E-commerce is a low risk business strategy for companies to use for developing an international customer base. The combination of global marketing with an Internet distribution method allows many companies to try their hand at reaching growing target markets overseas.
Global Internet Marketing
Going global is even easier than it has been in the past. Small entrepreneurs can market their product overseas from their living room, while large corporations have access to consumers across the world 24 hours a day by using the Internet. How is this possible? The Internet and the increasing growth of technology make it easy to reach consumers with websites. The Diaper Sponge Pants Company has recently expanded their market to both India and China. Fortunately, it has been a very easy process due to an E-commerce framework that is available. E-commerce is the buying and selling of products or services over electronic systems such as the Internet. Using the Internet to sell to international consumers is a very low risk business decision. Companies do not have to tie up huge financial investments through franchising, direct investment or brick-and-mortar stores overseas.
Pros of Internet and Global Marketing
The Internet and new technologies have allowed companies to easily expand to overseas markets. Diaper Sponge Pants has a dynamic website that allows international orders. It also provides a tremendous database for the company to use to build their customer base. Software has been developed to translate between languages, which makes communication with international customers easier for companies to implement. There is also software that provides currency conversions.
Global shippers, such as UPS and FedEx, help provide easy international logistics for product expansions. The biggest advantage is the ability to reach huge, growing target markets to increase corporate market share and profits. Countries such as India and China have a developing middle class with a large disposable income. The market is ripe for American companies to promote their products and services for long-term growth opportunities. It is very easy to customize websites for each international country, which can reflect local customs, currency and advertising messages.
Cons of Internet and Global Marketing
Along with advantages, there are also disadvantages and issues for companies who use E-commerce. Diaper Sponge Pants Company had an unconditional refund policy that they offer as part of their promotional mix. They have run into an issue when trying to sell their diapers with that promotion in Germany. Evidently, Germany has a maximum 14-day return policy, due to a court issued ruling. This law made it difficult for Diaper Sponge Pants to promote their unconditional refund policy.
Another key difference is the use of credit cards. Many countries do not embrace or accept credit cards. Diaper Sponge Pants relies on credit cards for almost all of their online transactions. For example, many consumers in Japan do not use credit cards. Instead, they order their products online and pick them up at a local brick-and-mortar store. Many other countries also do not like to use credit cards, because they feel it gives too much private information out to companies. This is an issue for Diaper Sponge Pants as they rely on website sales using credit cards and then delivering the product with their shipper. Diaper Sponge Pants needs to establish a brick-and-mortar store who will handle their diaper orders for Japanese sales orders.
The Marketing Mix
Companies can successfully use the Internet to reach international customers. The marketing managers must take into account marketing mix adaptation to ensure that they are promoting correctly to the different target markets. This means that they have to understand different cultures and make adjustments to the marketing mix. For example, Diaper Sponge Pants came to realize that Indian consumers did not have the disposable income to purchase very large amounts of the disposable diapers. The marketing mix needed an adjustment in the 'P' for product. The diaper company developed a diaper product that contained smaller amounts of diapers, a smaller price and the ability to be stocked in stores with smaller shelf space.
Let's review. Companies need to consider developing an international customer base in order to stay competitive in the global marketplace. E-commerce is one method that can be used to enter an international market. The risk is lower than establishing a brick-and-mortar store or directly investing overseas. There are pros and cons to Internet marketing, and the need to grow market share and the availability of international profits make it an easy decision to market overseas.
After viewing this lesson, you'll be able to explain the advantages and disadvantages of using the Internet for global marketing.