Market Penetration Strategies
For this case, several effective strategies of expanding the company brand into the foreign markets, and making it internationally recognizable. However, it is important to underscore the fact that competition on the local markets has its unique “local” characteristics, which the company should meticulously research before venturing to enter a new market (Davidson, 2004). Therefore, using a combination of global expansion strategies is justified in these cases.
In our case, the following approaches to international brand expansion and the first sales in other countries are actionable:
Product Differentiation. Differentiation strategies are focused on the development of unique product characteristics, which are not offered by the competitors (Stutz & Warf, 2007). Emphasizing unique selling propositions of the products during the marketing and advertising activities becomes a critical aspect of a sales campaign (Porter, 1985). It is also noteworthy to mention that the ‘vertical’ type of product differentiation, i.e. by changing one feature of a product, and using the media to inform potential customers about this advantage of the company’s products.
Cost Leadership. Developed by Michael Porter, this strategy is recognized as the most effective method of getting competitive advantage over the competitors. Making the products of the company less expensive, while maintaining the same quality standards is conducive to the global advancement of the company brand recognition (Porter, 1985). In meantime, implementation of this competition approach requires technological supremacy over the competitors of the company (Stutz, Warf, 2007). Other factors that drive cost leadership are economies of scale and scope, effectiveness of the company management and cumulative experience of the project workforce. At the same time, cost leadership should not be confused with price leadership, which is the main cause of the extremely low profit margins.
Operational Effectiveness Strategy – this strategy is successfully used by many transnational manufacturing companies (Davidson, 2004). Its key rational is that the company should carry out its internal business processes better than the competitors do (Porter, 1985). This approach significantly reduces the time, which is required to take a managerial decision, thus making product launches sooner and increasing their lifespan.
Formation of Strategic Alliances and Joint Ventures. Concluding agreements with the companies, which operate in the same market, on the local level has several indisputable advantages:
Shared risk. Because the products of strategic partners usually complement each other, the risks of a potential market failure become shared between them, and negative market exposure is offset during the times of economic recession.
Mutual knowledge - the local strategic partner is usually more skilled in terms of supply chain management, marketing and distribution in the targeted area of operations.
It will be possible to access the markets sooner. Because strategic partnership free the company from a highly burdensome localization stage and the company may start using its partner’s resources on the local market, launching a new product on some local market sooner than usually becomes possible.
Achieving economies of scale – when resources of the different companies are pooled together, achieving economies of scale will happen sooner than under a usual market penetration scenario.
Innovating the Products and the Processes. Michael Porter identifies innovation as one of the critical aspects for delivering a unique mix of values to the customers, and thus achieving market excellence. The key aspect in this regard is to develop a cutting-edge technology, thus ‘leapfrogging’ the competitors.
At the same, the today’s business practice shows that having several business strategies at the same time is important because the deficiencies of a one strategy will be compensated by the advantages of another one (Stutz & Warf, 2007)
References
Davidson, W. (2004). Breakthrough how great companies set outrageous objectives, and achieve them. Hoboken, N.J: Wiley.
Porter, M. (1985). Competitive advantage: creating and sustaining superior performance. New York London: Free Press Collier Macmillan.
Stutz, F. & Warf, B. (2007). The world economy: resources, location, trade, and development. Upper Saddle River, NJ: Pearson Education Inc.
