Question 4 Market entry: What methods of market entry would be most appropriate for these firms?

Three issues primarily determine the methods of market entry chosen by international companies: control, cost, and the risks involved. 1 Firms then analysis why that method is the most appropriate by evaluating criterias such as their prospect of return, the size of their business and the financial resources available, their current involvement in overseas markets, and the nature of their competition and market power. 2 Consumer products firms must also consider the competitive advantage of their products over other brands; which includes patents and trademarks. 3 Due to consumer products being that of small value and the different nature of each product type,4 the suitable methods of market entry for these firms are exporting, niche marketing, and e-commerce. Exporting There are two forms of exporting a firm can use, indirect exporting and direct exporting. Indirect exporting is through the use of an intermediary to directly sell goods to consumers or wholesalers. Indirect exporting includes export houses and piggybacking. In direct exporting, a company will manage itself in the foreign market by directly exporting to its consumers. The firm is responsible for the market research, foreign distribution, and logistics of shipment and for collecting payment. 5 This is an advantageous method as the firm will have a greater degree of control over all
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Scott, N. Lecture 5 Export Market Entry Methods, & Export Market Promotion PowerPoint notes, accessed 26th March 2013. 2 Scott, N. Lecture 5 Export Market Entry Methods, & Export Market Promotion PowerPoint notes, accessed 26th March 2013. 3 Scott, N. Lecture 5 Export Market Entry Methods, & Export Market Promotion PowerPoint notes, accessed 26th March 2013. 4 Scott, N. Lecture 1 Introduction to Export Trade PowerPoint notes, accessed 26th March 2013. 5 About.com Direct Exporting: Advantages and Disadvantages to Direct Exporting viewed 26th March 2013 http://importexport.about.com/od/DevelopingSalesAndDistribution/a/Direct-ExportingAdvantages-And-Disadvantages-To-Direct-Exporting.htm

aspects of the business and it eliminates the use of intermediaries, which increases the firms potential profits. Direct exporting includes distributors and export houses. Distributors A distributor will order the goods and then sell them to a wholesaler, retailer or end user in their own country at a price they will determine themselves.
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Furthermore,

they will also take title of the goods and assume the risks and responsibilities for the sales themselves. 7 Distributors are paid fees by adding a margin to products, and their fees are higher than those of agents because they usually carry inventory and are responsible for marketing. 8 Bundaberg Brewed Drinks is an Australian company that began in 1960 and have since been delivering premium crafted beverages from a family owned brewery for over 40 years. 9 To export their products to the Hong Kong market, Bundaberg used a local Hong Kong distributor called Metro Alliance Ltd. Metro Alliance represents brand owners focused on distributing their products and develop diversified distribution channels for those brands in Hong Kong.
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Fig. 2: Metro Alliance Ltd Hong Kong

Fig. 1: Bundaberg Brewed Drinks Australia

Niche Marketing
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Ontario, Direct Exporting Options, viewed 26 March 2013. http://www.sse.gov.on.ca/medt/ontarioexports/en/Pages/direct_export_options.aspx 7 Scott, N. Lecture 5 Export Market Entry Methods, & Export Market Promotion PowerPoint notes, accessed 26th March 2013. 8 Austrade Agents and Distributors viewed 26th March 2013. http://www.austrade.gov.au/Agents-and-distributors 9 Bundaberg Brewed Drinks Our History viewed 23rd March 2013. http://www.bundaberg.com/info/about_us/our_history/ 10 Metro Alliance Ltd Distribution Channel viewed 23rd March 2013. http://www.metroaltd.com/dist.html

Niche marketing is concerned with marketing a differentiated product or service overseas, usually to a single customer segment.
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This method is beneficial to this

business type, as limited demand of the product will make it easier for firms to manage, as they may not have the capabilities of producing their products at a greater scale due to limited resources and capital. An example of this would be Suncoast Gold Macadamias Ltd, an Australian supplier of bulk macadamia nuts. Founded in 1985, the company has developed a reputation around the world for the quality of its products and a comprehensive client service.
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The company has

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adopted taste profiles of specific regions to enter new markets to enter certain markets which may not be traditional consumers of the product.

Fig. 3: Suncoast Gold Macadamias Australia E-Commerce Consumer product companies also have the option of market entry through ecommerce. The use of the Internet to exploit potential markets has allowed for firms to grow international rapidly. E-commerce has allowed for companies to reach a wider scale of consumers and markets. An example of a successful e-commerce based firm is Australian global born AussieBum, which had first been denied by
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Doole, I. & Lowe, R. (2008). International Marketing Strategy: Analysis, Development and Implementation. 5th ed. London: Cengage Learning EMEA. p151. Viewed 26th March 2013. http://books.google.com.au/books? id=UU1yPY2UwhMC&pg=PA151&lpg=PA151&dq=suncoast+gold+macadamias+niche+ markets&source=bl&ots=O187rkx9Vf&sig=hg1NI2rEBhK83dI1pqKMkiXKOc&hl=en&sa=X&ei=I1JMUe6PMMmsiAf9uICQBA&ved=0CDgQ6AEw Ag#v=onepage&q=suncoast%20gold%20macadamias%20niche%20markets&f=false 12 Suncoast Gold Macadamia About Us, viewed 23rd March 2013. 13 Dynamic Export January 2007 Australias Top 50 Exporters, accessed on vUWS 23 rd March 2013. https://vuws.uws.edu.au/bbcswebdav/pid-451230-dt-content-rid10553382_1/courses/200589_2013_aut/200589_2013_aut_ImportedContent_2012112608 0344/200589_2012_spr_ImportedContent_20120423033338/200589_2012_aut_Imported Content_20111005024837/200589_2011_spr_ImportedContent_20110605061456/50%20 Top%20Australian%20Exporters%20Pt%201.pdf

local retailers and began to use the Internet to market its swimwear and underwear clothing to a worldwide market.
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AussieBum has been exporting products online

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since 2001 and its online site has been translated in eleven languages, it also delivers its swimwear to many leading department stores worldwide. bilingual translation abilities and controlled growth. coming in from foreign markets. 17
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The main

drivers of their success are their advanced customer service systems, their online As a result of AussieBums success in the use of online marketing, they now have 90 per cent of their sales

Fig. 4: AussieBum

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Australian Export Awards Case Study AussieBum NSW, viewed 26 th March 2013. http://www.exportawards.gov.au/Resources/Case-Studies/aussieBum/default.aspx 15 Australian Export Awards Case Study AussieBum NSW, viewed 26 th March 2013. http://www.exportawards.gov.au/Resources/Case-Studies/aussieBum/default.aspx 16 Dynamic Export January 2007 Australias Top 50 Exporters, accessed on vUWS 23 rd March 2013. https://vuws.uws.edu.au/bbcswebdav/pid-451230-dt-content-rid10553382_1/courses/200589_2013_aut/200589_2013_aut_ImportedContent_2012112608 0344/200589_2012_spr_ImportedContent_20120423033338/200589_2012_aut_Imported Content_20111005024837/200589_2011_spr_ImportedContent_20110605061456/50%20 Top%20Australian%20Exporters%20Pt%201.pdf 17 Dynamic Export January 2007 Australias Top 50 Exporters, accessed on vUWS 23 rd March 2013. https://vuws.uws.edu.au/bbcswebdav/pid-451230-dt-content-rid10553382_1/courses/200589_2013_aut/200589_2013_aut_ImportedContent_2012112608 0344/200589_2012_spr_ImportedContent_20120423033338/200589_2012_aut_Imported Content_20111005024837/200589_2011_spr_ImportedContent_20110605061456/50%20 Top%20Australian%20Exporters%20Pt%201.pdf