The Concept of International Marketing - Essay Example

Part a Theodore Levitt’s seminal article ‘The Globalisation of Markets’ has revolutionalized the concept of business and has given fresh thoughts to the marketing in the era of advancing technologies and rapid globalization. It has also caused many companies to examine their international advertising strategies and to adopt a global strategy. According to the article, the globalization has given a new perspective to the business which needs to look beyond the local interests and operate business on a wider platform based on common goals and universal value system. He says that ‘A powerful force drives the world toward a converging commonality, and that force is technology’ (HBS, 1983). The whole world has shrunk into a global village where the MNCs1 have lost their relevance. The multi-cultural societies around the world have facilitated better and more economically viable options for the global business by accepting their products and services in the same common format. Levitt has defined and conceptualized global business with the core assumption of commonality where universal values with common goals and standard product and services, not only exist but are also acceptable in the same format. This particular approach has a number of problems which need to be looked into with deeper understanding and wider perspective than merely that of economic viability. Basic principles of economics and business strategy are intrinsically linked to the people and therefore any business and economic decision that are made, must take into consideration of the impact that they are going to have on the society at large. According to Huntington “The great divisions among humankind and the dominating source of conflict will be cultural”(Huntington, 1993). The social changes brought about by rapid globalization, have changed the socio- cultural values of a country, forcing them to formulate new strategies and policies to meet the challenges of the emerging pluralistic societies. The changing values necessitate development of a new social order which would not only embrace multi cultural values but help forge a universal bond that would transcend national and religious boundaries. The rapidly changing environment of globalization has made the businesses more competitive thereby making it obligatory for them, as well as for the working force to become more flexible and swiftly adapt to the changing technologies and work environments. The process of globalization has changed the dynamics of international business. The emerging new economies of the developing world have made the global market more challenging and interesting. With the global competition becoming increasingly stiff, the business houses are becoming less rigid and changing their business and market strategy as per the socio- economic compulsions of the host countries. The compulsions of the present times require versatility in the work ideology and functioning, thus making it imperative that individuals and firms, embrace the multi-cultural to meet the challenges with efficiency and unmatched proficiency. MNCs are characterized by indigenizing their products and services to suit the conditions of the nations where they had started their business operations. They expanded their business by operating business interests in different countries. Therefore the overall cost of their products and services were many fold increased which made their business much more difficult to stand against the local competition. Apart from the cost, the various marketing and non-marketing factors often make it imperative for the companies to be more flexible in their strategies and approach which results in low profitability. But these are initial hurdles that provide them with the fundamental strength to understand the delicate nuances of the people’s preferences which gives them a wide scope to exploit the potential that exist within that society. The inter-dependency of the states in the field of economic cooperation and trade practices has been one of the major factors for globalization. The so called ‘Western’ supremacy as a developed economy is fast loosing its status as such and its main competitors like China and India are fast developing as a global economic force. The emerging new economic forces of the new world order have also contributed in developing a little antipathy and rivalry in the ‘West’ which might have resulted in accepting them and thereby obstructing the formation of a peaceful social network. The genuine endeavors of the government and the collective initiative of the public would help initiate dialogues among the people with different ideologies and help foster common visions and goals. Emerging markets are crucial in the era of globalization and can be defined as the new area with high income and where the demand for the product can be created with relative success. Cases of developing economies like China and India are prime examples that have huge potential for developing markets. They have also a distinct and vast diversity in values and ideologies within the social fabric. One needs to take cognizance of the social values and customs while evolving its strategy to make a success of its marketing strategy. The socio-religious culture of the community has strong impact on the attitude and consumer behaviour of the public, which has direct affect on economic transactions of the company. It is therefore vital that needs and concerns of the community, within which the firm intends to operate, be studied in detail so that sensitive public issues are not violated. It is for this reason that Levitt’s theory of global business could only be viable for a small segmented target and not for the multi-cultural society at large. In an article titled ‘Marketers: Bid farewell to strategy based on old 4P2s’, the author, Don Shultz stresses the need to redefine marketing strategies that must meet the growing demands of the changing times. According to him, McCarthy’s principles of 4Ps of marketing have outgrown their effectiveness in the present age of information technology. Today, the technological advancements have brought forth an explosion of information that is easily accessible to public through the internet and other media like television, radio, mobile phones etc. The internet has made it easy for the customers to become aware of the product details including its availability at competitive prices which has precipitated the need to develop a whole new perspective for a new marketing technique. Hence one needs to be more open when Shultz say that it is the end-users who now control the markets rather than the marketers. Another very important factor that makes Levitt’s theory of global business highly improbable is the relevance of non market factors which have direct and indirect impact on the overall performance and operation of the firm. These factors are highly relevant when the business interests are global. ‘These are characterized by 4Is: issues, institutions, interests and information’3 (Baron, p2). They are the socio-political environment within which the firm has to operate. Issues, which might clash with the operations and performance of the company, must be addressed urgently. The institutions are defined as bodies which are affected by the issues, which may be local or national in character. Interests are the personal stake of the individual or groups, in the issues. Lastly the information relates to the various facts and fictions of the issues and the actions taken thereon. These are but few of the highly pertinent problems that Levitt’s theory would need to overcome. Part b Marketing primarily deals into products and services that benefit people in some way or the other, people become the most important factor in the market strategies. A good marketer always tries to exploit the personal preferences of the persons to influence his behaviour as a consumer of goods and services that he wishes to sell. As mentioned earlier, changing fashions and trends are innovative marketing strategies that are used to sell products in creative packaging. In the era of rapid globalization, pluralistic society are increasingly becoming common and therefore the challenges of developing new strategies and models of management have become interesting but more complex. Marketers excel in influencing the self concept and personality traits and behaviour by developing market strategies of the products, keeping in mind the prevailing lifestyles of the people. Hence, different market strategy is adopted for different group of people. Advertisements are the most prolific example of segmented marketing where the contents of advertisements are decided by the target group. Toys’ advertising will be focused on children that will tempt them to buy whereas a dress worn as fashion statement by top model or actress is most likely to be bought by youngsters and fashion conscious persons. The cross cultural paradigms of the globalization are increasingly becoming more vital to the overall strategies. Edward Hall says ‘In some cultures, less information is contained in the verbal part of the message since more is in the context’ (1990). In the international marketing, advertising, being one of the most potent tools of marketing strategy, understanding of cross cultural value system becomes highly essential to communicate effectively and disseminate information in a manner that would get the message to the targeted audience or customers. It is also very complicated because it involves multifaceted tools which need to be interpreted in the correct context for effective advertising. The understanding of their cultural beliefs, give them a wider perspective of their perception and interpretation of the various symbols and contextual contents of the advertising material and thereby facilitate better penetration into the emerging new markets. Modern scientists like Hall, have categorized culture into two basic formats; low culture and high culture. The low culture is defined by its easy to understand explicit wordings. There is normally no ambiguity and the understanding relies primarily from the verbal or textual content. The American culture and most of the Western societies can be defined as low culture where words are used to convey the message as they are. Therefore, communication is easy as the information needs to be explicit and detailed with regard to the product and services that are advertised or promoted. According to Mooij, ‘In these cultures, it is important to provide adequate information relating to the product or service in order to satisfy their need for content’ (De Mooij 1998). In emerging new economies like India, China, Japan and some European countries like France, Italy, Spain, have ‘high culture’ mainly because the words are only relevant on the wider context of the whole issue or information. The cultural factors like symbols, beliefs, language also play a very important role in the overall depiction or advertisement of the product and services. Coding and decoding of texts becomes highly skilled feature of the advertising because the words have associated meanings and symbols may vary in their impact in different cultural society. Hence, companies from low cultures that are operating in high cultural region, need to equip themselves appropriately, in terms of cultural understanding and the format of the advertisement. The compulsions of the globalization has necessitated in segregating the core purpose of advertising. The international advertising may comprise of developing a corporate image or promoting a global brand. It can also be used for introducing products and services on a regional basis. Peebles and Ryans assert that the most important issue in international marketing strategy is whether to go in for a global or regional advertising campaign, or tailor communication to differences in local markets (Peebles and Ryans 1984). If a new product is to be launched and if, it requires to be differentiated from amongst similar products, then local campaigns are tailored to suit the local markets. International advertising are important features of global business and form an intrinsic part of evolving marketing strategy. Effective advertising are the hallmark of the global brands like Levi’s jeans, Diesel, Rolex watches, IBM computers etc. While some of the global brands have become controversial for depicting sexual explicit messages to promote their goods, the others have taken precaution to maintain a high level of credibility in the new markets by not violating the sensibilities of the socio-cultural and religious beliefs of the region concerned. This is a very important aspect of global marketing if the company wants to maintain a sustainable presence in the global arena. Another very important factor of the global marketing is that it facilitates to overcome the barrier of cross cultural paradigms and promotes better understanding and respect between them. The concept of high and low context culture provides the business with knowledge and awareness that is used not only to project its image to the public but they also inculcate universal brotherhood that goes beyond the national boundaries. One can thus conclude that non market factors necessitate formations and incorporations of management strategies that go beyond the realm of individual company’s concern and interests. The globalization has made the role of such factors, an integral part of broader management strategy which encompasses planning for distinctive competencies along with considerations for wider ramifications of the socio political environment of the place. The changing times have made the businesses more competitive thereby making it obligatory for them, as well as for the working force to become more flexible and swiftly adapt to the changing technologies and work environments. With the global competition becoming increasingly stiff, “organizations must change because their environments change” (Bateman, 1990). The business houses must become less rigid and change their business and market strategy as per the socio- economic compulsions of the countries where they are operating. Reference Baron, David E. Integrated Strategy: Market and Non Market components. California Management Review. Vol.37 N. 2, 1995. Bateman, Thomas S., and Carl P. Zeithaml.(1990). Management: Function and Strategy. Homewood, IL: Irwin. De Mooij, M. (1998).Global Marketing and Advertising: Understanding Cultural Paradoxes. Sage Publications, Thousand Oaks, CA. Hall, Edward T. (1976). How cultures collide. Psychology Today, July 1976. Huntington, Samuel. (September 1993). Clash of Civilizations. Council of Foreign Affairs. [Accessed 16 September 2008]. Levitt, Theodore. (1983). The Globalization of the Markets. Harvard business Review, May-June 1983. Peebles, D.M. and Ryans, J.K., Jr. (1984). Management of International Advertising: A Marketing Approach. Allyn and Bacon, Boston. Shultz, Don E. Bid Farewell Strategy based on old 4Ps. Marketing news; Feb 12, 2001; 35,4; ABI/INFORM Global. p 7. Read More