International Marketing Research Paper

Excerpt from Research Paper :

International Marketing

In many ways, domestic marketing and international marketing are similar. They are based on the same fundamental principles of using price, product, place and promotion to craft appeals to customers that will enhance sales. There are certain facets of international marketing, however, that are slightly different. Marketers need to be aware of what these similarities and differences are.

In terms of similarities, the fundamental things that a company must pay attention to are the same. The company must understand its target market, have a strong distribution strategy, set its price effectiveness and it is must promote the product with a message that appeals to the target market (Nag, n.d). The mechanics of these things, however, can be considerably different in foreign markets. IN particular, where consumer tastes and ability to pay are different, or where channels for either distribution or marketing communications are different, a company can be forced to utilize a completely different strategy internationally compared with the domestic market. Often, there are gaps in local market knowledge and expertise that will need to be addressed in order that the marketing plan is effective. Some of the most commonly-cited examples are with marketing communications and blatant errors (like selling the Chevy Nova in Mexico, where "no va" means "does not go"). Firms operating internationally must take greater care to understand the local market culture and conditions before entering the market.

There is also a difference between international marketing and global marketing. International marketing reflects a company that sells its products or services internationally, and the term implies that the company might alter its approach depending on the market. A beer company, for example, might have entirely different marketing messages, price points and distribution strategies -- even positioning -- in different markets. Global marketing implies a company that has a consistent global strategy. In such instances, the company would have the same approach to distribution, pricing and product in every country in order to present a unified global marketing strategy to every market in the world. Apple is a good example of this, as it changes almost nothing in its marketing approach in different countries, even the pricing and positioning are consistent.

A firm that operates domestically is going to be more similar to a firm that operates globally than to a firm that has an international strategy, because it will have a single, unified marketing approach for everywhere that it sells its products. However, the difference between these two is that crafting a strategy for the domestic market will be easier. Not only is the knowledge of the market greater but the company can craft the marketing program specifically to the needs of that market. A global marketing strategy is different because no one national market can be taken into consideration. The company must craft a strategy that works across all national markets -- it cannot be too domestic in nature, and indeed should avoid being heavily influenced by any one geography. This approach reflects a view that all of the target customers are going to be the same no matter where they are in the world -- the target customer is not defined by geography but by other demographic and psychographic characteristics that transcend geography.

2. There are a number of unique strategies that multinational companies utilize in the international marketing environment. There are unique market entry strategies that other companies might not use, such as having an emphasis on joint ventures or merger and acquisition activity as means of entering a given market. Multinational companies will often emphasis the autonomy of local market subsidiaries. The nature of multinational companies is that their composite parts are strong national entities, only tied together by a corporate umbrella. There may not be significant control on the part of the parent company. The multinational approach therefore emphasizes the development of local products, setting local price points, cultivating local channels and retaining these within the one market. However, one thing that this allows multinationals to do is to import ideas from foreign subsidiaries to the home market and to other markets around the world. An example of this would be the McCafe concept at McDonalds. This has been successful for the company in the United States, but came to the U.S. from Australia via 17 other countries (no author, 2001).

In addition, the blending of standardization and customization is a unique feature of the multinational. The question of the degree to which companies should standardize when operating overseas has been a feature of business literature for decades, and standardization grew as a strategy in the 1960s (Buzzell, 1968). Two companies that blend the two effectively are Starbucks and Ford. The basic Starbucks concept does not change, and you can always buy coffee there, but the company has adjusted its product and service offerings for the different countries in which it operates. Likewise, Ford has a basic automobile platform in terms of the frame, engine and other "guts," but the superficial elements of the car's chassis and interior can vary significantly around the world. (2011 Ford Annual Report). Parts of the product or service are standardized, but there are accommodations for local market needs in both of these cases.

3. There are a number of variables that can influence the success of international marketers. Knowledge is definitely the key variable. Every element of the marketing program can be challenging so knowledge about local tastes, distribution channels and communications strategy will all contribute significantly to the success or failure on an international venture. The information-gathering and processing capabilities of management will be critical.

One of the most important elements in making the right decisions about marketing in international markets is that the company needs to avoid ethnocentrism. Making assumptions about the foreign market, rather than gathering actual data, is a great way to fail. A good example is who EuroDisney went over like a fly in the punchbowl because Disney made broad assumptions about European vacation habits and tastes, based on the idea that they were similar to American. The company took an ethnocentric approach when it launched in Japan, but succeeded due to unique factors of that culture that were not present in Europe. Keeping an open mind and working with facts and verified information is critical to success in overseas markets.

A third variable that is a key success factor in international marketing is tapping into local expertise. A company operating abroad can gain more local market information by working with a local partner, even if just on marketing strategy. It is also worth noting that often working with a local partner reduces political risk as well, especially important when market access can be restricted by government easily.

4. There are several different market entry models, and each carries with it its own advantages and disadvantages. These include a greenfield, exporting, acquisition, joint venture and licensing agreements (QuickMBA, 2010). A greenfield subsidiary is one in which the company enters a market by investing its own money and building the foreign subsidiary from scratch. This technique is risky in some ways because it subjects the firm to a higher degree of political risk, and reduces the opportunity for the company to gain local knowledge. However, it also gives the company the highest degree of control over its own fate, and the profits as well. Starbucks is buying back franchises in China now that it has sufficient local market expertise, because it values control and the ability to keep all profits (Franchise Press, 2011).

Exporting is a low-commitment method of market entry. Working with local distribution partners and advertisers, a company can produce elsewhere and then market a good in a country. This gives it more flexibility with respect to exiting, and utilizes existing production capacity. This approach is somewhat limited with respect to growth potential, but is often utilized to help minimize the risks associated with market entry. Companies often use this tactic in small markets, and also to learn more about a market before making a bigger commitment to it.

Licensing or franchising also help a company to enter a new market. These approaches involve working with a local partner who will run the day-to-day aspects of the operation. Starbucks utilizes this approach in many of its foreign markets. It licenses the use of it names and trademarks, along with its supplies and systems of management. The franchise partner takes care of running the stores. The split of duties with respect to marketing is usually subject to negotiation. The foreign company often seeks to balance developing a consistent global brand with appealing to local tastes and leveraging the partner's local market knowledge to create more effective marketing strategies.

Mergers, acquisitions and joint ventures are another type of market entry strategy. By buying or forming an equity partnership with a local company, the foreign company can enter the market with a lot of capabilities built in. The local company might already have infrastructure and a brand that can be used. This…

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