Business Marketing Techniques

Archive for November, 2009

Economies are increasingly becoming dependent on services. There is an urgent need to innovate new services and the new service delivery mechanisms. But innovation processes remain oriented towards products. There are well-tested, scientific methods for developing and refining manufactured products but most of them are not applicable to services. There are definite difficulties in applying traditional methods of research and development o services.

A service often exists only in the moment of delivery to its customers, which is difficult to isolate in traditional laboratories. And since many services are tailored to individual buyers at the point of purchase, they cannot be tested through large samples. Because of these constraints, experiments with new services are most useful when they are conducted live, with real customers engaged in real transactions. But live experiments magnify the cost of failure. An experiment that fails may harm relationships with customers and even the brand may suffer if experiments fail repeatedly, putting the customers at inconvenience often.

Traditionally many companies have stayed focused in their domestic markets and have refrained from competing globally. They know their domestic markets better and understand that they have to make fundamental changes in the way they work to be able to compete globally. But increasingly companies are choosing or are being forced to market their products in markets other than their domestic markets. It has become imperative for most companies to compete in foreign markets.

Domestic markets are saturated and there is pressure to raise sales and profits. Most companies have very ambitious sales and profit targets. If such figures have to be realized, companies have to move out of their domestic markets. Domestic markets are small. Companies which have ambitions to become big will have to look for bigger markets outside their boundaries. Domestic markets are growing slowly. Most companies are no longer content to grow incrementally. If such companies have to achieve high growth rates, they have to obtain some of their sales from international markets.

In some industries like advertising, customers want their suppliers to have international presence so that suppliers can contribute in most of the markets where the buyer is operating. For instance, a multinational will choose and advertising agency which has a presence in all the markets where the multinational is selling its product. The customer does not want the hassles of hiring a separate advertising agency for each of its markets. This process will be replicated in more industries.

A multinational company seeking materials and equipments would want its supplier to supply to its entire international manufacturing locations. The supplier is forced to develop competencies and resources at many international locations to be able to serve the international manufacturing locations of its buyer. The boundary between a company’s domestic market and other markets is getting blurred. Only a company which is internationally competitive can protect its domestic market.