Researchers at Texas A & M University and University of Texas Austin have published a new paper in the marketing journal, explaining how the current local business generates local markets, how to use marketing tools to counter the threat of foreign arrival. can do.
The study, which will be published soon by the Nandini Ramani and Raji Srinivasan in the September issue of the Marketing Journal, “Impact of marketing and response to the existing companies.”
In recent years, many governments have liberalized their foreign markets for foreign investment in anticipation of economic growth.
Foreign companies often bring better technology, product and management practices in these markets.
However, those countries which are free to pursue economic development can create negative consequences for existing local firms who are accustomed to working in protected markets and do not have resources to compete with foreign competitors coming to them. May be.
Present corporate managers, of course, are concerned about the effects of liberalization on the performance of their companies.
For example, in response to the possible liberalization of the Indian retail sector, Kishore Piyani, CEO of India’s largest retail retailer, said in opposition to reform, “Retail sector should not be to foreign players, while on flat grounds Too small to compete.
“Similarly, the founders of Indian Technology Startups, who are fighting the United States like Amazon and Ober , Argues that foreign competitors are destroying the local industry and have asked the Indian government to implement protective measures.
Given that liberalization can be indispensable, how can managers save themselves from their negative consequences?
In a new study in the marketing journal, two researchers examined whether existing companies could change marketing mix reactions to liberalize their performance.
They think of many aspects of existing companies that can influence marketing and performance responses, including the knowledge of local institutions, market forces and the contacts of foreign markets and companies.
In order to estimate the impact of liberalization on responses to the marketing mix of existing companies and the performance, the researchers benefited from a semi-experimental experiment done by the The results show that with the maximum knowledge of local institutions and market forces, existing firms should speed up their distribution in response to liberalization.
Ramani said, “Knowledge of existing local distribution networks and business partners is a powerful feature,” they can take advantage of them by accelerating distribution to achieve outstanding performance after liberalization.
“For current companies with market risk and foreign exposure, the results signal that they can improve their performance by increasing their promotion, such as consumer discounts and rebates.
For policy makers, who can be tempted to overcome obstacles to protect local companies from overseas competitors, after the study of our study.
The marketing mix of existing firms identified as a mechanism to prevent the crowd Does it Srinivasan said, “Policy makers do not have to meet the demands of existing business leaders to enhance protectionist barriers.
But they encourage ways to facilitate the learning of existing companies from foreign businesses by promoting alliances and trade unions. , And can create a win situation for local businesses and policy makers, “said Srinivasan.
In order to estimate the impact of liberalization on the reactions of marketing mix of existing firms and performance, we get benefit from a semi-empirical experiment conducted by the Indian government in 1991, in which some industries were liberalized, while liberalization of some industries had not been.
Using this semi-experimental experiment, which consisted of 3,000 companies, we are allowed to control other factors which can be changed simultaneously with editing.
Our findings indicate that with the maximum knowledge of local institutions and market forces, existing firms should accelerate their distribution in response to liberalization.
For existing companies with market risk and external performance, our results show that they can improve their performance by increasing their promotion, such as consumer discount and discount
For policy makers, who may be interested in reacting to the demands of local business leaders from overseas firms to protect local firms, to overcome obstacles, our study will be used as a mechanism to prevent congestion after liberalization.
The marketing mix of existing companies identifies reactions. Policy makers do not need to meet the requirements of the current bus.