International Marketing

A firm’s international marketing program must generally be modified and adapted to

foreign markets. This international marketing program uses strategies to accomplish
its marketing goals. Within each foreign nation, the firm is likely to find a combination
of marketing environment and target markets that are different from those of its own
home country and other foreign countries. It is important that in international
marketing, product, pricing, distribution and promotional strategies be adapted
accordingly. In order for an international firm to function properly, cultural, social,
economic, and legal forces within the country must be clearly understood. The task of
International marketing is more difficult and risky than expected by many firms.
One of the most controlling factors of international marketing is management. It is
very important for managers to recognize the differences as well as similarities in
buyer behavior. Many mistakes can occur if managers fail to realize that buyers differ
from country to country. It is the international differences in buyer behavior, rather
than similarities, which cause problems in successful international marketing. An
international marketing manager is a manager responsible for facilitating the
exchange of products between the organization and its customers or clients.
Sometimes an international marketing manager will find difficulties in completing the
exchange of products. Many surprises in international business are undesirable
human mistakes. An international corporation must fully understand the foreign
environment before pursuing business matters. Problems constantly crop up and
many times have unexpected results. Sometimes these unexpected results are
unavoidable. Other times they are avoidable. To be sure those avoidable situations do
not occur, international marketing managers must be aware of cultural differences.
Cultural differences take place among most nations of the world. Differences in
culture are one of the most significant factors in an international company. All
nationalities posses unique characteristics, which are unknown to many foreigners.
Many of the top international businesses are unaware of these cultural differences. It
is very important to understand these cultures in order to market a product
successfully. As an example, different nationalities have different beliefs on how
business matters should take place. Where some countries prefer to work with a
deadline other countries can take this as being offensive. Many countries feel it is an
insult to be asked to work under a set time period. A country may feel that a deadline
is threatening and may feel backed into a corner. On the other hand, other countries
try to expedite matters by setting deadlines. To be effective in a foreign market it is
necessary to understand the local customs. Knowing what to do in a foreign country
is as important as knowing what not to do. Failure to understand local customs can
lead to serious misunderstandings between business people. The simple rejection of
a cup of coffee can lead to total confusion. The decline of an invite is sometimes
considered an affront. To avoid making blunders, a person must be able to discern
the difference between what is acceptable behavior and what is not acceptable
behavior. Violations of a local custom can be insulting, and can cause uncomfortable
situations. To be a successful manager of international marketing, one must be able
to discern the differences as to what must and must not be done. It is almost
impossible to attain complete knowledge and understanding of a foreign culture.
As established, culture plays an important role in the drama of international
marketing. Of all the cultural aspects, communication may be the most critical. It is
certain that communication has been involved in a number of cultural confusion.
Good communication linkages must be set between a company and its customers,
suppliers, its employees, and the governments of the countries where it performs
business activities. Poor communication can obviously cause various difficulties. One
source of difficulty among starting companies is that of effective communication with
potential buyers. The problem is that there are many possible communication
barriers. Sometimes messages can be translated incorrectly, regulations overlooked,
and economic differences can be ignored. Other times when the message does
arrive, its ineffectiveness can cause it to be of no value. Every now and then a buyer
will receive the message, but to the companies disappointment, the message was
sent incorrect. It is normal in multinational businesses to send and receive messages
on a regular basis. Many well-known people have incapacitated public speech
introductions by using inaccurate titles and names. Not all communication problems
are verbal. Some serious problems have occurred as a result of non-verbal
communication. Non-verbal communication exist in numerous forms. Sometimes a
person’s appearance can convey a stronger message than intended. Untidy attire, for
example, can be more offensive in some nations than in others. The local people
often are willing to overlook most of the mistakes made by tourist. On the other
hand, locals are less tolerant of the errors of business people. It is very important to
be able to interpret the different means of communication in international marketing.

In America, we sometimes take for granted the display of products on the market.
However, in other nations such product array and selection do not always exist. It is
important to understand that even if local customers can afford a certain product,
they may not always want it. If by chance are interested, it may be only if it is
substantially modified to fit their local preferences and taste. These adaptations exist
in the form of product and package. The alteration of a material product is sometimes
required to match the product to local taste and conditions. Adaptation of the
package is often needed to attract customers to the product. Many times adaptation
is also used to maintain a product’s righteousness in a unique environment. A firm is
occasionally forced to modify both the product and the package to create an
appropriate product for the new market. Some products may require more technical
modification than others may. Measurement systems vary between countries, and
often components need to be adjusted to cleave to local standards. The need for
product adaptation has existed for many years. In 1857 England’s East India
Company possibly lost control of India because it failed to modify a product it
provided. A product may be well acceptable in markets, but may not sell if housed in
an inappropriate package. Packages promote the product and they protect it.
International packaging must be able to withstand the journey. Some countries have
exported their products only to witness the return of crushed and half-empty
containers. Packaging can sometimes bring embarrassment to a company. Medical
containers made in the U.S. drew unwanted attention because they carried the
instructions “Take off top and push in bottom.” These messages was harmless here in
America, but were sexual and humorous connotations to the British. Often the choice
of package and product is difficult. Sometimes companies have failed to sell their
products overseas because of the packaging of a product. Each firm must determine
the area most appropriate for its product. Determining the region where it is most
appropriate to market a product is not an easy task. Wherever the location of these
places, they must be found because market testing is essential in international
marketing.
Many countries maintain regulations concerning their products and packages.
Countries have expectations that foreign marketers will adhere to the rules. Failure to
abide by the rules of a country can prove to be very costly. The legal and political
atmosphere varies across national borders. Different countries have different legal
policies. There are laws to which a marketer must abide by when marketing
internationally. Some countries enact laws to protect consumers or to preserve a
competitive atmosphere in the marketplace. Since many countries maintain
regulations concerning their products and packages, the wording or color of a
package can create difficulties. In some countries giving gifts to authorities is a
standard business procedure. In other countries, such as the United States, these
gifts would be considered as bribes or payoffs and are strictly illegal. If an error
occurs it can be costly, but with the appropriate alterations it can be corrected. The
General Agreement on Tariffs and Trade (GATT) reforms imposes on national
governments the obligation to sacrifice local and state laws that protect customers,
and the environment. Plans were developed in the mid-1980s to broaden GATT’s
mandate by extending its police powers to the areas of foreign investment and trade
in services. If such reforms are enacted, GATT will have the authority to remove
barriers to foreign investment and to override or knock out local laws for protecting a
nation’s insurance, brokerage, an banking businesses. Removing local laws can
definitely make the international work place easier, when it comes to the legal
aspect.
In the field of marketing, a product promotion can be the most difficult. Timing is the
most critical element in the launching of a new product. Most firms understand this
and also perceive that varied peoples hold different conceptions of time. Since some
nationalities are more conscious of time factors than others, extra time must often be
allocated to guarantee that everything is completed as schedule. An international
marketer can adopt several strategies regarding its product and promotion.
Marketing a product internationally through a single promotional message worldwide
can be effective for products that have standardized appeal for the majority of the
people. Most times this could be the least expensive strategy. When it is hard to
translate promotional messages or to adapt an overall promotion to local customs,
companies market one product. This promotion is designed to market one product
but vary its promotions. Some products are well known among the nation and need
little advertising. The advertisement can be on American influence located in China. If
a theme works exceedingly well in one country, then it naturally becomes very
tempting for a firm to want to use it in another country. There is a big risk involved in
doing this, because admirable themes are culturally oriented. For example, consider
the very popular Marlboro advertisements. The Marlboro man projects a strong
masculine image in America and in Europe. In Hong Kong, attempts to use this
advertisement were unsuccessful because the urban people did not identify with
horseback riding in the countryside. Several firms have tried to use old, reliable
promotional methods in countries where they simply do not work. Billboard
advertisements, for example, are perfectly legal in most parts of the Middle East, but
it does not mean one should use them. In some cases companies have been know to
advertise in the wrong language. Such mistakes can cause major problems.
It is often the promotional strategy that creates mistakes. The perception of the
product characteristics plays an important role in the international marketing
strategy. One must realize that the importance’s of a certain product traits vary from
country to country. Multinational corporations, therefore, must consider varying
promotional tactics. Adapting the product but using the same promotional mix is a
strategy used when a product will not appeal to different local tastes. For example an
American cheese company may need to use different ingredients when making
cream cheese for the markets of different countries. The most expensive strategy is
adapting to both the product and its promotion. This strategy may be required when
neither the existing product nor its promotion would appeal to foreign markets. In
some cases, the international firm may develop a completely new product for a
foreign market. It can be very costly to create a new product line for a foreign
market. The distribution strategy used sometimes depends on the firm’s international
organization. It does not matter if it is licensing, exporting, or manufacturing in the
host country. International marketers use existing distribution channels for the most
part. Distribution channels link the producer of a product to the consumer or
industrial user. This international marketing channel is sequence of marketing
organizations from nation to nation that directs the flow of products. Most industrial
products use shorter channels.
One of the most basic levels of international marketing is licensing. A license is a
contractual agreement in which one firm permits another to produce and market its
product and use its brand name in return for a royalty or other compensation. This
grant may be in the form of a direct sale of rights or be limited to a certain period of
time. International licensing can be tied to joint ventures between the parent and the
subsidiary. For example, an American candy manufacturer might enter into a
licensing arrangement with a British firm. The British producer would be entitled to
use the American firm’s candy formula, and packaging to advertise the candy as
though it were its own. The advantage of licensing is that it provides a simple method
of expanding into a foreign market with no investment. However, if the licensee does
not maintain the licensor’s product standards, the product’s image may be damaged.
Another disadvantage is that a licensing arrangement does not usually provide the
original producer with any foreign marketing experience. Technology licensing is a
conceivable alternative to the exportation of finished products through intermediaries
or to the different types of capital involvement, which could be chosen as an
international strategy. Many companies use intercompany licenses to protect the
intellectual property of the parent company that is held by the subsidiary, and to
allow for payments by the subsidiary to the parent of certain license fees. Licensing is
also dependent upon product characteristics. Products subject to rapid technological
change are also good licensing candidates. For most large companies licensing is
designed as a means to enter secondary markets. The potential licensor must look at
legal and financial considerations. Many times the decision to license has been made
since the company has no other alternative because the government restricts direct
investment through controls on foreign ownership or because it restricts the
development of marketing network by a number of tariff barriers. Licensing allows
the licensor to enter into foreign markets with a low financial risk. The decision to
license is a complex one. Many licensing relationships do not succeed because the
parties fail to understand each other’s agenda.
The creation of joint ventures sometimes prevents all the problems encountered by a
company when going overseas from occurring. With the combined expertise and
efforts of local and foreign firms, many problems will be eliminated. A joint venture is
a partnership that is formed to achieve a specific goal or to operate for a specific
period of time. International corporations may enter into joint ventures. Most joint
ventures were formed to share the extremely high cost of exploring for offshore
products. A company should create a joint venture only after giving it some
consideration. Many problems occur when company’s fail to thoroughly investigate
potential partners. Licensing decisions are as difficult to analyze as those decisions
involving the creation of a joint venture. Failure to make the correct decisions at the
right time can result in the loss of substantial long-range business prospects and
profits.
A firm can also manufacture its products in its home country and export them for sale
in foreign markets. Like licensing, exporting can be a relatively low-risk method of
entering foreign markets. Unlike licensing, it is not an easy task. Exporting opens up
several levels of involvement to the exporting firm. On the basic level, the exporting
firm may sill its products to an export/import merchant. This merchant assumes all
the risks of product ownership, distribution, and sale. It may purchase the good’s in
the producer’s home country and assume responsibility for exporting the product.
The exporting firm may also ship its products to an export/import agent. The
export/import agent arranges the sale of the products of foreign intermediaries for a
commission or fee. The agent is an independent firm that sells and may perform
other marketing functions for the exporter. The exporter retains title to the products
during shipment and until they are sold. An exporting firm may also establish its own
sales offices in foreign countries. These installations are international extensions of
the firm’s distribution system. The exporting firm maintains control over sales, and it
gains both experience and knowledge of foreign markets. Eventually, the firm may
develop its own sales force to operate in conjunction with foreign sales offices or
branches.
Pricing is a very important factor in international business. The pricing system more
common in international marketing is cost-based pricing. Cost-based pricing is not as
popular in domestic marketing as it is in international marketing. Using this simple
method of pricing, the seller first determines the total cost of producing or purchasing
one unit of the product. The seller then adds the amount to cover additional cost and
profit. The cost added is called the markup. The total cost of the markup is the selling
price of the product. Many smaller firms calculate the markup as a percentage of
their total cost. Markup pricing is easy to apply, and it is used by most businesses.
However, it has two major flaws. The first is the difficulty of determining an effective
markup percentage. If this percentages too costly, the product may be overpriced for
its market. On the other hand, if the markup percentage is too low, the seller is
“giving away” profit that could have earned simply by assigning a higher price. In
other words, the markup percentage needs to be set to account for the working of
the market, and that is very difficult to do. The second problem with markup pricing
is that it separates pricing from other business functions. The product is priced after
production quantities are decided upon, after cost are incurred, and almost without
regard for the market or the marketing mix. To be effective, the various business
functions should be integrated.
The different types of pricing can vary in international marketing. Geographic pricing
strategies deal with delivery cost. The seller may assume all delivery cost, no matter
where the buyer is located. The seller may share transportation cost with the buyer
to pay the greatest part of delivery cost. When a foreign product enters a country,
there is a tax added to the cost. Import duties are designed to protect specific
domestic industries by raising the prices of competing imported products. The
importer first pays most of the import duties. After the importer pays the price it is
then passed on to the customers through higher prices. These higher prices are
usually less competitive. The cost of shipping and complying with other various
regulations can also add to the pricing method. Prices are also effected by exchange
rates, especially by changes in these rates. Financial limitations are normally
imposed through exchange rates. It is required to convert local currency to foreign
currency at government-imposed exchange rates. Because of the added cost and
uncertainties in the exchange rate, prices tend to be higher in foreign markets than in
domestic markets.
An important economic consideration is the distribution of income. The distribution of
income, especially discretionary income, can widely vary from nation to nation.
Discretionary income is of particular interest to marketers because consumers have
more input in the spending of it. Income creates purchasing power. International
marketers tend to concentrate on higher income countries as either personal,
disposable, or discretionary. For obvious reasons, marketers tend to concentrate on
higher income countries. Some producers have found that their products are more
likely to sell in countries with low income. As in domestic marketing, the determining
factor is how well the product satisfies its target market.
International marketing encompasses all business activities that involve exchanges
across national boundaries. A firm may enter the international market for many
reasons. Whatever the reason international marketing can provide and efficient way
of entering the market. A firm’s marketing program must be adapted to foreign
markets to account for differences in the business environment and target markets
form nation to nation. The marketing mix may require the modification of cultural,
social, economic, and legal differences. Foreign marketing requires the understanding
of various additional costs, which tend to increase the prices of exported goods. The
marketing program of an international company must adapt to the necessities of a
foreign market. The strategies it uses to accomplish a firm’s marketing goal should
be the main priority of the marketing program. False assumptions frequently cause
expensive mistakes in the market.