International Marketing: Billabong Exporting Business

Executive summary

There are different factors that lead to businesses establishing themselves in global market. Some of them include desire to maximize shareholders fund and changes in world’s consumer trend. Billabong is an Australian company responsible of manufacturing and exporting surfwear products. The company has established itself in different countries. Currently, it is one of the major exporters of surfwear to Japan. The ever-growing uniformity of the global consumers has made it possible for Billabong to take its products in Japan and sell them successfully. As most of consumers have access to pay TV and internet, it has made it easier for the company to export surfwear to Japan. Improvement in communication across the globe has also facilitated in coordinating operations between the company in Australia and its exporting agents in Japan. Information technology has helped the company revolutionize its operations. The company has been able to transfer information and database within a short period hence improving its efficiency.

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Competition in foreign market calls for organizations to come up with strong strategies. For companies entering foreign market for the first time, it is imperative to partner with domestic companies already established in the market. This is to help them build their image. Like Billabong, a company intending to export its products needs to analyze its potential market and ascertain that it will help in attaining its objectives. There is need to consider cultural and political environment of the target market as these will determine business performance. Having strong marketing mix can facilitate in increasing export volume of a company. Developing products that best meet consumer needs guarantee a company continuous sales. Consumers believe in the quality of the products. It is vital to consider prices of competing products before setting price for one’s product. Using internet in export promotion would help a company reach wide range of foreign market. Developing a good rapport with go9vernment, banks and other institutions adds to competitive advantage of a company. The company receives financial and technical support thus increasing its export volume.

Introduction

As businesses seek to expand and improve their sales volume, they tend to look for foreign markets. There are different factors that lead to businesses establishing themselves in global market. Some of them include desire to maximize shareholders fund and changes in world’s consumer trend. Billabong is an Australian company responsible of manufacturing and exporting surfwear products. The company has established itself in different countries. Currently, it is one of the major exporters of surfwear to Japan. The ever-growing uniformity of the global consumers has made it possible for Billabong to take its products in Japan and sell them successfully. As most of consumers have access to pay TV and internet, it has made it easier for the company to export surfwear to Japan. Improvement in communication across the globe has also facilitated in coordinating operations between the company in Australia and its exporting agents in Japan. Information technology has helped the company revolutionize its operations. The company has been able to transfer information and database within a short period hence improving its efficiency.

To effectively exploit the Japanese market, Billabong has utilized numerous procedures as well as come up with a viable marketing mix to attract customers. This paper aims at looking at some of the exporting requirements and strategies that the company has had to face so as to effectively exploit Japanese market.

Surfwear products exported by Billabong

Since 1973, the company has dominated Australian market in production of surfwear apparel brands. The company manufactures surfwear clothes used by men, women as well as children. Among some of the clothes manufactured by the company are Billabong surf clothing T- shirts, woven and knits, trunks, surf clothing jeans and boardshorts. The company also produces special hats with its brand and surf clothing sweatshirts. There are different varieties of Billabong suits exported by the company. They range from fullsuits, rashguards and springsuits. All these varieties of surf clothes comprise the surfwear products exported by Billabong to Japan.

Exporting decisions

Before the company embarked on importing surfwear to Japan, it had put various considerations into place. The company had a strong desire of improving its profit as well as expanding its market to cater for the surplus products that were being manufactured. Having exploited Australian market, exporting the surplus products was left as the only option for the company (Chadee & Kumar 2004, pp. 461-472). This compelled the company to look for a potential foreign market where it could take its excess products. Market deregulation by the Japanese government gave the company an opportunity to sell its products in Japanese market. The company was not required to meet many exporting regulations. This made it easy for Billabong to introduce its products in Japan. Unlike other markets where some products are not authorized to be sold, Japanese market accommodates for all products. The company has also been in need of expanding its operations to avoid cases of business failure. There have been incidences of businesses collapsing in case of reduction in competitive advantage. This is especially for those companies that rely on domestic market. Exporting surfwear to Japan would save the company from incurring lose in case its sales in local market went down. Japan; being one of the most populated countries in the world offered a potential market for the company. Changes in clothes purchase among the Japanese also gave impetus to the company’s desire to enter into Japanese market.

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Market entry

There is nothing hard in business operation that entering a new market. The manner in which a business introduces itself in new market determines whether it will gain market share. Competition from rival companies already established in the market may lead to the new company failing to gain ground in the market. To establish itself in Japanese market and at the same time reduce operation costs, Billabong decided to look for medium private trading companies in the country. It then liaised with these companies in distributing its surfwear. These are the companies that it later acquired. As these companies had knowledge of consumer purchase trend, Billabong was able to ensure that it supplied the market with adequate surfwear (Chadee & Kumar 2004, pp. 474-480). As there were abundant businesses in Australia that dealt with exporting clothes to Japan, Billabong also used these companies to indirectly export its surfwear to Japan. With its products bearing its brand, the company started gradually gaining market share through these companies’ sales till consumers got used to its products.

Export strategies used by the company

There are different strategies used by companies to establish themselves in new markets. Lack of knowledge of the market by a company makes it hard to effectively exploit it. It becomes hard for it to overcome competition from those companies that have already established their brand in the market. Apart from conducting market analysis of the new market, companies also opt to merge with local companies. As the local company have the knowledge about the market, it becomes easy for the new company to devise marketing strategies through the help of the local company. Other companies opt to transfer their operations close to the foreign market (Ekeledo & Sivakumar 2004, pp. 68-84). This helps them in overcoming export overheads such as having to meet specific export regulations. To effectively manage its export to Japan, Billabong has used different strategies. The company has used acquisition strategy where it has acquired some businesses in Japan. These businesses have acted as intermediaries for the company. It has been possible for Billabong to ship its products to these businesses who have acted as their distributors. This has saved Billabong the overhead of having to send its staffs in Japan to study the market trend. The company has also been saved the need to directly deal with its consumers. The acquired companies have helped in conducting market analysis and dealing with consumers in case of any problem.

Another strategy that has been used by Billabong in establishing itself in Japanese market is Greenfield strategy. It is the tendency of business organizations to seek cheaper sources for manufacturing places (Ekeledo & Sivakumar 2004, pp. 86-101). This is to help them reduce their operations cost and at the same time increase their profits. This has been the same for Billabong. The company has established manufacturing plant in Japan. This has saved it the cost associated with shipping its products from Australia. It has also avoided some government regulations as well as foreign exchange risks. This has improved the company’s efficiency as products are manufactured locally.

Billabong also uses indirect approaches in exporting surfwear to Japan. There are numerous businesses in Australia that buy clothes from the company. The main aim of these companies is not to sell the clothes in the local market. After buying from Billabong, the companies later export the surfwear to Japan. Through this method, the company is saved having to face export overheads. Once the company sells the products to domestic intermediaries, it does not have to follow up them to ensure that they have reached the foreign market. Through indirect export strategy, Billabong is relieved from conducting market analysis or monitoring buying trends in the foreign market. All these responsibilities are transferred to the domestic intermediaries.

The company is also involved in direct export of surfwear to Japan. Here the company assumes all the responsibilities associated with exporting which range from market research, organizing for foreign distribution and collections (Jain 1989, pp. 70-74). Through the help of department of commerce in Australia, Billabong is able to identify potential market in Japan as well as advertise and market its products in the country. Despite the company being required to sacrifice its time and staffs in the undertaking, the strategy has been the most productive. Through the strategy, the company has been able to increase its profit and attain long term growth. Most organizations using direct export strategy fail to achieve their objective due to their management teams failing to commit themselves and direct their attention to the process. It becomes hard for the management to conduct market research and organize for effective distribution mechanisms. Products from such organizations end up not reaching their consumers on time. Billabong management team understands the importance of committing itself to direct export process. As a result, surfwear from the company reaches the market on time. This has helped in improving the company’s brand in Japan consequently expanding its sales volume.

One of the entities that have benefited from establishment of internet is business. Internet has led to introduction of e-commerce. This has eliminated geographical barriers that hampered the ability of businesses in accessing foreign markets. Currently, companies are capable of exporting their products and services over the internet. Customers order and negotiate for products over the internet. Payments are made over the internet and products delivered later. Billabong has taken advantage of e-commerce to export its products to Japan (Jain 1989, pp. 76-79). The company conducts market research, advertise and inform its foreign customers about its new products over the internet. Customer them order and pay for products which are delivered later.

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Marketing Mix used by Billabong in exporting surfwear to Japan

Before its expansion to foreign markets, the company used word of mouth to inform its consumers about its products. This method helped the company increase its profit as it was possible to convince customers to purchase its products. As the company continued developing its market widened becoming hard to teach all consumers through word of mouth (Leonidou & Katsikeas 2005, pp. 517-532). Its entrance into exporting business has even made it hard for the company to some promotional methods. Currently, the company employs the 4Ps marketing mix in enhancing its export business. Billabong understands that ability to increase its export volume depends on its products. Consequently, product development is a continuous process in the company. It has come up with different design teams responsible of developing products for different markets. This has led to its products appealing to Japanese market. Dynamically, the company comes up with new brands of surfwear. This offers the company greater freedom to tailor its products to address needs of specific market segments in Japan. This has been one of the reasons why its products have attracted big market in Japan. The company positions its products as high quality and fashionable. This makes them stand out from products from other companies.

Although offering its products at a higher price would make it increase its revenue per item sold, the company knows that the move may also be detrimental if its customers opt to buy from competitors (Leonidou & Katsikeas 2005, pp. 534-551). Consequently, Billabong operates with a competition based pricing. It determines prices for its products based on that of competing products from rival companies. This has helped the company increase its sales volume and overcome competition. However, if not well managed the pricing mechanism may send a negative impression about the quality of products offered by the company.

As a way of promoting its products, the company uses different media. Its products are advertised in most of the retail outlets in Japan. There are abundant billboards in the country bearing advertisements of Billabong’s products. The company also advertises its products on magazines. The company products are also featured in most movies and television shows. Most of Japanese households own television. Uploading product advertisement in TV shows that are most watched in the country helps Billabong reach a wider audience. The company is able to create product awareness to potential consumers who had no idea about the product (O’Cass & Julian 2003, pp. 366-384). The company has developed videos such as Billabong odyssey which appeal to its customers. As a result, the company is able to retain its customer base as well as developing new. Billabong has taken part in different social responsibilities such as sponsoring clubs and supporting victims of Tsunami in Asia. All these activities have led to people in the continent perceiving the company as socially responsible. This has significantly boosted its market volume in Japan. Billabong management team is ever at par with technology. The company has taken advantage of online advertisement through advertising its products on various websites. This strategy has aided in improving its export volume to Japan.

The company’s surfwear are sold in over 2,500 outlets in Australia and across the world. The company has opted to use a selective channel in distributing its products in Japan. It sells it products through specialty skate and surf shops established in the country. It does not make use of discount outlets and departmental stores in distributing its products. This approach allows the company to have a wide distribution network for its products while at the same time strengthening its image in the public a committed manufacturer of skatewear and surfwear. The company is also in the process of establishing a flagship store in Japan (Simpson & Kujawa 1996, pp. 107-112). This will facilitate in raising brand awareness in Japanese market. In spite of product distribution in global marketing being a complex logistical exercise, Billabong has managed to come up with a distribution mechanism that has enhanced its export shipment to Japan.

International competitive strategies

Globalization has led to business organizations having accesses to global market. Accordingly, competition in international market has rapidly increased. With companies from different countries offering similar products in the same market, it has become difficult for one company to dominate the market. This has led to organizations devising international competitive strategies so as to increase their sales volume. On its part, Billabong has used product customization as one of the strategies to help it gain control of Japanese market in surfwear sales. The company has come up with unique product designs making its surfwear standout from those of competitors. With its staffs being able to tailor its products with consumer needs in the country, the company has managed to overcome competition. Most of the people have opted to use its products due to their quality and favorable price (Simpson & Kujawa 1996, pp. 113-117). Billabong products are offered at a relatively lower price compared to that of competing products. This has made it possible for most consumers to afford the products thus increasing the company’s sales volume.

The success of any business depends on both the market and nonmarket strategies. A company that establishes a good relationship with the government, banks and other institutions experiences rapid growth that one that does not. This is because it becomes easy for such company to get support both financially and technically from these institutions. The government ensures that it has provided favorable conditions to promote organization growth. This has been the reason why Billabong has managed to sustain its export business to Japan (Spulber 2007, p. 365). The company has established a good relationship with Australian government. This has made it benefit from government support with respect to ensuring that there is a favorable marketing climate which supports exporting. The government has also liaised with Japanese government thus allowing the two countries to partner in trade with minimum restrictions. By developing a good rapport with Australian banks, Billabong benefits from grants to fund its exports. This has made the company supply Japanese market with products even when returns from the market are low. This has been one of the advantages that have helped the company overcome competition from other companies. Billabong can offer its products at a lower price than its competitors and still enjoy substantial profit.

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Billabong employs staffs from Japan to deal with its products distribution. These staffs are empowered hence having a chance to look for the most effective way of distributing the product. Being in contact with consumers, these staffs receive consumer feedback as well as exploring potential markets. Information gathered from the market is conveyed to Billabong thus making it guarantee that its products address all consumer needs. Cost associated with employing local distributors is low compared to sending personnel from Australia to deal with product distribution (Spulber 2007, p. 371). Reduction in operations cost makes the company offer its products at lower prices that rival company thus attracting wider market.

Recommendations

To effectively exploit the Japanese market, Billabong needs to conduct a thorough market study. This is to help it understand buying behavior of various customers as well as their preferences. It will help Billabong come up with new designs of manufacturing quality surfwears that will best meet consumer needs. The company will also understand the various regulations it is expected to adhere to in the market. This will guarantee the company continuous exportation of its clothes to Japan.

Conclusion

Competition in foreign market calls for organizations to come up with strong strategies. For companies entering foreign market for the first time, it is imperative to partner with domestic companies already established in the market. This is to help them build their image. Like Billabong, a company intending to export its products needs to analyze its potential market and ascertain that it will help in attaining its objectives. There is need to consider cultural and political environment of the target market as these will determine business performance. In its export, Billabong uses different strategies. These include direct exporting and indirect exporting strategies. Having strong marketing mix can facilitate in increasing export volume of a company. Developing products that best meet consumer needs guarantee a company continuous sales. Consumers believe in the quality of the products. It is vital to consider prices of competing products before setting price for one’s product. Using internet in export promotion would help a company reach wide range of foreign market. Developing a good rapport with go9vernment, banks and other institutions adds to competitive advantage of a company. The company receives financial and technical support thus increasing its export volume.

References

Chadee, D. & Kumar, R., 2004. Sustaining the International Competitive Advantage of Asian Firms: A Conceptual Framework and Research Propositions. Asian Pacific journal of management, 18(4), pp. 461-480.

Ekeledo, I. & Sivakumar, K., 2004. International market entry mode strategies of manufacturing firms and service firms: A resource-based perspective. International Marketing Review, 21(1), pp. 68-101.

Jain, S. C., 1989. Standardization of International Marketing Strategy: Some Research Hypotheses. Journal of Marketing, 53(1), pp. 70-79.

Leonidou, L. C. & Katsikeas, C. S., 2005. The export development process: An integrative review of empirical models. Journal of International Business Studies, 27(3), pp. 517-551.

O’Cass, A. & Julian, C., 2003. Examining firm and environmental influences on export marketing mix strategy and export performance of Australian exporters. European Journal of Marketing, 37(3/4), pp. 366-384.

Simpson, C. L. & Kujawa, D., 1996. The export decision making process: An empirical enquiry. Journal of International Business Studies, 5(1), pp. 107-117.

Spulber, D. F., 2007. Global Competitive Strategy. London: Cambridge University Press.

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