefits of the approach are in the reconciliation of goals and reality through information search and market selection. It is practical for enterprises of all sizes due to its low resource-intensity. Also, the theory is relevant because it is applicable to any circumstances.
Although traditional market selection approaches are effective, they do not comply completely with the requirements of international expansion. A traditional approach to entering foreign regions stems from defining the core competencies of a company and then comparing them with market demand (Sakarya, Eckman & Hyllegard 2007). Nevertheless, it is not universally acceptable for international expansion. Many firms have to choose a particular core competency to transfer it into the foreign market to fill in the missing niche (Martin, Swaminathan & Tihanyj 2007). Moreover, globalisation of business operations may require the management to re-evaluate the core competencies and adjust their operations to the country of business. Therefore, the process stimulates creative thinking, information search, and adaptability of an organisation. At the same time, going global creates additional niches of operation that result in new sources of revenue.
Internationalisation requires adaptation and learning as the new environment should correspond to the core competencies of the organisation. At the same time, different schools of through propose various ways of approaching the process of entering foreign markets. The eclectic theory suggests that information is of paramount importance for an organisation planning to expand abroad. Insufficient awareness of the target country, missing data about customers and flawed entry mode selection can result in a fiasco (Sakarya, Eckman & Hyllegard 2007). In Dunnings perception, firms should select an expansion strategy based on the transaction cost analysis. The advantages proposed by foreign markets in terms of resources are calculated together with internal evaluation of the companys processes (Ayazlar 2015). OLI elements (ownership, location, and internalisation) create a framework for choosing the entry mode and strategy for international expansion. In essence, the theory proposes that any firm can enter the international market with the relevant knowledge and sufficient decision-making methodology.
Another popular approach to entering a foreign market is Uppsala model of international expansion, which is grounded in the idea of gradual growth. An organisation builds a strong ground on the local level and then ventures into foreign markets. The idea is to enter regions with similar cultural and economic background and gradually expand into unknown territories (Johanson & Vahlne 2009). It is a relevant and practical theory as it allows companies to build competence upward and work in a traditional bottom-up method. Nevertheless, Forsgren and Hagstrom (2007) challenge Uppsala model by claiming that its long-lived tradition is not applicable to the modern fast-paced world, where the first-comer advantage is critical. Thus, although Uppsala model seems to be a safe method of entering foreign markets, it is time-consuming.
The two-stage model is a popular strategy for international market segmentation and targeting, particularly among large corporations. The process includes macro and micro analysis of the area of interest. Theoretical and practical application of the method proves it an effective way of entering a foreign market as well as a cluster of regions based on consumer preferences (Gaston-Breton & Martin 2011). Sakarya, Eckman, and Hyllegard (2007) suggest that reliance on macro-economic factors can significantly hinder possible success of international expansion. In response to the defined problem, the researchers offer adding market potential and emerging dynamism as additional elements in evaluation. The two-step model for international market segmentation allows familiarising with the unknown customers through identifying them with familiar local segments (Tkaczynski, Rundle-Thiele & Beaumont 2010). After screening, segmenting, and familiarising with the destination for international expansion, a business has to establish a stable position in the market and win a competitive advantage.
Building a Competitive Advantage
A competitive advantage is a prerequisite for any business, either local or international, to yield revenue. In order to add value to a company, the management has to establish an image in the region of operations. The literature offers many approaches to creating and sustaining a competitive advantage through establishing the important elements of international business. The multi-tiered approach to creating consumer value requires venturing into different levels of influence. Therefore, the countrys profile contributes to the success of business operations. Smit (2010) proposes that Porters Diamond of competitive advantage defines the attractiveness of a region for international business. The author suggests that countries compete for the world market in the same way as companies do. As a result, internationalisation starts with identifying the destination. Matching the companys core competency with the countrys profile creates a fruitful tandem in the long-run (Sakarya, Eckman & Hyllegard 2007; Smit 2010). The choice of a country for international expansion should start from defining corporate needs and matching them with a countrys profile.
The second level of analysis is the corporate strategy and its perspectives in the new locale. The value chain model defines the firm level of success and competitiveness. For a company to create a competitive advantage, it has to realise the demand, respond to it, and receive a positive feedback. When the chain is established in the initial organisation, it has to transfer to the international destination with no regard to the mode of entry (Taylor 2010). The international marketing starts at the local level with establishing a reputation with customers, perfecting the processes, and creating coordination between different departments (Ensign 2001). Therefore, creating a value chain is the crucial goal to be completed before venturing into the international market.
Finally, industry analysis requires careful consideration of the competitive advantages of the international market. Porters five forces create a framework for evaluating the competitiveness of the industry abroad to ensure that the plan to internationalise will be successful (Stonehouse & Snowdon 2007). The search of information on the competitors on the international arena is a critical strategy element as it helps to evaluate the attractiveness of the country as well as identifies the companys competitiveness (Hodgkinson, Maule & Bown 2005). Understanding the rivals is necessary for building a competitive advantage and capitalising on it.
The topic of internationalization, particularly among small and medium enterprises, has attracted a growing interest in the research field. The reason is that the contemporary globalized world presents numerous opportunities for organisations with small budgets. Therefore, the difference between the approaches to international expansion adopted by SME and MNE is the subject of evaluation. Firstly, the research revealed that small companies tend to choose a non-systemic approach to expansion (Musso & Francioni 2012). The limited availability of financial and human resources does not allow SME to allocate sufficient time and effort to systematisation of screening and strategizing. Consequently, the management takes the approach of trial and error instead of informed projections (OECD 2009). On the contrary, multinational corporations adopt a systematic approach that originates from a detailed analysis. The reason is that big companies manage larger resources and can allocate more of them to studying new markets (Musso & Francioni 2012). Nevertheless, the statistics show that both systematic and non-systematic approaches bring positive outcomes for business.
The described processes relate to organisations that aim to enter foreign markets after some time of operating in the local area. However, there is a specific type of companies that are born global and attempt to become international from the beginning (Knight & Liesch 2016). Internet-based organisations, in particular, are established as global businesses due to the lack of barriers for operation. Therefore, the process of entering the international arena has changed in the recent years. At the same time, the approaches and ideas discussed above equally apply to different firms. Thus, small enterprises should not conserve the resources but capitalise on them, as presented in the example.
Internationalisation of Apple iWatch 2
Apple iWatch 2 is an updated product of Apple Inc. that is internationally available for sale. The manufacturing company has the reputation of a globally recognised brand, which is a strong point for building a competitive advantage. The corporation has been creating considerable confusion about the launch date of iWatch 2 to excite interest among the consumers around the world. In business terms of international expansion, Apple seems to have done excellent market evaluation and effective segmentation for the product. Firstly, the target customer of iWatch 2 is universal and includes sport-lovers with active lifestyle and a thirst for adventures. The segment is present in every country where Apple operates. Therefore, the same approach to positioning the product works on the international arena. Secondly, the company is a large multinational corporation that uses a systematic approach to identifying the regions of marketing. Apple has offered some countries to pre-order the gadget to evaluate the level of its purchasing power (Leung 2014).
The theory that applies to the case of Apple iWatch 2 is the eclectic theory of internationalisation. The company offers the product in every country of its operation with the aim to generate considerable revenue from sales. The management does not test the product on the local level but capitalises on the time resource by launching it internationally. Moreover, the competitive advantage of the strategy stems from internal operations as Apple cooperated with Nike to introduce multi-brand experience for the users (Apple, Inc 2016). Another important factor about iWatch 2 is that it is manufactured by the company that has a value to the customers as proven by other products. It contributes to the competitive advantage in the international market. Finally, the organisation is becoming a global firm and a universally recognised brand, which facilitates the international market entry of iWatch 2. Therefore, the success of the international launch of Apple iWatch lies 2 in the long history of Apples global presence, its competitive advantage in sleep design and cooperation with other famous brands, and the marketing strategy of pre-launch ordering and advertising.