INTERNATIONAL MARKETING

Meaning
 Refers to marketing carried out by companies overseas or across borderlines.
 AMA, “ International Marketing is the multinational process of planning and executing
the conception, pricing, promotion and distribution of ideas, goods and services to
create exchange that satisfy individual and organizational objectives.”

International Marketing Environment

An International PEST Analysis.

PEST is a well-known and widely applied tool when considering the external nature of the
domestic market. However, it is equally as useful when applied to the nature of the international
marketing environment.

International PEST Analysis would consider:

 How easy will it be to move from purely domestic to international marketing?

 Would your business benefit from inward foreign investment?
 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?
 Many other factors those are specific to your organization or industry.

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.

International Marketing and Culture

What is the influence of culture on international marketing?

Culture could relate to a country (national culture), a distinct section of the community (sub-culture), or
an organization (corporate culture). Culture includes all that we have learned in relation to values and
norms, customs and traditions, beliefs and religions, rituals and artifacts (i.e. tangible symbols of a
culture, such as the Sydney Opera House or the Great Wall of China). Organsations must accept that
differences in values, customs, languages and currencies will mean that some products will only suit
certain countries and that as well as there being global markets e.g. for BIC and Gillette razors, and for
Coca-Cola drinks, there are important regional differences

Therefore international marketing needs to take into account the local culture of the country in which
you wish to market.

The Terpstra and Sarathy Cultural Framework helps marketing managers to assess the cultural nature
of an international market. It is very straight-forward, and uses eight categories in its analysis. The Eight
categories are Language, Religion, Values and Attitudes, Education, Social Organizations, Technology and
Material Culture, Law and Politics and Aesthetics.

Language
With language one should consider whether or not the national culture is predominantly a high
context culture or a low context culture. The concept relates to the balance between the verbal
and the non-verbal communication.

In a low context culture spoken language carries the emphasis of the communication i.e. what is
said is what is meant. Examples include Australia and the Netherlands.

In a high context culture verbal communications tend not to carry a direct message i.e. what is
said may not be what is meant. So with a high context culture hidden cultural meaning needs to
be considered, as does body language. Examples of a high context cultures include Japan and
some Arabic nations.

Religion
The nature and complexity of the different religions an international marketer could encounter is
pretty diverse. The organization needs to make sure that their products and services are not
offensive, unlawful or distasteful to the local nation. This includes marketing promotion and
branding.

 In China in 2007 (which was the year of the pig) all advertising which included pictures
of pigs was banned. This was to maintain harmony with the country's Muslim population
of around 2%. The ban included pictures of sausages that contained pork, and even
advertising that included an animated (cartoon) pig.

Values and Attitudes

Values and attitudes vary between nations, and even vary within nations. So if you are planning
to take a product or service overseas make sure that you have a good grasp the locality before
you enter the market. This could mean altering promotional material or subtle branding
messages. There may also be an issue when managing local employees. For example, in France
workers tend to take vacations for the whole of August, whilst in the United States employees
may only take a couple of weeks’ vacation in an entire year.

 In 2004, China banned a Nike television commercial showing U.S. basketball star
LeBron James in a battle with animated cartoon Kung Fu masters and two dragons,
because it was argued that the ad insults Chinese national dignity.
Education
The level and nature of education in each international market will vary. This may impact the
type of message or even the medium that you employ. For example, in countries with low
literacy levels, advertisers would avoid communications which depended upon written copy, and

would favour radio advertising with an audio message or visual media such as billboards. The
labelling of products may also be an issue.

Social Organizations
This aspect of Terpstra and Sarathy's Cultural Framework relates to how a national society is
organized. For example, what is the role of women in a society? How is the country governed -
centralized or devolved? The level influence of class or casts upon a society needs to be
considered. For example, India has an established caste system - and many Western countries
still have an embedded class system. So social mobility could be restricted where caste and class
systems are in place. Whether or not there are strong trade unions will impact upon management
decisions if you employ local workers.

Technology and Material Culture

Technology is a term that includes many other elements. It includes questions such as is there
energy to power our products? Is there a transport infrastructure to distribute our goods to
consumers? Does the local port have large enough cranes to offload containers from ships? How
quickly does innovation diffuse? Also of key importance, do consumers actually buy material
goods i.e. are they materialistic?

 Trevor Baylis launched the clockwork radio upon the African market. Since batteries
were expensive in Africa and power supplies in rural areas are non-existent. The
clockwork radio innovation was a huge success.

Law and Politics

The political ideology on which the society is based will impact upon your decision to market
there. For example, the United Kingdom has a largely market-driven, democratic society with
laws based upon precedent and legislation, whilst Iran has a political and legal system based
upon the teachings and principles Islam and a Sharia tradition.

Aesthetics
Aesthetics relate to your senses, and the appreciation of the artistic nature of something,
including its smell, taste or ambience. For example, is something beautiful? Does it have a
fashionable design? Was an advert delivered in good taste? Do you find the color, music or
architecture relating to an experience pleasing? Is everything relating to branding aesthetically
pleasing?

The International Market Entry Evaluation Process

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. Let's take a look at each step in turn.

Step One - Country Identification

So you conduct country identification - which means that you 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 you 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 you 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. Now in-depth screening can
begin.

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 macro-economic factors but also micro-
economic factors and 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 information
will form the basis of segmentation, targeting and positioning. One could also take into account
the value of the nation's market, any tariffs or quotas in operation, and similar opportunities or
threats to new entrants.

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. Managers could also look at other nations that it has entered to see if there are
any similarities, or learning that can be used to assist with decision-making in this instance. A
final scoring, ranking and weighting can be undertaken based upon more focused criteria. After
this exercise the marketing manager should probably try to visit the final handful of nations
remaining on the short, shortlist.

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. Now you will
need to be careful in respect of self-referencing. Remember that your experience to date is based
upon your life mainly in your own nation and your expectations will be based upon what your
already know. Try to be flexible and experimental in new nations, and don't be judgemental - it's
about what's best for your company - happy hunting.

Modes of Entry into International Markets (Place)

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, Joint Ventures, Overseas
Manufacture and International Sales Subsidiaries.
The Internet
The Internet is a new channel for some organizations and the sole channel for a large number of
innovative new organizations. The eMarketing space consists of new Internet companies that
have emerged as the Internet has developed, as well as those pre-existing companies that now
employ eMarketing approaches as part of their overall marketing plan. For some companies the
Internet is an additional channel that enhances or replaces their traditional channel(s). For others
the Internet has provided the opportunity for a new online company.

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 and 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. Examples of indirect
exporting include:

 Piggybacking whereby your new product uses the existing distribution and logistics of
another business.
 Export Management Houses (EMHs) that act as a bolt on export department for your
company. They offer a whole range of bespoke or a la carte services to exporting
organizations.

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:

 Access to technology, core competences or management skills. For example, Honda's

relationship with Rover in the 1980's.
 To gain entry to a foreign market. For example, any business wishing to enter China
needs to source local Chinese partners.
 Access to distribution channels, manufacturing and R&D are most common forms of
Joint Venture.

Overseas Manufacture or International Sales Subsidiary

A business may decide that none of the other options are as viable as actually owning an
overseas manufacturing plant i.e. the organization invests in plant, machinery and labor in the
overseas market. This is also known as Foreign Direct Investment (FDI). This can be a new-
build, or the company might acquire a current business that has suitable plant etc. Of course you
could assemble products in the new plant, and simply export components from the home market
(or another country). The key benefit is that your business becomes localized - you manufacture
for customers in the market in which you are trading. You also will gain local market knowledge
and be able to adapt products and services to the needs of local consumers. The downside is that
you take on the risk associated with the local domestic market. An International Sales Subsidiary
would be similar, reducing the element of risk, and have the same key benefit of course.
However, it acts more like a distributor that is owned by your own company.

Products and International Marketing

Standardization versus Adaptation
international product decision-making often centres around the standardization versus
adaptation debate. Essentially, do we market the same, standard product in an international
market or segment, or do we localize it, and adapted it so that it pleases local tastes? Here are
some of the advantages and disadvantage of standardization.

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 your product. One of the payoffs
of great quality for a single product category is that the reputation of your 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 reduces 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.

Quality is improved since efforts are concentrated upon the single product. Staff can be trained
to enhance the quality of the product and manufacturers will invest in technology and equipment
that can safeguard the quality of the standardized product offering.

Disadvantages of Standardization.
Since the product is the same wherever you buy it, it is wholly undifferentiated. It is not unique
in anyway. This leaves the obvious opportunity for a competitor to design a tailor-made,
differentiated or branded product that meets the needs of local segments. Of course products
have different uses in different countries (for example cycling is a leisure activity in some
nations, and a form of transport in others). Local markets have local needs and tastes. Therefore
by standardizing, you could leave yourself vulnerable.

Another problem with standardization is that it depends largely upon economies of scale. With
global businesses, your business will manufacture in a number of nations. However, some
countries implement trade barriers (and yes - this includes the USA and the European Union). If
this is the case, then localization and the resultant adaptation is inevitable.

International Marketing and Price

How should we set prices for international markets?
Influences on pricing for international marketing.
 The cost of manufacturing, distributing and marketing your product.
 The physical location of production plants might influence price. For example, Toyota
have plants in their European market, in the United Kingdom and Turkey.
 Of course fluctuations in foreign currencies affect pricing. Many companies are
benefiting from a relatively low US Dollar price during the 2010s. This make imports to
the United States expensive, but exports relatively cheap to other nations. However
fluctuations make it very difficult for companies to make long-term decisions - such as
building large factories in global markets i.e. costs of production are cheap today, but
could be expensive in the future, impacting upon the price that your business is forced to
charge.
 The price that the international consumer is willing to pay for your product.
 Your own business objectives will influence price. For example, large international
companies such as Starbucks may operate at a loss in some locations but still need a local
presence in order to maintain their economies of scale, as well as their reputation as a
global player.
 The price that competitors in international markets are already charging.
 Business environment factors such as government policy and taxation.

International Pricing Approaches

 Export Pricing - a price is set for by the home-based marketing managers for the
international market. The pricing approach is based upon a whole series of factors which
are driven by the influences on pricing listed above. Then mainstream approaches to
pricing may be implemented - see below.
 Non-cash payments - less and less popular these days, non-cash payments include
counter-trade where goods are exchanged for goods between companies from different
parts of the World.
 Transfer Pricing - prices are set in the home market, and goods are effectively sold to
the international subsidiary which then attaches its own margin based upon the best price
 that local managers decide that they could achieve. Then mainstream approaches to
pricing may be implemented - see below.
 Standardization versus adaptation - do you use a standard, common approach to
pricing in each market, or do you decide to adapt the price to local conditions?

International Marketing Communications

(Promotion)
Influences upon International Media Choice.
There are a number of factors that will impact upon choice and availability of media such as:

 The nature and level of competition for macros channels in your target market.
 Whether or not there is a rich variety of media in your target market.
 The level of economic development in your target market (for example, in remote regions
of Africa there would be no mains electricity on which to run TVs or radios).
 The availability of other local resources to assist you with your campaign will also need
to be investigated (for example, sales people or local advertising expertise).
 Local laws may not allow specific content or references to be made in adverts (for
example, it is not acceptable to show naked legs in adverts displayed in Muslim
countries).