International Marketing

International marketing refers to marketing carried out by companies overseas or

across national borderlines. This strategy uses an extension of the techniques used in the
home country of a firm.
International marketing is simply the application of marketing principles to more than
one country.
International marketing is often not as simple as marketing your product to more than one
nation. Companies must consider language barriers, ideals, and customs in the market
they are approaching. Tailoring your marketing strategies to attract the specific group of
people you are attempting to sell to be highly important and can serve the number one
cause of failure or success.

One of the fundamental steps that needs to be taken prior to beginning international
marketing is the environmental analysis.

Below we consider the nature of an international PEST Analysis (Political, Economic,

Social, and Technological), and the influence of tariff and non-tariff barriers.

International PEST Analysis would consider:

How easy will it be to move from purely domestic to international marketing?
What is the nature of competition within each individual market, and how will companies
from other nations compete when you meet with them head-to-head in unfamiliar
countries?

Political
Is there any historical relationship between countries that would benefit or hinder
international marketing?
What is the influence of communities or unions for trading? E.g. The European Union
and its authority over European laws and regulation.
What kind of international and domestic laws will your business encounter?
What is the nature of politics in the country that you are targeting, and what is their view
on encouraging foreign competition from overseas?
Economic
What is the level of new industrial growth? E.g. China is experiencing terrific industrial
growth.
What is the impact of currency fluctuations on exchange rates, and do your home market
and your new international market - share a common currency? E.g. Polish companies
trading in Eire will use Euros.
There are of course the usual economic indicators that one needs to be aware of such as
inflation, Gross Domestic Product (GDP), levels of employment, national income, the
predisposition of consumers to spend savings or to use credit, as well as many others.
Socio-cultural
Culture, religion and society are of huge importance.
What are the cultural norms for doing business? E.g. is there a form of barter?
Will cultural norms impact upon your ability to trade overseas? E.g. Putonghua is very
difficult for many Western people to learn.
Technology
Do copyright, intellectual property laws or patents protect technology in other countries?
E.g. China and Jordan do not always respect international patents.
Does your technology conform to local laws? E.g. electrical items that run on non-
domestic currents could be dangerous.
Are technologies at different stages in the Product Life Cycle (PLC) in various countries?
E.g. versions/releases of software.
Tariff and Non-Tariff Barriers
There are a number of fences that companies need to plan for when initialising
international marketing. Tariff and non-tariff barriers are still very common, even today.
Tariff barriers are charges imposed upon imports - so they are a form of import taxation.
This could mean that your margins are reduced so much that trading overseas becomes
too unprofitable. However they are normally transparent and you can plan to take them
into account. Non-tariff barriers are trickier to spot. Governments sometimes act in favour
of their own domestic industries rather than allow competition from overseas.
Now lets look at following when understanding International Marketing:
What is the influence of culture on international marketing?
How to Enter a Foreign Market?
How does an organization enter an overseas market?
Media Choices for International Marketing.
Cultural Issues and International Marketing Communications.
How should we set prices for international markets?
Standardization versus Adaptation.

What is the influence of culture on international marketing?

Culture is the way that we do things around here. Culture could relate to a country
(national culture), a distinct section of the community (sub-culture), or an organization
(corporate culture). It is widely accepted that you are not born with a culture, and that it
is learned. So, culture includes all that we have learned in relation to values and norms,
customs and traditions, beliefs and religions, rituals and artefacts.
Therefore international marketing needs to take into account the local culture of the
country in which you wish to market.
It should study and analyze the countries: Language, Religion, Values and Attitudes,
Education, Social Organizations, Technology and Material Culture, Law and Politics.

How to Enter a Foreign Market?

The International Marketing Entry Evaluation Process is a five stage process, and its
purpose is to gauge which international market or markets offer the best opportunities
for our products or services to succeed. The five steps are Country
Identification, Preliminary Screening, In-Depth Screening, Final
Selection and Direct Experience.

-Step One - Country Identification

The World is your oyster. We can choose any country to go into. So conduct country
identification - which means that we undertake a general overview of potential new
markets. There might be a simple match - for example two countries might share a
similar heritage e.g. the United Kingdom and Australia, a similar language e.g. the
United States and Australia, or even a similar culture, political ideology or religion e.g.
China and Cuba.
-Step Two - Preliminary Screening
At this second stage one takes a more serious look at those countries remaining after
undergoing preliminary screening. Now we begin to score, weight and rank nations
based upon macro-economic factors such as currency stability, exchange rates, level
of domestic consumption and so on. Now we have the basis to start calculating the
nature of market entry costs. Some countries such as China require that some fraction of
the company entering the market is owned domestically - this would need to be taken
into account. There are some nations that are experiencing political instability and any
company entering such a market would need to be rewarded for the risk that they would
take. At this point the marketing manager could decide upon a shorter list of countries
that he or she would wish to enter.
-Step Three - In-Depth Screening
The countries that make it to stage three would all be considered feasible for market
entry. So it is vital that detailed information on the target market is obtained so that
marketing decision-making can be accurate. Now one can deal with not only micro-
economic factors but also local conditions such as marketing research in relation to the
marketing mix i.e. what prices can be charged in the nation? - How does one distribute a
product or service such as ours in the nation? How should we communicate with are
target segments in the nation? How does our product or service need to be adapted for
the nation? All of this will provide information for the basis of segmentation, targeting
and positioning.
-Step Four - Final Selection
Now a final shortlist of potential nations is decided upon. Managers would reflect upon
strategic goals and look for a match in the nations at hand. The company could look at
close competitors or similar domestic companies that have already entered the market to
get firmer costs in relation to market entry.
-Step Five - Direct Experience
Personal experience is important. Marketing manager or their representatives should
travel to a particular nation to experience firsthand the nation's culture and business
practices. On a first impressions basis at least one can ascertain in what ways the nation
is similar or dissimilar to your own domestic market or the others in which your
company already trades.

How does an organization enter an overseas market?

A mode of entry into an international market is the channel which your organization
employs to gain entry to a new international market. Here you will be consider modes of
entry into international markets such as the Internet, Exporting, Licensing,
International Agents, International Distributors, Strategic Alliances, Joint Ventures,
Overseas Manufacture and International Sales Subsidiaries, Stages of
Internationalization.

The Internet
The Internet is a new channel for some organizations and the sole channel for a large
number of innovative new organizations. The e-Marketing space consists of new
Internet companies that have emerged as the Internet has developed, as well as those
pre-existing companies that now employ e-Marketing approaches as part of their overall
marketing plan.

Exporting
There are direct and indirect approaches to exporting to other nations. Direct exporting
is straightforward. Essentially the organization makes a commitment to market overseas
on its own behalf. This gives it greater control over its brand and operations overseas,
over an above indirect exporting. On the other hand, if you were to employ a home
country agency (i.e. an exporting company from your country - which handles exporting
on your behalf) to get your product into an overseas market then you would be
exporting indirectly.

Licensing: Franchising involves the organization (franchiser) providing branding,

concepts, expertise, and in fact most facets that are needed to operate in an overseas
market, to the franchisee. Management tends to be controlled by the franchiser.
Examples include Dominos Pizza, Coffee Republic and McDonald's Restaurants.

Turnkey contracts are major strategies to build large plants. They often include a the
training and development of key employees where skills are sparse - for example,
Toyota’s car plant in Adapazari, Turkey.

International Agents and International Distributors: Agents are often an early step
into international marketing. Put simply, agents are individuals or organizations that are
contracted to your business, and market on your behalf in a particular country. They
rarely take ownership of products, and more commonly take a commission on goods
sold. Agents usually represent more than one organization. Agents are a low-cost, but
low-control option. Distributors are similar to agents, with the main difference that
distributors take ownership of the goods. Therefore they have an incentive to market
products and to make a profit from them. Otherwise pros and cons are similar to those
of international agents.

Strategic Alliances (SA): Strategic alliances are a term that describes a whole series of
different relationships between companies that market internationally. Sometimes the
relationships are between competitors.

Joint Ventures (JV): Joint Ventures tend to be equity-based i.e. a new company is set
up with parties owning a proportion of the new business. There are many reasons why
companies set up Joint Ventures to assist them to enter a new international market.
Media Choices for International Marketing:
Marketing communications in international markets needs to be conducted with care.
This lesson will consider some of the key issues that you need to take into account when
promoting products or services in overseas markets. There will be influences upon the
media choice, cultural issues to be considered, as well as the media choices themselves -
personal selling, advertising, and others.

Cultural Issues and International Marketing Communications:

There are a whole range of cultural issues that international marketers need to consider
when communicating with target audiences in different cultures.
Language will always be a challenge. One cannot use a single language for an
international campaign. For example, there are between six and twelve main regional
variations of the Chinese languages, with the most popular being Mandarin (c 850
Million), followed by Wu (c. 90 million), Min (c. 70 million) and Cantonese (c. 70
million). India has 22 languages including Assamese, Bengali, Bodo, Dogri, Gujarati,
Hindi, Punjabi, and Tamil to name but a few.

How should we set prices for international markets?

Price can best be defined in ratio terms, giving the equation

resources given up
price  =     ———————————————                
goods received

This implies that there are several ways that the price can be changed,

"Sticker" price changes—the most obvious way to change the price is the price tag— we
get the same thing, but for a different (usually larger) amount of money.

Reference Prices: Consumers often develop internal reference prices, or expectations

about what something should cost, based mostly on their experience. Most drivers with
long commutes develop a good feeling of what gasoline should cost, and can tell a
bargain or a rip off.

Standardization versus Adaptation:

Product is a focal element of the marketing mix. When considering the nature
of products and services in international marketing, the same models apply such as:
-Product Life Cycle (PLC) - products could be at different points in the PLC in various
nations, possibly creating new opportunities.

-Ansoff's Matrix - market development could mean that an existing product is marketed
in a new international market.

-Three Levels of a Product - marketers would consider the local market's need for core,
actual and augmented products.

-Internet Marketing and Product - how do eMarketers make product decisions?

Advantages of Standardization: International uniformity has its own advantages. As

people travel the World, they can be assured that wherever they go the product that they
buy from you will be same and that it will have the same, standard benefits. This could
mean the components that they buy from you in different local markets as they
themselves become global.

Standardization reinforces positive consumer perceptions of our product. One of the

payoffs of great quality for a single product category is that the reputation of our
product will help you sell more of it. Positive word-of-mouth pays dividends for brand
owners.

Cost reduction will give economies of scale. Since you are making large quantities or
the same, non-adapted product - you benefit from the advantages associated with
manufacturing in bulk. For example, components can be bought in large quantities,
which reduce the cost-per-unit. There are other benefits relating to economies of scale,
including improved research and development, marketing operational costs, lower costs
of investment, and in an age where trade barriers are coming down - standardization is a
plausible product strategy.

Disadvantages of Standardization:

• Lack of uniqueness - exclusivity may be behind purchase decision

• Off-target - miss the customer target completely

• Vulnerable to trade barriers - local production may be necessary, so economy

of scale benefits are lost

• Strong local competition - customisation by competitors, lack of local

knowledge

Thus, we see how best we could apply marketing principles to more than one country.
The main issue we should give importance is that international marketing is not just
about marketing but we have to consider various other factors as mentioned above. It
differentiates companies which are successful and one’s which failed in international
marketing.