Market
Internationalizing the Small and Medium Sized Firm – four cases
One aspect of the internationalization process is that you need to find and attract new customers in other countries. The companies in this study are all dependent on local marketing since they are very small and have to attract local customer within the countries they are entering. They do not possess well-known international brands, such as IKEA. Therefore, marketing towards new customers is usually very costly since you have to spend money on building brand awareness etc. (Kotler 1991). The general aspects of marketing in a foreign country is to be able to adapt your product/service to the local customer, know the local demands, i.e. understand the local market in general (Johansson 2000). One strategy of marketing when entering a new country that has proven to be successful is the use of reference-customers1). The possible success of this depends slightly on what kind of product/service that the company is offering, but initial customers are always important as indirect marketers (Kotler 1991). The importance of using early adopters on a new market to further evaluate the product’s/service’s ability to attract customers is also discussed and supported by Kotler (1991).
The need to fully evaluate the potential of a market before deciding to enter is quite obvious. The general development towards a global information society has made it a lot easier for companies to learn about foreign markets. The incremental, and thereby learning approach described by the Uppsala-researchers is therefore not to the same extent necessary, since it is possible to obtain most of the information already from the home market. Being an SME it is however a quite difficult task, since it will be too expensive in comparison to their size to make it very thorough. They cannot as large companies afford to spend too much on research; this is why Trade Councils and specialized research companies are probably one of the most cost-effective solutions. Evidence also shows that young firms tend to neglect market research to some extents; they use basic market data together with hunch feelings (Johansson 2000). If a market study should be conducted fully it is important to take all aspects into consideration. Malhotra (1999) presents a useful framework for this, using an extended version of his domestic model he adds factors such as; marketing environment, government environment, legal environment, economic environment, structural environment, informational and technological environment as well as socio-cultural environment. The need to fully observe and acknowledge the impact of cultural differences on costumer behavior and preferences are stressed by Johansson (2000).
One specific aspect of research is to choose the timing of market entry. This has had a large impact on the studied SME’s. There is no recipe to foresee the future but realistic and cautious calculations are the least that could be asked for. There are numbers of examples where too optimistic ideas about the development of the market and specific industries have caused failures (Schimanski 2001).
