International Marketing in Automotive industry of Japan, Britain and South Korea - Essay Example

International Marketing Student’s Name Institution Date International Marketing Executive Summary International marketing involves a lot of complex processes which every business firm needs to be familiar with. It is important for a business firm to understand the challenges and benefits it is likely to experience by exporting products to particular countries. There are market risks which are associated with international marketing such as strict regulatory laws, tariffs, high taxation and foreign ownership laws. A firm may also face difficulties in accessing important marketing and distribution channels for its products and this may have a consequence on its overall performance in a particular market. Introduction The products to be sold will be cars and they will be manufactured and exported to three main destinations. Cars have a high demand in various destinations because they are the most preferred mode of transportation which people rely on in major cities and countries. People’s tastes and preferences for cars are constantly changing and they opt for particular models that are able to satisfy their needs and interests. An effective marketing strategy will be formulated to look at consumption patterns in various countries and how they are likely to impact the sale and purchase of cars by various consumers (Slater, Narver & McLachlan, 2004, p. 337). This paper will discuss specific market factors in Japan, South Korea and Britain to find out how they affect the sales of vehicles in these three countries. The paper will focus on one of the three countries with the most favourable market environment to find out how car exports from Australia can be marketed there. Main Body The three main countries that will be the target destinations for cars include Japan, Britain and South Korea. These countries have been chosen because the international market segmentation focused on consumption patterns, lifestyles, purchasing power and preference for new products from other countries. Other factors that have been considered include legal factors, existence of competitors, ease of entry and other business regulations that are likely to impact on the sales of the product in the market (Panda, 2008, p. 68). The entry strategy for each of these markets will be taken into consideration to ensure that the firm gets a positive return on investment within the first two years of setting up operations in each of the three countries chosen. Other factors that are associated with the ease of doing business in each of these three countries will be taken into consideration before export procedures are put in place by the firm. South Korea and Japan are close to Australia and they are more suitable because of their geographical location. In particular, South Korea has favorable laws which favour foreign investments and this will make it possible for cars to be exported there with fewer restrictions. Another factor that makes South Korea a suitable market is that its population is liberal and they prefer purchasing high quality commodities. The firm stands to gain by coming up with appropriate market penetration strategies because prospective car buyers go for brands that have outstanding attributes which conform to their status and lifestyles. Consumers in South Korea easily accommodate goods from other countries and their cultural backgrounds do not discourage them from sampling new products that are being sold (Pride, W.M. & Ferrell, 2010, p. 92). Therefore, the market entry strategy is likely to benefit from fewer restrictions that exist in the country. Even though Japan has a thriving population, the consumption habits of prospective buyers do not favour products that are manufactured abroad. However, the country is known for its low taxes for domestic enterprises and this makes it easy for local business people to produce and market their goods locally. There are other restrictions on foreign ownership of local industries as mandated by the law and this makes it difficult for a foreign firm to sell its products freely in the market. Another consideration that has to be taken note of is that Japan is a highly developed country where high quality products are manufactured. Consequently, this means that products need to have a high quality standard for them to compete effectively with other products being sold in the country (Ferraro, 2006, p. 74). However, on average, rental and property prices in the country are very expensive and this increases the cost of dong business in the country. Britain is geographically far from Australia and as a result, exporting cars there is likely to result in high shipping and transportation costs. The legal environment in the country has a lot of similarities with Australia and this makes it appropriate for foreign investments. As a result, there are fewer barriers of entry which exist in the British market for a firm that intends to sell products in Britain. The country is multicultural and it is easy for a firm to appeal to specific market segments to register positive revenues out of its business activities (Schmidt, 2007, p. 107). Cultural and ethnographic market study offers valuable opportunities to firms to establish important relationships with specific customer groups to increase their market penetration. In effect, the distribution channels are well established and they make it possible for vehicles to be sold in the country with fewer restrictions. Britain is the most suitable foreign destination for the product compared to South Korea and Japan. The market channels for the distribution of the product are well developed in Britain compared to the other two countries (Mühlbacher, Leihs, & Dahringer , 2006, p. 112). There are also fewer legal and regulatory restrictions on products that are imported from Australia because the two countries have had positive bilateral relations which have been instrumental in strengthening their economies. These bilateral relations have strengthened trade ties between Australian and British firms. Therefore, Australian firms that export their products to the Britain are not likely to be considered as outsiders. However, in the wider context, Britain’s membership in the EU has some favourable and unfavourable consequences for foreign business firms that seek to establish their operations in the country. Another issue that needs to be considered is that safety requirements are more stringent in Britain than in South Korea and Japan. This has a direct impact on the cost of doing business in the country. The first major challenge the firm is likely to experience while introducing the product to this country is the regulatory environment. The cars produced have to comply with stringent environmental as well as air pollution laws. Since Britain is a part of the EU, the firm needs to familiarize itself with all E.U. laws to find out how they are likely to affect its operations. Another challenge the firm has to consider is that labour costs in the country are very high and the firm is likely to incur a lot of costs in its operations (Verbeke, 2009, p. 97). Labour laws are enforced strictly and as a result, the firm needs to take time to understand all the labour practices that are observed locally to find out how they are likely to impact on its operations. The last challenge is that consumers in the country are exposed to high quality international brands and this shapes their perceptions about the quality of products that are sold in the market. A joint venture will be the most suitable strategy to use to enter the British market. The firm needs to establish a strong partnership with another firm in Britain to help it penetrate the market easily. This approach will help the firm to overcome regulatory barriers of entry that may hinder it from operating freely in the country (Kotabe, & Helsen, 2001, p. 68). The firm will also be able to save a lot of costs that are likely to be incurred as a result of establishing operations in a foreign country. Another important benefit that is associated with a joint venture is that the firm will be able to benefit from existing market channels and information to appeal to customers in crucial market segments. The firm will be in a position to understand the cultural issues that have an impact on marketing and how they need to be resolved to enable its products have a good performance in the market. Recommendations The firm needs to carry out a market study, to find out specific issues that are associated with international business in specific markets it intends to enter. The firm also needs to look at the incomes of its target clientele to find out if they are likely to find the products being sold to them well suited to their interests and expectations. A cost benefit analysis needs to be done to enable the firm to assess the benefits and disadvantages it is likely to experience by operating in Britain. The firm needs to look at business history, credit risk and knowledge of the market when choosing a joint venture partner to minimize risks that are likely to occur due to its involvement in international trade. The firm also needs to find out how the EU common market protocols will impact on its operations because Britain is a member of this regional body. Conclusion Since Britain is the most appropriate foreign destination of the product, the firm needs to undertake an effective market survey to help it stay in touch with prospective clients in the country. It also needs to understand the manner in which it can add value to its products to make them conform to expectations of different clients that reside in the country. References Ferraro, G.P. (2006). The cultural dimension of international business. Upper Saddle River, NJ: Pearson Prentice Hall. Kotabe, M. & Helsen, K. (2001). Global Marketing Management. Hoboken, NJ: John Wiley & Sons. Mühlbacher, H., Leihs, H., & Dahringer , L. (2006). International marketing: A global perspective. Mason, OH: Cengage Learning. Panda, T.K. (2008). Marketing management. New Delhi, India: Excel Books. Pride, W.M. & Ferrell, O.C. (2010). Marketing express. Mason, OH: Cengage Learning. Schmidt, W.V. (2007). Communicating globally: Intercultural communication and international business. Thousand Oaks, CA: Sage Publications. Slater, S.F., Narver, J.C. & McLachlan, D.L. (2004). Responsive and proactive market orientation and new product success. The Journal of Product Innovation Management, 23 (3), 334-347. Verbeke, A. (2009). International business strategy. Cambridge, UK: Cambridge University Press. Read More