International Marketing
International Marketing
International Marketing
trade and capital mobility as well as thru the diffusion of knowledge and information Marketing is defined as the human activity directed at satisfying needs and wants thru exchange processes. International Marketing is defined as the performance of business activities designed to plan, prie, promote and direct the flow of companys goods and services to consumers or users in more than one nation for a profit. It takes place when marketing /trace is carried our across the border or between more than one nation. Global Marketing is the process of focussing the resources and objectives of an organisation on global marketing opportunities ad needs. Intl marketing involves.. 1. 2. 3. 4. Identifying the needs and wants of customers in international market Taking marketing mix decisions across different countries Penetration into international markets using various modes Taking decision in view of dynamic intl market environment
Reasons OR Objectives of entering International marketing 1. 2. 3. 4. 5. 6. 7. Growth saturation of domestic markets, smaller countries (SGP, HongKong etc. have limited markets) Profitability price differential amongst markets Achieving Economies of scale Risk spread economic upheavals in home market can balanced Access to imported Inputs Uniqueness of Product or Service herbal prods, handcrafts, software development etc India has an edge Marketting Opportunity due to Life cycles - a product saturated in a domestic market may have demand in other countries 8. Spreading R&D costs large market size help absorb R&D costs
International marketing challenges 1. 2. 3. 4. 5. 6. 7. 8. 9. Political and legal differences Cultural differences Economic differences Differences in currency unit Differences in Language Differences in Marketing infrastructure advertising medium Trade and investment restrictions High costs of distance Differences in business practices
Cultural Nuance
Consumers are influenced to purchase products by marketing messages delivered through the media, including print media such as magazines. Humor is often used in commercial messages to get the consumer to pay attention. But what is considered extremely funny in one culture can be perceived as confusing or insulting in another. To produce effective advertising requires more than accurate translation of the message from one language to another. It requires a deep understanding of the culture, customs, morals and even religious views that predominate in that country. What motivates consumers to buy products varies from country to country.
Communication Style
Business executives from different countries can encounter several barriers to effective communication besides obvious language differences. The traditional pace of business negotiations can be different. Americans sometimes want to hurry negotiations along, whereas in some other countries emphasis is placed on building relationships before a business deal is seriously considered. Executives from other countries may place a higher value on things such as facial expression instead of just the words that are being said.
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The size of refrigerators in USA is very big compared to Indian refrigerators, as women there believe in storing vegetables and other eatable items, which can be consumed till longer period of time. Even the value and beliefs associated with colour vary significantly between different cultures. Blue considered as feminine and worm in Holland, is seen as masculine and cold in Sweden. Green is a favourite colour in Muslims, but in Malaysia, it is associated with illness. White is associated with death and mourning in China, Korea and in some traditions in India. Although, the same color expresses happiness and is color of wedding dress of the bride in English country. Such differences suggest that same marketing mix can not be used for all markets. 2. Legal Environment: Legal systems vary both in content and interpretations. A successful marketer will modify his marketing strategies in accordance with such variations. Laws affect the marketing mix in terms of products, price, distribution and promotional activities quite dramatically. For many firms such laws are burdensome regulations. For e.g. in Germany environmental laws mean a firm is responsible for the retrieval and disposal of packaging waste it creates and must produce packaging which is recyclable. In Canada, if the information does not appear in both French and English, the goods may be confiscated. An international Marketer should learn about the advertising, packaging, and labeling regulations in foreign markets. India has been seen by many firms to be an attractive emerging market having many legal difficulties, bureaucratic delays and lots of official procedures. Many MNCs have found it difficult to break such hard structure. Foreign companies are often viewed with suspicion. How ever, some firms have been innovative in overcoming difficulties. 3. ECONOMIC ENVIRONMENT: The economic situation varies from country to country. There are variations in the levels of income and living standards, interpersonal distribution of income, economic organization, occupational structure and so on. These factors affect market conditions. The level of development in a country and the nature of its economy will indicate the type of products that may be marketed in it and the marketing strategy that may be employed in it. In high income countries there is a good market for a large variety of consumer goods. But in low-income countries where a large segment does not have sufficient income even for their basic necessities, the situation is quite different. 4. POLITICAL ENVIRONMENT: The political environment of international marketing includes any national or international political factor that can affect the organizations operations or its decision-making. The tendencies of governments to change regulations can seriously affect an international strategy providing both opportunities and threat. (1992s liberalization policy by Narsimha Rao Govt.) An unstable political climate can expose firms to many commercial, economic and legal risks. Political risk is defined as being: A risk due to a sudden or gradual change in a local political environment that is disadvantageous to foreign firms and markets. 5. TECHNOLOGICAL ENVIRONMENT: The Technological Environment is perhaps the most dramatic force now shaping our destiny. An international marketer should very well keep in his mind the change taking place in technology and thereby affecting the product. New technologies create new markets and opportunities. However, every new technology replaces an old technology. Xerography hurt carbon-paper industry, computer hurt typewriter industry, and examples are so on. Any international marketer, when ignored or forgot new technologies, their business has declined. Thus, the marketer should watch the technological environment closely. Companies that do not keep up with technological changes, soon find their products outdated. The United States leads the world in research and development spending. Scientists today are researching a wide range of promising new products and services ranging from solar energy, electric car, and cancer cures. All these researches give a marketer an opportunity to set his products as per the current desired standard. The challenge in each case is not only technical but also commercial that means manufacture a product that can be afforded by mass crowd.
1. Media Regulations o comparative advertising e.g., Germany prohibits use of superlatives. o time allocations e.g., In Italy 12% ads per hour., o special taxes e.g., Japan, o type of product, type of copy and illustration, etc. 2. Language limitations - translating ad slogans, literacy levels, use of different languages. 3. Cultural diversity - Symbols, colors, tastes, values and beliefs etc. - subcultures. 4. Production and cost limitations - Poor quality printing, lack of high grade paper, film editing and processing facilities, high comparative cost for quality. 5. Media - Availability, Audience data, international media.
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Worldwide competition
One of the product categories in which global competition has been easy to track in U.S.is automotive sales. The increasing intensity of competition in global markets is a challenge facing companies at all stages of involvement in international markets. As markets open up, and become more integrated, the pace of change accelerates, technology shrinks distances between markets and reduces the scale advantages of large firms, new sources of competition emerge, and competitive pressures mount at all levels of the organization. Also, the threat of competition from companies in countries such as India, China, Malaysia, and Brazil is on the rise, as their own domestic markets are opening up to foreign competition, stimulating greater awareness of international market opportunities and of the need to be internationally competitive. Companies which previously focused on protected domestic markets are entering into markets in other countries, creating new sources of competition, often targeted to price-sensitive market segments. Not only is competition intensifying for all firms regardless of their degree of global market involvement, but the basis for competition is changing. Competition continues to be market-based and ultimately relies on delivering superior value to consumers. However, success in global markets depends on knowledge accumulation and deployment.[1] tiwana.
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.
[edit] International marketing
If the exporting departments are becoming successful but the costs of doing business from headquarters plus time differences, language barriers, and cultural ignorance are hindering the companys competitiveness in the foreign market, then offices could be built in the foreign countries. Sometimes companies buy firms in the foreign countries to take advantage of relationships, storefronts, factories, and personnel already in place. These offices still report to headquarters in the home market but most of the marketing mix decisions are made in the individual countries since that staff is the most knowledgeable about the target markets. Local product development is based on the needs of local customers. These marketers are considered polycentric because they acknowledge that each market/country has different needs. these are negotiation variables.
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, shape, or form. However, the bottle can also include the countrys native language and is the same size as other beverage bottles or cans in that same country.
Price
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 products 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.
Placement
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 products 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.
Promotion
After product research, development and creation, promotion (specifically advertising) is generally the largest line item in a global companys marketing budget. At this stage of a companys 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. Market research measures such as Flow of Attention, Flow of Emotion and branding moments provide insights into what is working in an ad in any country because the measures are based on visual, not verbal, elements of the ad.
The advantages of global market we can introduce our product by using advertising:
Economies of scale in production and distribution Lower marketing costs Power and scope Consistency in brand image Ability to leverage good ideas quickly and efficiently Uniformity of marketing practices Helps to establish relationships outside of the "political arena" Helps to encourage ancillary industries to be set up to cater for the needs of the global player Benefits of eMarketing over traditional marketing
Reach
The nature of the internet means businesses now have a truly global reach. While traditional media costs limit this kind of reach to huge multinationals, eMarketing opens up new avenues for smaller businesses, on a much smaller budget, to access potential consumers from all over the world.
Scope
Internet marketing allows the marketer to reach consumers in a wide range of ways and enables them to offer a wide range of products and services. eMarketing includes, among other things, information
management, public relations, customer service and sales. With the range of new technologies becoming available all the time, this scope can only grow.
Interactivity
Whereas traditional marketing is largely about getting a brands message out there, eMarketing facilitates conversations between companies and consumers. With a two way communication channel, companies can feed off of the responses of their consumers, making them more dynamic and adaptive.
[edit] Immediacy
Internet marketing is able to, in ways never before imagined, provide an immediate impact. Imagine youre reading your favorite magazine. You see a double-page advert for some new product or service, maybe BMWs latest luxury sedan or Apples latest iPod offering. With this kind of traditional media, its not that easy for you, the consumer, to take the step from hearing about a product to actual acquisition. With eMarketing, its easy to make that step as simple as possible, meaning that within a few short clicks you could have booked a test drive or ordered the iPod. And all of this can happen regardless of normal office hours. Effectively, Internet marketing makes business hours 24 hours per day, 7 days per week for every week of the year. By closing the gap between providing information and eliciting a consumer reaction, the consumers buying cycle is speeded up and advertising spend can go much further in creating immediate leads.
[edit] Demographics and targeting
Generally speaking, the demographics of the Internet are a marketers dream. Internet users, considered as a group, have greater buying power and could perhaps be considered as a population group skewed towards the middle-classes. Buying power is not all though. The nature of the Internet is such that its users will tend to organize themselves into far more focused groupings. Savvy marketers who know where to look can quite easily find access to the niche markets they wish to target. Marketing messages are most effective when they are presented directly to the audience most likely to be interested. The Internet creates the perfect environment for niche marketing to targeted groups.
] Adaptivity and closed loop marketing
Closed Loop Marketing requires the constant measurement and analysis of the results of marketing initiatives. By continuously tracking the response and effectiveness of a campaign, the marketer can be far more dynamic in adapting to consumers wants and needs. With eMarketing, responses can be analyzed in real-time and campaigns can be tweaked continuously. Combined with the immediacy of the Internet as a medium, this means that theres minimal advertising spend wasted on less than effective campaigns. Maximum marketing efficiency from eMarketing creates new opportunities to seize strategic competitive advantages. The combination of all these factors results in an improved ROI and ultimately, more customers, happier customers and an improved bottom line.
Disadvantages
Differences in consumer needs, wants, and usage patterns for products Differences in consumer response to marketing mix elements Differences in brand and product development and the competitive environment Differences in the legal environment, some of which may conflict with those of the home market Differences in the institutions available, some of which may call for the creation of entirely new ones (e.g. infrastructure) Differences in administrative procedures Differences in product placement. Differences in the administrative procedures and product placement can occur