The International Marketing Environment
International Marketing is any marketing activity which supports business
activity, in a country other than the one that the business is located in.
International marketing enables businesses to provide benefits (in the form of
products and services) to consumers around the world.
Global marketing is “Marketing on a worldwide scale reconciling or taking
commercial advantage of global operational differences, similarities and
opportunities in order to meet global objectives. Global marketing is not a
revolutionary shift, it is an evolutionary process. While the following does not
apply to all companies, it does apply to most companies that begin as domestic
companies.
A marketing restricted to the political boundaries of a country, is called
“Domestic Marketing”. A company marketing only within its national boundaries
only has to consider domestic competition. Even if that competition includes
companies from foreign markets, it still only has to focus on the competition that
exists in its home market. Products and services are developed for customers in
the home market without thought of how the product or service could be used in
other markets. All marketing decisions are made at headquarters. The biggest
obstacle these marketers face is being blindsided by emerging global marketers.
Because domestic marketers do not generally focus on the changes in the global
marketplace, they may not be aware of a potential competitor who is a market
leader on three continents until they simultaneously open 20 stores in the
Northeastern U.S. These marketers can be considered ethnocentric as they are
most concerned with how they are perceived in their home country. Domestic
market is a large market that every nation needs. These markets are all restricted
to be under control of certain boundaries in that company or country. This type of
marketing is the type of marketing that takes place in the headquarters. The
disadvantage that this brings is that they really don’t have that much of a say of
what happens within the company. In domestic markets it helps reduce the cost
of competition. By reducing competition the company has a better shot of being
more successful in the long run. Also if the company’s competition is not a big
factor that will affect their business, they have a good shot at making prices
higher and people will still purchase that product.
A domestic market also gets the opportunity to operate in different areas
and this gives the company an opportunity to have bigger markets to advertise to.
Even in Domestic markets businesses are still trying to trade with each other to
promote their business to other businesses in the area. A good thing that helps
out Domestic market is that they might be able to receive tax benefits, because
they offer jobs to the nation and give people opportunities for work. Domestic
market helps country’s out by offering more jobs bring in good business to the
market and also helps with the trading around the market.
International marketing is the export, franchising, joint venture or full
direct entry of a marketing organization into another country. This can be
achieved by exporting a company’s product into another location, entry through a
joint venture with another firm in the target country, or foreign direct investment
into the target country. The development of the marketing mix for that country is
then required - international marketing. It can be as straightforward as using
existing marketing strategies, mix and tools for export on the one side, to a highly
complex relationship strategy including localization, local product offerings,
pricing, production and distribution with customized promotions, offers, website,
social media and leadership.
Internationalization and international marketing meets the needs of
selected foreign countries where a company’s value can be exported and there is
inter firm and firm learning, optimization and efficiency in economies of scale
and scope. The firm does not need to export or enter all world markets to be
considered an international marketer.
Global marketing is a firm’s ability to market to almost all countries on the
planet. With extensive reach, the need for a firm’s product or services is
established. The global firm retains the capability, reach, knowledge, staff, skills,
insights, and expertise to deliver value to customers worldwide. The firm
understands the requirement to service customers locally with global standard
solutions or products, and localizes that product as required to maintain an
optimal balance of cost, efficiency, customization and localization in a control-
customization continuum to best meet local, national and global requirements
to position itself against or with competitors, partners, alliances, substitutes and
defend against new global and local market entrants per country, region or city.
The firm will price its products appropriately worldwide, nationally and
locally, and promote, deliver access and information to its customers in the most
cost-effective way. The firm also needs to understand, research, measure and
develop loyalty for its brand and global brand equity (stay on brand) for the long
term. At this level, global marketing and global branding are integrated. Branding
involves a structure process of analyzing “soft” assets and “hard” assets of a
firm’s resources. The strategic analysis and development of a brand includes
customer analysis (trends, motivation, unmet needs, segmentation), competitive
analysis (brand image/identity, strengths, strategies, vulnerabilities), and self-
analysis (existing brand image, brand heritage, strengths/capabilities,
organizational values)
Further, Global brand identity development is the process establishing
brands of products, the firm, and services locally and worldwide with
consideration for scope, product attributes, quality/value, uses, users and
country of origin; organizational attributes (local vs. global); personality
attributes (genuine, energetic, rugged, elegant) and brand customer relationships
(friend, adviser, influencer, trusted source); and importantly symbols,
trademarks metaphors, imagery, mood, photography and the company’s brand
heritage. In establishing a global brand, the brand proposition (functional
benefits, emotional benefits and self-expressive benefits are identified, localized
and streamlined to be consistent with a local, national, international and global
point of view. The brand developed needs to be credible. A global marketing and
branding implementation system distributes marketing assets (website, social
media, Google PPC, PDFs, sales collateral, press junkets, kits, product samples,
news releases, local mini-sites, flyers, posters, alliance and partner materials,
affiliate programs and materials, internal communications, newsletters, investor
materials, event promotions and trade shows to deliver an integrated,
comprehensive and focused communication, access and value to the
customers, that can be tracked to build loyalty, case studies and further
establish the company’s global marketing and brand footprint.
Global marketing is a field of study in general business management to
provide valuable products, solutions and services to customers locally,
nationally, internationally and worldwide.
Not only do standard marketing approaches, strategies, tactics and
processes apply, global marketing requires an understanding of global finance,
global operations and distribution, government relations, global human capital
management and resource allocation, distributed technology development and
management, global business logic, inter firm and global competitiveness,
exporting, joint ventures, foreign direct investments and global risk management.
The standard “Four P’s” of marketing: product, price, placement, and promotion
are all affected as a company moves through the five evolutionary phases to
become a global company. Ultimately, at the global marketing level, a company
trying to speak with one voice is faced with many challenges when creating a
worldwide marketing plan. Unless a company holds the same position against its
competition in all markets (market leader, low cost, etc.) it is impossible to
launch identical marketing plans worldwide.
A global company is one that can create a single product and only have to
tweak elements for different markets. For example, Coca-Cola uses two
formulas (one with sugar, one with corn syrup) for all markets. The product
packaging in every country incorporates the contour bottle design and the
dynamic ribbon in some way, shapes, or form. However, the bottle can also
include the country’s native language and is the same size as other beverage
bottles or cans in that same country
Price will always vary from market to market. Price is affected by many
variables: cost of product development (produced locally or imported), cost of
ingredients, cost of delivery (transportation, tariffs, etc.), and much more.
Additionally, the product’s position in relation to the competition influences the
ultimate profit margin. Whether this product is considered the high-end,
expensive choice, the economical, low-cost choice, or something in-between
helps determine the price point.
How the product is distributed is also a country-by-country decision
influenced by how the competition is being offered to the target market. Using
Coca-Cola as an example again, not all cultures use vending machines. In the
United States, beverages are sold by the pallet via warehouse stores. In India,
this is not an option. Placement decisions must also consider the product’s
position in the market place. For example, a high-end product would not want to
be distributed via a “dollar store” in the United States. Conversely, a product
promoted as the low-cost option in France would find limited success in a pricey
boutique.
After product research, development and creation, promotion (specifically
advertising) is generally the largest line item in a global company’s marketing
budget. At this stage of a company’s development, integrated marketing is the
goal. The global corporation seeks to reduce costs, minimize redundancies in
personnel and work, maximize speed of implementation, and to speak with one
voice. If the goal of a global company is to send the same message worldwide,
then delivering that message in a relevant, engaging, and cost-effective way is
the challenge. Effective global advertising techniques do exist. The key is testing
advertising ideas using a marketing research system proven to provide results
that can be compared across countries. The ability to identify which elements or
moments of an ad are contributing to that success is how economies of scale
are maximized.
Global marketing Environment is complex term to explain because it is
covering all the issues of world that are continuously changing. To explain the
true present picture of the Environment it’s necessary to go through the most up-
to-date literature and study the current changes. This chapter is giving the idea
about the today’s marketing and changes & challenges of the sub environmental
forces.
The changing behavior of customers and proliferation of new marketing
channels setups the new issues in the business world. In international market
competition it’s becoming harder and harder to maintain the life time relation
with customers. Selling quality product and service in affordable price is not
enough to gain the customer loyalty there are also many other dimensions of
care. These all changes make profit secondary and modify organizations to
customer-focused organizations and born the new theories and approaches.
Today’s marketing has come out with the circle of 4P’s (Product, Price, Place and
Promotion) and in the broader sense it is taking as an organizational function.
The modified form of marketing is to provide greater value to customer and
develop and maintain a healthy relationship.
The global marketing environment comprises the intermediate and the
macro environment. The intermediate environment contains those factors which
are semicontrollable through contracts and they will be categorized as suppliers,
Distributors, facilitators and shareholders. For example in software industries
the different vendors, application sellers, temporary specialist staffs and
subcontractors etc are part of intermediate environment. The macro
environment is made up of those factors and forces which are generally
uncontrollable. (Lee, 2005) For the Global strategic marketing planning to
evaluate and investigate the threats, opportunities and for risk assessment
usually organizations used the PESTLE analysis here PESTLE stands for Political,
Economic, Social, Technological, Legal, and Environmental Factors. Mostly
external auditor is used to audit the impact of these forces.
An analysis of the environmental uncontrollable allows the potential
marketers to place products on a continuum of environmental sensitivity. At the
one end are environmentally insensitive products and at the other end, those
more sensitive to economic, socio cultural, physical and other factors. The
greater the sensitivity, the greater the need for the organization to learn the way
the product interacts with the environment
A number of factors constitute the international environment: social,
cultural, political, legal, competitive, economic, plus technology. Each should be
evaluated before a company makes a decision to go international.
The cultural environment consists of the influence of religious, family,
educational, and social systems in the marketing system. Marketers who intend
to market their products overseas may be very sensitive to foreign cultures. While
the differences between our cultural background in the United States and those
of foreign nations may seem small, marketers who ignore these differences risk
failure in implementing marketing programs. Failure to consider cultural
differences is one of the primary reasons for marketing failures overseas. This
task is not as easy as it sounds as various features of a culture can create an
illusion of similarity. Even a common language does not guarantee similarity of
interpretation. For example, in the US we purchase “cans” of various grocery
products, but the British purchase “tins”. A number of cultural differences can
cause marketers problems in attempting to market their products overseas.
The importance of language differences cannot be overemphasized, as
there are almost 3,000 languages in the world. Language differences cause many
problems for marketers in designing advertising campaigns and product labels.
Language problems become even more serious once the people of a country
speak several languages. For example, in Canada, labels must be in both English
and French. In India, there are over 200 different dialects, and a similar situation
exists in China.
Colors also have different meanings in different cultures. For example, in
Egypt, the country’s national color of green is considered unacceptable for
packaging, because religious leaders once wore it. In Japan, black and white are
colors of mourning and should not be used on a product’s package. Similarly,
purple is unacceptable in Hispanic nations because it is associated with death.
Consider how the following examples could be used in development of
international marketing programs: In Russia, it is acceptable for men to greet
each other with a kiss, but this custom is not acceptable in the US. Germans
prefer their salad dressing in a tube, while Americans prefer it in a bottle. In
France, wine is served with most meals, but in America, milk, tea, water, and soft
drinks are popular. McDonalds’s Corporation has opened 20 restaurants in India.
Since 80 percent of Indians are Hindu, McDonald’s will use a non beef meat
substitute for its traditional hamburger. The likely beef substitute will be lamb, a
very popular meat in India. In anticipation of its restaurant openings, McDonald’s
conducted extensive market research, site selection studies, and developed a
relationship with India’s largest chicken supplier. McDonald’s has opted to
market its product in India, largely because India’s population of more than 900
million represents one sixth of the world’s population.
An individual’s values arise from his/her moral or religious beliefs and are
learned through experiences. For example, in America we place a very high value
on material wellbeing, and are much more likely to purchase status symbols than
people in India. Similarly, in India, the Hindu religion forbids the consumption of
beef, and fast-food restaurants such as McDonald’s and Burger King would
encounter tremendous difficulties without product modification. Americans
spend large amounts of money on soap, deodorant, and mouthwash because of
the value placed on personal cleanliness. In Italy, salespeople call on women
only if their husbands are at home.
An individual’s values arise from his/her moral or religious beliefs and are
learned through experiences. For example, in America we place a very high value
on material wellbeing, and are much more likely to purchase status symbols than
people in India. Similarly, in India, the Hindu religion forbids the consumption of
beef, and fast-food restaurants such as McDonald’s and Burger King would
encounter tremendous difficulties without product modification. Americans
spend large amounts of money on soap, deodorant, and mouthwash because of
the value placed on personal cleanliness. In Italy, salespeople call on women
only if their husbands are at home.
Americans seem to be fanatical about time when compared to other
cultures. Punctuality and deadlines are routine business practices in the US.
However, salespeople who set definite appointments for sales calls in the Middle
East and Latin America will have a lot of time on their hands, as business people
from both of these cultures are far less bound by time constraints. To many of
these cultures, setting a deadline such as “I have to know next week” is
considered pushy and rude.
Americans seem to be fanatical about time when compared to other
cultures. Punctuality and deadlines are routine business practices in the US.
However, salespeople who set definite appointments for sales calls in the Middle
East and Latin America will have a lot of time on their hands, as business people
from both of these cultures are far less bound by time constraints. To many of
these cultures, setting a deadline such as “I have to know next week” is
considered pushy and rude.
dition to his/her values, as discussed earlier. In the United States and
other Christian nations, Christmastime is a major sales period. But for other
religions, religious holidays do not serve as popular times for purchasing
products. Women do not participate in household buying decisions in countries
in which religion serves as opposition to women’s rights movements. Every
culture has a social structure, but some seem less widely defined than others.
That is, it is more difficult to move upward in a social structure that is rigid. For
example, in the US, the two-wage earner family has led to the development of a
more affluent set of consumers. But in other cultures, it is considered
unacceptable for women to work outside the home.
The level of technological development of a nation affects the
attractiveness of doing business there, as well as the type of operations that are
possible. Marketers in developed nations cannot take many technological
advances for granted. They may not be available in lesser developed nations.
Consider some of the following technologically related problems that firms may
encounter in doing business overseas: Foreign workers must be trained to
operate unfamiliar equipment. Poor transportation systems increase production
and physical distribution costs. Maintenance standards vary from one nation to
the next. Poor communication facilities hinder advertising through the mass
media. Lack of data processing facilities makes the tasks of planning,
implementing, and controlling marketing strategy more difficult.
A nation’s economic situation represents its current and potential capacity
to produce goods and services. The key to understanding market opportunities
lies in the evaluation of the stage of a nation’s economic growth. A way of
classifying the economic growth of countries is to divide them into three groups:
(a) Industrialized, (b) Developing, and (c) Less-developed nations.
The industrialized nations are generally considered to be the United
States, Japan, Canada, Russia, Australia, and most of Western Europe The
economies of these nations are characterized by private enterprise and a
consumer orientation. They have high literacy, modem technology, and higher
per capita incomes. Developing nations are those that are making the transition
from economies based on agricultural and raw materials production to industrial
economies. Many Latin American nations fit into this category, and they exhibit
rising levels of education, technology, and per capita incomes, Finally, there are
many less developed nations in today’s world. These nations have low standards
of living, literacy rates are low, and technology is very limited. Usually, the most
significant marketing opportunities exist among the industrialized nations, as
they have high levels of income, one of the necessary ingredients for the
formation of markets. However, most industrialized nations also have stable
population bases, and market saturation for many products already existing. The
developing nations, on the other hand, have growing population bases, and
although they currently import limited goods and services, the long-run potential
for growth in these nations exists. Dependent societies seek products that satisfy
basic needs-food, clothing, housing, medical care, and education. Marketers in
such nations must be educators, emphasizing information in their market
programs. As the degree of economic development increases, so does the
sophistication of the marketing effort focused on the countries.
The political/legal environment abroad is quite different from that of the
US. Most nations desire to become self-reliant and to raise their status in the
eyes of the rest of the world. This is the essence of nationalism. The nationalistic
spirit that exists in many nations has led them to engage in practices that have
been very damaging to other countries’ marketing organizations. For example,
foreign governments can intervene in marketing programs in the following ways:
Contracts for the supply and delivery of goods and services, the registration and
enforcement of trademarks, brand names and labeling, patents, marketing
communications, pricing, product safety, acceptability, and environmental
issues.
Business activity tends to grow and thrive when a nation is politically
stable. When a nation is politically unstable, multinational firms can still conduct
business profitably. Their strategies will be affected however. Most firms
probably prefer to engage in the export business rather than invest considerable
sums of money in investments in foreign subsidiaries. Inventories will be low and
currency will be converted rapidly. The result is that consumers in the foreign
nation pay high prices, get less satisfactory products, and have fewer jobs.
The exchange rate of a particular nation’s currency represents the value of
that currency in relation to that of another country. Governments set some
exchange rates independently of the forces of supply and demand. The forces of
supply and demand set others. If a country’s exchange rate is low compared to
other countries, that country’s consumers must pay higher prices on imported
goods. While the concept of exchange rates appears relatively simple, these
rates fluctuate widely and often, thus creating high risks for exporters and
importers.
US companies make one-third of their revenues from products marketed
abroad, in places such as Asia and Latin America. The North American Free
Trade Agreement (NAFTA) further boosts export sales by enabling companies to
sell goods at lower prices because of reduced tariffs. Regional trading blocs
represent a group of nations that join together and formally agree to reduce trade
barriers among themselves. NAFTA is such a bloc. Its members include the US,
Canada, and Mexico. No tariffs exist on goods sold between member nations of
NAFTA. However, a uniform tariff is assessed on products from countries not
affiliated with NAFTA. In addition, NAFTA seeks common standards for labeling
requirements, food additives, and package sizes. One of the potentially
interesting results of trade agreements like NAFTA is that many products
previously restricted by dumping laws, laws designed to keep out foreign
products, would be allowed to be marketed. The practice of dumping involves a
company selling products in overseas markets at very low prices, one intention
being to steal business from local competitors. These laws were designed to
prevent pricing practices that could seriously harm local competition. The laws
were designed to prevent large producers from flooding markets with very low
priced products, gain a monopoly, and then raise prices to very high levels. In
1993, about 40 nations, counting the European Community as one, had anti-
dumping legislation. Those in favor of agreements argue that anti-dumping laws
penalize those companies who are capable of competing in favor of those
companies that are not competitive. Almost all the countries in the Western
hemisphere have entered into one or more regional trade agreements. Such
agreements are designed to facilitate trade through the establishment of a free
trade area customs union or customs market. Free trade areas and customs
unions eliminate trade barriers between member countries while maintaining
trade barriers with nonmember countries. Customs Unions maintain common
tariffs and rates for nonmember countries. A common market provides for
harmonious fiscal and monetary policies while free trade areas and customs
unions do not. Trade agreements are becoming a growing force for trade
liberalization; the development of such agreements provides for tremendous
opportunities for US companies doing business in Latin America and North
America.
The creation of the single European market in 1992 was expected to
change the way marketing is done worldwide. It meant the birth of a market that
was larger than the United States, and the introduction of European Currency
Units (Euros) in place of the individual currencies of member nations. Experience
in multilingual marketing would help non-European companies succeed in this
gigantic market. With new technologies such as multilingual processing
programs, it would be possible to target potential customers anywhere in Europe,
in any language, and in the same marketing campaign. Progress toward
European unification has been slow-many doubt that complete unification will
ever be achieved. However, on 1 January 1999, 11 of the 15 member nations took
a significant step toward unification by adopting the Euro as the common
currency. These 11 nations represent 290 million people and a USD 6.5 trillion
market. Still, with 14 different languages and distinctive national customs, it is
unlikely that the EU will ever become the “United States of Europe”.
Most nations encourage free trade by inviting firms to invest and to
conduct business there, while encouraging domestic firms to engage in overseas
business. These nations do not usually try to strictly regulate imports or
discriminate against foreign-based firms. There are, however, some governments
that openly oppose free trade. For example, many Communist nations desire
self-sufficiency. Therefore, they restrict trade with nonCommunist nations. But
these restrictions vary with East-West relations. The most common form of
restriction of trade is the tariff, a tax placed on imported goods. Protective tariffs
are established in order to protect domestic manufacturers against competitors
by raising the prices of imported goods. Not surprisingly, US companies with a
strong business tradition in a foreign country may support tariffs to discourage
entry by other US competitors.
Entering an international market is similar to doing so in a domestic
market, in that a firm seeks to gain a differential advantage by investing resources
in that market. Often local firms will adopt imitation strategies, sometimes
successfully. When they are successful, their own nation’s economy receives a
good boost. When they are not successful, the multinational firm often buys
them out. Japanese marketers have developed an approach to managing product
costs that has given them a competitive advantage over US competitors. A
typical American company will design a new product, and then calculate the
cost. If the estimated cost is too high, the product will be taken back to the
drawing board. In Japan, a company typically starts with a target cost based on
the price that it estimates the market is most willing to accept. Product designers
and engineers are then directed to meet the cost target. This approach also
encourages managers to worry less about product costs and more about the role
it should play in gaining market share. Briefly, at Japanese companies like NEC,
Nissan, Sharp, and Toyota, a team charged with bringing a product idea to market
estimates the price at which the product is most likely to appeal to the market.
From this first important judgment, all else follows. After deducting the required
profit margin from the selling price, planners develop estimates of each element
that make up the product’s cost: engineering, manufacturing sales, and
marketing. US firms tend to build products, figure how much it costs to build the
product, and then ask whether the product can be sold at a profitable price. US
companies tend not to assess what the market will be willing to pay.
