Abstract
International marketing is an important concept in international management course. This paper analyses this concept by looking at the different components of the international marketing, which include identifying market opportunities, market targeting, market mix and consumer behaviour.
The diversity of global market is also emphasised in this paper especially its importance to the marketers. Several recommendations are also given to the marketers and transnational corporations at the end of the paper.
Introduction
International marketing and consumers is a concept that mainly deals with how companies carry out marketing across national borders and in the overseas markets. Agarwal, Malhotra and Bolton (2010, p.18) observe that emerging global culture has made it easier for transnational corporations to cross borders and cultures to market their products.
With increased globalization, many companies have extended their operations beyond domestic market hence requiring development of new marketing strategies that will reach their customers who are distributed in many regions across the world (Douglas & Craig 2011, p.82).
Global marketing mainly deals with the process of identifying the market, market targeting, and selection of entry mode, market mix and different strategies that can be used to gain competitive advantage in the international market.
As Onkvisit and John (2004, p.3) argues, international marketing involves coming up with new plans and executing them in relation to pricing, promotion, and distributing goods, services and ideas in the international market. The success of these processes will meet the objectives of the corporation as well as satisfying the needs of the customers.
There are many differences between global marketing and domestic marketing. The later involves marketing in a small market segment; for instance, a given region or country where there is no much diversity among the consumers.
In this scenario, it is very easy for marketers to understand the market since the market segment is not large and diverse. However, the case is different in the international marketing where the market segment is too large and diverse compared to the domestic market.
In this kind of market segment, there is language differences, cultural and social differences coupled with political and ideological differences. These differences make global market to be more complex where international marketers have to deal with these challenges to acquire and retain customers from all the regions where they have established their markets.
Marketers have to apply strategies that are different when they are marketing their products in the international market compared to domestic market. They have to use different approach when they are identify the market segment, mode of entry and marketing strategies to enable them to survive in the increased global marketing.
Consumers in the global market are also very diverse since they come from different regions of the globe. These consumers are different in terms of purchasing power, preferences and other behaviours depending with their locality.
Marketers in the global market have to use different approaches for different market segments in order to meet the demands of their customers. Cultural differences also play an important role when marketers are identifying their market segments as well as choosing the products to be distributed in the divergent regions.
The fact that consumers are different requires global companies also to come up with a product mix that will cater for the needs of their diverse customers. International marketing involves the following concepts:
Identifying market and targeting
Market opportunities
Identifying market opportunities is an important process not only in the global market but also in the domestic market mainly because marketing process always involves some level of uncertainty where companies are not very sure how their products will fair in the market.
This level of uncertainty is even high in the international market compared to the local market where companies are not sure whether their products will sell in the market. Competition in the global market is very high and companies that intend to venture in this market have to identify and choose their target appropriately.
Kaplow (2010, p.438) argues that analyzing market share before venturing is crucial for marketers. Simoneaux and Stroud (2011, p.75) concur with this view in their argument that market analysis will help to measure chances of success of a new product.
Many companies that have ventured in the international market ended up failing immediately they start their operations or even some time later due to many challenges prevalent in the market. Thus, it is very important for a company launching its operation in the overseas market to carry a thorough research about the market as a way of reducing the level of uncertainty.
Four sources of uncertainty face marketers when they are identifying market opportunities. First, there is inadequate information about the available market alternatives where marketers are not aware that certain market opportunities exist.
For instance, a certain profitable opportunity may be available in a certain geographical region and unless marketers are aware of its existence, they will not consider it among other alternatives.
Secondly, uncertainty in the choice of international market will arise due to external factors that will affect the operation of the corporation in a certain region. Different geographical regions have different political, economic, social cultural and technological environment.
These factors will have great impact to the outcome of the new decision to venture in the overseas market. Before the company implement this strategy, a thorough analysis of these factors is very important. According to Banham (2010, p.19), analysing potential impacts of external environment is crucial in the success a business.
Company has to carry a thorough PEST analysis where it is required to analyze the effects of these factors to the success of the business. Fereidouni, Masron, Nikbin and Amiri, (2010, p.175) claim that external environment may motivate investors to invest in a certain region.
In deed, external environment is a major consideration when investors are making decision about new market opportunities (Yajiong, Huigang, & Boulton 2008, p.67).
Political environment is very important to the success of any business in any region. In a politically stable state, business tends to thrive since government will create a good environment for investors. In such a country, regulatory mechanisms created by the government will promote economic activities in the region thus favouring investors in that region.
Politically unstable states do not offer the environment required by the investors to thrive in their business. Government may impose strict rules and regulations such as high tax rates that may not create favourable atmosphere for the success of the business. Economic factors are also very important when looking for overseas business opportunities.
There is high level of success when one starts a business in a region that is doing well economically. Growing economies offer a fertile environment for new business since there are many economic opportunities in such a region.
The chances of business thriving in a region where there is low economic growth is also minimal compared to the region where there is high economic growth rate given the fact that economic growth typifies people’s purchasing power; therefore, in a poor economy, people’s purchasing power will be low hence chances of business success are low.
Kloviene and Gimzauskiene (2009, p.70) indicate that, the performance of an organization is greatly affected by its external environment. Social-cultural factors also play a crucial role in determining the success of new business.
Different regions have different cultures that have great impact to the people living in a certain region. In fact, some regions have integrated their political system with their social and religion systems thus affecting all the economic activities in such a region. Business regulations are also related with the culture of people living in that region.
Thus, social cultural differences play a very important role when companies are considering different market opportunities. Finally, though it is possible to import new technology, different regions are in different levels of technological advancement.
The level of technological advancement of a given region will affect the operations of the business established in that region. Hence, for a company to choose from among different alternatives, these four factors have to be considered to ensure the option chosen has the lowest level of uncertainty.
Market targeting
Market targeting involves analysing the specific characteristics of different market segments. Marketers analyse different market segments using their demographic characteristics. These demographic indicators include population growth and density in the region that will help marketers to know the size of the market.
Different regions have different population density, which is an important consideration to the international marketers when they are weighing different market segments. High population regions are likely to offer higher chances of success for new business compared to regions with low population density.
When considering different market segment, marketers also analyse the gender make up of different regions to help in identifying the product that may fit a given market segment. Some regions are highly populated with women compared to men implying that when targeting such regions, gender difference is an important factor to consider.
A product that is used by women will sell more in a region heavily populated with females since the market size for the product will be large. Age distribution is also an important demographic characteristic to consider when analyzing potential market target.
Consumer behaviour is directly related to the age of the consumers. The preferences of consumers change as their age changes and therefore, marketers need to ensure that the age of their potential customers is put into consideration when they are developing their products.
The needs of different generations are different whereby for instance, the preferences of baby boomers generation are different from those of X and Y generations. Indeed the generation targeted by a certain product, need to be fully understood by the marketer. The new product ought to be taken to the right generation, which has high chances of buying it.
Markets also need to analyse the purchasing power of the targeted population since it is different in many regions. The level of income of the targeted group will determine whether they will afford the product or not.
Marketers ought to choose their products depending on the income levels of their consumers. Low-income consumers may not be willing to buy a product, which they perceive as a luxurious good; instead, they will opt to meet basic needs first while luxury comes second or last.
For instance, when a corporation is planning to introduce its products in the developing countries’ market, it is necessary to consider the income level of the target segment to ensure that their product is affordable by the potential customers in that region.
A product that falls in the category of luxury should target high-income populations that can afford it. Marketers should consider not only the income of their consumers, but also how that income is distributed in that population.
There are some regions, which report positive economic growth, but most of the resources are owned by a small percentage of the population. Another important factor to consider is social considerations such as taboos and religion, which also affect the preferences of the consumers.
For instance, consumption of alcohol is prohibited in most of the Islamic countries; therefore, alcohol-selling companies should carry out in depth research before opening an outlet in such countries to determine if the project would be cost effective enough to generate significant income.
Finally, when selecting market of a product in the international market, it is also important to consider how foreign products are received in different countries. Many national governments have come up with laws for regulating import and export of goods and services, which may affect operation of foreign companies in such regions.
Marketing Mix
The strategy of market mix is used in both domestic and international market to help companies to increase their share in the market. Becker-Olsen, Taylor, Hill and Yalcinkaya (2011, p.30), posit that consumers have positive perception towards those products that have global image.
International marketers apply the four P’s (price, product, promotion and place) that form the element of marketing mix in their attempt to increase their sales in the overseas market. These P’s summarize the product mix in both domestic and overseas market.
Companies have continued to combine all these four variables to acquire and retain their customers. As Dimofte, Johansson and Ronkainen (2008, p.113) contend, development of global brands is the main goal of international corporations.
Product development is used to come up with new products that will satisfy the needs of the customers as the market continue to change. The place represents the process of making the products available to consumers when they need them.
This includes distribution channels that are employed by different companies to make their products more available to the consumers.
Promotion is also used to elevate the image of the brand in the market and finally price strategy is one of the most effective marketing tools that can be used to increase sale of a given product in the market. Use of global media as Chu and Huang (2010, p.129) not, plays an important role in creating global brands.
In international marketing, different market mixes have to be developed for different regions in order to maximize sales in the market segments. Dimofte, Johansson and Bagozzi (2010, p.81) suggest that, global products perform differently in varying ethnic group.
One product may have different mixes that are offered in different parts of the world because of diversity in the global market where consumers of the same products are different in terms of income, culture, preferences among other diversities.
This will require an international company to vary their market mix to ensure optimal sale in different market segment. For instance, a company may use price strategy to attract low-income customers in a certain region and use promotion strategy to reach customers who are literate in another market segment.
Due to increased competition in the global market, companies are trying to use all the four strategies to increase and retain the market share.
Improved technology has also played an important role in promoting international marketing. Companies can now reach their customers with ease in all parts of the world within a very short time. New technology and increased global media coverage have enabled companies to advertise their products globally.
It is also possible to distribute products of a given company through on-line services, which can be accessed in many parts of the world. For instance, software manufacturers such as Microsoft are selling their products to customers in all the regions of the world over the internet.
All these product mixes have taken international marketing to another new level where companies can now serve their customers better. International companies just need to choose a combination that will suit its market segment.
Global Consumer Behaviour
Globalization has great impact on the global market where a different set of consumers have emerged. Consumer behaviour in the global market is also different since these consumers are different in terms of economics, culture, and social issues and marketing.
Analysis of global consumer behaviour requires an approach that is multidisciplinary rather than an individual approach that is used in the domestic market. Kumar and Sarang (2011, p.23), highlight that, analysis of consumer behaviour requires cross-regional model approach.
Consumers in the international market are diverse and their behaviour is affected by their diversity. Cultural diversity requires use of mixed approaches by the marketers. Steenkamp and de Jong (2010, p.18), hold that consumers have different attitudes towards local and global market.
Townsend, Yeniyurt, Cavusgil, and Deligonul (2004, p.1) concur with this view in their argument that, due to diversity of the global market, marketing programs are necessary for effective sale in the global market. The decision of consumers to buy a product in a given region will be affected by factors that are different from another consumer group in another region.
For instance, one of the factors that affect the choice of the consumer is the country of origin of a given product. Consumers tend to associate quality of a given product in the global market with the country of origin.
According to Al-Sulaiti and Baker (1998) argue that Japanese electronic products are highly valued by customers compared with electronic products such as from United States (p.152).
Mechanical products such as tractors from Germany are also highly valued by consumers compared with products from other countries. As noted by Ozsomer and Altaras (2008, p.1) global brand authenticity is important in the global market.
For example, many countries in the global market are manufacturing electronic goods such as television and computers. In this case, consumers tend to choose such products depending on the country of origin.
Counterfeit products are on the increase in the global market making differentiation according to the country of origin an important factor to consider when buying a product that is made in more than one country.
Technology differences in many parts of the globe also affect the consumer behaviour in the international market. Different regions are in different levels of technological advancement, which means that consumers from some parts of the world can only use some products only.
Ability to use computer is also different in different regions of the globe. For instance, computer literacy is high in developed countries and low in developing countries; therefore, marketing via internet is likely to generate more results in say the US as compared to a country like Nigeria at the heart of Africa.
Al-Sulaiti and Baker (1998) also analyses consumer profile in the international market among consumers from different countries (p.154).
According to this analysis, products that are manufactured in USA appeal more to younger market while France products appealed more to feminine market. Older groups are more attracted to the British products. The case study below is used to illustrate similarities and differences between two regions.
Comparison of barriers to international marketing culture between Australia and Saudi Arabia
The two regions are different in many aspects, which affect international trading in the two countries. They have some common barriers to international marketing, which researchers have to encounter when they are operating in the two regions.
First, in both countries, there are government regulations, which define how especially foreign corporations do trade in those countries. This may limit the operations of international corporations. Secondly, identifying market segments in both countries is a problem to the marketers in two countries.
They have to carry out thorough market research to be able to understand the dynamics of market segments in the two countries. Thirdly, there is competition in the two countries, which requires corporations to use more resources to acquire customers in the two regions.
On the other hand, the two countries have many differences when it comes to international marketing barriers. First, though in the two countries there are rules and regulations from the government, the extent to which they affect business operations differs.
Australia is a more democratic country where government intervenes in the market operations where necessary. In Saudi Arabia, the running of the government is intertwined with culture, beliefs, and religion of the people.
The government has come up with strict regulations to control the market operations such as prohibiting sales of some products such as alcohol among others. The regulations affect international marketing in those regions.
Secondly, the countries are culturally different which requires a corporation operating in the two countries to use a multidisciplinary approach in their marketing. According to Sousa and Bradley (2008), cultural differences between two countries are very important to the marketers (p.467).
The fact that the two countries have different cultures means that different marketing approaches will be required. The consumer behaviour is affected by the culture of a certain region. Customers’ willingness to buy some products will depend with their culture.
If the culture of that group does not advocate for the use that product, then it means that people will be less likely to buy the product. For instance, the fact that Arabs countries such as Saudi Arabia do not support consumption of alcohol means that consumers will not buy the product even when it is offered in the market.
Thirdly, Australia and Saudi Arabia are in different levels economically which affect international marketing in the two regions. Australia is more developed compared to Saudi Arabia implying that marketers have to use differing approach to attract customers in the two countries.
For instance, openness to trade in the international marketing depends much on the level of economy of a given country. Less developed countries are more likely to face trade barriers compared to developed countries. As Shoham and Albaum (1995) note, there more export barriers for developing countries compared to developed countries in the international marketing(p.85).
Recommendations
The area of global marketing and consumer behaviour is very important in international management. Even though a lot research has been done on the area as noted above, more research needs to be done to improve the understanding of this concept.
Transnational corporations need information on how they can improve their strategies to strengthen their position in the global market. This information can only be obtained through carrying out market research frequently due the dynamics of the global market.
Global corporations need to carry enough market research before venturing into a new market. Many corporations have failed in the past when they ventured in the new market segments due to high risks that are involved in this action coupled with little information regarding the best business strategies that can work out well in a given region.
The chances of failure can be minimized by carrying out a thorough research about new foreign market. These corporations need to consider the external environment of the region they are intending to begin their operations and the effects of these factors to the success of their business.
Issues as political, economic, social-cultural and technological factors need to be analysed properly before venturing into foreign markets to reduce the level of uncertainty in the new market.
Secondly, global corporations also need to carry market analysis in the segment they are intending to begin their operations because of diversity in the global market that requires an approach that is cross-cultural and cross-national.
Thirdly, understanding consumer behaviour in the international market is also very important. Consumers in the global market are very diverse and marketers need to consider this diversity when they are choosing the approach to use to reach the consumers.
Preferences such as country of origin and technological advancement are very crucial to consumers in the global market when they are making their decision to purchase a product.
Fourthly, a good market mix is very important in the global market where transnational corporations are required to come up with different market mixes that will cater for different segment of the market.
Some consumers will prefer low prices, while others will be attracted by product promotion or the availability of the product depending with their demographic characteristics.
It is therefore important for marketers in the international market to know the strategy they are going to apply for a given market segment. Finally, more research needs to be done to help marketers understand the dynamics of the global market.
Conclusion
International marketing is an important concept in the international management since it defines the success of a business in the international market. Good marketing strategies are important for transnational corporations operating in the global market.
International marketing mainly deals with the following areas, the process of identifying opportunities in the global market, market targeting, market mix and other strategies that help corporations to increase their share in the global market.
Consumer behaviour in the global market is also different from that of domestic market since consumers in the global market are very diverse.
An approach that is cross-national and cross-cultural is necessary to reach customers in the global market more effectively. This requires marketers in the international market to apply strategies that will cut across national and cultural boundaries such as global media in their marketing.
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