International Marketing Choises - Research Paper Example

INTERNATIONAL MARKETING Abstract International marketing is the process of marketing products and services across boundaries. International marketing involves the process of exchanging goods and services with the consumers of a different country. The opening up of world economy has contributed immensely towards the growth of International marketing as there has been a decrease in custom duties, creation of free trade zones, less complication of documents etc. This report highlights on the International market entry choices by an organization such as Exporting, Licensing, Joint ventures and foreign direct investment. The report also focuses on the forms of marketing as well as the International marketing mix strategy. The research paper also highlights on the International marketing issues pertaining to the effect of Business to Business marketing and advantages of World Wide Web marketing. The key findings of the project includes that organizations are taking up international ventures to avail the opportunity which has been provided by the government of respective countries. Another important finding of the research paper is that companies are being infinitely benefitted by the use of social media and their marketing campaigns are getting a boost with the use of social networking sites like Facebook and Twitter. A company which will be venturing internationally must conduct a PESTEL analysis before entering a new nation. A business cannot exist in hollow it exists in a society, so the responsibility lies on them to look after the social welfare. Therefore it is strongly recommended that organizations must follow green and ethical marketing. Table of Contents Table of Contents 2 INTRODUCTION 4 INTERNATIONAL MARKETING CHOICES 4 Forms of Marketing 5 Push Strategy 5 Pull Strategy 6 Push-Pull Strategy 7 International Marketing Strategy 7 The impact of Cultural aspects 8 INTERNATIONAL MARKETING ISSUES 9 Business to Business marketing 11 Ethical or green Marketing 12 World Wide Web marketing 13 CONCLUSION 14 REFERENCE 15 INTRODUCTION Business was a part of the system since immemorial time, but it was limited to domestic markets only. Post World War II mankind saw the growth of International trade among the leading industrial countries of the world, which boomed the growth rate of the national economies. But from 1990’s slowly and steadily the concept of international trade started converting to international marketing. The study of international marketing remains incomplete until and unless we define the concept of marketing. According to Philip Kotler Marketing can be defined as the process of planning, organizing, analyzing and controlling the customer base of the organization with a view of satisfying their needs and eventually making profit. In this research perspective we are more concerned about international marketing or in other words taking up of marketing activity to the international level. Therefore International marketing can be defined as a process of planning, evaluating and implementing pricing, promotion and distribution of goods and services in a transnational way and thereby creating exchanges, which satisfy individual goals and services. It includes activities that generate the flow of goods and services from one part of the globe to the other (Ptu, 2011). In present circumstances organizations are deeply focusing on international market opportunities. The rationale behind this is to cater to new geographical segments and also to have competitive advantage. Even governments of respective countries have also started encouraging companies to take up international venture in order to strengthen the economy. This is the reason for which we find the existence of governing bodies such as World Trade Organization, International Monetary Fund and GATT to name a few. All of them exist with the primary objective of facilitating trade among their respective member countries. Currently Globalization and Industrialization have become the utmost necessities for the economical growth of a country. Companies are focusing more and more on the global market to utilize the opportunity as world is interconnected like never before. INTERNATIONAL MARKETING CHOICES An organization which seeks to cater to foreign market must have a proper strategic choice over the mode of entry. Generally there are four common ways of entering a foreign market namely Exporting, Licensing, Joint Venture and Sole Venture. The mode of entry must be critically evaluated before opting for a particular one (Ramaswami & Agarwal, n.d, p.1-2). Exporting- Exporting is a process by which a company directly sells its product to the end customer of another country. Exporting depends profoundly upon the coordination between the Exporter, Importer, Transporter and Government. A shining example of Exporting is Amazon group that exports its products to other countries. Licensing – It is a process by which different rights are given to a company who does business in the target country on behalf of the actual organization. Rights include Logo, Trademark etc. Example could be General Motors and Ford Motor Company. Joint Venture – Joint venture is a mode of market entry by which a company joins hand with another company of the target country to start its operation. For example Sony BMG Music Entertainment company which is a joint venture between Sony Corporation of America and Bertelsmann AG of Germany Foreign Direct Investment – It is the mode of entry where the organization starts its operation on its own. There is no involvement of a third party. For example Tata Steel of India that went for a foreign Direct Investment in USA. Forms of Marketing Promotion is an essential part of any marketing strategy. An organization may have the best product in the market but the success purely depends upon the promotional element. In general there are three basic types of promotional strategies namely push strategy, Pull strategy and a combination of both namely push-pull strategy. Push Strategy Push promotional strategy to some extent is a sales oriented strategy. The company which practices such strategy undergoes rigorous personal selling and trade advertising to convince the wholesaler or retailer for selling their product. After the company pushes the product to the house of wholesaler, the wholesaler pushes it to the retailer and at last the retailer does various types of promotional displays such as POP display, Glow sign boards and other forms of promotions to convince the customer for buying the pushed product. Pull Strategy A pull strategy on the other hand is focused on marketing the product and creating demand for the product rather than selling it. The organizations which practices pull promotional strategy depend on consumer demands for its product distribution. In this process the companies rather than pushing the products to the wholesaler or retailer focuses on its promotional efforts for creating demand to the end user. This type of companies spends heavily on their promotional campaign which ultimately helps them in the long run. Once the demand for the product is generated from the consumers there is no need of pushing on the contrary the members of the supply chain will ask for the product (Lamb, Hair & Mcdaniel, 2011, p.489-492). (Source: Bbmms, 2012) Push-Pull Strategy Push-Pull strategy is a combination of both the promotional strategies. They primary objective lies in pushing the product for creating the demand. They constantly develops new product which they push to the retailer and through advertisement and other promotional method creates consumer demand for the product. International Marketing Strategy Companies around the world are identifying the need of developing their core competencies to face in the international market. With the opening up of world economy and Globalization, consumer tastes and wants are also getting diversified. In International marketing strategy the basic concept of 4p’s remains the same but there is need of some alteration and modification in these factors, as a strategy for a country may not work in another country (Lowe & Doole, 2008, p.3). For example product like Air cooler will hardly sell in countries like Spain, USA etc. as these countries remains cool throughout the calendar. Likewise Beef recipes will be of no use in Hindu based countries. The 4p’s of international marketing strategy are described below. Product Strategy – Product strategy for international marketing depends upon the specific category of the products. There are products which work in all country; there is no need of product alteration in such cases. Again there are products which need to be altered or modified depending on the country of operation. It is affected by the local laws of the country and also the purchasing power. Examples include a pencil where there is no need of alteration and a product like coconut candy which needs alteration as coconut is not consumed in many countries. Pricing Strategy – Companies always price the product according to the market, depending upon the purchasing power and other governmental factors. There are cases where Government fixes the minimum and maximum selling prices of the goods and services in their respective country. Place Strategy – Organizations must place their product in such a way that it becomes the most convenient way for customers to avail it. There are different strategies available for a company to enter a new country these includes Franchising, Licensing or appointing an independent distributor. Promotion Strategy – Promotion is a process of creating demand for the goods and services of the company through different means of communication. Companies adopt different strategies for different country for promoting the product. The communication medium is chooses accordingly to the countries preferences over print and broadcast media. (Source: Nzdl, n.d.) The impact of Cultural aspects Culture represents our lifestyle and personality. In other words culture is our way of our dressing, eating, thinking, beliefs, attitudes, values etc. Culture imparts a great impact on the international marketing. Culture influences the business in different ways starting from the language problem to the promotional aspect. A company willing to enter foreign shores needs to study the culture of the target country. A company promotes its product for communicating its feature to the target customer and ultimately influencing them to buy it. So to have an effective communication the marketer must send the communication according to the culture of the country. To cite an example one cannot use nudity to promote a product if the culture of that country does not permit it. A single message can carries different meaning depending upon the culture of a country or what an individual perceives about it. An organization should have the capability to overcome the challenges or obstacles which they may have to face while entering the new market. The first step should be taken carefully because if it falters the company will hold minimal chances of operating in that region, therefore first step should be taken very carefully. One of the best strategies a company can undertake by considering the cultural aspect is by learning the language of the host country and utilizing it in the communication will certainly help them in connecting the people of that host country more flexible. INTERNATIONAL MARKETING ISSUES Companies venturing outside their domestic boundaries have always found different challenges on their list. Some of the challenges include the difference in culture, language, different monetary system, different legal systems pertaining to that country etc. Every organization who wants to get into the international venture needs to have proper information of the destination country (UnWomen, N.d.). In general a company moving into new country always conducts a PESTLE analysis which helps them to get an idea of the people, legal aspects and other factors of that country. A PESTLE is a strategic analysis tool, which examines Political, Economical, Social, Technological, Legal and Environmental factors. Political – It gives us information about the political aspect of a country, which includes the ruling party’s motive towards international ventures, the present political situation of the country etc. Economical – It includes the issues like the economic stability of a country, the level of income, and other economical factors. Social – Social factors plays a huge role for a company taking international venture. It analyzes the culture of that country, religion, caste etc. Technological – It analyzes the technical infrastructure of a country i.e. how a country can offer technical support like Information system, Electronic Data Exchange etc. Legal – It refers to issues like, rules and regulation pertaining to that country. It takes into account the Rights, Consumer protection etc. Environmental – This comprises of the natural Environment. It evaluates the effect on its product which may cause due to climate change. (Source: Mastering Strategic Management, 2012) Business to Business marketing During the past 15 years business to business marketing has evolved as one of the strongest areas of marketing. It is about meeting the need of another business venture. Traditionally business to business marketing have been identified as complex and less glamorous compared to other forms of marketing. Business to Business marketing is a process of selling goods and services of a company directly to another company. It is one of the fastest developing forms on the field of marketing. It is primarily associated with five basic concepts i.e. idea of exchange, the turn of production idea, the product idea, sales strategy and the appearance of the promoting myopia. The main aim of business to business marketing lies in converting leads into customers. A firm active in business to business marketing always concentrates in establishing relationships through communication by different means. The primary objective is to produce leads and convert them into sales (Small business assistance, 2011). The areas where business to business marketing are possible includes private organizations, Government entities, Non-Profit organizations and institutions. Ethical or green Marketing From the early 1960’s issues on Ethics and environment gained huge importance. A recent study revealed that consumers are willing to pay a few bucks extra for a green product rather than paying less for a low quality product. Consumers now-a-days are more concerned about the impact of low quality products on the environment. Green marketing is one such issue where organizations produce goods which are friendly to the ecological environment. This can be achieved by focusing on the recyclability of a product and also manufacturing goods which are environmentally sound. Green marketing includes greening of products as well as greening of firms. The examples of green marketing embrace less use of paper and transferring to electronic medium, using of recyclable materials etc. This is the reason why these day’s mostly everything is available electronically starting from payment of bills to shopping through credit or debit cards. Green marketing is closely related with industrial ecology and sustainable environment. While on the other hand Ethical marketing include terms like copyright, trademark and patent. These are the factors which hold high value in ethical marketing practices. Ethics can be defined as the set of moral principles and values. It determines the action of an organization in a society. Sometime when something is technically correct can be viewed as an unethical issue. An organization is a part of the society and they hold a huge responsibility towards the betterment of the society. Being ethical a company develops cordial relationships with its customers in the long run. It creates positive impression on the customers mind about the company and also ensures repeat sales. The bad effects or penalties which a company has to bear in case of not following the green as well as ethical marketing practices are lack of trust from customer’s point of view, bad word of mouth and possible legal action against the company (Ecofirms, n.d.). World Wide Web marketing In 21st century World Wide Web has made it possible for the buyers and sellers to have a transaction throughout the globe without being physically present. World Wide Web is a collection of various websites that offers text, graphics, sound and animation. With the development of internet, consumers from different parts of the world can avail products which are not available in their local stores. Consumers just browse through different websites which offer online selling of product and from there they can easily select their desired option and buy it through debit or credit cards. The advantage of using World Wide Web marketing is its mass reach, a company which sells its product online can have its customer from any part of the world. Companies these days are also targeting social media as a medium of promotion. Facebook, Twitter, Orkut are some of the well known platforms where companies advertise their product rigorously. However only enabling online service do not solves the issues; there are existence of many competitors around the globe who are also involved in same kind of business marketing with similar products and services at same price. Therefore in order to overcome such hurdles companies must come up with something special compared to its competitors. An example of something unique is where earlier consumers has to pay instantly to the seller before getting its product delivered, but recently companies like HomeShop18.com allows its customers to pay cash on delivery. The system have become more flexible and user friendly. CONCLUSION After going through the study of international marketing it has been observed that international trade is more a necessity than desire. In order to survive in this turbulent environment a company must opt for international ventures. This not only gives them new customers but also provides them with competitive advantage over their competitors. Availability of Internet has taken international marketing to the next level. The opening up of world economy and globalization contributed heavily towards the growth of international trade. Government also encourages its organization to take up international venture which in turn helps them in strengthening the national economy. REFERENCE Bbmms. (2012). Factors having an impact on setting the promotion mix. Retrieved from http://www.bbmms.org/2010/01/factors-having-an-impact-on-setting-the-promotion-mix/. Ecofirms. (No Date). Ethical Marketing. Retrieved from http://www.ecofirms.org/about-ethical-marketing.php. Lamb, C. W., Hair, J. F., & Mcdaniel, C. (2011). Essentials of Marketing. US: Cenage Learning. Lowe, R., & Doole, I. (2008). International Marketing Strategy: Analysis, Development and Implementation. US: Cenage Learning EMEA. Mastering Strategic Management. (2012). Evaluating the General Environment. Retrieved from https://new.edu/resources/evaluating-the-general-environment. 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