The not-so-obvious importance of strategy in international marketing

Ever seen a foreign client buying your product just because of your transportation modes, contractual and payment agreements, insurance policies, or customs duties?

I’m not saying that these aspects are not important, on the contrary: they become essential once you have found a good client who is interested in your offer and services, but how to find that client? This is obviously a prerequisite for the application of any trade technique and tool.

For example, it’s just a matter of plain common sense to see that a contractual agreement, a delivery method and a payment term should be tailored to the chosen type(s) of clients, also considering the competitors’ behavior.

However, I found that most public and private organizations that offer services, courses, suggestions and web-based tools to support SMEs’ internationalization activities, mainly focus their attention on trade techniques, often ignoring the need to develop – as a prerequisite – an adequate awareness of the critical importance of strategy in making internationalization choices and investments.

Too bad that about 98% of the Italian manufacturing and service activities is generated by micro and SMEs, and that micro and small companies rarely have the sensitivity and skills to successfully make strategic choices like, for example, that of entering a new foreign market instead of another.

What is the purpose of attending a seminar on international contracts and payments if we don’t have the opportunity to learn about the best approaches for identifying to which type of prospective clients these contracts and payments conditions will be proposed?

By the way, as Jack Welch summarized in his famous book (Winning) about fifteen years ago, strategy is just intelligently deciding how to allocate resources, given a very specific market and competitive context, and this has more to do with common sense than with techniques and technicalities.

The problem is how to use, in practice, that common sense: this needs to be taught, given the growing complexity of the business environment.

Furthermore, the problem of privileging techniques at the expense of strategy is frequently compounded by a major underlying factor:

• the same government and public entities that sometimes facilitate the access to financial resources and services by these companies are the first at adopting a non-strategic and unfocused approach in the allocation of funds and professional help: the often limited amount of resources made available is equally distributed without specific selection criteria in terms of objectives, industry sectors and/or type of companies
• the typical result is that a large number of beneficiaries of these funds and assistance will count on an amount of resources and technical help well below the so-called threshold or critical mass for succeeding in their particular industry and foreign market context, and therefore most resources are totally wasted
• strictly related to the above is the total lack of awareness, among both the companies and the public entities, of the concept (and implications) of opportunity costs, i.e. the missed opportunities of investing in a given direction instead of pursuing other options that could be more attractive.

The lack of selectivity and focus can only be overcome with a preliminary and careful analysis of the existing opportunities and threats in the various industry, competitive and geographical contexts, and this can be taught and learned, together with the appropriate methods of:

• classifying and segmenting clients
• identifying the pertinent and reachable markets
• developing the appropriate communication messages to these markets
• choosing the most suitable media and distribution channels
• identifying the appropriate costs and understanding their behavior based on these choices
• setting the price levels that maximize the profitability and/or the market objectives
• understanding and managing the relationship between investments and specific results
• designing a plan and a management control system for reaching and improving these results
• etc.

Some of these topics are fortunately more or less explicitly addressed in the growing number of courses and seminars on digital marketing, but only after a full immersion and an in-depth understanding of strategic marketing, companies will be able to understand how to use the necessary trade techniques and digital technologies, including the ability to identify the professional resources best suited to assist them in the concrete application of these techniques and technologies.