Globalization and Changes in the International Markets - Essay Example

? Complete standardisation of offerings and marketing interactions in International Marketing strategy is always the main goal to achieve, and pursuing it will inevitably provide a company with higher performance.” Please discuss, using conceptual arguments as well as practical. Contents Contents 2 Introduction 3 International Marketing strategy 4 Standardisation of offerings 6 Standardization of marketing interactions 8 Effects of standardization strategy on business performance 11 Conclusion 13 References 14 Introduction The advent of globalization has brought some dramatic changes in the international markets. The economic reforms adopted by the governments in different economies across the world led to the inflow of investments by the companies in the foreign countries which opened up the global markets for the companies of different sizes across the world. The transformation in the business environment led to the modification in the international strategies adopted by the companies. Thus the marketing environment and the culture of the companies underwent rapid changes over the period of time. The developments in the market environment and the strategies adopted by the organizations have come up in order to respond to the changes in the consumer behaviour and demands of the customers in the economy. The advancement in communication technologies and other online applications as a result of strategic implementations in the global markets have changed the outlook of the customers of the companies. The customers have become more aware of the information on the products and the services offered in the global arena. The level of awareness of the customers has increased and they have started to weigh the different options for the products and services offered by the companies in the international markets. The customers have learnt to define their needs in a far better manner and seek solution to satisfy their wants on a consistent basis (Andrus, 1990, p.430). Apart from this, there have an increase in the competition among the business houses for offering the products and services in the market. In order to gain competitive advantage, the companies started to focus on their strategies to avoid duplication of information on the products and services offered by the company. This led to the standardization of the offerings and marketing interactions as an important trend in the international marketing strategies of the companies. International Marketing strategy The standardization of product offerings and marketing interactions is extremely important for the multinational companies in order to increase the acceptability of the business in the eyes of their customers. As the approach of standardization helps the companies to achieve success in the business operations, the multinational companies include this approach in the international marketing strategies designed by the multinational organizations. The companies that have wide spread operations in various markets across international boundaries considers the changing trends of consumer behaviour in order to design international marketing strategies that are important for achieving successful and sustainable business operations. The experience and learning gathered by the companies in the local markets are applied to the several foreign markets where the company has expanded its operations. The companies ensure that there is no duplication of the information available to the customer on the product and service offerings of the company in different international markets. The international marketing strategy also takes into account the activities of promotion and marketing interaction done by the executive in several foreign markets. The sequence of penetration and expansion of the business in the foreign markets are important part of the international marketing strategy (Cavusgil, 1994, p.20). The multinational companies that operate in the different foreign market are faced with situations of varying market demands and consumer behaviour and emerging new trends and style in the foreign markets. In order to attain a sustainable operation in the foreign economies, the corporations need to adapt to the changing trends of the market and develop new products or make modification in the existing brands. This helps the companies to provide the desired solutions in the market and helps them to increase the acceptability of the product and service offerings. Several example of multinational companies could be stated, namely Wal-Mart, Tesco, Sainsbury, Morrison, McDonalds, etc who have adopted international marketing strategies to meet the changing demands of the customers by offering products and services that will meet their tastes. The main objective of the organizations in the process of expansion and setting up sustainable business in the foreign markets is to achieve economies of scale. The international strategies adopted by the companies may restrict the companies under certain situations to further expand but to consolidate their business in the existing foreign markets. In order to achieve this, the corporations like Wal-Mart, McDonalds, Tesco, Sainsbury, etc. have focussed on further internalizing their products through the existing international operations. In such cases the enterprises have focussed on taking up promotional campaigns on a much bigger scale and providing information on the products and service to a wide segment of the customers through the use of communication technologies and other advanced application that have been developed due to technological developments. The main objectives of the international marketing is to achieve an integration of the global operation and the technology systems in order to provide an improved access for information to the customers and help them in taking informed decision for availing the product and the service (Craig, 1992, p.75). This approach in international marketing have helped multinational entities like Wal-Mart, Sainsbury, Morrison, Tesco, etc. to improve the level of interaction with the customers on the marketing of its products and services. The reliability and trust developed by consistency of the product promotions and the product and service offerings have helped these multinational businesses to develop a brand image and attain sustainable business operations in the foreign markets. The integration of the technology with the economic sectors has changed the strategies of international marketing and the organizations have started to attach more focus on the consistency of the product and service offerings in the global markets. Standardisation of offerings In the course of global expansion of the business, the multinational companies have faced a critical situation over standardizing the product and service offerings to the customers of the foreign market. The multinational companies are faced with situations of dilemma in which they need to modify the offerings of their products and services in order to meet the demands of the market. This brings the concept of adaptation in international marketing. Thus standardization and adaptation are two strategies in international marketing that have gone side by side and formed the basis of the companies in the international marketing decisions taken by them. The organizations that have expanded their business in several foreign markets encounter changing market trends. The changing market trends may be due to the economic development of the foreign economies in which the companies operates, the development of technology and communication in the foreign markets, the changes in the livelihood of the consumers and their changing lifestyles, habits and culture (Day, 1981, p.292). The advancement of information technology, growing use of social media and other technological applications available at the finger tips of the consumers in both the emerging as well as developed markets have kept the customers well informed of the new product offerings, changes in the existing products and services of the companies, the prices, the places of distribution, the relative advantages and disadvantages over the products and services of the customers, etc. This has generated recall value for various brands and the customer have transformed into active mode in making decision of purchase and marketing. In order to attain competitive edge and sustain the market share in the foreign markets, the multinational companies have laid additional focus on standardization of the products and service (Douglas 1, 1989, p.57). This strategy adopted by the companies in the international markets helped them to deliver consistent solutions to their customers through standardization of offerings as per the demands of the market. The duplication of product and service offerings has been removed with the help of this international marketing strategy that reduced the confusion as well as communication gap between actual product and service information to the one that has reached the customer (Douglas 2, 1987, p.28). The example of McDonalds could be used in the standardization of its product and service offerings in several foreign markets. With the changing market trends due to the process of globalization, McDonalds have encountered the situation where the customers of the foreign markets have differed in the terms of purchasing power parity, food habits, style of living, influence of religion beliefs on lifestyle, etc. McDonalds found that the lack of variation in the food product offerings to the customers could be detrimental for the company in terms of sustaining the market shares and the revenues. In accordance with the market demands, McDonalds has standardized their portfolio of product and service offerings to the customers in different markets by allocating right proportion of resources such as finances, human resources, etc. Mc Donald has introduced food products which are competitively priced with the market and also offered discounts in order to encourage increasing footfall in their stores. The concept of standardization however has two different perspectives in the stage of international marketing which says that the companies could adopt standardization strategies in international marketing by adopting a marketing mix that matches the expectations of the customers. This could be done with the efficient allocation of resources and offering appropriate weight-ages to customer’s demands of product quality and competitive pricing in the individual foreign markets (Dow, 2006, p.225). The standardization of offerings could also look to establish one product portfolio which could be uniquely recognized by the customers. Along with the standardization of the offerings, the companies have also applied the concepts of adaptation in international marketing which explains that the multinational companies modified their product in accordance to the demands of the market in order to increase their acceptability among the customer. This resulted in the increase of market share and profitability of the multinational business houses on a sustainable manner. Standardization of marketing interactions The concept of standardization could be applied to the international strategy of marketing interactions of the companies in global expansion and sustenance of their business in the foreign markets. The process of globalization and the existence of the business in the different foreign economies require the multinational companies to develop a strategic plan of international marketing in order to make full use of the available resources to explore the potential opportunities in the foreign markets. In the course of adopting an international marketing strategy, the companies are faced with the situation where the different sets of socio-economic environment are needed to be encountered by the multinational companies (Ghoshal, 1993, p.336). The different sets of customers in the foreign markets are different in terms of their indigenous nature, needs, cultures, belief and religion. The customers of some economies may be predominantly conservative in nature or may be liberal in their attitude. Thus the ways of interpretation of the marketing interactions by the companies would be different. In order to promote their products and services to the largest target segment of the customers identified in the foreign markets, the companies adopt the strategy of standardized marketing interactions in international perspective (Jain, 1989, p.72). The standardization of marketing interactions has been done by the companies by providing single standardized information of the products and service in several advertising and promotional campaigns. The example of McDonalds could be highlighted in this context to show that they have adopted the standardized marketing interaction strategy by establishing its universal corporate logo as a symbol of its physical evidence of food stores. McDonalds has developed a brand image through its food products and services over the years. The company has also developed a corporate logo which is the unique brand image of the company and signifies its presence in the international markets. The physical evidence of McDonalds denotes standardization of the way of communication with the customers which is interpreted in the same way by the customers in all the foreign markets where the company has opened up its food store. The other view of implementing the standardized marketing interaction strategy in international context is to identify the changing trends in the economic and business environment and the growth of technology and the communication media in the foreign markets where the multinational company has laid down its operation (Johansson, 1977, p.24). The multinational companies standardize their marketing interaction by undertaking an analysis on the access obtained through various communication technology platforms and then selecting the appropriate communication technology application to promote the products and services. For example, the emergence and growing use of social media has led to the shift in communication patterns of the business as a result of the changing social trends. With the use of social media, the multinational companies could look to provide consistent information to its customers in the foreign markets all over the world and avoid the risk of duplication in case of promotion of its products and services. This form of standardized marketing interaction has allowed the multinational organizations to promote their products and services with standardized information in quick time (Laroche, 2001, p.255). The customers have also been able to keep them updated on the product and service information of the competitors and take informed decision of purchase. For example, Apple Inc. is a manufacture of electronic device and gadgets, software and hardware who engage in the online marketing of its products for effective interaction with the customers in the international market. Apple Inc. has been able to market and sell their electronic gadgets and the software on a high scale through the use of social media and their online portal. By selling through the online mode, Apple has been able to showcase the standardised products and services offered to the customers at the same time all over the globe. The standardization of offerings and marketing interaction has helped the customers in making informed decisions on purchase. Effects of standardization strategy on business performance The approach of standardization in the international marketing strategy of the companies has been beneficial for the multinational corporate houses who have wide spread operations in the foreign markets all over the world. The strategy of standardization of the offering of products and service as well as marketing interaction with the customers is highly essential in the changing trends of globalization and the need for the companies to adapt to these changes in order to attain a sustainable business performance (Laughlin, 1994, p.9). The standardization of the offerings of the products and services has been done by the companies after an analysis of the upcoming trends of consumer behaviour. The changes in the income level of the population, the demand for products in the markets, the expectations of the customers, purchasing power parity has led to the modification of the product mix of the companies that suits the demands of the market. In order to tap the market potentials in the foreign economies, the companies have either standardized their products through offering single solution in the markets or have standardized their product mix in accordance with the demands of the customer in respective foreign markets. The example of Starbucks could be explained in this context. Starbucks offered a standardized product and service of tea and environment friendly coffee shops that resulted in the development of brand image of the company due to the rich experience provided to their customers by the Starbucks stores. However, after the global economic recession, Starbucks have standardised their product mix with respect to the changes in purchasing power of the people. This has allowed Starbucks to revive losses that it incurred in their business due to the economic downturn. Thus standardization of offerings of products and service has helped in improving the business performance (Levitt, 1983, p.102). Due to the standardized products and services offered by the multinational companies, the acceptance among the consumers has highly increased that have resulted in the growth of revenue of the organizations. The positive effects of the standardization of offerings of the companies include enhancement in business turnover and profitability. The standardization of the marketing interactions by the multinational companies has led to the selection of the right communication platform in line with the technological advancements and use of those technologies by the customers. Due to the standardization of the marketing interactions, the companies have been able to promote their products to largest customer segments in the foreign land. The consistent information provided by the multinational companies had developed the level of trust and reliability (Medina, 1998, p.235). The customers have been able to taken quick and informed decision on product purchase. For example, the online marketing of software products by Apple Inc. Has led to increase in business performance of the company as they have been able to improve their business turnover due to the quick and informed decisions taken by the customers on purchase followed by the online transactions. Thus standardized marketing interactions have resulted in increase of business performance through attaining increased turnovers, revenues and profitability (Onkvisit, 1987, p.55). The business has also been able to attain competitive advantage over other player as the customers have found them to offer products and service that are compatible with their demands. Conclusion The economic reforms undertaken by the governments and the emergence of global markets have changed the business environment, especially for the multinational companies. The changing trends in the behaviour of consumers have resulted due to the process of globalization. The customers have become more sensitive and the level of awareness of the products and services have increased by leaps and bounds so that they could engage in informed decision making for availing the products and services. The multinational companies have also adapted to the changing trends of the consumers behaviour and also taken necessary steps to provide readily available information to the customers. The multinational companies which operate in different foreign countries have also indentified the shifts in the economic trends, the changes in purchasing power, difference in the level of acceptance due to the varying culture, religious ideas and beliefs. Thus the companies have standardized their product mix and then offered it to the foreign markets. The standardization of the offerings of the companies coupled with the standardized marketing interaction has allowed the companies to integrate the business environment with the advancements of technology. The availability of quick and consistent information to the customers through the communication platforms like the social media has given rise to increase in acceptance of products and services of the business. Due to the quick decisions taken on purchase, the business turnover increased with increase in revenues, and profitability. 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