4.7 international marketing

business etiquette

- business etiquette is the mannerism and customs by which business is conducted in different countries - an awareness and understanding of differences in business etiquette and cultural factors have become crucial elements of international marketing - a lack of awareness of the different ways in which business is conducted throughout different parts of the world could mean that the business fails to secure deals or contracts with foreign firms

What are the strategic and operational implications of international marketing?

1. language and cultural differences - international marketing managers need to be aware of potential differences in language and culturesand howthese impact upon their marketing strategies e.g. frozen food products such as microwave-ready meals are popular in some European countries but are not in many Southeast Asian nations 2. legal differences - Differentcountries have different legal systems and laws, which will impact upon strategic and operational decisions of marketers even the same law (e.g. packaging and labelling of food products) may have different standards this means it might be more difficult (and hence more expensive) to sell the same products in overseas markets tax laws will also differ from country to country. 3. political environment - the degree of political stability within a country can have a major impact on whether international marketers succeed in overseas markets, e.g. trade protection such as tariffs, quotas and subsidies for domestic firms create major obstacles for international marketing political unrest, such as the violent protests and attacks in Kenya (2013) and Egypt (2014), and corruption will destabilize operational and strategic decisions for multinational companies operating in these countries 4. economic environment - the state of the economy directly affects the degree of success of international marketing during a global financial crisis, for example, most businesses will struggle irrespective of their marketing strategies and budgets The World Bank ranks Singapore, Hong Kong and Denmark as countries where doing business os open and straightforward, whereas it is far more bureaucratic and difficult for multinational companies operating in China, India and Brazil exchange rate fluctuations can also have an impact on the success of international marketing 5. infrastructure - the state of a country's transportation networks and communications technologies can have an impact on international marketing. For example, channels of distribution rely heavily on transportation networks (such as rail, air and sea) whilst internet technologies affect how well marketers can use viral marketing and social media e.g. Google and Facebook are banned or have restricted access in a few countries

How does globalization affect international marketing?

Globalization is the integration and interdependence of the worlds economies. For international marketers, this means an attempt to efficiently produce and sell the same products in different countries. The outcome of globalization is that markets, cultures and tastes have converged at an accelerating pace

Distinguish between strategic alliance, joint ventures and franchising as methods of entering international markets.

a. joint ventures - these occur when two or more companies invest in a shared business project, pooling their resources to form a separate business - the companies retain their separate legal identities but share the risks and returns from the joint venture - many foreign firms have formed joint ventures with Chinese and Indian companies to gain access to these growing markets b. strategic alliances - these are similar to joint ventures except the partners do not form a new business with a separate legal identity - again, strategic alliances with foreign firms can allow a business to gain access to overseas markets c. franchising - this involves a business allowing others to trade under its name in return for a fee and a royalty payment based on a predetermined share of the sales revenues - e.g. McDonalds, Subway, KFC, Pizza Hut and Burger King all use this growth strategy to enter overseas markets

cultural exports

cultural exports are the commercial transfer of ideas and values from one country to another, e.g. US fast-food (see Figure 4.7.c), Hollywood movies, drive-through outlets (first introduced in the USA in 1975), satellite (cable) television and sports apparel. Even the sales of Harry Potter books have proven to be one of Britain's most successful exports, helping to make J.K. Rowling the world's first author to earn more than $1 billion; Western traditions of celebrating events such as St. Valentine's Day and Halloween have also spread throughout the world, bringing huge commercial opportunities for businesses; Due to freer international trade and the growth in globalization, trade in cultural exports has grown exponentially. - however, in their pursuit of exporting more, a business must consider the cultural differences between different countries and regions of the world.

What is global marketing and how does it differ from international marketing?

global marketing is an extension of international marketing; it involves selling the same product using the same marketing approach throughout the world, as used by global brand leaders - market their audience to an international audience By contrast, international marketing refers to differentiated marketing that is tailored to suit different countries.

What are the opportunities and threats posed by entry into international markets?

opportunities: 1. increased customer base - the size of a market can be enlarged by marketing products to overseas buyers this should lead to greater sales revenue and possibly higher market share for the business 2. economies of scale - by operating on a larger scale, a business is likely to benefit from cost savings known as economies of scale - these cost-reducing benefits of larger scale operations can enable growing firms to gain higher profit margins or to reduce their prices (thereby giving them a price advantage over their rivals). 3. increased brand recognition - having a standardized marketing strategy across the world (such as using identical packaging and advertising) not only reduces average costs of production, but can also lead to greater international recognition of a brand - this can lead to improved brand loyalty and increased sales revenues 4. spread risks - by operating in various international markets, a business is less exposed to the risks in one particular country (such as a recession or changes in fashion and tastes). 5. extend the product life cycle - a business might find that the domestic market for its product is saturated or in decline by marketing the product overseas, the firm can expand its lifecycle to generate higher sales revenues. e.g. Mobile phone companies use this strategy when selling older models of their phones in less affluent countries. 6. gain more profit ultimately, - all the reasons above for international marketing can help to generate more profits for the business overseas markets provide an extra source of customers and can be financially lucrative threats: 1. legal issues - entry into international markets can also be a problem due to different legal systems, e.g. advertising cigarettes on television has been banned in the USA since 1971; advertising is largely prohibited in Cuba and in Sao Paulo, Brazil, so even for large multinational companies this would present a major barrier to international marketing governments can set up other international trade barriers to protect their domestic industries (quotas, tariffs) copyright, trademark and patent legislation must also be adhered to; this covers issues such as brand names, slogans, inventions, works of art and processes already legally assigned - to other businesses; marketers need to take this legal factor into consideration when devising their international marketing campaigns - differences in consumer protection laws must also be observed by international marketers; many countries have their own code of conduct on advertising and packaging information and these must be respected; the British Advertising Standards Authority, for example, states that all advertisements must be "decent, truthful and accurate". In most EU countries, there are legally binding controls over the use of advertisements aimed directly at children, e.g. in Sweden it is illegal to advertise products on television to children under the age of twelve 2. political issues - businesses that market their products overseas need to consider the different political systems abroad countries that have a stable political climate tend to be less risky and more receptive to foreign businesses selling products in their territory In countries like Singapore and Hong Kong, there are few political barriers, but there are huge political hurdles to deal with if businesses wish to market their products in countries such as Afghanistan or North Korea 3. social and demographic issues - different socioeconomic and demographic conditions mean that businesses may need to reconsider their international marketing when exporting to less affluent countries, the product and price may differ from that sold in more prosperous nations - overseas customers in Japan (expatriates and tourists) are not very well catered for as only about 1% of the population are foreigners - by contrast, in highly multicultural societies such as Malaysia (see Figure 4.7.b), marketing caters for a much wider audience with the same advertisements in Malay, Chinese and Indian languages - with growing prosperity and income in some parts of the world, international marketers can target different customers with different products; in 2006, supercar manufacturer Lamborghini opened its first showroom in China due to its phenomenal growth rate; Japan and Italy have theworld's oldest populations (as measured by the average age of the population) so marketers take a different approach to pricing, product, place and promotion when targeting these countries than if they were marketing to nations with younger populations such as Kenya or Vietnam - pressure groups concerned about the impacts of business activity on society can also create problems for marketers hoping to gain a foothold in foreign markets. Hong Kong Disneyland faced many problems from animal activist groups when it opened in September 2005, including protests about sharks fin soup being on the food menu. People for the Ethical Treatment of Animals (PETA), the world's largest animal rights group, has caused many problems for companies such as McDonald's, KFC and Procter & Gamble operating in overseas markets. 4. economic issues - a key argument for more and freer international trade is that it enables people to have a greater choice of products at more competitive prices. International trade also allows citizens to have access to products that would otherwise be unavailable in their own country because domestic producers cannot supply such products in a cost effective manner, such as tropical fruits being grown in cold countries. These arguments can present major international marketing opportunities for large businesses However, international marketing of products also increasesthe degree ofcompetitionin the marketplace. Transportation costs, exchange rate fluctuations, interest rates and communication costs are further economic issues that need to be considered when marketing products overseas.

international marketing

the marketing of a firms products in foreign countries