Evaluating Countertrade Agreements in International Marketing

Introduction and overview

International marketing is the strategic planning of the organisations in developing effective marketing tactics to promote the brand in the market (Vellas, 2016; Nassimbeni, Sartor and Mucignat, 2016). Through the international marketing tactics, the multinational corporate firms try to enter into new emerging market, where proper marketing tactics are suitable for the organisations to enter in to the market and establish the brand successfully (Morschett, Schramm-Klein and Zentes, 2015). The study aims at evaluating the advantages and disadvantages of using countertrade agreements instead of more conventional pricing methods, where the organisation Lidl can have the opportunity to develop the countertrade agreements instead of developing conventional pricing. The study also provides a scope to develop effective strategic planning by using of the Internet and related technologies in their International market including E-marketing and M-marketing technology, which are important for the companies to sustain in the business and promote the brand successfully in the market. In this regard, the organisation Lidl and the emerging market china will be evaluated through which it is possible to recommend some suitable marketing strategic planning or the brand Lidl through which it would expand their business internationally by entering into the Chinese market.

The global market is expanding at a rapid rate, where there is sustainable high growth in the market, especially in the retail sector. there are many organisations such as Tesco, Sainsbury’s, Walmart as well as Morrison, Aldi etc. are operating globally and it would be beneficial for the firm to develop effective marketing strategic planning with the help of the internet and latest technology, so that the retail firms can expand their business successfully by proper promotional activities of the organisational products and services. In the recent era of globalisation, there is intense competition in the global retail market and there are many firms in the retail sector across the globe, where every firm are operating in the market with their excellence performance and tactics, which in turn help them to grab the future market opportunities and gain high competitive advantage (Martin and Javalgi, 2016). This intense situation as well as high competition, high threats of substitute products and string customers base across the globe are the major factors that influence the firm like Lidl to expand their business internationally.

There are other factors such as international growth of the business, presence of the company in international market, high market share and political stability as well as legal rules, environmental protection and technological up-gradation which are also influencing and contributing factors in motivating the companies to expand their business operational activities in the international market. Lidl tries to expand their business across China, which is an attractive emerging market place with high economic growth and social development. It would be beneficial or the organisation to develop effective marketing strategic planning with proper utilisation of the internet and latest technology in order to better into Chinese market where the growth rate of the business and high consumer base are beneficial for Lidl to expand the business and establish the firm in china. Lidl is a German based global discount supermarket providing quality products and services in the retail sector, where it operates though the super market chain across the European counties and also USA. It is efficient to operate in the retail market with latest products and innovative services and the firm has the capability to expand their business across the emerging market for improving their performance in the global retail market d secure future sustainable development (Lidl, 2019).

Evaluating the advantages and disadvantages of using countertrade agreements instead of more conventional pricing methods

Countertrade mans the exchange of goods and services which are paid for, in whole or for part, with other goods and services rather than with money. There are different types of countertrade agreement such as barter, counter purchase, compensation trade, switch trade, offsets and clearing agreements, through which the firm can expand their business in the new international market successfully. In this regard, there are different advantages of countertrade agreement where it gives additional hard money ad technology advances in the firm which further helps the firm to access the emerging market China. It also helps to conserve the foreign current reserves of the importing countries and it further allows the access to foreign market without necessary setting up of the marketing tactics of the companies (Nassimbeni, Sartor and Mucignat, 2016). Moreover, the countertrade agreement is beneficial for the organisation Lidl to enter into Chinese market, as it helps the company to export the products to Chine in order to utilise the market base with other domestic firms. In addition to this, the countertrade agreement is beneficial for balance overseas trade, international expansion of the companies, gain high competitive advantage and strengthen the customer’s base of the company where the agreements are suitable for the organisation to enter into the emerging market and operate in the market without having proper set up (Kotler et al., 2018).

The agreement is beneficial for the organisation to increase sales volume, retain the customers in the market, clean up the debt, build strong customers relationships, gain foreign contract and find lower cost purchasing sources in the market (Burtescu, Dumitru, and Bondoc, 2017). Hereby, considering the advantages, the countertrade is an effective option through which Lidl can expand their business in china, where the manager can promote their products and services and gain strong customer base for the quality products. Gaining high competitive advantage in the Chinese retail market as well as enhancing sales volume and maximising profitability is possible for the organisation Lidl to ensure in the Chinese market. Stability in the Chinese market and promoting the business in the market are also easy for Lidl where the organisation can retain and attract the Chinese customers of their quality products and services. On the other hand, there are some disadvantages which are accepting alternative means of payment instead of hard currency, exchange of poor quality of goods and services, mistrust and high expenses to maintain in house trading departments to arrange and manage the countertrade deals in the market (Burtescu, Dumitru, and Bondoc, 2017). There are other disadvantages such as it is a time consuming and complex negotiation where uncertainty exists between the firms and it is also a costly process where brokerage cost is included (Onukwugha, 2019). Hereby, it would be expensive and costly for the organisation Lidl to enter in the Chinese market through countertrade agreement rather than conventional money pricing where it is time consuming and uncertain process. In this regard, the corporate firms aims at developing countertrade agreements rather than choosing the conventional money based pricing, where both the firms would beneficial under the agreement of countertrade to maximise their profitability and sales volume in near future.

There are strategic opportunities for the organisation Lidl to get into countertrade agreement where the firm can expand the business in the emerging market for accessing the Chinese market and strengthening their customer’s base in near future to sustain in the business and secure future sustainable growth (Rahmawati, and Saputri, 2019). In this regard, barter is one of the effective strategic opportunities for Lidl to get into the countertrade agreement or accessing the Chinese market. In this context, barter is the exchange of goods and services directly for other goods and services without the use of money as means of purchase or payment (Nassimbeni, Sartor and Mucignat, 2016). In this regard, it would be beneficial for the organisation Lidl to focus on electronic goods, which are innovative and have creative design and which can be purchased at affordable price. China is excellent in technology and production o electronics goods like Smartphone, gadgets, tablet, etc. and in this regard Lidl has the opportunity to develop agreement with one electronic company Xiaomi in China to transfer the retail products with exchange of the electronic products in the market. In this regard, Lidl can export the retail products to China and the Chinese manufacturing firm can export the creative electronics products to the UK. This is one of the effective ways to develop countertrade agreement between Lidl and Chinese electronic firm Xiaomi to exchange retail products for electronics products, where the organisation Lidl can enhance their performance and access the market of china for maximising the profitability and sales volume. Hereby, the organisation can choose the option of countertrade agreement which is the compensation trade, where the part of the exchange is done as barter and rest part is done by exchanging the currency (Casson and Chukujama, 2016). These two opportunities for developing the countertrade agreements are flexible and easy option for the company Lidl to enter into the Chinese market and gain high competitive advantage over the international retail market.

Developing the strategic planning by using of the Internet and related technologies in their International market

It is necessary to develop effective marketing tactics to enter into the emerging market, where in the recent era of globalisation, internet marketing is beneficial for the entire organisation in promoting the organisational products and services in the market. Internet and smart phones are hereby playing a crucial role in enhancing the international marketing tactic and ensure that the firms can utilise the platform of internet marketing for successful promotion of the organisational products and services. In this regard, mobile technology is one of the effective ways, where the organisation Lidl can promote their organisations successfully (Onukwugha, 2019). The company Lidl needs to invest on developing mobile technology where the mobile application is for the countertrade agreement between Lidl and the electronic firm Xiaomi in China. This is effective for Lidl to promote the products in China, where the company also can access the customer’s base ad market in China. Xiaomi is a famous Smartphone manufacturer in China and it would be beneficial for Lidl to develop effective mobile application on barter agreement with Lidl. The customers in Xaomi Smartphone can access the mobile application at free of cost where the application is developed itself in the phone, where the customers can access it for attractive retail products of Lidl. This is effective for Lidl to utilise the consumer’s base of Xiaomi and promote the brand successfully. In this regard, proper content needs to be developed in the mobile application with attractive pictures of the products and detailed information about the quality, quantity and pricing of the products and these are necessary to attract the customers in Chinese market.

In addition to the above strategic planning, it is necessary for the organisation Lidl to focus on social media marketing, where online posts and contents are uploaded in the social media sites in China. In this regard, proper posts need to develop with attractive content and products and it is necessary to upload the posts on WeChat, which is famous social media platform, where the social communities are involved in China. In this regard, WeChat is like FaceBook in China, where social communities can access the latest information about the products and services, and it further provides a scope to Lidl to attract more social communities and share the information about the organisational products and prices so that it is possible to promote the products in the emerging market successfully. in addition to this, Lidl also needs to enhance the e-marketing tactics in promoting the organisation in the Chinese market and in this regard, posting in Sina Weibo, is also effective for Lidl to promote the brand, where Sina Weibo is like Twitter, where the organisational can post with latest updates ad this would be beneficial for Lidl to expand their business in China and access the market successfully with quality products and services. Search engine optimisation is another strategic option, where the firm needs to improve the process of increasing quality and quantity of website traffic by increasing the visibility of a website or a web page to the users of the web search engine. In this regard, the organisation Lidl needs to invest on improving search engine optimisation by increasing the traffic of searched in Baidu Tieba, which is a search engine and forum in China.

Additionally, Lidl needs to merge with the company Xiaomi which is famous in China for mobile technologies and communication, and develop the countertrade agreement with Xiaomi for successful promotion of the business of Lidl in china, where the company Lidl focuses on developing countertrade agreement rather than focusing on traditional money pricing strategy. Considering the promotional activities, Lidl also needs to tie up with Xiaomi marketing strategies planning and invest on the marketing planning of Xiaomi, so that the company Xiaomi develops the software where additional dialog box, with proper information about the products and services of Lidl, will be appeared on the web page, so that it is possible to advertise the latest products and services of Lidl and promote it in the Chinese market. Hereby, this is an effective strategic option for the organisation Lidl to merge with Xiaomi and enter into the Chinese market or promoting the organisational products and services and attract the audiences in the market for maximising sales volume and profitability. Apart from that, Xiaomi needs to promote the products after the barter agreement with Lidl where Lidl can access the market of Xiaomi for promotion of their products and expansion of the business in the Chinese market. As per the above discussion, the company Lidl also can expand their business in India, which is also another emerging market and it has string customer’s base in the retail sector (Rahmawati, and Saputri, 2019). It would also be possible for the organisation Lidl to strengthen their e-marketing and m-marketing tactics by developing social media post in FaceBook and Twitter as well as creating videos on the products and services for uploading it in YouTube. Hereby, the emerging markets would be the best place for the organisation for international expansion of the business, where for example Lidl can expand their business in China and India, which are attractive emerging market with high economic growth and social development.

Conclusion

It can be concluded that, international marketing tactic are effective for the firms to expand their business in the international borders and for example, Lidl as a retail firm in the European countries and USA, has the capability to expand their business in the emerging markets like China and India, for global expansion and gaining high competitive advantage in the global retail sector. In this regard, the countertrade agreement would be favourable for Lidl to enter into the market and promote the brand through the e-marketing and m-marketing tactics. Through the e-marketing and m-marketing tactics, it is possible to attract the social communities across the emerging markets and access the market for promoting the products and services, so that the organisation Lidl can strengthen their customers base and maximise profitability and sales volume and it in urn provides a scope to the firm to secure future sustainable development with high market share and competitive advantage in the international retail industry.

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