International marketing management - Essay Example

1 Introduction International Marketing is beset with problems that are radically different from domestic ones. While the ultimate objective is to entice customers but there are new factors of culture, language, religion and customs that need to be addressed both to attract customers and not to alienate them. Since firms go international in pursuits of competitive advantage, costs play a vital role and it has been established that in these proactive times when the media has taken new forms like the web, customer retention is far more easier than customer acquisition as the customer is no longer passive but is well informed as well as aware of his needs, values them greatly and will not settle for less. 2 Value Marketing has shifted from the traditional product centred view to a service centred view (Vargo and Lusch 2004). It has further evolved into creating a new experience for the customer by providing unique values (Prahlad and Ramaswamy 2004). Marketers therefore segment, penetrate and promote goods with objective of attracting customers (Vargo and Lusch 2004). Marketing mix as under 4 Ps does not attract a customer any longer (Gronroos 1977) as it is product oriented. Therefore relationship marketing has become more important because it moves marketing from transactional to relationship based exchange. Relationship marketing brings about a new integration into the marketing dimension. 3 Marketing Mix With advances made in technology global trade has changed. The customer that was passive in the past has become interactive, becoming connected replacing his isolation and changed into informed from being unaware (Parhalad and Ramaswamyl2004). Earlier in the seventies and eighties a large parts of the world were controlled economies, especially those of China and India. This changed with their liberal economic polices and they have become emerging markets, adding both suppliers and consumers to the world markets. As a result the marketing mix underwent a great change and innovations produced a new range of products that were now perceived as desirable by the customers. Market based economies replaced the old policy based economies and free trade ensure better reach for producers and better availability for the consumers. Home Markets were restrictive both in terms of size and competitiveness but the global arena offered much more in values. However it also brought competition of a new kind and mergers and amalgamations became more prominent to offer a larger and better variety to consumers. The customer valued a product or service differently in the international market depending on the benefits sought. With varying tastes and dispositions the customers demands became different and had to be catered to and this new value perception required a deeper study for understanding requirements to direct manufacturing and service in the proper directions. This made the need of market research to become more focussed and predictions had to be more accurate. 4 Complexities Companies need to be more well informed of consumer needs n the international markets especially in the emerging and developing markets. The geographical integration of markets and cross border transactions are compelling acquisition of new information on linkages between the consumer and the distribution channels including suppliers and distributors, logistics and warehousing, retailers and customers. There is need for up to date research on issues of segmentation and opportunities crossing national boundaries. It is becoming increasingly important to focus on conducting studies which cover multiple countries examining differences and similarities in behavior and response patterns across countries in search of homogeneities to evolve marketing campaigns. Still the cultural factors at national levels cannot be ignored and markets are heterogeneous in nature, the research has to be focussed rather than general. Rapidly changing conditions in the emerging markets make research redundant in quick time. However with rising purchasing power of the large middle classes due to liberalisation of their economies it can be predicted that this will release the pent up demand for all kinds of consumer durables and will make substantial difference in the marketability of products for which markets are already saturating in the developed countries. Higher standards of living also will open markets for many luxury items as well. Still the collection of relevant data is difficult and many large companies have suffered setbacks especially in China where they expected larger demand for their products but failed to recognise the local cultural requirements Lack of well developed market research infrastructure is to be dealt with caution and understanding of the target markets. Ability has to be developed to acquire information that is closer to reality and predictions are difficult to make as there is lack of historical data.  Research finding are also difficult to assess and local elements need to be involved to understand the social undercurrents that will be missed by foreign researchers. Multilingual specialties have to be used to study and address country specific issues in order to design a useful research project (Douglas and Craig 1997). 5 PESTLE Analysis There are many uncertainties when a company plans to exports to another country where conditions differ from the Home country (Erramilli and Rao, 1993). Conflicting data and its interpretation make it difficult to arrive at decisions. (Boyacigiller, 1990), and in absence of adequate information it is impossible for companies to project consequences of their strategic decisions.(Achrol & Stern 1988). Indeed this may lead to wrong and harmful decisions effecting performances overseas. (Lee, 1998). To overcome this difficulty Johanson and Vahlne (1977, 1990) and Wiedersheim-Paul, Olson and Welch (1978) suggest that it is best if the target country is closely similar to the Home country to ensure success. Undoubtedly similarities are easier to manage and less challenging and more likely to succeed. This calls for a PESTEL analysis of the intended market. PEST stands for Political, Economical, Social and Technological influences that affect a business. These are all external factors that are beyond the control of management but deeply affect its business strategies. 6 Cross Cultural Factors Sometimes product innovations are misunderstood because of language and other barriers. General Motors had launched a new model of Chevy called the Nova. It was a great success in the States. However it failed miserably in Mexico. The reason was that in Spanish Nova means “no-go”. Had there been an understanding or knowledge of the language such an elementary mistake and a huge loss could have been averted. It has been said that cultural differences can throw up unique customer preferences that require customization of the marketing mix to promote demand (Bartlett 1986; Beamish, et al 1994). Culturally related regions like the US and Canada can be more successful in sharing market activities and know-how in comparison to say US and Indonesia. The greater ability to cross-sell products in culturally related markets reduces marketing expenses as well as market research expenses compared to markets that are diverse in cultures (Takeuchi and Porter 1986). It is more difficult and more expensive to share this in a cross cultural consolidation or expansion. 7 Marketing Research With data it is possible to segment the market and subsequently to determine the target customers for the organization’s products. Once this data is available, the serious exercise of Segmentation begins. This data on consumers from various sources contains the following information. Demographics like age group (teens, retirees, young adults), gender, education level, ethnicity, income, occupation, social class and marital status Geographics like location (national, regional, urban/suburban/rural, international) and climate Purchasing habits by identifying brands used, purchase frequency, current suppliers Local Environment like cultural, political, legal framework. Benefits sought by buyers by price, overall value, specific feature, ease-of-use, service, etc. Knowledge of how the product is used, situation when used, etc. Purchase Conditions by studying time of day/month/year of purchase, credit terms, trade-in option, etc. Characteristics of Individual Buyer by observation of purchase experience, how purchase is made, influencers on purchase decision, importance of purchase etc. In the International market the above analysis is to be seen in conjunction with culture, language and local environment background. These added variables will give more focussed results in order that the company can understand the preferences of the local consumer. For an effective and efficient Marketing strategy, segmentation is an important tool, but segmentation research data precedes selection and segmentation methods models and procedures are based on customer profiles. Profiling requires certain pre-conditions and they are that a group of customers need specific products and there is nominal variance in their expectations. This will result in effective and profitable Targeting. 8 Consulting Often it will be suitable to employ an outside consultant who will have intimate knowledge of the market to assist in budgeting for market related activities as he will have hands on experience. This will enable the company to avoid pitfalls due to language and other barriers that cannot be surmounted with minimal training. An adequate exposure and experience cannot replace any amount of training. Part (b) 1 International Marketing Strategy The purpose of advertising is to increase the awareness, be informative, create recognition, to eventually improve returns and is generally a drive to increase sales by tempting the customer to retail outlets. It has been recognised by marketers that ‘impact’ is very important during a promotional effort (Clark 1997). In this cyber age a verbal message is passé therefore graphics, colourful and exiting packaging, symbols and characters are used to attract attention (Senbach 2000). For prolonged attention marketers depend on attention-grabbing and action-filled advertising (Matthews 1997). The results are astonishing as consumers recall these events in great detail even after long intervals. In an International marketing campaign, the most crucial is the national culture and these cultural practices dominate the marketing scenes in successful campaigns. These are the impressions and practices picked up in early childhood and called software of the mind by Hofstede (1993). These are less explicit and are the main drivers of customs and eventual behaviours (Jaeger 1986). They need to be understood and taken into account when preparing for international marketing. 2 Brand Image It is common enough knowledge that all groups or communities have icons and celebrities around which they revolve. Their actions are emulated and they are revered in various degrees. The larger the groups, the more numerous the celebrities and icons will be among them. When they display their emotions in an advertisement they are capable of changing the faiths and belief of the viewers by involving them in the ad. It is a combination of emotions and the message that the marketers use for maximum effect. The actor here is plays the larger role and is able to alter or sway the belief. It is the executional effect that is relevant and the message is secondary and supportive. Dynamic ads, as in Television, are more engaging and therefore more effective in the making of Purchase decisions. This is because the changes of emotions that characterize these ads add the element of drama to it. Thus, both emotional flow and emotional integration should affect involvement in the ad (but for different reasons). Emotional flow and emotional integration may also affect purchase intentions by means of their effects on understanding, relevance, and brand image. Emotional integration which unequivocally demonstrates the emotional benefits that accrue from product use that these induces a vivid trial experience which helps consumers understand what the usage of the product will be like. Assuming the experience is favourable; it indicates future support the consumer will receive from product use. Consistent with these ideas, Puto and Wells (1984) propose that empathy strongly influences ad persuasiveness and choice behaviour by converting the viewers experiences of using the product. Bagozzi and Moore (1994) have also shown that empathy is related to consumer action. 3 International Campaigns The greater ability to cross-sell products in culturally related markets reduces marketing expenses as well as market research expenses compared to markets that are diverse in cultures (Takeuchi and Porter 1986). It is more difficult and more expensive to share this in a cross cultural consolidation or expansion. It is similarly difficult to devise a common campaign for markets having different language and cultures and can indeed create havoc like the Chevy Nova mentioned earlier in this paper. Usually the campaigns should be oriented with local environment to be effective. 4 Communications An important point to note here is that advertising and promotions both need effective communication to produce successful results. Kotler et al (1996) have pointed out persuasive communication is designed to stimulate a pre-defined response from consumers and advertisers use this ploy to gain advantage over susceptible consumers. This can be done using various methods like “mass media advertising, personal selling, sales promotion, direct mail and point-of-sale merchandising” (Kitchen 1999). Latest addition in their arsenal is provided by technological advances that have brought forth electronic and digital media, the internet, mobile devices etc., (Crosier 1999) and all of them offer another platform that is interactive communications (Pavlou & Stewart 2000). Communication has therefore become an important tool for sending across the message from the advertisers and usually it is cleverly executed through use of several mediums. According to Crosier (1999) integrated marketing communications is now considered the underlying principle of success in the marketplace. The earlier method of communication was addressed to passive audiences hence it was staid and results were largely predictable (Barry & Howard 1990). The targeted consumers were passive and could be influenced into purchasing the products (Lannon & Cooper 1983). But with more proactive audiences communication needs to be and has become a two-way process where the consumer decides how to receive and respond to the promotions communicated to him (Kitchen 1999). 5 Conclusion The conclusion drawn from the above discourse is that International Marketing is different from domestic practices due to language, religion, custom and environmental factors, the basics like communication, use of celebrities, brand promotions and relationships play an important role in both. In case of International marketing adequate precautions should be taken by people who are aware of the local conditions so that neither the promotions go waste not the customer is alienated by their use. Bibliography Achrol, R. S. and Stern, L. W. (1988). Environmental Determinants of Decision-Making Uncertainty in Marketing Channels. Journal of Marketing Research, 25 (February): 36-50. Bagozzi, Richard P. and David J. 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