International Marketing Environment

Keywords: marketing internationally, international market analysis

In this report we are primarily focusing on the issues of marketing a product or a service internationally. The rise of globalization has eased many of the issues that were a hindrance on international trade in the past but at the same time new laws and regulations have replaced the conventional method of doing international trade with more sophisticated but complicated systems as well. The following points have been covered in the report for the literature review of our research which focuses majorly on the global marketing environment and the impact of culture in the international marketing environment.

International marketing overview

Cross-cultural influence on international marketing strategies

Marketing challenges in globalization

Ethics in international marketing

E-marketing – a new paradigm in international marketing

Role of branding in international marketing

Export-import marketing

Standardising global marketing strategy

Globalization affecting the economies of different nations

International Marketing Environment and Cultural Environment

The world has become globalized and international marketing takes place all around us every day. It has a major effect on our lives and offers new opportunities and challenges. International marketing is a tool used to obtain advancement in one’s present position and its transaction takes place across national borders highlights the difference between domestic and international marketing. The area of international marketing strategy refers to using a common product, price, distribution and promotion program on a worldwide basis. Setting up business in new market and positioning the product requires extensive knowledge of environment, as well as risk, threats and opportunities might present. It is very important for a business to understand effective marketing, as what may work for one company may not work for them. The company entering in to new market must access the potential of different countries and involves three levels of analysis: The macro-level analysis of the national environment; analysis of the consumer market in general; and micro-level analysis of factors affecting the specific product (Morrison, 2009).

Assessment at the Macro-level looks at geographic features, economic indicators, demographic data, social and economic structure, and the political environment. The economic data includes the GDP growth rate of a country that how big the market is for trade. Demographic data shows the age distribution of the population as the world’s developed economies have large segment of young population. The social and economic factors indicate what types of employment are prevalent, what opportunity exists for social mobility and what role family networks plays in society. The political factor includes the level of political stability and legal protection afforded to property, including intellectual property. Cultural factor give a judgments the capacity and taste of the customer, for e.g. the countries based on Hinduism and Islamism religion face drop of the sale of meat products during holy festivals, where in U.S and other European countries during Christmas the sale of meat, wine and electronics are at peak (Czinkota & Ronkainen, 2007).

Micro-level analysis includes the ease of entry and its costs, the extent of competitors present and the substitute and the upcoming new competitors, and the profit potential. Entering a new market through exporting is less costly than FDI. Retailers recognize a physical presence of the brand in the foreign market. This is less costly for a small business like boutique and fast-food outlet than a large concept of hypermarket. As the large retailing operation is a costly and complex investment. An analysis of competitors will show the degree of concentration and the extent to which foreign investors are active (Czinkota & Ronkainen, 2007).

Culture influences every part of the business, including the type of products, the way of people relate to each other in organization, staff communication and the values and the goals of the organization. Culture is an important component in the organization’s relation that how it relates with other firm, their employees, customers and with an array of stakeholders group. International marketing is often not as simple as marketing your product to more than one nation. Companies have to consider language barriers, ideals, and customers in the market they approaching. It takes lot of planning and strategy to attract the specific group of people you are attempting to sell to be highly important and can serve the number one cause of failure or success (Boone, Kurtz, Mackenzie, & Snow, 2007).

An established, culture plays vital role in the field of international marketing. Of all the aspects language must be the main and biggest barriers a company has to face when it becomes global. A good communication must be set between the company, its customers, suppliers, employees, stakeholder and government of the foreign country where an organization is settling up its business. Language plays very significant role in culture as English is the globally accepted language but sometime can create misunderstandings. Even after knowing the language sometimes misunderstandings can happen like for e.g. in India, due to difference in pronunciation the sentence ‘lack of rupees’ may sound ‘laky of rupees’. As the significance of language is ascertained, its impact on the elements of the international Marketing mix is indisputable. As the marketing mix should in itself be a product of understanding the consumer, keeping in mind that language is an integral part of that consumer, it follows that mastering the nuances of the new market’s language

helps the organization to target its marketing mix, namely product, price, distribution and communication, more closely on the potential consumer (Morrison, 2009).

Modern organisations across the world are going to great lengths to incorporate ‘customer care’ as in the integral part of their organisational culture. Staying close to the customer is now considered to be an essential part of any organisations strategy towards ensuring greater sales for example, described the case where a workflow management system is used by an organisation to strengthen the organisational culture towards greater customer orientation, quality of services and performance. (K, Chakrabarty, & Whitten, 2007). Values, belief and assumption are the most valuable facets any culture and connecting to the people by their belief is the key ingredient to connecting your idea to people.

The culture has become more significant in outward expression in recent years, facilitated by the growth of global media. Outward expression of culture can be seen through television, art, music and buildings. In society, organisation’s logo, jingle, promotion adds and symbols identify the firm and project its image and value to the customer. Some countries have subcultures and more than one culture exist it gets very crucial for the organisation in term of marketing to send its message to everyone without hurting anyone cultural emotion and values. For e.g. the country like India have many cultures and have big population of major religion of the world i.e. Christian, Muslims, Hindus and Buddhism. So while promoting any product it is important to connect everyone without hurting anyone. Business need to review the important strategy of the four P’s, which are product, place, price and promotion. (Dominici, 2009).

Cultural change also depends on economic development and varies from place to place as shifts from rural to urban environments. The economic condition of a consumer is better in urban area than rural and so on market also varies of this factor that where is the right location to be set for the brand. Moving away from rural area to city represents a radical shift in a way of life, not just economically, but also in terms of social and cultural implications. The people living in urban area lead much better life style than rural and so on the market for luxuries goods and products have space where as the rural population like to live on basic amenities and do not spent much on luxury. In developed world, over 80% of people now live in cities. Better education is very essential for any country growth. More the population will be educated; the infrastructure will grow more with new technology. As the educated generation have more adaptation ability to adapt new technology and can be competitive in environment. Setting up business in any market look for the qualified staff, so the cultural environment matters that qualified staff availability is sufficient. As world is moving to new technology and everyone communicate through fast and shortest way from million miles away in e-marketing world. The Successful e-marketing strategies in international markets will depend on existing infrastructure and marketing institution. E-marketing reduces the manpower cost and reaches to customer quick and can have access anytime. The globe is becoming closer with contribution of new technologies and experiments (Sheth & Sharma, 2005).

Literature Review:

In the following section of the report we have divided the subjects under different headings which give an overview of the factors which covers international marketing of products and services and the way globalization is making the whole world combined into a single trading platform. Following is the literature review of our research findings which is given in a sequential manner which relates to the international marketing environment and the effects of globalization.

International marketing overview:

(J4) identified two prospects of the international marketing area based on a review of several thousand journals; the dimensions identified are management or marketing and business environment. Given that these dimensions or the part of the similar areas help to differentiate between different types of research, it is clear that business environmental research is a very important area of study; more usually addressed by business and management rather than marketing journals. This shortfall in environmental research output lacks the relevance in the spectrum of research, obviously needed by those carrying out international marketing.

Other issues or dimensions related to environmental analysis that is needed to be investigated further and beyond includes the impact of the changing environment on individual companies of different sizes and from different sectors. Market definition can be put in the activity of environmental scanning and it supports the belief or notion that historical analysis is important for the proper understanding of development, international relations with overseas countries and trade. (J19)

Similarly an equally important area is the contemporary framework to understand and acquire the knowledge of how changes in the economic, political, social, technological, legal and environmental context of doing international marketing impacts on the results and success of a company’s products or services if a sector wise International marketing is done for its products or services. For example, marketing to Iraq in the light of the recent war would most certainly be predicted to be that the proper contingency planning became paramount in marketing departments operating in this market. Forecasts become redundant, distribution channels may have been completely destroyed; networks might have been broken up and the market might have been seriously undermined. Some companies will have ceased operations altogether for the duration.

In the above schematic diagram, it has been stated that for international marketing environment analysis, the main division has to be in the form of micro-analysis and macro-analysis, where micro-analysis relates to the regional market of the business and macro-analysis relates to the global trade. (J3)

Cross-cultural influence on international marketing strategies:

The international marketing scenario has to consider the impact of cultural influences on the business when the business enter in a new market that means a foreign land where there might be cultural differences from the home land.

In an era of globalization and global business activity, understanding the cross-market applicability of the susceptibility of the adoption of new products becomes a matter of increased importance, as even companies and service sector firms highly successful in their domestic operations (e.g. launching products) often fall aback when they expand their operations internationally. For example, Kellogg entered into India in the late-1990s. Indian consumers did not pay much attention to breakfast cereals because most consumers either prepared breakfast from food related with starch, so every morning they grabbed some biscuits with tea. Thus, like many of its counterparts, Kellogg’s expansion to India proved unsuccessful, and, after three years in the market, sales stood at $10 million (J18).

It is well documented in many articles and books that culture of a particular land can have a strong influence on consumers’ thoughts and actions. Hence, culture can potentially have a significant influence on consumers, which also influences things like word-of-mouth and the behavior through its influence on individual values and group norms. (J7)

Similarly, there is also an increased level of criticism where insistence on contrasting national cultures are compared in terms of relatively simple binaries such as differences in individualist versus collectivist culture. (J8)

International Marketing Success

Corruption

Relationship Oriented Culture

Cultural distance

Physical distance

Consumer Resources

In the above diagram, it can be depicted that all international markets are not the same. There are some areas where international trade has corruption, nepotism, and favoritism inside them. Relationship oriented culture leads to corruption for example, if a person has contacts with the member of judicial system, then laws won’t be as strict for him as it would be for others to setup a business or get any work done. Then again, relationship oriented culture leads to consumer resources which in turn give success to international marketing strategies. The physical distance of the entrepreneur and the cultural distance doesn’t matter in this case that much since nepotism is prevalent in a scenario where relationship oriented culture acts for international marketing success. (J9)

Marketing challenges in globalization:

One of the most important reasons to examine the attitude of firms to that of the marketing challenges of globalization is the diversity of firm’s size, industry environments and strategy. Since organizations and companies vary in terms of size, membership of the industry and the competitive strategy of that particular industry and their executives which vary in terms of their characteristic even different organizations may perceive and respond to the same marketing environmental patterns differently hence giving a hint of serious implications and challenges for organizational actions and performance. Furthermore, many existing literature supports the view that top managers need to deal with the impact of the industry environment and that of globalization in a judicial frame. (J10)

Regardless where the firm belongs it will be on the path towards globalization, hence it must respond to the forces shaping the global environment and the marketing challenges they present. The nature of the marketing challenges is precise and it continues to change and the form they will take in the twenty-first century remains most uncertain. It is however clear that to be successful in the future as well in the present scenario the firm must be an even more astute marketer than in the past. An effective global strategy depicts the necessity to respond quickly and appropriately to opportunities and challenges locally and internationally. (J10)

Ethics in international marketing:

It is accepted that the wave of globalization is an unavoidable process and will progress forever. All business that firms desire to compete successfully in international environment has to obey to the legal and ethical rules and regulations. So to behave in an ethically and socially responsible manner there should be a hallmark of every marketer`s behaviour, domestically or internationally Hence it requires little thought for most of us to know the social responsibility and or ethically correct response to questions about breaking the law, destroying the environment, denying someone’s rights, taking unfair advantage, or behaving in a manner that would bring bodily harm or damage.

The best guide to good international marketing ethics is:

• Do not direct intentional harm.
• Produce more good than harm for the host country.
• Respect the rights of employees and of all others affected by one`s actions or policies.
• To the extent consistent with ethical norms, respect the local culture and work with and not against it.
• Multinationals should pay their fair share of taxes and cooperate with the local governments in developing equitable laws and other background institutions

E-marketing – a new paradigm in international marketing:

The introduction of e-marketing or e-business creates a fundamental shift in the behavior of consumers and the strategies of international marketing. It also adds to an increase level of complexity to the arena of international marketing. However, the specific infrastructure for e-marketing strategies of a country for its different stages suggests us for targeted strategic development of e-business implementation in different countries. (J22)

E-marketing is different in terms from general marketing strategies. The market is open for all and uses a very wide platform i.e. the internet, so cultural differences; environmental factors are not taken into consideration often. The primary advantages of e-marketing which gives an edge over traditional formulas of marketing is reducing costs and enhancing reach. The cost of the platform for e-marketing is typically lower than the other marketing platforms such as face-to-face salespeople or middlemen/distributors. E-marketing platforms increase the boundaries for reach and reduce the costs by providing three areas of advantage for customers. First, the marketing firm can provide unlimited information to customers where there is no requirement of human capital. Second, the e-marketing firms can create customized information for individual customers that allow customers to choose and design products and services that meet their specific requirements. Finally, e-marketing platforms can allow transactions between customers and firms which again typically do not require human capital; there are virtual modes of communication and payments. (J22)

Role of branding in international marketing:

Branding has tremendous potential for international marketing. However, this potential has not been fulfilled for a number of reasons. Much of the analysis and commentary are at normative level, which debates the relative merits of a global versus local approach to international branding. Additionally, the relatively few empirical studies states that global branding often take a narrow approach to branding, as narrow as just the brand name. These limitations presents the point of separation from the current study that takes a more comprehensive and strategic approach to the role of branding in the market that goes international. The pivotal role of international marketing strategy is acknowledged as a driving force in internationalisation. Using such a pivot, makes a reference to performance measure which is included in the recognition of the role of branding in assessing international performance. Further, a new approach is developing in terms of how branding contributes to more effective marketing strategy. Specifically, there are two mechanisms that are added beyond what the existing global branding literature has considered. Firstly, light is thrown on branding-related managerial cognition, which is termed as brand orientation. Secondly, international brand repositioning is also considered as a contributor to the performance.. (J24)

Export – Import marketing:

International business which relates to trading of commodities from one country to the other is called export-import marketing. Export managers and researchers are mostly concerned with basic aspects of firm survival in the international business arena which relates to product quality while overlooking some important points like product innovation and relationship management. Firms that have established or have good relationship with their importers are more likely to realize the potential of their product and the market. Relationship capabilities enable firms to improve the product, come out with innovation hence enhancing the product quality which altogether turns into good export performance enhancement. (J12)

EMO behavior

Degree of internationalization

Export performance

Export market dynamism

EMO behavior-squared

The diagram above presents the conceptual model for the export market orientation (EMO) behaviour which relates to export success. The model proposes a positive linear relationship between EMO and export success. It also represents the hypothesis that EMO shares a non-linear relationship to export success (which is negative quadratic). So it is arguable that the relationship of EMO and export success whether it is linear or non-linear is dependent of market dynamism and the international strategy the firm pursues. (J13)

In the world of big multinationals companies, it is a question of thought whether small and medium size enterprises can survive in the export-import arena. Small firms that tend to export larger output perform better. As a result, they accumulate knowledge and result in competitive advantage. But all small firms are not capable of doing large output because all the firms don’t have equal level of efficiency in export import process. (J15)

Standardizing global marketing strategy:

As there have been differences in the thoughts and interpretations of what standardization is, there have also been differences among researchers on the advantages or disadvantages of standardization, and whether standardization is an appropriate strategy or not. The main argument is in favour of standardization which states that the forces of globalization driven by technology were homogenizing markets and that marketers needs to take advantage of this trend by following a standardized marketing strategy. Also primarily focussing on “Triad” market consisting of the USA, Japan, and Europe suggested that these markets are fairly homogeneous and since these markets were amongst the major markets in terms of share for the world economy that it was concluded that a strategy of standardization was the appropriate one to follow. (J26)

The concept of strategic fit provides the theoretical foundation for the study of performance consequences of international marketing standardization. The strategic fit paradigm explains the necessity of maintaining a consistent link between the strategy of the firm and the context within which the strategy has been implemented. The bottom line of the core-proposition is matching the marketing strategy with the marketing environment leads to a superior performance. The concept of strategic fit has played a key role in development of strategic management and organization theory fields. (J25)

Globalization affecting the economies of different nations:

Firms that align the type of sourcing strategy with that of the knowledge intensive business services (KIBS) attribute should perform significantly better than those that do not achieve the requisite match, thus, managers of firms should realize that the key to superior performance is to have a strategic fit between sourcing the strategy and sourcing the attributes, and it is not to have particularly sourcing strategy or attributes alone in the place. (J14)

Globalization has made cross-border business deals easier than ever. The world is getting smaller. Not in a geographical sense, but in a business sense. Starting businesses in foreign markets is increasingly popular these days. With the advent of e-mail, video teleconferencing, the Internet and e-commerce, businesses are no longer restricted to operations in a sole location. Improved trade, favorable tax rates, labor and centers of excellence have almost made it a necessity to have offices or strategic alliances in more than one country. The global economy is a world of new opportunities.

Critique of the Literature

Marketing and business environment are two particular dimensions which help to differentiate between different types of research, it is clear that business environmental research is a very important area of study; more usually addressed by business and management rather than marketing journals. (J4) Hence the author mainly focuses on the two paradigms in the wide world of international business which are thought to be the pivotal roles for successful and pivotal roles for international marketing roles. According to us marketing is an obvious and important part of International business and so is business environment, but what we feel is the political, economical and environmental aspects are also to be taken into consideration when a wide aspect like International business is taken into consideration, also it is will be ambiguous in our part if we do not interpret what consists under the business environment and whether it has all the required points like social, political, environmental etc.

In the second aspect author is trying to state that the issues or dimensions related to environmental analysis which are needed to be investigated further and beyond includes the impact of the changing environment on individual companies of different sizes and from different sectors.(J19) And according to us it is an indispensable factor for any kind of business or sole entrepreneurs, that they have to accept change and specifically the environmental change which the businesses of all ranges and sizes goes through with the passage of time assuming that the environmental change also includes price range fluctuation of commodities and services , cultural change in the society and the change in governing policies.

As discussed above the author (J3) states in this one that political, economical, societal, technological, legal and environmental changes has to be taken into account when a business is looking forward or searching for its target market in an overseas environment.

In an era of globalization and global business activity, understanding the cross-market applicability of the susceptibility of the adoption of new products becomes a matter of increased importance. (J18) and of course it has to be effective and proper understanding is required because change is a constant factor in business environment and if a business cannot accept change then in the long run it might result in the dismal failure of its foundation. (J7)

Individualist and collectivist thoughts have to an integral part of International business and are basically the two sides of the coin when taking into consideration the strategies for international business. (J8)

As stated by the author that success in International Marketing leads to level increase in corruption and bribery is actually a true thought and is very much prevalent in many countries around the globe (J9) where business is acquired by peer pressure of the powerful and oppression techniques, in these cases product quality, diversity, individual rights are not at all taken into consideration and is actually termed as ‘business malpractice’. It usually becomes a success strategy mainly in those countries where corruption is predominantly popular. It might not be the same of advanced countries and might work the very opposite way. (j22)

Diversity of the firm size has to be taken into consideration when globalization is put as a forward question for the firm. (J 10) And according to us more diverse the firm’s ability to accommodate itself in terms of size the greater the output for the business.

E-marketing has a new way of marketing there product internationally (J22) and it is of course a new way for marketing of products and it creates a very big and broad platform for the people who wants to market the product in overseas land or internationally. And even the strategies should be different when e-marketing are taken into consideration.

According to the author branding is an important part of International marketing strategies but it cannot be a success measure for the business or cannot be used for in success when a product is launched internationally. According to us the literature holds a bit of contradiction as branding may not always work but there are cases where the brand name of the product drives it success whether its in a local market or in overseas. (J24)

Export market orientation (EMO) behaviour which relates to export success and it shares a positive linear equation between them. (J13). It actually holds a lot relevance and export market orientation can be equated to the basic foundation of the export business. Where they make analysis on the different markets, different customer trends , different product analysis. It gives and covers all the areas of Political, Environmental, Societal, Technological, Legal and Environmental scenarios and analysis for a successful export trade. The average of all the above factors gives the company or its product the degree of internationalization that it has got.

Mainly focussing on “Triad” market consisting of the USA, Japan, and Europe suggested that these markets are fairly homogeneous and since these markets were amongst the major markets in terms of share for the world economy that it was concluded that a strategy of standardization was the appropriate one to follow. (J26). Standardizing global marketing strategies might not always work as each market is new, as the nation is new and hence a rule of thumb which works for the “triad” might not work with other markets. Although a standardized marketing approach can be obtained on generic products like wheat, flour or petroleum but commodities that holds a niche value might not respond to the theory of standardizing global markets.

Globalisation has already changed many of the world economies and obviously there needs to have a strategic fit where businesses should be knowing the key to sourcing the strategy and sourcing the attributes and also finding out the superiority of each other.