The Impact of Distance between Countries in International Marketing Strategy: The Case of Portuguese Subsidiaries in Spain

The dynamic of international business and the diverse contexts dictated by differences between countries, means that international companies face the challenge of finding the balance between standardizing and adapting their marketing mix strategy in foreign markets in order to be succeed. The purpose of this study is to contribute to the understanding of how Portuguese companies develop their marketing strategy in the Spanish market. We use the theoretical model of Ghemawat (2007) to assess the differences between countries and evaluate their impact on the marketing strategy of the subsidiary companies. Our study is qualitative and adopts a case study methodology by conducting semi structured interviews in two Portuguese SMEs to achieve a better understanding of the process of formulation of the international marketing strategy. Our findings indicate that the dimensions of distance that have greater influence on the marketing strategy of the subsidiary company in the Spanish market are the dimensions of cultural, administrative and economic, with the geographical dimension less relevant. The adaptations that proved to be necessary conditions for the performance of the business embody the value proposition to customers through the brand, product differentiation, design, price and communication.