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Wise Exporters: Case Study

Introduction

Exporting is used as a means for venturing into the international markets. There has been an increased interest for people to know the performance of the export market. The quest has caused some analysts to research more about the export market (Aaby & Slater, 1989; Bilkey, 1978; Cavusgil & Nevin, 1981: Douglas & Craig, 1992; Leonidou, 1995, 1998; Leonidou and Katsikeas, 1996). Even though many people have researched the export market, there are still some doubts that arise from their studies (Zou & Stan, 1998, p.333). This paper discusses the case of Wise Exporters in consideration of the problem affecting many companies in the export market, namely, lack of consideration of a wide range of factors in developing an efficient strategy for exporting.

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Case Study

Wise Exporters is a company which has been in export marketing for five years. The company is based in the United States. It has been buying its electronics products from the USA and European local suppliers and exporting them to Africa since it started. Over the years, it has changed management and leadership with a quest for having a leadership that would put in place an efficient exporting strategy. The company realized that it needed an efficient strategy in the face of stiff competition from electronic goods exporters from Europe and the USA. Although identifying suppliers and customers were not a problem, it became clear after carrying out market research that they had not put in place an efficient strategy. It needed to identify factors that are important to influencing exporting strategy. However, it concentrated on gaining experience in export marketing, increasing its structural size by covering more markets, persistent selling and exporting, and neglected to a greater deal the 4 Ps of marketing, which is a crucial consideration to any marketing company. All factors are important for marketing success. It appears that many companies have not included all factors (or a variety of them in developing an efficient marketing strategy). The paper analyzes the factors considered by Wisep Exporters as the first priority to enhancing its exporting strategy and the actual issues/factors that any exporting company needs to consider while developing an efficient marketing strategy.

A number of factors are necessary consideration to developing an efficient marketing strategy. According to Katsikeas et al. (2000), there are two factors that influence the export market. One, the export market can be affected by the company strategy of marketing and second the export market can be affected either by season of marketing or the company management. The distance between the two countries involved in export market can help greatly in coming up with a good marketing strategy (Dow, 2000).

The current globalization affecting many countries has played a greater role in motivating many of them to get involved with the export market. Many countries have laid down goals and objectives that can help them to improve on their exports. For country or an exporter to increase in his exports, she has to know the difference between his export marketing strategies with those of his competitor. Before a company ventures into the exporting market, it needs to know how much its product is being appreciated by the local consumers (Douglas & Craig, 1989; Theodosiou & Leonidou, 2003). For a company to excel at the export market, it must have very competitive benefits compared to the rest of the companies in the export market (Naidu & Rao, 1993; Samiee & Walters 1991). Companies that lose at the export market are those that do not have a well structured market strategy.

According to June and Collins- Dodd (2000), research on export is mainly based on resource, contingency and relational concepts. The research concept explains that the success of a company at the export market is basically affected by the company activities. These activities are contributed by the size of the company, experience of the company, company competence and the marketing strategies that the company uses at the export market (Aaby & Slater 1981; Cavusgil & Zou 1994; Styles & Ambler 1994; Zou & Stan 1998).

The contingency concept suggests that the company should be able to come up with strategies that can help it be competent at the export market (Cavusgil & Zou 1994; Reid 1987; Yeoh & Jeong 1995). That is for a company to perform at the export market its current situation matters a lot.

According to Styles and Ambler (1994), the relational concept involves the issue of how the company is networked with other companies and how they relate at the export market.

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In this essay I will discuss some of the concepts that need to be used in a company for it to perform well at the export market or to develop its export marketing activities.

Organizational Factors

Company Size

The company size is one of the main factors that can cause the performance of a company to the export market to differ from another. That is to say that larger companies always perform better than smaller ones, this is because they enjoy better economics of scale compared to smaller companies (Aaby & Slater, 1989). Thus, it is justified for Wisep Exporters to expand its size and market coverage.

Recent studies on export market by (Zou and Stan, 1998; Aaby and Slater, 1989), proves that the company size directly relates with its performance at the export market. According to Bonaccorsi (1992), company size gives a varying effect to its performance at the export market. The researchers named above finally came to a conclusion that the company size still has got areas of argument concerning its influence to performance of a company at the export market. According to Moini (1995), there is no specific conclusion that can be reflected from the past studies concerning the company and its performance at the export market. Despite there being no concrete conclusion on how the company size affects its performance at the export market, some authors have clearly shown that a company size is a very important factor at the export market (Moen, 1999).

When the company size is the subject of study in a meta-analysis, it means that company size has a great impact on its performance at the export market. According to Zou and Stan (1998), increased performance of the company is realized when the size of the company is related to its sales turnover. He also continues to say that when the size of the company is considered by the number of employees it has, it ends up losing at the export market. Therefore, for a researcher to carry out his study he has to consider carefully what measurements he will use to represent the company size of his case study.

Company Export Experience

Many studies carried out in the past on export market does not agree on the issue of the export experience being a reason for the company to perform well or not at the export market. According to studies carried out on the export market, the company export performance is dependent on its competency at the export market (Cavusgil & Zou, 1994; Dominguez &Sequeira, 1993; Dean et al, 2000). According to Copper and Kleinschmidt (1985); Naidu and Prasad (1994), company‘s export experience does not relate to how it will perform at the export market. Thus, Wisep Exporters need to consider experience of marketing on the international scene as a minor factor for consideration.

Company Export Motivation

According to Dean et al, (2000), the company’s motivation to export market always ends up into a good performance at the export market. According to June and Collis-Dodd (2000), when a company persistently gets involved with exporting, it turns out to be that at the end it will perform best at the export market. For a company to be persistence at the export market it has to be influenced by its marketing strategic structure that was planned by the management (Johnston & Czinkota, 1982; Katsikeas & Piercy, 1993; June & Collins –Dodd, 2000). It is important therefore, for Wisep Exporters to continue being persistent in the export market for electronic goods.

Persistence or a self motivated exporting company performs better at the export market than a company that exports on timely basis (Johnston & Czinkota, 1982). Companies that perform best at the export market are those that are persistent on their sales and those that are always informed of the export market activities (June & Collins- Dodd, 2000).

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Company Marketing Strategy Factors

The management marketing strategy influences the performance of a company at the export market. A well planned marketing strategy will influence a company’s competency at the export market (Porter, 1980, 1986). The ability of a company to compete at the export market depends on the planning of the marketing strategy by the management. Hence, Wisep Exporters needs to have an efficient management team to spur its marketing strategy. As each company structures out its marketing strategy, it has to consider its local competency and its requirements for competency at the export market (Aulakh, Kotabe & Teegen, 2000).

A company that keeps on improving its marketing strategy ends up producing products or services that are attractive to its consumers. Therefore, it is important for Wisep Exporters to put in place a dynamic marketing strategy. This can be only achieved by ensuring use of superior trade mark, use of advanced technology during production and use of new and creative products (Miller, 1988). When a marketing strategy is based on cost-leadership it ensures that the consumers get products of high quality at lower prices compared to the others (Porter, 1986). Cost –leadership strategy helps Wisep Exporters to obtain above average returns at the export market because it can easily reduce prices of its products so as to match with that of its competitors and still at the end make profits from its sales (Miller, 1988).

According to Cavusgil and Zou (1994), export marketing strategy is a plan that helps a company to control the external and internal forces so as to meet its goals at the export market. The major success of a company at the export market is influenced by product pricing, distribution and advertisement (Katsikeas, Leoniduo & Morgan, 2000). When planning a marketing strategy for an international market, a company has to consider whether to use its standardized strategy or come up with a new one that fits to the international market environment (Cavusgil & Zou, 1994; Shoham, 1996). The degree of making up a new strategy plan or sticking to the original one is dependent on product, company, market, management and the environmental conditions of the export market (Dean, Menguc & Myers, 2000). The 4ps are important consideration for Wisep Exporters while seeking to develop an efficient marketing strategy.

With reference to the many studies carried out, it can be said that performance of a company at the export market is greatly influenced by its marketing strategy. This ends up to product acceptance by consumers due to its high quality (Shoham, 1996; Dominguez & Sequeira, 1983; Louter, Ouwerkerk & Bakker, 1991) product price strategy (Shoham, 1996, Samiee &Anckar, 1998, Styles & Ambler, 1994), trader support (Cavusgil & Zou, 1994), sales plan (Shoham,1996) and advertisement (Styles & Ambler, 1994; Shoham, 1996).

Companies that keep on improving their products are always willing to come up with a plan that will enhance their products exporting (Dominguez &Sequeira, 1992). An improvement on product influences a company’s performance as well as paves a way for the company to enter into the export market successfully (Cavusgil & Kirpalani, 1993 & Christensen et al, 1987). Those companies that have no experience of the export market finds it easily to export their original products and this may negatively affect their export performance (Kirpalani & Macintosh, 1980). In conclusion it can be said that improving product influences export market performance positively.

Changing of prices has an advantage of export performance when it is higher than the local prices and vice versa (Koh & Robicheaux, 1988). According to Cooper and Kleinschmidt, 1985, changing of prices applies to those countries that are exporting to nearby countries and mostly they end up exporting less and poor company growth. In international export market mostly they pressurize on reducing the prices and this ends up to company performing poorly at the export market. According to Shoham (1995), the prices of the international market should always be constant.

A company that makes use of good sales and distribution strategy by use of middlemen always ends up succeeding in its exports (Aaby & Slater, 1989; Cavusgil & Zou, 1994; June & Collins-Dodd, 2000). For a company to succeed at the export market, it has to persist on good distribution structure and frequently checking out on their distributors’ performance (Beamish, Craig & McLellan, 1993). According to Shoham (1999), it is not easy to keep on changing distribution structure.

According to Shoham (1996), Promotion and advertisement plays a greater role for a company to perform at the export market. The best form of advertisement at the export market is the personal contact (Dow, 2000).

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The above discussion brings out the following questions;

Is there a specific structure of distribution that a company should use?

  1. Should every company consider product adaptation?
  2. Should all companies use similar market strategies?

Briefly, from the above discussion the management of each company should sit down and come up with a distribution structure that will favor the performance of specific products at the export market. In short this means that every company should have its own channel of distribution basing on the type of its products and the distance between its export markets.

For product adaptation this will be dependent on the size of the company and the market of its products. For instance a smaller company should not consider product adaptation because it will not benefit from economics of scale and vice versa. If a company is exporting its products in an internal market it should consider product adaptation compared to a company that exports its product to nearby countries. Each company should come up with its own marketing strategy so as to influence competency at the export market and therefore enhancing their performance due to competition.

Conclusion

From the above discussion, it can be concluded that the performance of a company at the export market is influenced by its size. This is to say that a larger company is expected to perform better than a smaller company because it can easily adapt to varying market conditions.

The company export experience does not play a very greate role in performance at the export market. This is so because a company that has been in the export market for years is expected to perform better than the company that is venturing to export market for the first time.It can also be concluded that a company’s export motivation influences most of its performance at the export market. This is so because a company that persists on the export market is expected to perform better than a company that ventures into export market on timely basis.

Finally, it can be concluded that company’s marketing strategy influence s greatly on is performance. This is so because a company that has a well laid down structure of marketing strategy it always benefits in high sales due to high quality products produced. This in turn attracts more consumers to use their products and in the end raising the sales turnover, therefore leading to an improved performance at the export market. A well planned marketing strategy ensures that the consumers get the products or services on time.

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