In today’s global business environment, we need to understand the people who come from another country and culture in order to be successful in global marketing.
International trade is booming causing an increasing importance of global marketing around the world. The truth is that many U.S. firms are successful international marketers. However, with global competition is intensifying, it is necessary for businesses to think globally.
Global firm is a firm that, by operating in more than one country, gains Research and Development (R&D), production, marketing and financial advantages in its costs and reputation that are not available to purely domestic competitors.
Here is what a business manager of a firm doing business globally should be aware of.
Important decisions in global marketing
Global companies face six major decisions in international marketing:
1. Looking at the global environment.
The international trade system:
- Tariffs, quotas, embargoes, exchange controls, non-tariff trade barriers.
- World Trade Organization (WTO) and General Agreement on Tariffs and Trade (GATT).
- Regional free trade zones: European Union (EU), North American Free Trade Agreement (NAFTA), other free trade areas.
Economic environment:
- Industrial structure: subsistence economies, raw material exporting economies, industrializing economies, industrial economies.
- Income distribution.
Political and legal environments:
- Attitudes toward international buying.
- Government bureaucracy.
- Political stability.
- Monetary regulations regarding countertrade: barter, compensation, counterpurchase.
Cultural environment:
- Impact of culture on marketing strategy: Cultural traditions, preferences, behavior.
- Impact of marketing strategy on cultures: Globalization vs. Americanization.
2. Deciding whether to go international.
Not all companies need an international presence. Globalization may triggered by several factors. Risk and the ability to operate globally must be carefully assessed.
3. Deciding which markets to enter.
Define international marketing policies and objectives, and sales volume goals. Decide how many countries to target. Decide on the types of countries to enter. Screen and rank each of the possible international markets using several criteria: market size, market growth, cost of doing business, competitive advantage, risk level.
4. Deciding how to enter foreign markets.
Possible ways of entering into international markets include:
A. Exporting: Direct vs. Indirect
B. Joint Venturing: Licensing, contract manufacturing, management contracting, joint ownership.
C. Direct Investment: Assembly facilities, manufacturing facilities
5. Deciding the global marketing program.
Strategies for international marketing include:
A. Pan-Global Strategy with standardized Marketing Mix: Same basic product, advertising, distribution, and other elements of the Marketing Mix are used in all international markets.
B. Global Localization with adapted Marketing Mix: The Marketing Mix elements are adjusted for each international target market.
The following aspects regarding the Marketing Mix should be considered:
a. PRODUCT. Product strategies for the global market include:
- Straight product expansion: Marketing the product with no changes.
- Product adaptation: Altering the product to meet local conditions or the wants of the foreign market.
- Product invention: Creating new products or services for foreign markets.
b. PROMOTION. Global promotion strategies mainly include:
- Standardized global communication: Advertising themes are standardized from country to country with slight modifications.
- Communication adaptation: Advertising messages are fully adapted to local markets.
c. PRICE. Companies face many problems when it comes to global pricing strategies:
- Price escalation
- Pricing to foreign subsidiaries
- Recent economic and technological forces
- The Internet
d. PLACE (DISTRIBUTION). Global distribution channels need to use the whole-channel view:
- Seller’s headquarters organization
- Channels between nations
- Channels within nations
- Numbers and types of intermediaries
6. Deciding on the global marketing organization.
Managing International Marketing Activities:
Step 1: Organize export department.
Step 2: Create an international division.
Step 3: Become a global organization.
Now, you should be able to understand how the international trade system, economic, political-legal and cultural environments affect a company’s international marketing decisions.
Also, you got to know three key approaches to entering international markets as well as understood how companies adapt their Marketing Mixes for international markets.
Finally, you have learned how to identify the three major forms of international marketing organizations.
