International Marketing Strategy - Nestle - Case Study Example

INTERNATIONAL MARKETING STRATEGY Executive Summary Business growth and expansions is something that business executives and owners always wish to have in the course of their management. Globalisation has brought the need for business to expand and exploit markets that exist beyond the borders of their countries. Advancements in information and technology have necessitated the need for business growth and development. International business expansion often leads to a multicultural working environment where people from different cultures are represented in the business. With international business expansion, comes the need for international marketing strategies in order to publicize the business and let clients in the international market to know about the business and its products and services (Worthington & Britton 2006, 24). Businesses have to know that the interactional business environment has different characteristics compared to the domestic market. In this case, business executives and marketers have a duty to devise mechanisms by which they can market their products in the new business environments to achieve its set goals and objectives. This paper examines the international business marketing strategies and how they can be developed by the business in the process of establishing competitive strategies and market position. It examines how Nestle, a food and beverage company headquartered in Vevey City in Switzerland can use these strategies in its international marketing processes. Table of Contents Topic Title Page No. 1.0 Executive Summary 2 2.0 Introduction 4 3.0 International Marketing 5 4.0 The International Marketing Environment 6 4.1 Socio-Cultural environment 7 4.2 International legal Environment 7 4.3 Economic Environment 8 4.4 Political Environment 9 5.0 International Marketing Strategies 9 6.0 Clarifying what is driven globally and managed locally 10 7.0 Bibliography 13 Introduction All around the world, business managers are now realizing the increasing important for the businesses and companies to develop aptitudes, skills and knowledge that can help them to compete effectively on the international front. This has been necessitated by the increasing emergence of open world economies, globalisation of various consumers’ tastes and preferences and the ever-increasing expansion of the internet world (Agriculture and Consumer Protection 2014, 9). All these developments have prompted the need for business managers to develop the skills essential in responding to these pressures that continue to affect businesses and their strategies (Aurifeille 2009, 35). The emergence of the internet world has meant that businesses adopt various approaches by which they can tap into the changing consumer preferences. In this development, it is evident that it is no longer beneficial to stick to strategies used in the past decades, even if they were successful at that time (Brooks 2004, 15). Many business managers have realized that consumers are currently being influenced by the numerous information systems that have been brought about the increase and advancements in information and technology. Globalisation has meant that businesses adopt a multicultural working environment, buy which they can use to appeal to the diverse markets globally (Rao 2010, 27). The fact that this information age has increased information for consumers has meant that companies exploit this trend for their advantage. In this case, the management strategies in businesses have to ensure that they position the business effectively to handle the diverse business opportunities and threats emerging from various locations. With consumers being able to access information from their convenience wherever they are, business managers have been forced to engage their marketers in devising marketing strategies that can enable them reach these consumers in all parts of the world (Peter & Slaatta 2007, 37). International marketing International marketing, as practiced in many businesses simply refers to the franchising, export, direct entry or the joint ventures approaches used in the marketing aspects of an organisation to another country. This process is often achieved when a business makes its products, brands and exports them to another country, entry via an established joint venture with other firms in the targeted domestic market beyond its borders or simply through foreign direct investing in that target market. In this case, the company is often required to make a marketing mix of that country so that it can decide on the best ways to use in executing its marketing decisions (Education Portal. 2014, 8). One of the easiest ways of marketing the marketing mix could simply be use of the already marketing approaches, mix as well as the tools in the exportation of goods and services to other countries, to a more complex approach. The complex approach that can be developed in place of that which is already existing may comprise of localization, pricing mechanisms, production, social media, websites and other strategic leadership techniques. It is important for business managers to understand that the process of internationalization and the international marketing activities often meet the particular needs of the identified selected markets internationally. In this case, the company’s value is supposed to be exported in that country, where firm learning and inter-firm activities are common, including efficiency in the economies of scale as well as optimization and scope. However, a firm is not expected to be present in all the countries of the world in order to be classified as an international marketer. Instead, it has to devise strategies that can make it explore opportunities in its immediate neighboring country, then proceed to explore other markets depending on the success got from its initial processes. The International Marketing Environment Business executives and marketers are expected to understand that the international marketing environment is different from the domestic environment in many ways (Hamilton & Webster 2012, 42). The main distinction between local and international markets is the existence of multidimensionality and highly complex markets that a particular business is expected to work within. It is important that the marketing manager in the particular business understand these complexities and their implications on the business in its international marketing activities. The international marketer needs to have an understanding of the market entry strategies and other important factors relating to the particular country. Overall, the external environment in this new country will often have certain attributes that are different from those of the domestic market (Mayrhofer 2012, 51). In this case, he does not have to use the strategies initially applied in the domestic market because they may not apply in this new target market. Environmental influences on International marketing (Pasco & Beaumevieille, 2007) The socio-cultural Environment Compared to the domestic market, the influence of the socio-cultural environment in international marketing is immense. Some of the common factors in this process include the social conditions, material culture as well as the perceptions influencing consumer behavior (Ghauri & Powell 2008, 28). This environment determines the degree to which business clients internationally make their purchase decisions, different or similar across the different countries. It also provides the framework for global business branding and standardization of goods and services (Ciochetto 2011, 27). When the business fails to understand these particular needs, it becomes hard to manage their business. This is something that that nestle, an international food and beverage company has realized in the many countries it has managed to enter. The company has had to cope with changing customer tastes and preferences in the different countries it has been reaching (Nielsen 2001, 19). However, a perfect understanding of the international marketing environment has enabled it to have proper and successful growth and development. The international legal environment As far as international marketing is concerned, legal systems are often different in terms of content and their application. A company deciding to operate internationally is not just bound by the laws in its country alone, but also those in the country it is establishing presence (McManus & White 2008, 56). Business firms in the European Union often face an ever-increasing number of directives, which happen to affect their operations. The changes in the legal environment can have a big influence on a company’s marketing strategies. For instance, legal provisions about freedom of the media in different countries can have an effect on the promotional approaches the company wishes to use in the targeted country. The acceptability of a product by consumers in the targeted country can be influenced by different regulations like packaging and various major changes as proposed by the country’s legislations. A good example is the case of Kraft foods, which is a competitor company to Nestle foods selling products known as Lifesavers. These products are very similar to Polo Brand, which are manufactured by Nestle, and are sold in many countries in Europe. Under the law of the European Union, the company tried to stop the manufacture and sale of Kraft Foods’ Lifesavers, in an attempt to protect their market share. The Economic Environment It is an important thing for the international marketer to have a perfect understanding of the economic developments in the international market; this way, he can understand how these factors can influence his marketing strategies. This understanding provides key information about marketing strategies at the international level. It gives significant information about the various world-trading infrastructure like the trade agreements and other economic requirements in the international market. Firms are expected to understand the various economic policies and regulations in different countries and the directions of economic development in various countries. This enables them to determine whether they can effectively make profits by investing in various markets to satisfy the identify market demands. One of the challenges in their internationalization process is the process of developing an integrated approach that cuts across all the countries they are expanding. This often arises amidst the various divergent levels characteristic of the economic environment in different countries. These disparities make it impossible to have a single cohesive strategy that can influence various business functions like product development, pricing and promotion. The political environment In the international environment, elements in the political environment comprises of the international political factors that influences an organization’s operations. The political factors have a great influence in the management decisions made by the business; this includes the process of investing and the process of managing such investments. Politics are of the associated with the attitude of the government towards business activities. Politics in the international business environment determine the freedom, which permits firms to enter the market and undertake their investments. It is important to note that political regimes deemed unstable often expose foreign businesses to varieties of risks, which they would not have faced had they stayed in their local business environments. In this case, it is evident that the political environment is the most volatile as far as international marketing is concerned. Internationally, the habit of governments to change some of their rules and regulations often poses profound effects on international marketing. These changes often bring both opportunities and threats, something that foreign businesses need to have a perfect understanding. Countries that happen to be politically unstable often have few or no international business because of the fear factor that is created. Businesses often do well in countries that have peace and calm, this is because of many factors including mobility of labour and other resources in the success of the business activities. International Marketing Strategies The concept of international marketing can be described as undoubtedly enormous concept. It is important to note that the concept of leveraging international marketing strategies across different markets is very beneficial to businesses (Zou & Cavusgil, 2002, 43). In the first place, it helps to save efforts and resources used in business practices. The process is essential in ensuring a greater extent of consistency happening in the businesses’ branding other activities in its marketing processes. It is important to note that the process of building reliable customer relationships depends on the value and satisfaction that customers derive from the company’s products and services (Jilberto 2006, 27). For Nestle Company, it has established a two-fold approach to its international marketing processes. This is through the provision of products that are superior in quality and value. The company focuses on maintaining its customer base, while increasing on its efforts to expand its market share in the face of emerging companies that are posing competition to Nestle (Guriya 2014, 8). One of the companies that have been a great competitor to Nestle Co., is Kraft foods, which deals in similar products like Nestle. In fact, the company has been involved in legal battles with Nestle, in a bid to protect their respective market shares. Nestle has resolved to constantly monitor and change its marketing strategies in order to appeal to the needs of clients in many of the European and Asian countries it has expanded to (Gower 2014, 7). Clarifying what is driven globally and managed locally It is important that international marketers understand that having an international marketing approach does not always mean that the local market is absent, as well as the initiatives and market-specific plans in its processes (McGregor 2008, 17). International marketing strategies often set the parameters and framework through which local marketing processes for the business are carried out (Marketing Schools. 2014, 61). This way, the process offers the in-market teams the much-needed freedom for controlling the local success knobs. Marketing segments that often lend themselves on being fronted at the international marketing level comprises of branding and its guidelines. Other marketing processes include budgeting and planning, research strategies as well as strategies for social media marketing and marketing campaigns that run on large scale (Conklin 2006, 65). One of the strategies used in enhancing international marketing processes is dividing the particular markets into special tiers. A tiered market is essential in helping the business identify the territories, which can play a role in driving the greatest potential returns from the business. The process of tiering markets helps those markets in the top tiers to get bigger budgets for effectively managing their marketing activities (Rugman 2005, 33). This gives them autonomy; for instance, the research into the local users behavior and other actions that inform the product development process. It is important to note that the international and other local areas in the ownership particular market various from one company to another. However, international marketers are expected to define the specific areas effectively so that they can avoid any friction and other inefficiencies that may arise in the marketing activities (Griffith 2014, 5). Tiering markets has been an essential process that has helped Nestle company to set strategies it has used to enhance its internationalization process and its market share (Colby 2011, 49). Nestle has managed to effectively exploit the opportunities in different countries, creating competitive advantages beyond its main competitors like Kraft foods. It is important to note that international expansion is an important process that gives a business the much-needed economies of scale. Businesses are at liberty to devise various strategies that are cost effective in the process of their internationalization. It is important to note that the process of internationalization is quite complex and has to be carefully carried out in order to avoid losses in the process (Mognetti 2002, 63). While many businesses have had great benefits in their internationalization process, others have suffered losses from poorly set strategies in international marketing and expansion. Business executives and marketers should ensure that they are adequately prepared in order to begin and succeed in this process. Summary and Conclusion Business growth and expansion is one of the important goal and objective of most entrepreneurs when they begin their businesses. They are often motivated by the idea of exploiting business opportunities that exist in various countries and regions. Successful business expansion strategies often use strategies that enable its business owners to create competitive advantages and market position. Most multinational businesses have developed a perfect understanding of their business environment and devises their strategies from this concept. It is important that business planning to take this step to conduct a proper environmental scanning in order to come up with better actionable steps that can be implemented to enhance the effectiveness of their practices and general performance. Nestle, a multinational food and beverage company has been managing successful expansion strategies because of its sound management and market entre strategies in different countries across the world. Marketers should ensure that they have a perfect understanding of the consumer behavior so that they come up with marketing strategies that meet the identified needs of their consumers. Effective marketing strategies by a business that is growing and expanding should be directed at meeting the specific needs of consumers. This way a business can effectively meet its set goals and objectives while creating a sustainable market share. In this case, marketers of such companies should conduct market research and related activities in their marketing functions. Bibliography Agriculture and Consumer Protection. 2014. Market Entry Strategies. Viewed 8 November 2014. < http://www.fao.org/docrep/w5973e/w5973e0b.htm> Aurifeille, J. 2009. Trust, globalisation and market expansion. 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Journal of Marketing, Vol 66, No 4, 40–56 Read More