International Marketing - Essay Example

Running head: MARKETING Marketing The paper discusses the criteria which marketers can meet when taking product decisions for different countries. The differentiation between national and international markets, the reasons of going global, marketing research and product design are discussed as the basic criteria in marketers’ decision making. The paper evaluates the importance of defining the product status (local vs. international). The basic reasons of going global are discussed. Pestel model of marketing research is used as the example of how marketing research could happen. Finally, standardization and adaptation are discussed as the two possible product design decisions for marketers. Marketing Globalization and continuous integration of markets have already turned into the two distinctive features of the postmodern market reality. Companies expand internationally, to conquer additional market segments and to meet the ever growing needs of international consumers. Globalization and integration do contribute to the harmonization of cultural and economic principles across the geographical borders but, simultaneously, turn international marketing operations into the issue of the major marketers’ concern. The fact is in that in their striving to expand internationally, marketers must meet a multitude of criteria and satisfy numerous marketing needs. The differentiation between national and international markets, the reasons and drivers of international expansion, profound marketing research and the changes in brand/ product image are among the basic criteria of the international marketing success. To begin with, differentiation between national and international markets does play a significant role in the international marketing success. For any company that goes global, differentiation of markets is of critical importance. Here, geographic criteria of differentiation between markets are of primary importance. National markets are those that cover the territory of one geographic state. International markets refer to the market environments across national borderlines. Ultimately, global markets reflect the globalization tendencies of the information age and are the product of the global integration of markets. Global market unites international and national markets into a complex trade network and makes possible immediate transfer of goods, services, raw materials, knowledge, and other resources. The current globalization trends do contribute to the development of global markets but do not change the reality, which is increasingly diverse – both culturally and geographically. In this sense, prior to going global it is worth defining the exact status of the product. In other words, the company must have a clear idea of whether the product is local, international, multinational, or global. Theoretically, local products are those proper only in one single market; international products can extend and cover other markets; multinational products are or can be adapted to the perceived unique features of national markets, while “global products will work to meet global segments and consumer needs” (Keegan, 1999). Generally, the differentiation of markets implies that companies will seek to understand specific customer needs beyond the limits of the national coverage. Obviously, depending on the location and specific cultural features, customers will tend to hold different perceptions toward one and the same product; the needs in this product will differ, too. In the process of deciding the exact status of the product culture is, probably, the basic consideration. Culture covers several essential criteria like “language, religion, values and attitudes, education, the presence and influence of social organizations, technology and material culture, law and politics, and even aesthetics” (Terpstra & Sarathy, 2000). These are the basic components of any cultural analysis framework marketers should use in the process of conquering global markets. These, however, are not the only criteria marketers should meet when making produce design decisions for different countries. What are the reasons for a company to expand internationally? – This is one of the most important questions marketers must answer while making product decisions internationally. The reasons why companies choose to market their products internationally are so numerous that it is virtually impossible to list them all in this paper. Most often, international marketing decisions are based on the firms’ desire to build more brand value, to add growth markets and sources of revenues, to leverage existing technologies and intellectual achievements, or/ and to reduce home market dependencies (Edwards, 2006). The specific reason of market expansion will predetermine the direction of the marketing initiatives and will, simultaneously, create a general idea of how the product or service must look like in order to help the company to meet this expansion goal. For example, with the aim to add growth markets and increase revenues, marketing strategies will be designed in ways that emphasize the attractiveness of the product and make it acceptable for consumers. For example, marketers can emphasize the aspects of features of the product that make it integral with the customers’ cultural beliefs. Simultaneously, in their striving to leverage existing technologies, firms will concentrate on the technological and innovative features of the product itself and, as a consequence, make their marketing strategy more advanced. The choice of the marketing initiatives will depend on what the company seeks to achieve by going global. Market research is the vital component of any marketing strategy and the criterion marketers should meet when marketing products nationally and internationally. The question is in how to conduct market research and what aspects of market research to account for. Here, marketers can apply to the benefits of Pestel analysis. Pestel analysis is one of the best tools of researching international marketing environment. The benefits of undertaking such macro-market analysis include: (a) better resources effectiveness; (b) better platform for change; (c) improved planning efficiency; (d) better control of external changes; and (e) better understanding of competitor positions and strategies (Donnelly, Harrison & Megicks, 2007). Pestel analysis covers political (taxation, trade protection, and political systems stability), economic (consumer spending, consumer confidence, exchange rates, direct and indirect taxation), social/ cultural (demographics, religious beliefs, language, religion, values, education, purchasing behaviors), technological, environmental and legal considerations (Donnelly, Harrison & Megicks, 2007). Public acceptance will serve one of the basic criteria in the complex process of product decision-making at the international level. Here, Research and Design (R&D) is an essential component of any market research. Generally, R&D is the process of scientific development of a product (Martin, 1984). The aim of R&D is to create a new product which will serve the source of new competitive advantage at national, international, or global market level. Here, marketers must take into account the following criteria: (a) whether they develop a new product for national, international or global markets; (b) whether the idea or the product itself can be safeguarded as proprietary; (c) whether the rates of market growth justify significant investments in R&D; and (d) whether the use of new technologies in a new product or service is better than technology acquisition for the same product/ service (Martin, 1984). These criteria will serve a reliable measure of the future R&D and investment success. These criteria must be identified prior to engaging in the process of R&D itself. Product image is the necessary component of any product decision. Theoretically, marketers can use a variety of product variables to adjust their product decisions to specific markets. In the choice between standardization and adaptation, marketers can (a) sell the product as it is sold in the national markets; (b) modify products for different countries; (c) design new products for different markets; or (d) incorporate the most important differences and create a flexible product design which, in its turn, will result in the development of the global product (Czinkota & Ronkainen, 2008). Standardization is preferable when marketers seek to increase economies of scale, R&D and marketing, and pursue the principles of economic and market integration (Czinkota & Ronkainen, 2008). Adaptation is preferable when market conditions differ dramatically, as well as consumer behavior patterns; when governmental influences do not allow selling product as it is sold in the national markets, and when local competition is too high (Czinkota & Ronkainen, 2008). By choosing adaptation or standardization, marketers can meet one of the most important product design criteria, which will help them target international consumers and market their products/ services in an efficient way. Segmentation is another aspect of product design. Generally, segmentation is “the division of the consumer base, or potential consumer base into categories where there are similar characteristics” (Hooley, Saunders & Piercy, 1998). When marketing internationally, marketers must decide what criteria they will use to segment the target market and to divide potential consumers into different groups. For example, age could be used as a potential criterion of market segmentation. Income and the experience with using similar products have a potential to become effective segmentation criteria, when marketing internationally. Of course, these are just some out of many criteria to be considered in the international product decision-making. These are common for the majority of products or services but do not account for specific differences and consumer needs. Conclusion Globalization of economic processes and integration of markets have already become the definitive features of the postmodern economic reality. As a result, the development of international products and marketing strategies is becoming more sophisticated and complex. When making product decisions for different countries, marketers must differentiate between national and international markets, define the reasons of international expansion, conduct marketing research, and make decisions regarding product image. All these are the necessary criteria of any international market expansion and are the critical preconditions for any international market success. References Czinkota, M.R. & Ronkainen, I.A. (2008). International marketing. Cengage Learning. Donnelly, R., Harrison, G. & Megicks, P. (2007). CIM Coursebook: The marketing planning process. Butterworth-Heinemann. Edwards, W. (2006). Why go global? Compelling reasons to expand internationally. Franchising World, December 1. Retrieved July 31, 2010 from http://www.allbusiness.com/retail-trade/4017371-1.html Keegan, W.J. (1999). Global marketing management. Prentice Hall. Martin, M.J. (1984). Managing technological innovation and entrepreneurship. New York: Reston. Hooley, G.J., Saunders, J.A. & Piercy, L. (1998). Marketing strategy and competition positioning. London: Prentice Hall. Terpstra, V. & Sarathy, R. (2000). International marketing. 8th ed. Dryden Press. Read More