International Marketing and International Trade Barriers (Notes)
International marketing is simply the application of marketing principles to more than one country.
International marketing involves the firm in making one or more marketing mix decisions across national boundaries.
Global marketing
This refers to marketing activities coordinated and integrated across multiple country markets
Global marketing is a bigger brother to international marketing i.e. More of an extension
Domestic against international marketing
Domestic marketing is the marketing practices within a marketer’s home country
International marketing studies the how and why a product succeeds or fails abroad and how marketing efforts affects the outcome
Domestic marketing means that the company has to market its products within the national jurisdiction of the country without considering the effects of global competition
Challenges of international marketing
- Technological and Communications Advances
Companies have to fundamentally change the way they conduct business
It is acceptable for suppliers to ship parts or pieces to head office location for distribution
Manufacturing now demand that parts arrive on time to the location of the plant
The cost of logistics of warehousing are increasingly being assured by the supplier
Rapidly growth of technological advances has allowed competitors to have quicker response times than ever before
- Customers’ purchasing patterns and demands have also gone through a transition
The introduction of Catalogue, Online discount, house and home shopping network have caused a shift in buying pattern
As consumers we want more choices and greater convenience. Example: A company’s 3 day online marketing sales may be worth of monthly sale in a retail store
- Organization Restructuring
Formerly, global businesses had independent organizations in each country or region in which they operated. These structures most often mirrored that of the parent company
The head of the country or region would report into corporate
- Communication
With advances in technology have made it easier to keep in touch with people globally
Forces driving companies to International operations
- Political
Some companies see the opportunities from preferential Trading Agreement from other countries e.g. Tax Holiday, etc.
- Technological
Advancement in various technological aspects such as in Infrastructure, Communication Technology, etc.
- Market
In the modern marketing practices, global firms may become global customers
- Cost
Globalization of product lines and production helps reduce costs by achieving economies of scale
- Competitive
Firms are defending their home markets from foreign competitors by entering the foreign competitors’ markets
International Marketing Environment
Environmental factors affecting international marketing
Marketing environment is the environment in which marketing decisions are made and enacted
The marketing environment surrounds and impacts upon organization. There are three key elements to the marketing environment which are as listed below;
a) The internal environment
b) The micro environment
c) The macro environment
Why are they important?
Marketers build both internal and external relationships.
Marketers aim to deliver value to satisfied customers, so we need to assess and evaluate our internal business and corporate environment and our external environment which is subdivided into micro and macro
a) The internal environment
A useful tool for quickly auditing internal environment is known as the FIVE Ms which are Men, Money, Machinery, Materials and Markets
An Example: British Airways
Men – BA employees, pilots, engineers, cabin crew, marketing managers, etc.
Money – Money is invested by shareholders and banks for example
Machinery – Include its aircraft, air bridges and buses to ferry passengers from terminal to aircraft
Materials – For a service business like British Airways would be aircraft fuel
Markets – which can be both Internal and External
b) Micro Environment
This is a controllable environment
Micro environment is made from individuals and organisations that are close to the company and directly impact the customer experience
Example: This include:
- Suppliers
- Competitors
- Customers
- Other marketing input from agencies
SWOT Analysis tool
This tool is very important in analysing the Micro environment, the SWOT is the short form for;
Strength – Capital, etc.
Weakness – Less Market Share, etc.
Opportunity – New Markets, etc.
Threat – Other companies, etc.
c) Macro Environment
Micro environment is less controllable. The macro environment of much lager all encompassing influences (which impact the micro environment) from broader global society
The useful tool to help in Analysing the macro environment is known as PEST Analysis Tool
PEST Analysis Tool
This tool enable the marketer to analyse the external environment of the organisation or company concerned
PEST stands for;
Political – Tax regulations, Type of Government, etc.
Economical – National income, etc.
Social – Language, Attitude and Behaviour
Technological – Advancement in Technology and its impact on marketing activities such as Online marketing strategies (e-marketing, etc.)
International Trade Barriers
Import Controls are barriers to the free movement of goods and service that seek to distort the pattern of trade between countries
Example : In recent years, there has been a long running dispute between the European Union and the USA, over bananas, beef, cashmere and steel
Types of Barriers
i. Tariffs
A tariff is a tax on imports and is used to restrict imports and raise revenue for the government.
A tariff is placed on the value of imports. This raises the price of imports and as a result domestic demand contracts and domestic supply expands
Home producers can supply more at the new higher price
The tariff give domestic firms a competitive boost because the volume of import would have been reduced by the time it is imposed
ii. Import Quotas
this is a protectionist trade restriction that sets a physical limit on the quantity of goods that can be imported into a country in a given period of time.
An import quota directly reduces the quantity of a product that is imported and indirectly reduces the amount of money that the export producers receive
The main beneficiaries of quotas are the domestic producers who face less competition
iii. Voluntary Export Restraint
A VER is similar to an import quota. With VER the exporting country voluntarily restricts he number of goods that it ships to its trading partners
Foreign exporters must purchase licenses from its government and then exports its allotted amount
iv. Export Subsidy
This is a payment to a domestic producer who exports goods abroad.
If receiving an export subsidy, a company can remain competitive abroad by exporting up to the foreign price
v. Boycott and Embargoes
Boycott is an absolute restriction against the purchase importation of certain goods or services from other countries
A public boycott may be either formal or informal and may be sponsored y the government or by the industry
This may include travel bans
An Embargo is a refusal to sell to a specific country
vi. Monetary Barrier
A government can effectively regulate its international trade position by various forms of exchange control restrictions
Examples;
Brazil at some point has required funds to be deposited 360 days prior import-date
At one time or another, most Latin American and East European countries have required all foreign exchange transactions to be approved b a central minister
vii. Anti Dumping Penalties
This has emerged as a way of keeping foreign goods out of a market
Anti dumping laws were designed to prevent foreign producer from “Predatory pricing” whereby a foreign producer international sell his or her products in the USA for less than the cost of production to undermine the competition and take control of the market
International trade facilitators
Facilitating trade is about streamlining and simplifying international trade procedures in order to allow for easier flow of goods and trade at both national and international level
Trade facilitation Looks at how procedure and control governing the movement of goods across national boarders can be improved to reduce associated cost burdens and maximize efficiency while safeguards legitimate regulatory objectives
Cultural influences on international marketing
How we do things around here
Professor Geerte Hofstede did a study on various world cultures and he came up with the five dimensions.
For any international marketer wishing to penetrate the international scene, these dimensions pose as a breakthrough to various ways of life of the target market
Power Distance
This refers to the degree of inequality that exists and is accepted among people with and without
A high PD score indicates that the society accepts unequal distribution of power and people understand “their place” in the system
Low PD means that power is shared and well dispersed
It also means that society members view themselves as equals
Individualism
This refers to the strength of the ties people have to others within the community
A high IDV score indicates a loose connection with people
In countries with a high IDV score there is a lack of interpersonal connection and little sharing responsibility
A society with low IDV score would have strong group cohesion and there would be a large amount of loyalty and respect for members of the group
Masculinity
This refers to how much society sticks with and values traditional male and female roles
High MAS scores are found in countries where men are expected to be tough, to be the providers, to be assertive and to be strong
Low MAS scores do not reverse the gender roles
In low MAS society, the roles are blurred. You see women and men working together equally across many professions. Men are allowed to be sensitive and women can work hard for professional success
Uncertainty Avoidance
This relates to the degree of anxiety a society feel when in uncertain or unknown situations
Uncertainty avoidance refers to the degree of tolerance of uncertainty and ambiguity where men are on search for the truth
High UAI scoring nations try to avoid ambiguous situations whenever possible. They are governed by rules and order and they seek a collective truth
Low UAI scores indicate that the society enjoys novel events and values differences. There are very few rules and people are encouraged to discover their own truth
Post a Comment