This document discusses strategies for international niche marketing by small and medium enterprises (SMEs). It outlines key motivators and barriers to internationalization for SMEs. Successful international niche marketers must have good market information and understanding, provide high quality service, pursue small innovations, and evaluate appropriate market entry strategies in each country. Electronic commerce benefits SME internationalization by enabling real-time global communication and collaboration at low cost.

1. INTERNATIONAL NICHE MARKETING STRATEGIES FOR SMEs Session 5

2. STRATEGIES FOR SME INTERNATIONALISATION Exporting International niche marketing Domestically delivered or developed niche services Direct marketing including electronic commerce Participation in the international supply chain

3. KEY MOTIVATORS TO INTERNATIONAL MARKETING Reactive stimuli: adverse domestic market conditions opportunity to reduce inventories availability of production capacity favourable currency movements opportunity to increase the number of country markets and reduce market related risk unsolicited orders from overseas customers Proactive stimuli: attractive profit/growth opportunities ability to easily modify products for export markets public policy programmes for export promotion foreign country regulations possession of unique products economies from additional orders Managerial elements: presence of export minded manager opportunity to better utilise management talent and skills management belief in value of exporting

4. BARRIERS TO INTERNATIONALISATION Too much red tape Trade barriers Transportation difficulties Lack of trained personnel Lack of export incentives Lack of coordinated assistance Unfavourable conditions overseas Slow payments by buyers Lack of competitive products Payment defaults Language barriers Limited information to locate or analyse markets

5. SUSTAINING AND DEVELOPING THE NICHE The firm must: have good information about the segment needs have clear understanding of the important segmentation criteria understand the value of the product niche to the targeted segment provide high levels of service carry out small scale innovations seek cost efficiency in the supply chain maintain a separate focus E.g. by being content to remain relatively small concentrate on profit rather than market share evaluate and apply appropriate market entry and marketing mix strategies to build market share in each country they wish to become involved in.

6. THE DIFFERENCE BETWEEN EXPORTING & INTERNATIONAL NICHE MARKETING

7. IMPACT OF ELECTRONIC COMMERCE Benefits Real time communication across distance Levelling of corporate playing field Leading to more rapid internationalisation Sources of competitive advantage Creating new opportunities Erect barriers to entry Cost savings through on-line communication Facilitates inter-firm collaboration Marketing and sales promotion Data transmission

8. MULTILATERAL ASPECTS OF THE INTERNATIONALISATION PROCESS Johannson and Vahlne (1992)

9. GEOGRAPHIC DEVELOPMENT OF SMEs

10. GROWTH FOR NICHE MARKETERS

11. EMERGENCE OF ‘BORN GLOBAL’ Trends Increasing role of niche markets Need for small firms to specialise to compete with MNE’s Growing demand for specialised / customised products technology permits economical low scale production Communication technology advances Allowing management across borders Quick response time, increased flexibility and adaptability Accessibility of knowledge, tools and assistance E.g. funding, joint research programmes, technology transfer Growth of international partnerships

12. SUPPLY CHAIN INTERNATIONALISATION MNE OUTSOURCING Reasons for outsourcing reducing capital requirements of business Managing difficulty of developing quickly improving flexibility firms reluctant to take risks in non-core areas economies of scale of suppliers expertise of business support service providers downsizing may leave management resources stretched and unfocused Disadvantages loss of know-how costs of managing outsourced supplies

13. OUTSOURCING FOR SMES Advantages opportunities for learning from MNE security through reliable and predictable ordering able to focus on production and technical issues Disadvantages need for dependence on one/two major customers internationalisation driven by demands of MNE continual pressure to improve product and operations weakening of external marketing

14. MCKINSEY 7S FRAMEWORK Source: McKinsey and Co

15. ANSOFF GROWTH MATRIX

16. FACTORS AFFECTING SME INTERNATIONALISATION SME generic strategy Segmentation, targeting and positioning Competitive advantage Growth options SME internationalisation strategy SME generic strategy Customer base Industry structure and competition Supply chain Market factors Company factors Stage of internationalisation Ambition, capabilities and attitudes to risk Motivations and barriers Country and market entry selection

17. PRODUCT STRUCTURE

18. GEOGRAPHIC STRUCTURE

19. LEVELS OF INTERNATIONALISATION

20. CHARACTERISTICS OF SUCCESSFUL INTERNATIONAL B2B MARKETERS

21. REASONS FOR FAILURE Failure to effectively scan the international environment Over dependence on one product Ease with which larger, more powerful competitors or a number of smaller local competitors can copy the idea Failure to respond to worldwide changes in customer needs Failure to plan financial resources Failure to plan for fluctuation in currency values Failure to manage and resource both market and operations expansion Prohibitive cost of enforcing patents and trademarks in foreign courts which may favour local firms