What Should Exporters Consider When Using Direct Marketing Abroad?
Introduction
Direct Marketing is an advertising strategy that relies heavily on the individual distribution of sales pitch to potential customers, this method of marketing relies on methods to include, post mail, email, and texting. Direct exporters working abroad utilize direct marketing to eliminate intermediaries and maximize profits. Direct marketing is growing at a fast pace as a result of globalization. International direct marketing has been viewed as an attractive instrument that can be utilized by exporters (Krafft, 2007). There exist two types of exporters in the international market, active and passive exporters. The distinction between these two exporters lies in their marketing techniques. Active exporters put in a lot of effort to market their products to various buyers across different geographical locations. Active exporters invest a lot of time and finances in marketing. A passive exporter does not invest in marketing their products, these exporters only wait for a buyer to make an order and only works on producing that specific order. Exporters can also be direct and indirect. Direct exporters use agents and distributors to sell their products (Chaturvedi, 2005). To facilitate indirect exporting export management companies are used as middlemen by the exporter. Direct export relies on direct marketing techniques to sell to buyers abroad through agents who respond to direct buyers’ inquiries raised via many communication channels. Direct marketing is a lucrative method that can be used by exporters to market and sell their products abroad, however, there are certain considerations that exporters and exporting companies should put in mind.
As a result of rapidly growing technological innovations, changing lifestyles and preferences and the emergence of more favorable government regulation, selling products directly to customers without using local intermediaries has become a fast-growing area in international marketing and business. Exporters should consider utilizing direct marketing since the majority of the customers in the market prefer to buy their goods and services directly from the manufacture (Wang, 2005). In geographical areas to include North America, Australia, and western Europe the use of catalog sales is a legalized way of conducting business. The changing lifestyles of individuals living in these countries have encouraged the use of direct marketing. Exporters serving various markets abroad prefer to use direct marketing to keep up with the consumer changing lifestyles.
Another reason why exporters operating in foreign markets should consider using direct marketing is if they have the desire to increase their profits and revenues. A recent survey conducted on direct marketing revealed that it is still possible to make huge amounts of sales while using direct marketing while operating in other countries, the survey revealed that a U.S. mail-order based company sold items such as audio devices, kitchen appliances, and cameras at 50% of the prices charged in Tokyo, Japan (Chaturvedi, 2005). Even when the company faces competition from locally produced goods and services it is still possible to make profits through direct marketing since it reduces the cost of middlemen.
When using direct marketing abroad, exporters should consider factors to include tax. The exporter should consider if the goods and services are subject to taxation or not (Katsikea, et al., 2005). When sales are made from abroad some countries may impose a tax on the sales made depending on factors inclusive of the volume of sales. The exporter is subject to taxation if the exporter’s employees working abroad are subject to foreign jurisdiction when factors such as the time these employees spend in the country and immigration status are put under consideration. Before implementing direct marketing, the exporter should conduct thorough research to discover if the home country issues special tax benefits to exporters (Deari et al., 2008).
Social and cultural factors should also be put under consideration before an importer can utilize direct marketing to sell products abroad. An exporter is restricted to working within the social-cultural framework of the market they are operating in (Chaturvedi, 2005). Direct marketing works through understanding the needs and wants of consumers and these factors are essential in understanding the purchasing needs of consumers. Going beyond the home market requires an exporter to understand and interact with the social and diverse cultures of the foreign market.
Customer preferences and purchase needs are subject to change, a direct exporter must be able to keep up with the changing needs of consumers. Culture in most instances dictates the purchasing needs of individuals before an exporter can market their products and services directly it is important to learn about the culture of customers dominating the market (Chaturvedi, 2005). For example, direct marketing in China has been very successful in the country because the technique is based on an understanding of the Chinese cultural influence, however, for exporters from China to utilize direct marketing abroad they have had to make adjustments to their business approaches by changing the social and cultural practices and adopting those of the foreign country.
Political and legal factors play an important role in determining whether an exporter utilizes direct marketing while operating abroad. Any exporting company that has operations in foreign countries is prone to legal and political issues (Chaturvedi, 2005). For any exporter planning to operate in a foreign market, they have to first thoroughly study the market to find out if their corporate policies fit in with the legal and political environment of the market. The exporter should conduct a survey on the institutions, processes and on the problems currently facing the government in the country they intend to venture into. It is of prime importance to consider the political stability of a nation before choosing the most suitable method of marketing used in the country (Chaturvedi, 2005). Policies instituted in the country can either make direct marketing a suitable method of selling goods and services in the country or not.
Technology is and will be the driving force of businesses in the decades to come. Technological factors are at the forefront of enabling the use of direct marketing. Technological advancements differ from one nation to another. Before an exporter can utilize direct marketing, they need to consider the technological advancement of the abroad country to ensure that they reach a wider market using this method (Chaturvedi, 2005). The technology of the foreign country must be useful in attracting direct customers at a minimum cost.
In conclusion, direct marketing is a marketing technique used by businesses to reach buyers and targeted consumers without using advertisements and middlemen. Direct marketing can be used by exporters in abroad markets, however before exporters can use this method to operate in foreign markets, they must put some factors under consideration.
References
Chaturvedi, M. (2005). Managing global business: A strategic perspective. New Delhi: Excel Books.
Deari, H., Kimmel, V., & Lopez, P. (2008). Effects of cultural differences in international business and price negotiation.
Katsikea, E. S., Theodosiou, M., Morgan, R. E., & Papavassiliou, N. (2005). Export market expansion strategies of direct-selling small and medium-sized firms: implications for export sales management activities. Journal of International Marketing, 13(2), 57-92.
Krafft, M. (2007). International direct marketing: Principles, best practices, marketing facts. Berlin, Heidelberg: Springer-Verlag Berlin Heidelberg.
Wang, P. (2005). The economics of foreign exchange and global finance. New York, NY: Springer.
