International Marketing - Essay Example

? International Marketing Introduction This essay paper focuses on international marketing opportunities and expansion options that can be availed by organizations to broaden the scope of their business and increase business’s profitability. For this reason, the case of Luxottica has been chosen to elaborate the explanation of the models and theories utilized in this essay. Adaptation of Suitable Marketing Mix International marketing can be very challenging for companies. One of the main reasons of this challenge is the cultural variation and differences in market environment that lies amongst each nation of this world. Customs, believes, values, norms and traditions are all the ingredients of a culture which gives an identity to an individual in this global village. In addition to these cultural variations, the diversified market environment which entails a completely different industry and consumer market scenario at every geographical location ion in the world (Majaro 1977). Researchers have developed several theories to explain the strategies about culture, market environment and marketing and a few of those strategies spots light on international marketing. If a company wants to increase the number of shares in global market than they should classify their products in different markets and provide the consumer in accordance to the needs in host markets (Stanton 1987). It is Luxottica’s decision that whether to enter the global market or to keep the business in a few already existing markets. Then the company has to decide whether they will reach for all the markets with single marketing mix or provide different segments in accordance to the needs of the consumers. The best possible marketing mix that Luxottica should adapt keeping in view the global perspective is presented in the following section of the essay: Product Strategies The norms and trends are passed on from one generation to the other and as a result it becomes difficult for the populations living in different countries to adhere to new or a changed life style. However, the change can be observed in the modern generation of today, i.e. the present young generation is more inclined towards individualism. As compared to the older generation, the young generation is more prepared to adopt new trends and styles on its own with relative ease and swiftness. Luxottica should promote the concept of individualism through its promotional campaigns. This concept of individualism includes three classes of young generations, namely children, young people and young parents. For every group belonging to this young generation lot, Luxottica has something exclusive to offer in the form of a wide range of its optical products with a blend of local preferences. Thus it can be implied that Luxottica’s product strategy should largely based on the consumer behavior while keeping in view the cultural norms and market conditions prevailing in different countries of the world (Scruton 2007). Price setting Strategies Setting price of a product is determined by many factors and these factors may vary across different regions. Apart from the fact that the manufacturers costs of bringing a product into a useable form plays a decisive role in setting the price of a product, there are many other factors which are not under the control of the manufacturer. First of all, consumer behavior plays a significant and leading role in determining the price of a product. In countries where the income levels of people in general are not high, price plays the most important role in determining the success of a product or sometimes of a business as a whole. Consumers’ preferences for expenditures on any product are not necessarily influenced by its usefulness, quality and branding; the ability to pay for a product and the satisfaction which the use of a product yields are regarded as major factors responsible for the success of a product. Apart from this, the social and cultural norms prevailing in a society have a dominant role in determining the price of a product. As for instance, a society where there is a culture of saving a lot will tend to be very selective in expending its money and therefore it will be difficult for the business enterprises to motivate consumers to consume their products. The global presence of Luxottica presents a scenario where people of one country have a mixed spending behavior, some countries where people spends a sufficient amount of money on purchasing optical products. However, the lack of inclination towards savings at national level does not purport that the people opt to spend more rather than to save; in fact the presence of high proportion of middle class in the world and the low income level of the people belonging to the middle class does not allow them to save a lot. As for instance, during the recent economic down turn and the present time when economies are recovering, Luxottica should offer low price products which are not only affordable but also attractive for the customers (Scruton 2007). Place Strategies The basic objective of Luxottica should be to find a place which allows the consumers to have an ease of access. Following this strategy, Luxottica’s outlets should strategically be located at busy shopping malls and recreational areas. Furthermore, Luxottica should target the big cities on global scenario which are also an optimum choice for the opening up of outlets because the residents of these cities lie in a better income level group and show greater demands of the products offered. In addition to serving the products at the outlets, Luxottica should also facilitate its consumers by enabling them to purchase their products from the online portal of the company (Scruton 2007). Promotional Strategies An appealing promotional strategy, which is in line with the cultural, social norms, and designed according to the market environment, is regarded as a very effective way in which a business can motivate the general public to consume the products offered by it (Kotler 2005). Luxottica should consistently show up with its products and new offers through advertisements in print and electronic media. The newspaper, billboards, television, radio and magazines should be the preferred mediums used by Luxottica. Through its advertisement campaigns, Luxottica should put more emphasis on the cultural norms of the country and blend these cultural norms with its products in such a way that the consumers regard it as a part of their very own culture. Luxottica’s Internationalization When the costs and benefits of adapting a suitable globalization strategy are measured, organizations usually stress upon the locality of the company headquarters. In this scenario, the market, where skilled labor is widely available at cheaper costs and taxation system favors the business, organization should consider that market as the most potential place for locating its headquarters and take advantage of the favorable for its business activities (Hill 2005). This is the reason that Luxottica started business from United States of America, i.e. to take advantage of the favorable business environment prevailing in the United States, even during and after the recessionary period that stretched from 2007 to 2011. The gradual expansion of business size after succeeding in the US market by Luxottica is the resultant of image and prestige that the company has gained in the country. It is usually perceived that the products and services, which are successful in United States and are thought to be good by the consumer markets in the country, can easily enter into new geographic locations and attract customers towards it. The opportunities availed by Luxottica in America’s market and the image that it has build, helped the company to gain the attraction of customers in other countries and facilitated the company to establish itself as a diversified producer of optical and other products. Vernon (1966) states that the process of internationalization of an organization is based on the theory of product life cycle. This phenomenon was particularly identified by Vernon in which he stated that organizations followed an approach which included different phases of production. In the first phase, organization, i.e. Luxottica produced their products in the United States and exported them to other parts of the world. After they achieved stability in this phase, they developed production facilities in other advanced regions and produced their products to fulfill the demand of their products in those other regions of the world. After discussing the reasons behind Luxottica’s decision to start business from the United States, this essay takes the direction to the pros and cons that can be availed by implementing an efficient internationalization strategy. The biggest advantage the Luxottica can enjoy by going international with its product and services is the expansion of customer base. When Luxottica decides to enter new markets in other geographic locations of the world, it will require the company to put extra efforts in market research and in adapting suitable marketing strategies. But on the broader spectrum, Luxottica will also be expanding its customer base by attracting new customers at newer locations and diversified markets (Hill 2005). In addition to this advantage, Luxottica also enjoys the benefit to offset and recover the losses in one market by making profits and succeeding in other markets. That is, Luxottica will be making fortunes in other markets where market conditions are suitable for the company, whereas in other markets, it will be facing tough times. Also, Luxottica have fair chances to cater a foreign market segment, which specifically look for foreign and imported products. In this way, an additional number of customers will be added to the customer base (Stanton 1987). By catering the needs of international customers, Luxottica minimized the costs involved in designing and developing customized products and export to the customers’ location. Although, the costs involved in setting up an international business unit are higher in shorter run, but in longer run, it will provide unlimited benefits to the company (Kotler 2005). In addition to these benefits, there are costs involved for taking the business on international scenario. Luxottica have to face barriers, such as cultural differences and linguistic differences in international market. Also, Luxottica is also facing financial problems, such as fluctuations in currencies and interest rate, which are different at different geographic locations. Differences in legislative framework, governmental policies and industrial policies, political instability and economic downturn are also an obstacle that a multinational organization has to face (MacLean 2011). How Luxottica can Maintain its Competitive Edge The first and foremost step that Luxottica should take in order to maintain its global competitive advantage after the recessionary period, is to carry out a competitive analysis. Competitive analysis of the competitors will assist t he management of Luxottica to gain knowledge of their current strategies and how they are surviving. Also, it will facilitate Luxottica to possess an informed base for developing strategies to competitive advantage in the future. Additionally, it would assist in forecasting the financial returns of the company that can be made from future investments carried out after competitive analysis (Kotler 2005). Another strategy to overcome the financial crisis prevailing all the major economies of the world is to differentiate and bring changes in product design. Luxottica is present in more than 80 countries of the world and majority of them are facing economic downturn. In this scenario, to maintain the status of an established brand in the industry, Luxottica should alter products to decrease the costs, and at the same time, maintaining the quality perceived by customers. In this way, customers will perceive Luxottica as an affordable brand, and those who are not loyal to the company and purchase other brands’ products will be attracted towards Luxottica’s products. On the other hand, those customers who are loyal to Luxottica will remain loyal to the company (Majaro 1977). Market penetration is another strategy that organizations utilize for maintaining their market share and competitive edge. If Luxottica aims on setting up a penetration pricing strategy, it would be beneficial for the company to keep its share of market safe. Prices can be set at optimum level by comparing the current pricing strategy with the competitors, and than developing a pricing strategy which is comparatively more customer oriented as compare to the prices offered by competitors. But, Luxottica should keep in mind, that while reducing the prices, it should maintain the quality and standard that it delivers to the customers (Kotler 2005). Moreover, Luxottica should search for newer markets, in order to broaden the market size that it is catering. Conducting market research would assist the company to explore new markets and identifying the opportunities within these markets. In this way, Luxottica will have fair chances to attract new customers and expand the customer base, which in return, will increase the size of its revenues (MacLean 2011). Businesses all around the world use social networking and blogs for managing their business portfolios and promoting the upcoming offerings into the market. The best opportunity lies in the fact that businesses become more acknowledged about the target markets. It entails that businesses are more aware of the market conditions and potential opportunities that will provide them unlimited financial benefits by targeting the market according to the products and services, specifically (Hill 2005). In business management, the use of social networking sites and blogs is proven to be providing numerous solutions for business issues and problems. Luxottica should utilize the emerging marketing channels, i.e. the social networking websites for massive promotion of its products and services. In this way, Luxottica will have immediate access to customers and their personal information through their personal profiles on social networking websites. Social networking and blogging will also help Luxottica to bring improvements in their communication channels. A company owned social networking profile would help to timely acquire the knowledge about the latest products and promotional offers by Luxottica. Complete organizational information can also be provided to the customers with the help of social networking which improves the access to the valuable data that helps customers and investors to understand the organization and its business practices in detail (Hill 2005). Also, Luxottica needs to bring improvements in its traditional promotional activities. Luxottica is required to swap more market share by implementing a homogeneous or multi purpose marketing strategy that targets all the potential customers, without considering the classes or segments. Risks Involved in Aggressive Distribution The major risk involved in implementing an aggressive distribution strategy is the difficulties that Luxottica will be facing in the recovery or collection of payables. Those debtors who are liable to pay to Luxottica will be difficult to locate as there are huge numbers of debtors who purchased inventory from Luxottica and are difficult to track. Aggressive distribution strategy will welcome thousands of customers who will desire to take advantage of the promotional offers put forward by Luxottica. To cater the needs of vast customer base, Luxottica will be requiring producing products at larger scale, which will ultimately require the company to purchase excessive inventory. In this way, the tracking of inventory and maintaining the inventory level will be a difficult asks from the operation management of the company. There is a possibility that the company will have to incur losses in the form of inventory loss. To overcome the risks involved in aggressive distribution strategy, Luxottica is advised to adapt more flexible and supporting pricing strategy which can be supplemented by adapting a viral marketing campaign. Luxottica will be beneficial by implementing these two strategies, as its customer base will expand as a resultant of competitive prices and increased awareness among customers. Franchising Luxottica or Not Considering the market data provided by the case study of Luxottica, it is imperative that franchising the business would lead Luxottica to reduced control over the sales and distribution network. Franchising the business would not only cause ambiguity in the supply chain management but also increases the costs involved in making the product available for the customers. Presenting auctions for franchising and continuous management of franchised business is considered to be a costly initiative by a business. Moreover, Luxottica will have limited or restricted control over the franchisees. When the company has limited access to the franchisees, there is a possibility that the franchisees’ conduct and business activities distort the image and attitude of the brand that they are selling. Also, there is am uncertainty which exists among the franchisors and franchisee, i.e. both parties are unaware of the position of each other and do not know when the opposite party leaves the business. In Luxottica’s scenario, it will be uncertain, when one or more than one franchisee will shut down their business and create problems for the brand. Alternative Strategies for Making Product Available to the Customers Since the company is already distributing its products to the retailers in the market, therefore no direct sale or marketing strategy can possibly be recommended for the company. On the other hand, the fact that the company may take the initiative of opening up its own franchises by making agreements with third parties is not considered suitable in the existing scenario. However, the company may look for and implement alternative distribution strategies which offer some new avenues and can attract people from all over the globe. In this regard, it is recommended that the company shall add to its existing distribution channels an online distribution source or platform, form where the company can interact with the whole world through the World Wide Web and this approach will add a complete new dimension in the existing distribution channels for the company. The major benefits of distributing through online platform are that it is cost effective and is able to attract large number of consumers due its omnipresence on the globe. Moreover, the company may find it relatively easy to control its distribution activities through online channels as compared to the existing channels of distributing its products. Thus, online distribution channel can be recommended as an alternative distribution channel for Luxottica (Toral 2011). List of References Hill, C., 2005. International business: competing in the global marketplace. NY: McGraw-Hill. Kotler, P., 2005. Marketing Management. New Delhi: Prentice-Hall of India. MacLean, C., 2011. Internationalization. [Online] Available at: [Accessed 12 February 2012]. Majaro, S., 1977. International Marketing. London: George Allen and Unwin. Scruton, R., 2007. Culture Counts: faith and feeling in a world besieged. NY: Encounter Books. Stanton, W.J., 1987. Fundamental of Marketing. NY: McGraw-Hill. Toral, J., 2011. Impact of blogs and social networking sites to business. [Online] Available at: [Accessed 12 February 2012]. Read More