The Concept of International Marketing - Assignment Example

? International Marketing Table of Contents Table of Contents 2 Introduction 3 Question 3 Question 2 5 Question 3 8 Question 4 11 Question 5 13 Conclusion 15 15 Reference List 16 Introduction The concept of international marketing has gained substantial attention of practitioners and industry experts around the world (Wilson, 2010). Tracing the history and evolution of the international trade is synonymous with searching the beginning of human civilization. International trade was visible with the Babylonians, Egyptians and Greek merchants, who used to trade spices, coral, jewelry, slaves and pearls across the globe. A number of scholars states that this system can be traced back to 6000 years back (Kapil, 2011). International marketing generally involves recognizing the fact that people across the globe have different needs and requirements. In simple terms, it is defined as marketing across the national borders (Campbell, 2009). In this paper, such difficulties will be uncovered and along with that solutions to those problems will be also highlighted. Apart from that, the significance of important tools such as multinational marketing information system (MMIS), IMC etc. will be also highlighted. The firm chosen for this purpose from the UK market in Vodafone and the BEM (Big Emerging Market) selected for the company to enter is Brazil. Investigation on Vodafone’s international presence have shown that the company is yet to make its presence in the Brazilian market and Brazil being one of the largest country with emerging economy is a justified choice. Question 1 Trade is becoming increasingly global and is increasing in size at a robust rate. A number of reasons for this are responsible. One of the most evident one is the progress of technology. The improvement of transportation and communication system has provided companies with heap of opportunities and that made business and trade more practical (Nelson, 1999). The rapid expansion of business houses across the national borders has also tendered opportunities for the customers to avail the best products of different countries. The level of competition has also increased due to globalization as firms compete to produce the best product and offer the highest quality services (Onkvisit and Shaw, 2004). However, an organization operating in the overseas market has to face certain difficulties in getting accustomed with the situation of the target country. The issues arise in the form of cultural differences, language differences and differences in the market characteristics. Although, the problems mentioned above appears after the beginning of operation, but prior to that a number of issues also take place during the phase of market research. An international company might also face difficulties when attempting to research the market for a product or service (Holmquist, 2012). Vodafone is a telecommunication company and therefore the telecommunication sector of Brazil needs to be evaluated. Large companies across the globe have identified that international markets offer huge potentiality for the success of a business. In terms of the market size, countries such as India, Brazil, Russia and China are huge. Furthermore, the purchasing power of the consumers belonging to these countries is significant. Despite that, a company has to deal with a number of difficulties and complexities when attempting to research the market for a product or service in the chosen country. Nowadays, companies and other establishments use marketing research techniques so as to manage and minimize the risks associated with the market (Linder, 2006). Several studies have shown that companies do not spend much amount in developing products that market research indicates will be unsuccessful in the market. However, it is also true that marketing research at times did not shows proper results. The marketing research process is costly and at times produces results that are questionable. Now for Vodafone to enter the Brazilian market with its telecommunication products, it needs to carry out an in-depth analysis of the Brazilian telecommunication industry and also the market opportunities. This can be only uncovered by researching the market. In the context of the Brazilian market, the following are the complexities or challenges that a company might face: - 1. Cultural Diversity: - Brazil is country characterized diverse culture. People from different culture reside in Brazil. The country constitutes people from European, Asian and African roots alongside the local inhabitants (Paul, 2008). The country also has people from various religion and ethnic origin and is occupies a large area geographically. One of the positive factors for the marketers is that throughout the country, the same language is spoken. With a staggering population of 190 million, it is the fifth most populous nation of the world. Hence from this fact it is obvious that the country is characterized by huge diversity. For a MNC to conduct market research, it will be difficult for them to get the exact scenario of the country from the small sample. For example, the taste, preferences of the people belonging to Rio Di Jeneiro will obviously differ from the tastes and preferences of the people belonging to Sao Paolo. Studies have suggested that there are huge social and cultural differences even in the same city and that makes the research further difficult. Thus, it is evident that the biggest issue related to market research in Brazil is the diversity of the market that may hinder Vodafone to identify the exact need (Hitt, Ireland and Hoskisson, 2010). 2. Market Research technique: - The market research technique plays a crucial role in uncovering the market needs. Researchers and industry experts believe that the same technique of research does not proffer the same result in every market (Rugman, 2009). They believe that the same technique applied for the western market will not provide same result if applied in South America or Asia. This is because of the differences in demographics. Moreover, Vodafone also needs to gain the trust of the Brazilian people so as to gain deeper insights of the potential consumers. Studies have shown that Brazilians are enthusiastic in giving away their opinion, but they are reluctant to give it to anyone. Moreover, the technique needs to be precise convenient for the respondents and quick as Brazilian people give high value to time. Hence, designing the most important technique is a major challenge for the company (Ahlstrom and Bruton, 2009). 3. Survey Design: - Organizations mainly carry out market research activities for the purpose of identifying what the customers think and what they want (Cohen, 2004). The survey is the way by which data is collected and analyzed to get an overall view of the market. However, this becomes difficult when the market is diverse and lacks uniformity. In such cases, it becomes a challenge for the company to design the survey. This is because the survey can be appropriate for a certain consumer group and may not work accordingly for certain other groups. Question 2 In this information driven society and competitive economic environment, the significance of information in the business operation of a firm is very apparent (Dess, Lumpkin and Eisner, 2009). Without relevant information, a business will not be able to perform to its level best because an organization formulates its strategies and makes decision on the basis of information (Ferrell and Hartline, 2010). Eminent scholars have mentioned that information plays indispensible role in driving the decision making process, the communication of the organization and the reactions of the firm to the entire environment (Henry, 2008). Hence, it is obvious that information is a vital tool for communication in an organization and is also a critical resource in performing the daily operations of the business (Flamholtz and Randle, 2012). The sharing and transfer of information is visible probably in every organizational activity. For example, the business managers of a company spend most of their time in meeting and communicating with the other managers or subordinates. The entire process is either sharing of information or transfer of information and as a result of that the management of a company is itself dubbed as the information processing department. It involves collecting, processing and publicizing information to the members itself (Johnson, Whittington and Scholes, 2011). Therefore, it is imperative for an organization to manage steady flow of information from both internal and external environment of the organization. At times, organizations have to create information for their own purpose by processing the raw data. This is because organizations often get data in raw form (Porter, 2008). (Source: Witcher and Chau, 2010) Sometime, gaining access to information becomes a difficult task for the organization. This may be due to the unavailability or high cost associated with it. Now, the management of information for a multinational company or a company moving into overseas market is more important as the entire operation of the firm will be dependent on the information. The development of technology has allowed business houses to manage information in an efficient manner. Furthermore, the materialization of the digital information systems has improved the information management and procession skills of an organization. As a result of that information system is often dubbed as the foundation of business operation. In many businesses, it becomes difficult for the company to achieve the strategic goals of the company without the application of information technology. In general there are six major reasons for which a company uses specialized information technology services. The factors are achievement of operational excellence, development of new services, products and business model, supplier and customer intimacy, improved decision making, day to day business operation and achievement of competitive advantage in the market place. One of the most effective tools for Vodafone to manage its operations efficiently in the Brazilian market is the implementation of multinational marketing information system (MMIS). Multinational marketing information system (MMIS) is a computerized system that works in association with other information systems. This system is responsible for supporting the firm’s management system and solving complex problems and is related to the marketing activity of the firm. The four major components of the Multinational marketing information system (MMIS) are Order Processing System, Market Analysis System, Pricing analysis System and Sales trend forecasting System. Hence the scope of MMIS is large as it has the capability to address a number of areas in business. The marketing manager of Vodafone can use MMIS in the Brazilian market for the purpose of identifying and learning about the consumer wants and needs. Furthermore, it will be also helpful in devising marketing mix of Vodafone and measure its effectiveness in Brazil. The company can employ MMIS at different levels of business. For example, at the strategic level, it can be used to monitor the trends of sales and marketing and how it impacts in the new sales opportunities. It also plays predominant roles in the support planning of the new products and services and alongside monitor the performance of the competitors. At the management level, it supports market research activity promotional and advertisement campaign and also pricing decision. Lastly, at the knowledge level, it supports marketing analysis and identifying potential customers at the operational level. Therefore, the decision to recommend the company to implement MMIS is justified. The information that will be considered in such systems is the historical sales data, the overall expenses on advertisements and also information pertaining to the advertisement and promotional activities. The diagram below will illustrate the workings of MMIS in more details. (Source: Williams and Cutis, 2012) Now there is also an issue related with the cost of implementation of MMIS in the organization. According to different studies, the cost associated with the implementation of MMIS is generally on the higher side. However, along the same line the benefit provided by this technology is on the higher side. Hence, if a cost benefit analysis of the same is carried out, the results will be positive as the benefits are more in comparison to the cost. Question 3 The pricing strategy of a firm acts as the tool by which it captures the value of the market. The pricing strategy adopted by a firm plays indispensible role in the success of a firm. As a response to the identified gaps in the global marketing environment, the focus on the pricing strategies followed by a firm has significantly increased in the recent past. Several industry experts and authors have mainly tried to identify the factors that plays critical role in the determining the impact of international pricing strategy standardization. According to the findings of the literature, the degree to which multinationals makes a standard of the international pricing strategies rely heavily on the similarity levels of the host country and the country in which the company is headquartered or home country. The strong level of interdependence, competition in world economies and liberalization have accelerated the requirement of multinationals to frame an effective global strategies as an endeavour to achieve sustainable competitive advantage in the market place. The pricing strategy adopted by a firm in the international market continues to be a critical element in the global strategy of a firm. Now if the pricing decision needs to be considered by an MNC such as Vodafone, while operating in the international segment it needs to think about different aspects. Moreover, a thorough analysis of the external economical situation of the host country is necessary before coming to any conclusion pertaining to the pricing strategy. Since, Brazil is an emerging economy the significance of market analysis is more. For example, one of the most common factors of analysis is the purchasing power capacity of the host country. In addition, the economic scenario of the target country is another major factor. Brazil being economically developing nation can act as a positive factor for Vodafone. Studies have suggested that global pricing is far more complex in nature than the domestic pricing strategy of a firm. There are numerous reasons for global pricing to be more complex than the domestic pricing. Some of the common ones are as follows: - Fluctuation of the international currency Difficulties in accessing the credit risk of a firm Escalation of price due to the tariffs High regulation of the transfer pricing Methods of payment Anti dumping laws and price controlling measures. From the economical viewpoint, it often becomes difficult for an overseas company to exactly and accurately predict the demand and cost curves in the target country. This is because the demand as well as the other external factors does not remain stable over time. The role of competition also cannot be over shadowed. In the Brazilian market, there are substantial numbers of established telecom service providing company operates. The Brazilian market, as mentioned earlier is geographically huge and as a result of that geographic boundary and the cultural diversity also needs to be considered which pricing the services to be offered by Vodafone. Another constraint is that, the company will not be able to carry out differentiated pricing for the different states. This is because of the fact that all the probable competitors of Vodafone in Brazil currently use a standard pricing for the whole country. Now, the factors that Vodafone need to consider before making the final strategic decision related to pricing is as follows: - The positioning of the company will play crucial role in determining the price. The intention of Vodafone about how they want to position their product in the Brazilian market place is a major factor. For example, if the company wants to position itself as a premium player then it needs to keep the price higher. On the other hand, if it wants to position itself as a low end player, the prices will be comparatively lower than the other established players. Another major factor that Vodafone needs to consider while pricing their products for the Brazilian market is the purchasing power. They need to consider the extent to which individuals usually spends money for the purpose of availing telecommunication services. If the percentage of investment is significant then the company can easily look forward to cost plus pricing method. The taxes and other rates also need to be considered by the company before making the pricing. The corporate tax rate in Brazil is 30%, so it is necessary for the company to price their products in such a manner that they are able to satisfy their operation. In many nations, corporate social responsibility has become a mandatory activity and certain percentage of the profit needs to be invested into such activities. Therefore, it is strongly recommended to the company they carefully review the taxation policies and other economical aspects of Brazil before finalizing a stagey for pricing. Lastly it should be noted. Question 4 The role of marketing and communication in business has been instrumental throughout the ages. A business may develop high quality products and services and along with that also embraces a talented management and supervision team so as to look out for streamlined service delivery process. However, this entire system and process is irrelevant if the marketing and communication system of the firm is not up to the mark. The marketing and communication system of the firm is the process by which the company notifies the customers about its presence in the market place and also informs about the product and service offerings. If a company fails to promote its products in the market place, it is obvious that customers will not be aware of it and will fulfil their requirements from other providers. A number of scholars have stated that growing a business is directly proportional to the ability to sell. Thus, it is imperative to have in-depth understanding of the consumer needs and wants. Alongside that, formulation and implementation of the innovative strategies are also important to gain success. For each of these activities, communication is the only factor common and has the ability to address each of the areas. Communication also has greater scope and ability to promote a business. Some of the most obvious areas in which the role of marketing and communication is visible are as follows: - Creating Brand Awareness: - For a customer to buy any product from a particular company, at first it needs to know about the existence of the company as well as what are its offerings. The communication as well as the promotional strategies adopted by a firm helps a company to reach out to a mass customer segment. This in turn creates brand awareness for the firm. Developing a Strategic Vision of the Organization: - With the help of communication and promotional techniques a company also has the opportunity to uncover the hidden opportunities of the market place. Identification of the opportunities at the right place and right time will allow the company to achieve success. Expressing Competitive Advantage: - With the help of communication and marketing strategies, a company usually positions itself in the market place according to their desire. In addition, through communication techniques, a company gets the opportunity to precisely identify customer needs. This gives the company a competitive advantage over the rivals. Informing the stakeholders: - Through the marketing and communication process a company also gets the opportunity to inform the stakeholders about the happenings of the company. Moreover, the company can also notify about the important strategic decisions to the stakeholders. Attracting New talents for the Organization: - A better communication system of the organization is helpful for the acquisition of new talents in the organization. Therefore from the above discussion one thing becomes absolutely evident that communication and marketing activities of the company are extremely crucial. Vodafone can make use of various communication and promotion techniques in Brazil, so as to achieve loyalty and trust of the consumers. Additionally, better communication from the company’s side will lead to increased loyalty of the consumers. Vodafone uses integrated marketing communication strategy in its home country and a number of surveys have shown that the company is getting highly benefitted by it. Hence, it is strongly recommended to the company that they should make use of IMC strategies for the Brazilian market as well. On the contrary, previous studies have shown that companies have experienced additional complexities when made use of integrated marketing communication in the overseas market. This is principally due to the differences in culture and market characteristics. The possible differences as well as the complexities that the company might face while operating in the international market are discussed below. Integrated marketing communication is the process of marketing and communication in which integration and coordination of the marketing tools and resources are coordinated and are applied so as to maximize its impact on the customers. In the context of Brazil, it may not provide the desired result. For example, in Brazil the major difficulty will emerge in the form of structural issues. Due to differences in market characteristics, the company may need to choose a structure which does not support the IMC infrastructure. Usually, the Public relations department usually does not report to the marketing department. In addition, the sales force hardly meets with the advertisement department. As a result of that there can be high chances of miscommunication among the team members. In Brazil, companies involved in telecommunication business usually appoint stockists or distributors to distribute products in the distant areas. Hence, for this reason the company might face additional complexities. The complexities mainly arise due to the differences in the domestic and international communication process. (Source: Schultz and Gordon, 2011) Question 5 There are different forces or factors behind the intention of a company willing to initiate international marketing activities (Cherunilam, 2010). Some of the companies principally initiate it for the purpose of experiencing growth and believe introduction of new products and services in the international market will allow them to expand their customer base (Adler, 2010). As a result of that sales and revenue will automatically increase (Clifton, 2012). Furthermore, studies have also suggested that companies move to international market because it gives them the opportunity to gain access of the resources which is difficult to avail from the home country. The availability of cheap labor is another driver of international business (Dooley, et al., 2006). Hence, there are several reasons for which a company initiates international marketing process. Some of the popular names such as Cadbury, Coca Cola, and P&G are globally recognized companies (Pride and Ferrell, 2004). Their decision to trade across the national borders has paid off to a great extent as these companies are now considered as the most valuable companies of the world. However, studies have also suggested that a company who starts business in the overseas market faces extreme difficulties at the beginning because of the vast differences of market. One of the major, which is probably the most vital decision of a company, is to choose the most appropriate form of market entry mode. The entry mode chosen by an organization plays a crucial role in the success of a business. A number of incidences have shown that companies experienced augmented benefits only because of the most effective choice of the entry mode. For example, Walmart, the world’s largest retailer, mostly invest directly on the overseas market. As a result of this, the company is gaining high benefits in almost every country it is presently operating. In the similar way, KFC or McDonalds uses franchisee mode to enter the foreign soil. With this mode these companies have also gained success. Thus, the nature of business has a strong impact on the mode of entry chosen by the organization. There are several modes of entry through which a company enters a foreign soil. Some of the common ones are licensing, joint venture, foreign direct investment and exporting. The nature of business as well as the country in which it is supposed to operate plays a crucial role. The situation or the external environment of a country also plays a crucial role in determining the mode of entry. Some of the situation in which joint venture is most favourable is as follows: - 1. Strict Rules and Regulation of the Host Country: - The rules and regulation of the host country has a profound impact on the business operation. It also shapes the way a company operates in the market place. Since, Vodafone is a telecommunications company the rules and regulations are strict. In this context, joint venture with other established players will greatly help the company to overcome these barriers. 2. Political Turbulence: - Joint venture can be effective when the target country is experiencing political turbulence. 3. Inexperience: - If the company has less or no experience of overseas operation, joint venture can be a great solution. It also shares the economical risks associated with the operation. In general, Vodafone considers joint venture operation for the overseas countries. With this approach the company has been able to receive significant acclamation around the world. The company is rated as one of the best players of the industry. In addition, there are hardly any complaints against them pertaining to the products and services. The service delivery is absolutely ‘flawless’ according to the consumers. Hence, Vodafone is strongly recommended to enter the Brazilin market through the joint venture mode. In this context, the company can tie up with one of the interested telecommunication service providing companies of Brazil. This approach will greatly help the company to manage its operation cost as well as can cut down on the initial investment. Conclusion The study was meant to analyse the opportunities and complexities that Vodafone will face while entering the Brazilian market. The study made it evident that the first set of complexities will appear in the form of market research issues. This is because Brazil is a diverse country and it often becomes difficult to generalize any findings. However, to overcome these issues the company is recommended to make use of proper sampling technique and survey design. The entry mode recommended to the company is joint venture. In addition, the company is can choose to implement MMIS technology. 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