International Marketing: Host Market Analysis - Coursework Example

International Marketing - Host Market Analysis By [Presented to] of INTRODUCTION International marketing has been flourishing at a rapid pace helping organisations to explore new boundaries in a systematic manner. International marketing helps organisations to spread their business presence in different parts of the world in a well planned manner. In last few years, a number of medium and big sized organisations have been exploring new countries in order to establish themselves in a better way in the competitive business environment. International marketing is not easy and simple considering the fact that robust research is required to analyse strengths and weaknesses. A number of researchers believe that it is important to analyse opportunities and threats before entering into a new market. Additionally, it is important to assess the demographics in order to have proper understanding over the dynamics of the international market (Clancy, 2000). It is equally important to conduct a proper analysis on the segmentation, targeting, and positioning that will help organisations to create a sustainable and appealing product portfolio. The major purpose of this discussion is to introduce a new product/service in a host country along with examining relevant cultural and non-cultural factors. The discussion also analyses how a different marketing environment impacts the marketing mix. In this regard, the identified country is Saudi Arabia and the service to be introduced in the stated country is of Information and Communications Technology. Saudi Arabia has been growing at a rapid pace and technology has made early inroads in last few years. With the presence of wide arrays of technologies in the country, the introduction of virtual markets through the use of ICT will help in attracting a number of customers. With a global rise in online markets, there is definitely a scope for it but before that, it is important to conduct a thorough market analysis in a critical manner for a better understanding (Bannerjee, et al, 2005). Marketing Strategies Market strategies aim at enhancing the profitability of companies along with achieving sustainable competitive advantage in the business environment. Baker (2008) stated that market strategies help in developing plans and initiatives helping in attracting customers and thus enhancing the market share. Aaker (2008) stated that marketing strategies are the strategic analysis of situation of companies along with evaluating strategies helping in achieving the goals and objectives of the business. Kotler (2008) added that marketing strategies help in analysing the market having the potential of offering rich dividends in the long run. Marketing strategies become all the more important and significant in the international business and marketing as successful and proven marketing strategies embedded with robust market research and analysis helps companies to enhance their reach and appeal in a significant manner. In the context of the Saudi Arabia, it is important to analyse the influence of the international environment in international marketing strategies in a critical manner. Baker (2008) stated that the influence of international environment is huge on the international marketing strategies. International environment includes political, economic, social, technology, environment, and legal factors that need to be assessed and analysed through the PESTEL analysis. Along with this, it is important to analyse the growth factors and in this regard BCG matrix can be quite helpful. Additionally, Kotler (2008) believed that analysis of marketing mix also plays an important role in this regard. Thus, in order to ascertain the influence of international environment, it is important to understand the technological environment of Saudi Arabia along with analysing other environmental factors. This will help in understanding the actual influence and significance of the international environment on international marketing strategies in a critical manner. PESTEL Analysis It is important to conduct PESTEL Analysis in the context of Saudi Arabia for a better understanding on the influence of the international environment on marketing strategies. Political- the political scenario in Saudi Arabia is driven by the kingdom rule where the kind along with his council of ministers takes important and key decisions. There are 13 provinces in Saudi Arabia and each province is managed by the appointed governor. In the context of ICT and online marketing, the kingdom has introduced a number of support strategies especially from early 2000s resulting in the rise of ICT in a significant manner. This states that the political environment is stable in the context of the country but the kingdom decides the content and nature of the technology and obnoxious contents often get filtered. Economic- the economic scenario in Saudi Arabia is quite favourable for the international marketing strategies. With high GDP and no taxable income, citizens enjoy good quality of life. Additionally, the kingdom spent more than 80% of the total ICT spending on communication stating the fact that any business related to communication and technologies will be considered as quite favourable and profitable. Additionally, it can be said that online marketing will be a challenge in terms of establishment but the country has the potential to offer great platform to online business. Social- society in Saudi Arabia is majorly conservative but the acceptance rate of online marketing is quite high. Large numbers of young people are engaged in buying goods and services online. Along with this, a number of online marketers have offered wide arrays of opportunities to a number of customers in Saudi Arabia. There is no doubt that the advent of technology in Saudi Arabia happened quite late but the acceptance rate has been quite impressive highlighting the preference of people. This also proves that the online marketing has a great future in the country but requires impressive and simple ICT. Technology- Saudi Arabia adopted internet in 1999 and can be considered as a late venture into the technologies. However, by the end of 2000, the government spent impressive amount of money in strengthening the technological environment. Along with this, new and innovative technological policies were introduced and implemented in order to reduce the dependency on oil. Technological advancement helped the country to switch to new information and communications technologies. This also helped in the growth of domestic companies engaged in ICT along with attracting foreign companies. The late technological advancement gained great momentum mainly because of the government’s understanding and acceptance on the ICT having the capability to change the dynamics of the business and social environment in an innovative manner. Environmental- though, there are is no direct impact of ICT on the environment, the country has recently applied environmental regulations after the rapid industrialisation. This has helped in safeguarding the environment to a great extent. From ICT point of view, introduction of online market in the form of e-commerce does not require any raw-material but the existing technological infrastructure. Thus, it can be said that the use of ICT will be having little impact on the environment. Legal- in terms of the legal environment, it can be said that the mainly because of the monarchy rule, the rules and regulations are designed by the king. In order to safeguard the creative work, intellectual rights and corporate laws have been inducted under the Sharia Law as followed by the country. There is a strict filtering code suggesting that companies cannot sell anything and everything and customers cannot view and read anything and everything. Conservative ideas and acceptance does not too much of modernisation but the acceptance rate of online markets especially of clothes and electronics is a huge hit among the young population of the country. BCG Matrix BCG Matrix helps in analysing the growth of any company. The major purpose of using the BCG matrix is based on the fact of analysing the potential profit for ICT related venture in the international business environment of Saudi Arabia. Reference: Conforme, M (2015) Are you going to milk the cow or shoot the dog. [Online] Available at http://michaelconforme.com/are-you-going-to-milk-the-cow-or-shoot-the-dog/. [Accessed March, 09, 2015]. On the basis of the above figure, the analysis being conducted is as follow. Star- high market share in a fast growing industry does not apply in the case of implementing e-commerce in Saudi Arabia as the market share cannot be high amidst the tough competition. Question Mark- it states business operating in high market growth but low market share and suits the recommended business as the market shares has to be low initially. Cash Cows- it states a company having a high market share in a slow growing industry. This is not at all applicable in the case of the recommended business as the ICT industry is growing fast. Dogs- low market share in a sluggish industry can be the case in the stated business. Impact of Cultural and Social Forces on International Marketing Rodgers (2008) stated that cultural differences have significant amount of impact on habits and social activities. It is also found that it impacts organisations and social bodies in terms of how companies negotiate with others in international markets. Kotler (2008) stated that negotiation is the key force in cultural and social impact as different organisations have different ways of negotiating. Negotiation in Saudi Arabia is based on trust and belief. It is important for international marketers to build relationship with the government and customers in order to win their trust and later offer products and services. Kotler, et al (2007) stated that cultural issues play more important role compared to political and economical issues. Mayrhofer (2004) stated that socio culture environment is more important than any other environment in order to succeed in the competitive business environment. If the cultural aspect is missed in marketing strategies; there is every possibility of business receiving little attention and thus turning into a loss affair in the short and long run. Mayrhofer (2004) further added that business companies willing to be ahead and successful than their competitors need to be aware of the importance of home country factors and accordingly designing policies and business practices. The cultural and institutional differences cannot be neglected at any cost in order to remain competitive. Zacharakis (2006) stated that companies entering into the international market needs to be aware of cultural differences before entering such markets. The difference in the culture, language, taste, preference, demand, religion, and political states need to be analysed in a clear and critical manner before introducing a new product or service. Additionally, it is easier to survive in international markets if new partnerships can be created. This will help in mitigating the impact of challenges to a large extent along with enhancing the possibility of being successful in the long run. This also reduces the overall internal and external risk factors. Czinkota (2007) stated that culture in every country is meditated through three important factors in the form of cultural forces, cultural messages, and consumer decision process. In terms of the cultural forces, it can be said that family, education, and identity states the cultural forces. On the other hand, ethics, morality, behaviour, and roles influence the cultural message while consumer decision process is driven by a number of internal, external, social, and personal factors. In the context of e-commerce business in Saudi Arabia especially of clothes; it can be said that cultural forces are quite favourable with good quality of education and family accepting internet and technologies becoming a common scene. Furthermore, there has been awareness on online buying and people of Saudi Arabia loves buying electronics and clothes online. This states that cultural forces and messages are quite strong in terms of enhancing the business appeal and acceptance of the purposed international business. However, it is important to assess the buying habits and trends of people in Saudi Arabia. It needs to be mentioned that international marketing is not easy as understanding a culture is a challenging task. It requires profound understanding of the cultural issues and factors affecting the culture and society as a whole. Saudi Arabia is a growing economy with high per capita income and huge focus on technologies making it an attractive option for international marketers (Fill, 2002). However, the success of international business and marketing is purely dependent on conducting a thorough research and analysis of the present situation. People in Saudi Arabia believe in investing trust and belief before accepting business ideas and deals and the success of the purposed business is purely based on winning the trust and belief of people of Saudi Arabia. This will help in mitigating the negative impact of cultural forces along with understanding the needs and demands of customers. Overall, it can be said that cultural and social forces have direct impact on international marketing but thorough analysis and understanding will help in making the impact positive and profitable in the long run. Internationalisation Internationalisation is a process of increasing the involvement of companies in international markets. It helps in expanding the reach of organisations along with creating comparative cost advantage in the short as well as in the long run. However, internationalisation is not easy and simple as companies need to be flexible in terms of embracing new culture and values along with analysing the customer needs and demands. Internationalisation also offers serious competition from the local companies and requires great deal of local and international strategies to cope up with marketing and business pressure. Saudi Arabia has a different business environment that is formal and culture oriented. Business needs to be as per the culture and value of the customers. At the same time, the concept of marketing mix changes in the process of internationalisation. Marketing mix is defined as a business tool often helpful in determining a product’s offer driven by four Ps; Product, Price, Place, and Promotion. However, before discussing the marketing mix and how it changes in the context of internationalisation. It is important to discuss the segmentation, targeting, and positioning (Kotler and Keller, 2012). Kotler (2008) stated that segmentation is all about identifying segments that can be offered products or services followed by targeting them through effective marketing strategies and later positioning products through effective and innovative promotional and marketing tools. As a matter of fact entire population cannot be targeted and thus should be segmented as per the nature and usefulness of the product. Once the segment is identified; targeting and positioning becomes simple and easy. As it is quite evident that e-commerce will be mainly used by young people having technological knowledge so the segmentation should be based on the analysis of demographic and social factors. Once this is done, marketing mix can be designed and implemented through a pilot study. However, before conducting the pilot study, it is always useful to conduct market research in order to understand the customers; needs. Marketing mix is driven by four Ps and each of them plays an important and crucial role in the success of the business. The first P is product that is e-commerce and very much available in Saudi Arabia. It is important to offer this product in a local manner along with making it a bit different by using the differentiation strategy. This will help in attaining competitive benefits and advantages in the long run. Additionally, the product should be easily available that in the case of e-commerce is quite true (Kerin, 2012). Apart from this, the product should have acceptable and useful features and in this regard, it is important to use a simple framework that in the case of e-commerce business is very much there. After the product, it is important to determine the price. Now in this case, prices of the listed products should be affordable in order to gain customer attention along with making them buy in the long run. Economical prices of goods and services help in enhancing the business appeal. However, in this regard, the quality of the goods and services should not be compromised (Patterson, 2008). Place matters the most in the context of internationalisation. As the chosen place is Saudi Arabia mainly because of the technological advancement and acceptance, it will be quite useful to offer products and services the way they are presented in majority of the Saudi shops. Additionally, the place in this case does not matter a lot as people will be buying online. However, user interface and interactive tools should be used to offer the feel of the place in order to enhance the business appeal. Promotion also plays an important and crucial role in enhancing the acceptance rate of products and services. Promotional activities should be as per the acceptance of people living in the country. In the context of Saudi Arabia, it can be said that billboards, flyers, social media, and word of mouth can be effective promotional tools along with conducting relevant interviews and market research. This will help in promoting the new business along with gaining the attention of customers. It can be said that the entire four Ps change with the internationalisation process and strategy (Strouse, 2007). Conclusion International environment has a significant amount of impact on international marketing strategies. Different environments have different business appeal and significance affecting the entire set of marketing strategies. At the same time, the impact of cultural and social forces is also quite high on international marketing strategies. Marketing strategies need to revolve around the beliefs, customs, value, needs, demands, and acceptance of people rather on organisational values and beliefs. In the context of Saudi Arabia, it was found that the technological environment of the country has been advancing at a rapid pace offering new set of opportunities to many marketers. However, it also offers challenges in the form of adapting as per the local business environment and customising products and services as per customers’ taste and preferences. Overall, it was found that the process of internationalisation is quite appealing but requires adequate market knowledge in-depth market analysis. Additionally, the success is largely dependent on building relationship with the government, local bodies, and customers for long term acceptance in the competitive business environment. Apart from this, it is also important to driven by differentiation and innovation in order to remain competitive and ahead along with offering sustainability to the business for a long period of time. References Aaker, D (2008) Brand leadership, The Free Press Baker, M. 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Patterson, L (2008) Marketing Metrics in Action: Creating a Performance-Driven Marketing Organization. Racom Communications. Rodgers, J., Williams, M. & Peng, K. (2010). Cultural differences in expectation of change and tolerance for contradiction: A decade of empirical research. Personality and Social Psychology Review, 14, 296-312. Strouse, R (2007) Demonstrating value and return on investment: The ongoing imperative. Information Outlook. Zacharakis, A. L. (2006). Entrepreneurial entry into foreign markets: A transaction cost perspective. Entrepreneurship Theory and Practice , 21 (3), 23-39 Read More