MARKETING STRATEGIES IN AN INTERNATIONAL ENVIRONMENT Abhishek Chakraborty, Abhishek.chakraborty@dishamail.com INTRODUCTION This era is an era of globalization.

MNCs worldwide are increasingly involved in worldwide mergers and acquisitions. Many of the firms are outsourcing their manufacturing activities into different countries of the world. However, many firms face failure in establishing themselves overseas when they do not consider the international environment. It is therefore imperative that firms understand the differences in marketing environment across the world to remain successful in competitive arena. In this project we therefore discuss the differences in environment of different countries that a firm should consider when undertaking globalization strategies. This would enhance establishment of world class global organizations. Essentially, a countrys environment can be categorized into economic, political, legal, socio-cultural and technological environment. The differences across these environments should be carefully studied before establishing in International market. We discuss these environments for India, Europe, Americas and Asia-Pacific in sections to follow. SOCIO-CULTURAL ENVIRONMENT Table 1 shows the various socio-cultural dimensions across which various countries of the world differ. Table 1: Socio-cultural environment across the world Japan India Germany North-America Group oriented Fitting in with Private in their Individual Values and community groups approach uniqueness based people Hindi, English German and English and Language Japanese and many other English Spanish languages Hindu, Protestant Shinto and Muslim, Roman Protestant Roman Religion Buddhism Christian and Catholic, Catholic, Jewish Sikh Muslim Communication High context High context Low Context Low context Patterns culture culture culture culture Parameters Religion Different countries have different religious beliefs and failure to observe and understand the religious context of different countries/cultures may create problems for companies in marketing. For example, Yokohama Rubber Co. failed in Indonesia because it placed its logo which resembled Muslim holy scripts on its tires. The Muslims were offended by this act. Language Language also has an impact on firms marketing strategies. For example, Procter and Gamble sells diapers in the name nappies rather than diapers in UK as the word diapers is not common in UK. Similarly, in America product sold under the name ZIT foods in English spoken countries

is sold as Frescha Soda pop in Mexico. However, ZIT foods sales were low in Mexico because the Frescha is a slang meaning lesbian. Culture Culture is a problematic issue for many marketers since it is inherently nebulous and often difficult to understand. One may violate the cultural norms of another country without being informed of this. Friday is holiday in Islamic countries, which creates a big problem in international market which is a full working day for rest of the worlds market. ECONOMIC ENVIRONMENT Countries economic environment plays a significant role in determining firms marketing strategies. Economics limit the per capita spending by countrymen which may vary in different countries. Exchange rate effect The finance department of Shell- Sekiyu, Japanese-Dutch oil refiner and distributor, lost more than $1 billion by making a bad bet in the futures market with the speculation that the dollar would rise in 1993. GDP Effect Economic environment restricts the market. For example, Germans car manufacturers are coming to India and China with their costly cars such as BMW. The biggest threat to them is the lack of big market in India or China where people can get better cars at cheaper cost. In contrast to the German car manufacturers, Indian automaker Tata Motors is scheduled to introduce its long-awaited People's Car, with a sticker price of about $2,500, which can be easily acceptable by the Indians. POLITICAL ENVIRONMENT Firms marketing strategies must take into account the political environment of the country as different countries have different political conditions. Table 3 shows the various political dimensions across which various countries of the world differ. Parameters Type of government Political Instability Political Risk Table 3: Political environment across the world Japan India Germany Capitalism Stable Low Democracy Unstable High Capitalism Unstable High North-America Capitalism Stable Low

Type of Government Firms marketing environment is highly dependent on the type of Government in a country. For example, in India, firms need to consider the needs of all the people and even a financially sound venture may not be successful if it deviates from public interest. Inability to achieve a close-fit

between the internal dynamics of the firm and the political structure of the country has created problems for the firms. For example, Enron Power Project (Dabhol, India) was failed due to poor internal dynamics which did not match the political structure of India and it was the major reason for the failure of the project. Government Policies Government policy regarding budget, incentives, subsidies etc. also change with the change in the political scenario. This also affects the way the business is managed. For example, Indian Govt. is considering entering the reservation system in the private sector businesses. This would influence the HR policies, quality of firms HR, etc. Political Instability Unstable Governments pose greater risk for International firms as the policies of Government might change after new Government takes the control. Political environment has a very important impact on every business operation no matter what its size, its area of operation. A government controls and restricts a company's activities by encouraging and offering support or by discouraging and banning or restricting its activities depending on the government. TECHNOLOGICAL ENVIRONMENT Technological efficiency of countrymen plays a vital role for the firms marketing strategies. The approaches of firms are influences by the technological factors. Table 4 shows the various technological dimensions across which various countries of the world differ. Parameters Information & communication system Table 4: Technological environment across the world Japan India Germany Good Increased use Larger in use High rate Developing stage Not so significant Less use Low rate Good Increased use Medium use High rate USA Good Significantly large High rate High rate

Computerization & use of internet Use of electronic equipment Invention

The vivid example of Dell is very instructive. Dell started its business by direct selling model whereby customers could purchase laptops through Internet. However, Dells business suffered great set-back in India and China because people do not have as frequent access to Internet as in other countries. Moreover, people in India hardly make any purchases over Internet then what to speak of a costly product as that of Dell. India is at the developing stage in the information and communication system & the computerization & use of internet is not so significant. Moreover, invention rate of technology is also very low.

LEGAL ENVIRONMENT There are legal systems and the laws related to intellectual properties which must be considered while processing business function in the international marketing and if it has not been followed there are certain punishments and penalties. The legal laws across the world should considered by the firms for their survival in the international market. Firms have to go through the legal system of various countries. Table 5 shows the various legal dimensions across which various countries of the world differ. Parameters Legal System Table5: Legal environment across the world Japan India Germany Status law Common law Status law system system system North-America Common law system

IBMs example of legal victories against its Japanese competitors vividly explains the situation. Fujitsu copied the software made by the IBM against the copyright act, for which Fujitsu was forced to pay IBM $8 million a month until the year 2002. It is an example of legal constraint for any company against international patent law. Another problem with Indian legal system is that it takes a lot of time for cases to be heard and acted upon. MARKETING ENVIRONMENT Various countries different from each other in their demographic characteristics and behavior. For example, while serving alcohol in U.S. restaurants would go against the family image of the restaurant carefully nurtured over several decades. McDonalds has accommodated this demand of European patrons. Positioning across markets: Firms often have to make a trade-off between adapting their products to the unique demands of a country market or gaining benefits of standardization such as cost savings and the maintenance of a consistent global brand image. There are no easy answers here. On the one hand, McDonalds has spent a great deal of resources to promote its global image; on the other hand, significant accommodations are made to local tastes and preferences. The importance of STP: Segmentation is the cornerstone of marketingalmost all marketing efforts in some way relate to decisions on who to serve or how to implement positioning through the different parts of the marketing mix. For example, ones distribution strategy should consider where ones target market is most likely to buy the product, and a promotional strategy should consider the targets media habits and which kinds of messages will be most persuasive. Approaches to global segmentation: There are two main approaches to global segmentation. At the macro level, countries are seen as segments, given that country aggregate characteristics and statistics tend to differ significantly. In contrast, inter market segmentation involves the detection of segments that exist across borders. Note that not all segments that exist in one country will exist in another and that the

sizes of the segments may differ significantly. For example, there is a huge small car segment in Europe, while it is considerably smaller in the U.S. Nestle has to sell maggi noodles in India with taste makers as it was excepted in the other countries without taste maker. It helps to gives maggi a Indian taste. International Marketing product We often take for granted the obvious need that products seem to fill in our own culture; however, functions served may be very different in others. For example, while cars have a large transportation role in the U.S. Thus, it is important to examine through marketing research consumers true motives, desires, and expectations in buying a product. Approaches to Product Introduction Firms face a choice of alternatives in marketing their products across markets. An extreme strategy involves customization. On the other extreme, standardization involves making one global product in the belief the same product can be sold across markets without significant modificatione.g., Intel microprocessors are the same regardless of the country in which they are sold. Finally, in most cases firms will resort to some kind of adaptation, whereby a common product is modified to some extent when moved between some markets. McDonalds failed in standardization strategy in India and has to come up with Maharaja Mac which is less bland in taste. Promotional tools Promotional tools affect the administration of marketing research survey or firms strategies. For example, in Singapore, billboards are less common as compared to India. Thus, the sources of advertising in a country should be clearly known. Similarly, for price promotions, various promotions, such as coupon discounts that are available in US and Europe are non-existent and not taken seriously in India. The impact of geography Geography has a surprisingly large impact on distribution in many areas. While in the U.S., most communities are readily accessible through the Interstate freeway system (or at least from navigable roads that connect the freeways), many foreign areas are more difficult to reach. In Europe, connections across mountains were achieved through aggressive tunneling, but this has not yet been affordable in most developing countries. In some areas, the only way to bring most materials in may be air cargo, which is expensive. CONCLUSION Customers react very quickly in the market and can make quick changes. In this paper, I have discussed various dimensions across which firms must consider their strategies in order to succeed in a global environment. The point to remember about creating marketing strategies, as well as creating atmosphere and excitement around the products is that one needs to know, what he is selling and where he is selling. The bottom line is that to meet and exceed the growing challenges of international market, marketers must find right balance of all the above-discussed factors to survive. To maximize the effectiveness of future marketing smaller segments within

this broad segment are required to be kept in consideration to succeed in organizational goals if these things are considered.