1 .INTRODUCTION:
International marketing involves the firm in making one or more marketing mix decisions across national boundaries. At its most complexes, it involves the firm in establishing manufacturing /processing facilities around the world and coordinating marketing strategies across the globe. At one extreme there are firms that opt for ‘international marketing’ simply by signing a distribution agreement with a foreign agent who then takes on the responsibility for pricing, promotion, distribution and market development.
Good marketing strategies help the exporter understand and address these potential differences. These strategies are captured in the international marketing plan, a flexible document that will likely be reviewed, revised and modified throughout your exporting activities. Marketing is a continuous activity and so is marketing planning because you can never know enough about your customers and how to meet their needs. The basic marketing formula – the four “P’s” of product, price, promotion and place – is just the beginning when it comes to international marketing. Your plan will need to address many other factors, such as payment (international transactions and currency exchanges), paperwork (increased documentation), practices (different cultural, social and business styles), partnerships (strategic alliances to strengthen your market presence) and protection (increased risks relating to payment, intellectual property or travel) and many more.
2 .OBJECTIVES:
- To have an overall view of international marketing scenario.
- To understand the affect of business environment on international marketing.
- To learn the differences of marketing planning with domestic marketing.
- To evaluate the competitive landscape of international marketing.
3 .DIFFERENCES:
There are three differences you need to incorporate into your international marketing plan.
a) Feedback
When marketing to different markets abroad one must stimulate market feedback. In fact this needs to be one of top priorities right from the beginning. When starting targeting a foreign country it will be needed to adjust your communication and your marketing and sales strategies. It is important to understand how communication is received in a different culture and this takes time to understand well. As you get to know your foreign markets you still need to pay attention. In order to seize business opportunities, and avoid bad decisions, you need to know what is going on and place a high priority on stimulating feedback in your international marketing plan.
b) Flexibility
Again, it is all about getting to know markets that are different from your home market. As you get to know and understand these new prospects better you will need to adjust yr marketing. Simply put: Your international prospects react differently to your products. These differences may be very subtle. They can also appear at any stage of your international business. But if you stimulate feedback and listen for these differences you can:
- Improve your international results.
- Become present in your foreign markets.
a) Viability
In an international marketing plan you need to include even more elements of marketing accountability. The viability of your international endeavors may depend on this.
What does this mean? Here is a simple action plan:
- Review your international marketing plan
- Create a process
- Include steps that can be measured
- Review these steps for relevancy
- Use this process to create accountability
- Review results for viability
This gives your business the tools to make the right decisions to grow in foreign markets. Include a process for marketing accountability in your international marketing plan.
The export and marketing plans have been devised and make ready to enter the market and are seeking the best strategy to reach potential customers. There are as many market entry strategies as there are markets; however, these strategies can be loosely grouped into three categories. Direct exports, as the name implies, involve direct marketing and selling to the client. In a reasonably accessible market such as the United States, direct exporting of products or services may be a viable option. But in less familiar markets, with different legal and regulatory environments, business practices, customs and preferences, direct exporting may not be an option. A local partner, for example, may be better able to manage these complexities and serve your potential clients better. Indirect exporting is frequently used to enter new markets. Businesses selling products enter into an agreement with an agent, distributor or a trading house for the purpose of selling (or marketing and selling) the products in the target market. Due diligence is critical when selecting an agent or distributor for indirect exporting. Western Economic Diversification Canada has published a valuable checklist on selecting a foreign agent or distributor in its publication Ready for Export: Building a Foundation for a Successful Export Program. The third market entry strategy involves strategic partnerships with other companies or individuals with complementary skills and capabilities. A partner can often provide the insight, contacts and expertise that fill the gap in your export readiness. A strategic alliance with a company selling a complementary product or service can provide more effective market access, resulting in more foreign sales in less time. As with indirect exporting relationships, contractual agreements with partners must be stated in clear terms.
The key difference between domestic marketing and marketing on an international scale is the multidimensionality and complexity of the many foreign country markets a company may operate in. An international manager needs a knowledge and awareness of these complexities and the implications they have for international marketing management. There are many environmental analysis models which the reader may have come across. For the purposes of this textbook, we will use the SLEPT approach and examine the various aspects and trends in the international marketing environment through the social/cultural, legal, economic, political and technological dimensions.
4 .SOCIAL/CULTURAL ENVIRONMENT
The social and cultural influences on international marketing are immense. Differences in social conditions, religion and material culture all affect consumers’ perceptions and patterns of buying behavior. It is this area that determines the extent to which consumers across the globe are either similar or different and so determines the potential for global branding and standardization. A failure to understand the social/cultural dimensions of a market are complex to manage
a) CULTURAL FACTORS
Cultural differences and especially language differences have a significant impact on the way a product may be used in a market, its brand name and the advertising campaign. Operating effectively in different countries requires recognition that there may be considerable differences in the different regions. At the stage of early internationalization it is not unusual for Western firms to experience what appear to be cultural gaps with their counterparts. On the other hand, some commentators argue there are visible signs that social and cultural differences are becoming less of a barrier. The dominance of a number of world brands all competing in global markets that transcend national and political boundaries, are testimony to the convergence of consumer needs across the globe. However, it is important not to confuse globalization of brands with the homogenization of cultures. There are a large number of global brands but even these have to manage cultural differences between and within national country boundaries.
a) SOCIAL FACTORS
Growth and movement in populations around the world are important factors heralding social changes. Eighty per cent of the world’s population lives in developing countries by 2025 this is likely to reach 85 per cent. Any increase in population in high income countries is entirely due to migration. There are also visible moves in the population within many countries, leading to the formation of huge urban areas where consumers have a growing similarity of needs across the globe. By 2010, 50 per cent of the world’s population will live in urban areas: the world is moving into gigantic conurbations.
a) LEGAL ENVIRONMENT
Legal systems vary both in content and interpretation. A company is not just bound by the laws of its home country but also by those of its host country and by the growing body of international law. Firms operating in the European Union are facing ever-increasing directives which affect their markets. This can affect many aspects of a marketing strategy – for instance advertising – in the form of media restrictions and the acceptability of particular creative appeals. Product acceptability in a country can be affected by minor regulations on such things as packaging and by more major changes in legislation. It is important, therefore, for the firm to know the legal environment in each of its markets. These laws constitute the ‘rules of the game’ for business activity. The legal environment in international marketing is more complicated than in domestic markets since it has three dimensions: (1) local domestic law; (2) international law; (3) domestic laws in the firm’s home base.
1. Local domestic laws. These are all different! The only way to find a route through the legal maze in overseas markets is to use experts on the separate legal systems and laws pertaining in each market targeted.
2.International law. There are a number of international laws that can affect the organization’s activity. Some are international laws covering piracy and hijacking, others are more international conventions and agreements
3.Domestic laws in the home country. The organization’s domestic (home market) legal system is important for two reasons. First, there are often export controls which limit the free export of certain goods and services to particular marketplaces, and second, there is the duty of the organization to act and abide by its national laws in all its activities, whether domestic or international.
a) ECONOMIC ENVIRONMENT
It is important that the international marketer has an understanding of economic developments and how they impinge on the marketing strategy. This understanding is important at a world level in terms of the world trading infrastructure such as world institutions and trade agreements developed to foster international trade, at a regional level in terms of regional trade integration and at a country/ market level. Firms need to be aware of the economic policies of countries and the direction in which a particular market is developing economically in order to make an assessment as to whether they can profitably satisfy market demand and compete with firms already in the market.
Disparities of incomes set particular challenges for companies operating in international markets in terms of seeking possible market opportunities, assessing the viability of potential markets as well as identifying sources of finance in markets where opportunities are identified but where there is not capacity to pay for goods. Another key challenge facing companies is the question as to how they can develop an integrated strategy across a number of international markets when there are divergent levels of economic development. Such disparities often make it difficult to have a cohesive strategy, especially in pricing.
a) POLITICAL ENVIRONMENT
The political environment of international marketing includes any national or international political factor that can affect the organization’s operations or its decision making. Politics has come to be recognised as the major factor in many international business decisions, especially in terms of whether to invest and how to develop markets. Politics is intrinsically linked to a government’s attitude to business and the freedom within which it allows firms to operate. Unstable political regimes expose foreign businesses to a variety of risks that they would generally not face in the home market. This often means that the political arena is the most volatile area of international marketing. The tendencies of governments to change regulations can have a profound effect on international strategy, providing both opportunities and threats.
The invasions have brought market development opportunities for some but market devastation for others and higher political risk in neighboring markets for all. The instability in the Middle East and the continued threat of global terrorism have served to heighten firms’ awareness of the importance of monitoring political risk factors in the international markets in which they operate. Lesser developed countries and emerging markets pose particularly high political risks, even when they are following reforms to solve the political problems they have. The stringency of such reforms can itself lead to civil disorder and rising opposition to governments.
5. DIFFERENCES BETWEEN INTERNATIONAL AND DOMESTIC MARKETING
As we have seen in the previous sections, there are many factors within the international environment which substantially increase the challenge of international marketing. These can be summarized as follows:
1. Culture: often diverse and multicultural markets
2. Markets: widespread and sometimes fragmented
3 .Data: difficult to obtain and often expensive
4 .Politics: regimes vary in stability – political risk becomes an important variable
5. Governments: can be a strong influence in regulating importers and foreign business ventures
6 .Economies: varying levels of development and varying and sometimes unstable currencies
7 .Finance: many differing finance systems and regulatory bodies
8. Stakeholders: commercial, home country and host country
9. Business: diverse rules, culturally influenced
10 .Control: difficult to control and coordinate across market
6 .THE INTERNATIONAL COMPETITIVE LANDSCAPE
A major difference for managers operating on international markets is the impact all these currents and cross-currents have on the competitive landscape. Wilson and Gilligan (2003) define marketing as ‘getting the competitive advantage and keeping it’. The task of achieving this in a competitive environment where firms are subject to local, regional and global competition can be immensely challenging. This is especially so if indigenous local competitors are supported by the government of the country.
Across international markets, advanced countries are seeing significant competition from both emerging markets and less developed countries who are exploiting modern technology and their own low labour costs to compete in markets no longer so protected by tariff walls.
The complexity of competition is also heightened by the strategic use of international sourcing of components by multinationals and global firms to achieve competitive advantage.
The nature of the challenges and opportunities identified and the speed of change within the international environment, this means that substantially different pressures are being placed upon management than if they were purely operating in domestic markets. It follows from this that the manager of international marketing needs a detailed knowledge and understanding of how- particular environmental variables impact on a firm’s international marketing operations. Perlmutter (1995) identified nine cross-cultural management incompetencies which led to failure across a spread of country markets. He defined these core incompetencies as ‘the bundle of activities and managerial skills that are not matched in a great variety of countries where firms do businesses.
The first three are interrelated and relate to the failure to be market driven.
1. Inability to find the right market niches.
2 .Unwillingness to adapt and update products to local needs.
3 .Not having unique products that are viewed as sufficiently higher added value by customers in local markets.
4 .A vacillating commitment. It takes time to learn how to function in countries such as Japan.
5 .Assigning the wrong people. Picking the wrong people or the wrong top team in an affiliate.
6. Picking the wrong partners. There is a list of difficulties in building alliances; a main limitation is picking partners who do not have the right bundle of capabilities to help reach the local market.
7 .Inability to manage local stakeholders. This includes incompetence in developing a satisfactory partnership relationship with unions and governments.
8 .Developing mutual distrust and lack of respect between HQ and the affiliates at different levels of management.
9. Inability to leverage ideas developed in one country to other countries worldwide.
If such mistakes are not to be made in your marketing strategies, it is essential to ensure that the company has a robust and rigorous approach to its international marketing planning processes.
CONCLUSION:
Understanding all these facets of international business will transform the marketing plan into marketing action. Good marketing strategies help the marketers understand and address these potential differences. The three caricatures of international marketing plan namely Feedback, flexibility and viability have been enormously followed during the course of international marketing practices. The various environmental factors of international marketing have stressed the need for through understanding on the part of marketers. The competitive landscape of marketing at the international juncture is found to be turbulent and its domination is ever increasing for which effective international marketing plan designing is must.
References:
Books:
- Hollen. S. (2004) Global marketing- a decision oriented approach- 3rd edition- Prentice Hall.
- Doole. I & Lowe. R (2005) strategic Marketing decision in Global Markets- Thomson.
Journals:
- Journal of International Consumer marketing.
- Journal of Marketing Research.
- Journal of Business strategy.
Websites:
