Marketing innovation: A consequence of competitiveness | Journal of Business Research | Part 2: Research Objectives

Professor Suraksha Gupta, University of Kent

Professor Naresh K Malhotra, Georgia Institute of Technology

Professor Michael Czinkota, Georgetown University

Professor Pantea Foroudi, Middlesex University

ISSN 0148-2963

This study examines the relationship between competiveness and innovation in the marketing practices of large manufacturing firms that offer their branded products in different countries through a network of local small-and medium-sized enterprises (SMEs) as resellers of their brand. It builds on both the resource-based view and complexity theory to understand what features of the brand and the reseller enable them to adopt innovative marketing practices in an international setting.

We aim to bridge the gap in the existing marketing literature by reviewing current academic knowledge surrounding competitiveness and marketing innovation. Thus, the study addresses the following research question: What configurations of brand and the reseller enable the adoption of innovative marketing practices by two firms in an international setting? This study addresses the research question by first developing a suitable theoretical framework which is then used to investigate the question by means of empirical data.

 

 

Marketing innovation: A consequence of competitiveness | Journal of Business Research | Part 1: Context

Professor Suraksha Gupta, University of Kent

Professor Naresh K Malhotra, Georgia Institute of Technology

Professor Michael Czinkota, Georgetown University

Professor Pantea Foroudi, Middlesex University

ISSN 0148-2963

    Various studies recommend that managers aiming to venture into the challenging field of internationalisation should create a competitive edge that helps them to demonstrate the superior abilities of their firm (Porter, 2011; Samli et al., 1994; Barney et al. 2011). But, fear of the unknown deters managers from stepping out of their home country and benefiting from internationalisation because growth markets tend to be very complex as they foster competition (Knight, 1995; Thai and Chong, 2013). A business-to-business model of distribution allows managers of international firms to successfully deal with entry barriers and enter smoothly into a foreign market and effectively address the complexity of a place that offers high potential of growth to their businesses (Yan, 2012).

    A distributor simultaneously facilitates the entry of multiple firms with competing products into the market and engages micro level small and medium firms in the local market for selling (Chen, 2003). Since distributors offer multiple similar and competing products to resellers, markets being served through resellers become very competitive for international brands. Competition in a market encourages competing firms to demonstrate their ability to innovatively serve customers (Freeman et al., 2006). Lack of in-depth native knowledge in such markets is a major shortcoming for firms aiming to internationalise because it decreases their capability to innovate their marketing related business practices by predicting the business environment and trends in the consumption patterns of the foreign market (Bell, 1995; Johanson and Vahlne, 2009). Distributors and resellers have an important role to play in the successful penetration of a foreign market so how an international firm develops its capability to   market its products through reseller networks needs to be understood.

    The resource advantage theory recognizes the creation of a competitive edge as a function of marketing and identifies the role of branding in creating the capability of a firm to demonstrate its superior abilities (Hunt and Morgan, 1995; Hunt and Morgan, 1996; Srivastava et al., 2001). Simultaneously, the industrial practices of industrial brands particularly in the IT and telecom sector indicates that the managers of strong brands can compete in foreign markets based on their brand leadership and brand relationships in the local market. It has also been noticed and reported in the literature of local firms by studies like Gupta and Malhotra (2013) that a brand that contributes to the competitiveness of the reseller is able to compete at the local level using innovative marketing initiatives. These observations of various researchers indicate that the relationship between an international brand and its resellers in foreign markets becomes very important for brands in a market that poses strong competition (Anderson and Weitz, 1992).

The Case of Tesco: Community Promises and Local Priorities

Based in the United Kingdom, Tesco is the world’s third largest grocer, operating more than 7,817 stores and franchises in 12 countries. More than 60 percent of Tesco’s sales space is now located outside the United Kingdom. The company made its first move abroad in 1994, when it set up in Hungary, followed by Poland, Slovakia, and the Czech Republic. In addition to becoming a clear winner in Eastern Europe, the company is now the market leader in Malaysia. Tesco also planned to double the number of Tesco Express stores in Turkey in 2008 and more than doubled its online grocery sales in South Korea – its second most profitable market – since 2007.

Tesco set out a strategy to grow the core business and diversify with new products and services in existing and new markets. Some of their tactics included:

  • Partner with local players in emerging new markets – Tesco entered the US$270 billion a year grocery market in China in 2004 through a joint venture with Taiwan’s Hymall, which it now owns 90 percent. Today, Tesco operates 135 stores in China and has recently closed a deal with the state-run China Resources Enterprise. Tesco has its international sourcing headquarters based in Hong Kong, from where it sources more than 50 per cent of all clothing and 40 per cent of other non-food items. It buys about US$3 billion worth of goods and services from China annually.
  • Cater to local shopping preferences – Tesco is highly flexible in its retailing format to respond to different customer norms and tastes. The company’s stores in Thailand seek to replicate the product selection experience of traditional street markets, with less emphasis on the neatly packaged portions found in many Western markets. Tesco sells live toads and turtles in its Chinese stores, catering to consumers’ preference for shopping in “wet” markets.
  • Source talent globally, staff locally – The company has filled 80 percent of managerial posts in China with people hired locally, consistent with its strategy of acclimatizing to each country and keeping down the number of expatriate employees. At the same time, Tesco has recruited MBA degree holders from Indian consulting firms to staff its global function charged with deploying its global operations around the world.

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This is an excerpt from the book by: Michael R. Czinkota, Ilkka A. Ronkainen. International Marketing 10th Ed (USA: Cengage, 2013), pg 503.

 

How Companies Can Befriend A Trend

Trend research is a booming business. Many agencies and self-appointed gurus announce the latest trends from their perspective, generating publicity and awareness. This can be particularly confusing for multinational corporations because, apart from local and regional trends, they have to identify international and cross-regional trends, and incorporate them into their strategic planning and decisions. But trends and trend research are an integral part of business int he global marketplace. If companies miss out on market developments that fundamentally change customer interactions, they are doomed to fail…

How Companies Can Befriend A Trend

Published in Marketing Management

Apple and Google Top World’s Most Admired Companies 2015

Fortune recently came out with a list of the world’s most admired companies for 2015. The list is a report card on corporate reputations and looks at a company’s performance based on the following attributes: innovation, people management, use of corporate assets, social responsibility, quality of management, financial soundness, long term investment value, quality of products and services, and global competitiveness.

For this year, Apple came out on top for the eighth year in a row. Google and Berkshire Hathaway, led by Warren Buffett ranked second and third respectively. E-commerce giant Amazon.com came out fourth followed by Starbucks.

Four new companies landed on this year’s list – Chipotle, CVS Health, salesforce.com and financial services giant USAA. However, consumer criticism and security hacks have caused Mcdonald’s and Target to slip.

2015 Admired Companies

Fortune, together with global management firm Hay Group, conducted the research for The World’s Most Admired Companies. The list comprised of 1,400 companies; 1,000 came from Fortune’s 1,000 largest U.S. companies by revenue; 400 was from Fortune’s 500 global database with revenues of $10 billion or more. The list was made up of different companies representing 55 industries across 29 countries.

What other global companies should be included in the list?

Read the full report here: http://fortune.com/worlds-most-admired-companies/apple-1/