Export Marketing

MidTerm
Hammas Ali
Section L

Subjective

Q1- What are the benefits arising from international trade? Are they the same for
industrial goods as for consumer goods?

The internet and technology have made it much easier for businesses of all sizes to profit
from the many advantages of international trade. Going international could provide your
business access to a world of opportunities. The major potential benefits are lower prices,
increased variety and supply of good to choose from, increased revenues since more potential
clients worldwide, longer product lifespan and decreased competition. For the most part,
these benefits are the same for industrial goods as well as consumer goods. The import of
consumer goods has a direct effect; the import of industrial goods results in lower domestic
production costs and/or better products and/or the acquisition of new technology thereby
benefiting the consumer indirectly.

Q2- What is the relationship between importing and exporting for an individual
company?

Exporting is the sale of products and services in foreign countries that are sourced or made in
the home country. Importing refers to buying goods and services from foreign sources and
bringing them back into the home country. Companies export because it’s the easiest way to
participate in global trade, it’s a less costly investment than the other entry strategies, and it’s
much easier to simply stop exporting than it is to extricate oneself from the other entry
modes. A company may import goods or services primarily for sale in its home or other
markets. Many companies, however, import/obtain goods, services, licenses, and/or
technology for use in making products for export. Machine tools may be imported in order to
manufacture components or products domestically. Increasingly, companies are sourcing
components worldwide for use in making final products to be sold both domestically and to
other countries. From an individual company’s perspective, the knowledge, contacts,
products, and services gained through inward internationalization may influence the
development of market entry and marketing activities used in outward internationalization.

Q3 What were some of the strategic and tactical decisions taken by IKEA in the foreign
market?

Ikea has expanded from a small, family-owned home furniture corporation into
a global retailer within 385 stores in 48 countries, during its 72-year history. Ikea decided to
expand its market international starting from neighborhood Scandinavian countries according
to similar consumer tastes. Ikea started to expand to international markets in 1960. Since
price had been the key competitive idea behind Ikea since its inception, they came up with
Ready To Assemble (RTA) strategy, which helped Ikea to lower the cost of their products.
The RTA proposition also saves money for IKEA on shipping and storage. Most of the
company’s products are packed in flat boxes, reducing transportation costs, minimizing the
risk of damage, and making them easy for the customer to take home.
Secondly Ikea sources its products from 1800 suppliers in more than 50 countries and
contracts for capacity rather than a set number of items from its manufacturers.
Thirdly, they targeted conservative markets first, and later on moved ahead with slow and
steady expansion, in some countries especially Eastern Europe they acted as financiers and in
North Europe, Canada, Australia etc they gave franchises and by 2010 they were opening 5
to10 stores per year. While expanding in US market, they faced challenges initially since it
was a big market but they penetrated it by using price-competitive strategy. In 1990 IKEA
expanded by acquiring five stores owned by Stor Furnishings International in California.
Their expansion slowed considerably in the 1990s as the company consolidated its holdings
and worked on increasing per-store sales and raising overall profitability.
Ikea has made its name in furniture as easy, stylish design in low prices and have targeted the
middle-class segment.

Q4 What were the international marketing management decisions taken by IKEA?

The international marketing management decisions taken by Ikea were to meet the needs of
the market, have right supply in the right store. They used to take account of all the furniture
trends in a market, learn and implement them and then offer these trends as a USP to other
markets. The first thing they did while entering the United States was to teach people how to
pronounce the name, Ikea ran ads featuring an eye, a key, and a plus sign followed by the
word ‘ah.’ After this initial campaign the company began advertising its value proposition of
well-designed home furnishing at affordable prices in ads that featured the tag line: ‘It’s a big
country. Someone’s got to furnish it.’ IKEA's campaigns contain images, videos, and writing
their customers like to engage with in their day to day lives. The products are placed in
situations where it almost feels like the customer is stumbling upon them organically rather
than seeing them in a promotion. Scandinavian furnishings were catered as up-scale, niche
market where as their other product line was marketed for middle-class segment from which
they make their maximum profits. IKEA’s appeal is that its furniture is accessible,
approachable, and economical. ‘We have met a need that nobody bothered about,’ Kamprad
says.