The Marketing Environment - Essay Example

The Marketing Environment s Submitted by s: Introduction The world has experienced globalization making internationalmarketing a commonplace occurrence that has a significant impact on business while providing newer opportunities as well as challenges. International market is an instrument that is employed to achieve advancements in market position and it entails transactions across national borders, which distinguishes it from domestic marketing. Starting a business in a new market and positioning the product needs comprehensive knowledge of the environment along with its risks, threats and opportunities that might be exist. It is extremely vital for businesses to appreciate efficient marketing as the strategies that work for a particular product in a specific market may not necessarily work for another. A business entering a new market should carry out an assessment of the potential of the markets before fully entering the market. Therefore, the success of a business will mainly depend on its environment. This paper seeks to demonstrate that knowledge of the marketing environment is critical to international marketing. It will also include a case study to demonstrate the importance of knowledge of the marketing environment to international marketing. Marketing environments A business is surrounded and affected by market environments that are comprised of three main constituents including, internal set-ups, microenvironments and macro-environments (Donnelly, Harrison and Megicks, 2009, p. 79). These three components of the marketing environment are important as marketers strive to build both internal and external associations with the aim of delivering value to the satisfaction of customers. Therefore, businesses need to make an assessment and evaluation of their internal and external business environments before they venture into international markets. The macro-environment of a business is less controllable and includes bigger influences that have an impact on the microenvironment from a wider international society (Fitzen, 2009, p. 4). In regard to the macro-environment, the business should address culture, political issues, technology, the natural environment, economic issues as well as demographic aspects among other dynamics. The broader worldwide macro-environment certainly affects the success of a business and most of the factors associated with it remain uncontrollable. The more controllable factors in regard to the marketing environment are associated with the internal environment and the microenvironment the business operates in. Literature review International marketing operations all over the globe encounter various norms that are associated with their operating environment. The most important environmental elements with the ability to influence international marketing activities include culture, financial and political factors (Vasudeva, 2006). The cultural environment entails the appreciation of people for manufactured commodities, their expression for particular needs and their purchasing behavior. According to Dalglish and Evans (2008, p 14), culture in itself is a blend of principles, views, customs and perceptions that outline and discriminate a particular society. It is always assumed that culture is acquired, shared and disseminated from one generation to the next, but as far as international marketing is concerned, it is more appropriate to live a culture than to learn it. In order to increase cultural knowledge in regard to international marketing, business travelling and assignments are important as factual awareness of culture can be learnt and the interpretive knowledge acquired through experiences. In Czinkota and Ronkainen’s (1996, p 60) view, international marketing requires both sets of knowledge in order to master language, principles, religion and perceptions as well as social institutions, all of which are associated with a particular culture. In the business setting, there are two schools of thought in existence with one assuming that should have an ability to prevail upon cultural factors in their marketing tactic, while the other recommends that companies must shape their business tactics according to the requirements of a specific culture. In addition, international marketers should address all the cultural aspects of a particular society, as this may be the only way to succeed in a particular market. Appropriate economic environments also favor international marketing activities as secure economic environments are may be judged by global marketers through market characteristics such as population, income, patterns of consumption, infrastructures as well as perceptions towards foreign investments (Woo-Cumings, 1999, p. 302). The rate of population increase assists in the estimation while active population is the key source of labor that may be required. Markets need a population with purchasing powers, which is dependent on the level of income, prevailing prices, amount of savings as well as the accessibility to credit services. The ratio of income that is spent on products provides a clue of the level of market development along with an approximation of the amount of money that is left for other purposes. Therefore, an awareness of the proportion of households that own a particular product in a market enables the business to evaluate further the potential of the market. An economic environment that is successful entails the presence of fundamental economic infrastructures, which include transport, linear development, reliable energy as well as communication systems such as media and the internet. Regional economic bodies are influential factors that should never be neglected by the international marketer as economic integration provides unique opportunities as well as challenges international marketing systems as far as transactions in the global markets are concerned. Elimination of barriers between member markets and creation of new ones for the non-members require amendments in the previous approaches to allow for exhaustive exploitation if new scenarios (Hinkelman, 1994, p. 165). Pride, Pride and Ferrell (2007, p 197) state that the financial environment experiences a number of risks that require it to be efficiently analyzed by the international marketer. This is because political risks are considered under financial risks together with other risks such as commercial, risks associated with foreign exchange and inflation. As far as international business is concerned, the managers should develop ways of earning profits while avoiding the risks associated with the financial environment. Since money is supposed to flow between countries, dependable financial infrastructure such as the facilitating agencies, research organizations and commercial banks are essential. In some areas of the globe, the international business may be required to be a central partner in the development of a variety of infrastructures prior to its operations while in others it may significantly benefits for their extraordinary degree of sophistication. Environment analysis for international marketing Before a business can embark on international marketing, it is supposed to go through some essential steps that include an analysis of its environment. During this stage, numerous tools such as PEST analysis as well as Five Forces analysis may be valuable for understanding the environment but ultimately, the precise and exceptional nature of every individual country should be considered. The nature of an international PEST analysis in regard to tariff and non-tariff barriers should entail an assessment of socio-cultural dynamics including cultural, religious and societal factors, which are of tremendous importance. The cultural norms for doing business and marketing should be understood as they significant affect the ability of businesses to market their products effectively in overseas markets. Additionally, the copyright laws, intellectual property legislations and patents that safeguard technologies in other countries vary from country to country; for instance, China and Jordan more often do not abide by international patents. Therefore, it is important to make sure that the marketing technology conforms to the local laws and are in the same stage in regard to product lifecycles. Tariff and non-tariff barriers There are several hurdles that companies to consider in the process of initializing international marketing and tariff and non-tariff barriers remain common even in the current business environment. Tariff barriers include the charges that are imposed on imports making them a form of import taxation. These results in decreased margins to a level that may make trading overseas become an unprofitable venture. Nonetheless, they have a certain level of transparency that allows the business to plan for them beforehand when entering an international market. On the other hand, the non-tariff barriers are more difficult to identify as governments may at times favor the local industries instead of allowing competition from other countries. Companies that mainly deal with exportation often encounter bureaucracy, which takes many forms such as unwarranted hold-ups as well as red tape. Non-tariff barriers may also exist in the form of quotas that restrict the quantity of commodities, which can be imported into a specific country (Marjit and Yu, 2008, p. 300). Political environments International marketing is usually affected by various political situations that are in existence all over the globe (Rajagopal, 2007, p. 189). Therefore, an efficient manager should have full knowledge of the environment they wish to enter when considering an entry into a foreign market. Before attempting to enter into the foreign markets, the managers should spare enough time to make careful observations of the political environment as political settings may be volatile and can change considerably within a short time. This makes it important to commit a considerable amount of time to making sure of what to expect from the new market. Ideally, businesses should expand into the markets that are politically stable and secure, but more often, the emerging markets that are laden with business opportunities are characterized by administrations that are not particularly stable. This makes it necessary for the business to assess the propensity to have problems that could undesirably affect the business against the opportunities presented by the market prior to any execution of a marketing plan. Political risks are the risks of losses that occur as a direct consequence of the actions of an administration or changes in the political systems of a specific nation (Peng, 2011, p. 40). The degree of political risks varies based on the previous history and the level of consistency of a country and in most scenarios; firms seek to avoid entering the markets in countries that are perceived to have a high degree of political risks. The main contributor to political risks is the possibility of a countrywide conflict, wars or violent changes. If a country in which a business is operating in experiences violent outbreaks, the business should be prepared to deal with the violence that is directed at its operations in terms of property and workers. Conflicts also have a likelihood of having considerable negative effects on the customer base consequently affecting the potential for sales. International marketing operations may be harshly impacted by the political stances of a particular administration or by changes in regard to policies and regulations in foreign countries. In this context, it is possible to find certain products or organizations being prohibited from conducting its operations in some countries. The impact of the political environment underscores the need for cautious planning before entering a market as well as the need for a well-prepared exit plan. On the other hand, nationalism is an issue that is usually overlooked as far as the political environment is concerned. This has developed to become a pertinent issue since most of the nations strive to maintain their domestic culture and their industries (Czinkota and Ronkainen, 1998, p. 143). Nationalism can be considered as the degree of pride that citizens hold for their nation and exist to a certain point in every country. For that reason, it becomes a challenge for the international marketers when administrations or local groups of citizens are against the use of particular products and services that originate from beyond their borders. Consequently, the degree of nationalism may change considerably from time to time as political conditions as well as perceptions evolve. A business may be able to circumvent future hardships if it fully understands the political setting of a nation before it enters its market. The research and strategy conducted by the business will simplify the process of dealing with future changes or may clearly demonstrate if the market is feasible. Case study: Unilever Unilever is a company, which produces household commodities such as detergents, cosmetics, toiletries as well as food products. It is a huge corporation with more than five hundred operational bases all over the globe and its products can be found in markets in more than one hundred and seventy nations. Originally, the company was established in Europe after which it progressively expanded to the US, beginning with two factories. Currently, the company has factories in various parts of the Asian continent, Africa, North and South America as well as the Middle East dealing with an extraordinary range of goods that comprises among others, eleven brands that gain revenues in excess of one billion dollars each every year. The company is seeking to globalize its processes and align its human resource activities through collaborating with Accenture in identifying opportunities that exist in the marketplace while looking to foster long-lasting associations with a modernized base of the desired suppliers. The company is looking to collaborate in business with the suppliers who can conduct their operations in a dependable and cost efficient manner through various ways including coming up with strategies that will allow the suppliers to apply to be among the suppliers of human resource products and services to the company. The company has been gaining market share and success as a consequence of its ability to adjust to new markets as well as ever-evolving technology. In an effort to increase its revenues, Unilever transformed the focus of the company to concentrate on the places with higher potentials for growth. Focus on the new and emergent markets such as China, which has a high population of young people with increasing incomes, resulted in Unilever’s sales increasing by significant amounts in the developing world. At a point when the company was facing challenges like the Great Depression, it continued to concentrate on diversifying and expanding its food markets and directed more efforts towards research and development. During the fifties through to the eighties, Unilever’s marketing efforts only changes marginally and during this period, the company concentrated on technology, newer commodities and well as the international markets through remaining at par with the expansion of the world economies. Through the eighties, Unilever had already developed to be among the largest international companies and this enabled it to concentrate its marketing efforts on its already existing range of products. In the nineties, the company preferred to maintain its concentration on its portfolio while reducing some of its brands so that it could retain a stronger focus on the products that sold more globally. During the 2000’s, the company executed a newer five-year strategic initiative that concentrates on the requirements of the customers and a brighter future. Conclusion International marketing has developed to become a critical operational component of the large firms and to make sure that the international marketing is successful, it is imperative that the company wishing to expand to the global markets carries out international marketing research to better understand the marketing environment. International marketing environments differ from domestic market environments, as there are a number of adjustments that must be made so that the business may be able to operate in different nations. Understanding market environments in different countries is not difficult, but understanding culture is a more complex endeavor even though it is important. A business that wishes to expand its marketing operations into the international market should first take time to understand the marketing environment in it the markets it is considering in terms of culture and other factors. As research provides adequate knowledge, it is imperative for companies to carry out efficient researches so that their international marketing strategies they develop may achieve success. Bibliography Czinkota, M. and Ronkainen, I. 1996, Global marketing, Dryden Press, Fort Worth, TX. Czinkota, M. and Ronkainen, I. 2012, International marketing, Dryden Press, Fort Worth. Dalglish, C. and Evans, P. 2008, Teaching in the global business classroom, Edward Elgar, Cheltenham, UK. Donnelly, R., Harrison, G. and Megicks, P. 2009, CIM coursebook, Butterworth-Heinemann, Oxford, UK. Fitzen, L. 2009, Marketing Environment, GRIN Verlag GmbH, München. Hinkelman, E. 1994, Dictionary of international trade, World Trade Press, San Rafael, Calif. Marjit, S. and Yu, E. 2008, Contemporary and emerging issues in trade theory and policy, Emerald, Bingley, UK. Peng, M. 2011, Global business, South Western Cengage Learning, Mason, OH. Pride, W., Pride, W. and Ferrell, O. 2007, Foundations of marketing, Houghton Mifflin Co, Boston. Rajagopal, 2007, International marketing, Vikas Publishing House, New Delhi. Vasudeva, P. 2006, International marketing, Excel Books, New Delhi. Woo-Cumings, M. 1999, The developmental state, Cornell University Press, Ithaca, N.Y. Read More