Internet Commerce and Exporting: Strategies for Electronic Market Entry

Abstract

A host of new products and services are now available to more than a half-billion consumers. Firms now have greater opportunities to customize their product/service offerings as well as rely on standardized offerings as a preference. Global firms have the opportunity to customize their advertising and sales promotion messages to specific customer segments without the significant cost once involved in developing numerous messages for numerous markets. This communication segmentation strategy allows firms to achieve real dissemination strategies because of the elimination of wasted audience coverage and better-targeted messages aimed at the core benefits sought by various consumer segments. This is the new business world created by the Internet. As a result of recent technological advances in market entry, many firms are now beginning to increase their marketing and export functions. An emerging part of new technologies development involves electronic transactions over the open network, the Internet. An important Internet characteristic is its global coverage. Using the Internet as an access to the international market, firms generate significant revenues. For example, the music CD distributor CDNow, as a pure on-line company generated 21 percent of its total revenue from international markets in the first quarter of 1998; Dell, a computer manufacturer, generated 20 percent; and FastParts, an electronic components distributor, generated 30 percent. With other numerous examples of generating international revenue on-line, the Internet has already been proven a strategic tool in the exporting process. In this chapter we examine Internet marketing strategy for exporting and possible implications for firms using electronic technologies. The first part of this chapter presents Internet commerce as a specific entry mode to global markets using advanced technologies, represented by the Internet. Part Two introduces a model for Internet exporting strategies utilizing key components in the marketing mix (i.e., product, promotion, place, and price). The focus of this model is on the interaction between Internet commerce activities and software agents, and the potential impact on the exporting process. Applying the model of Internet-based exporting strategy to businesses, Part Three develops a strategic matrix that classifies firms based on the degree of product transferability and their capitalization on Internet technologies in exporting. Particular emphasis is given to the role of software agents in the electronic exporting process at different stages in strategy development. Finally, we summarize the impact of Internet commerce on exporting activities and highlight the benefits of incorporating new technologies into an exporting strategy.