There are important differences between domestic marketing and international marketing. International marketing cannot simply replicate domestic marketing strategies extending them abroad to market to different customers in overseas markets.
That is not how international marketing works.
International marketing has both strategic consequences and operational implications for business marketing their products abroad
- Operational consequences of international marketing. These are short-term narrower implications. International marketing affects the business on a daily basis such as the language(s) used in business communication, time for hosting meetings when participants live in different time zones or coming up with brand names that are culturally appropriate.
- Strategic implications of international marketing. These are long-term broader implications. International marketing helps to grow the business globally in different countries or spread the risks through diversification, if the business sells both domestically and overseas.
Case Study 1: Whirlpool operating overseas The differences in the various overseas markets in which Whirlpool operates include cultural differences because of the different uses of the dishwasher and refrigerator. Also, economic and social issues can play a part in what the customers of the different markets are willing to purchase The need to develop different products for different markets affects Whirlpool in increased spending to create the new products and in research to determine what a certain market and its customers like and are willing to buy. Also, profits would be different for different markets depending on the income of the consumers in that market. Prices would have to be lower for less developed countries and therefore, the product could not be made with as many advanced features.
Differences between international marketing and domestic marketing
There are also many disadvantages and drawbacks to marketing a product overseas. A firm might experience problems marketing its product overseas. Despite the uniformity and opportunities brought by globalization, countries still have their national identities through language, culture and other unique characteristics
Differences between operational and strategic implications of international marketing may include the following aspects:
1. POLITICAL DIFFERENCES
a. Political stability. Any firm that plans to do business internationally must consider the political stability of the country in which it plans to sell to. Political environment in a foreign country will have a major impact on international marketers. The degree of political stability may even determine whether the business will be successful in overseas markets. In general, businesses prefer stability when it comes to politics and no changes to the government. Stable state of the political map within a country can especially impact the success of new entrants to an overseas market.
Political stability comes from infrequent changes of governments. Therefore, this decreases the risk of doing business there. Countries that have a stable political climate tend to be less risky and more welcoming to foreign businesses selling products in their territory. Political instability comes from frequent changes of governments. Therefore, this increases the risk of doing business there. In extreme cases, political instability can make trading and doing business almost impossible.
Countries that have an unstable political climate tend to be more risky. Any change of government can bring about a quick change in attitude towards foreign companies.
Example 1: Singapore and Hong Kong have very few political barriers compared to Afghanistan, North Korea or several African countries.
b. Political attitudes. Governments can have mainly two contradicting attitudes toward international trade and companies from other countries entering into their countries. Some governments may be protectionist towards entry of new firms and their products.Trade protectionism in the form of trade barriers creates obstacles for international marketing. It usually comes in the form of tariffs, quotas and embargoes on foreign firms as discouragement.
On another hand, domestic firms receive subsidies and are awarded trading licenses faster for as encouragement. It is important to point out that government can set up international trade barriers to protect their domestic industries anytime. Despite the situation, every firm will have to adapt its business activities and products to local laws and customs, as well as follow accounting techniques, differences in ownership, land tenures and many other legal aspects of daily business life.
c. Political unrest. Political unrest applies to protests against the current ruling government. Any violent attacks, acts of terrorism or threats of civil violence will destabilize operational and strategic decisions for multinational companies operating in these countries which might lead to destruction of a company’s assets. This will all add to the problems of marketing products abroad.
2. ECONOMIC DIFFERENCES
a. Economic conditions. The state of the economy can directly affects the success of international marketing. This mainly applies to elementary economic factors which businesses need to consider in each and every country they operate: differences in TAX rates, interest rates, unemployment rates, the age structure of the population, population growth, income and wealth distribution, exchange rate fluctuations, etc. Decisions about a firm’s marketing activities will need to take all of these factors into account
Example 2: During a global financial crisis in 2008 most businesses in the US struggled irrespective of their international marketing strategies
b. Exposure to international trade. Freer international trade enables people to have a greater choice of products at more competitive prices.A key economic argument for more and freer international trade is that it enables people to have a greater choice of products at more competitive prices. It allows citizens to have access to products that would otherwise be unavailable in their own country. These arguments can present a major opportunity for large multinationals in their international marketing.
International Marketing of products increases costs such as transportation, interest, communication, exchange rate fluctuations. These must be considered when marketing products overseas.
Example 3: Many foreign businesses from the US and Europe took advantage of investment opportunities in China after reforms and opening up in the country, its economy and making international trading arrangements.
3. SOCIAL DIFFERENCES
a. Income of consumers. The average income per capital of customers varies greatly between countries around the world. Some rich countries have GDP per capita as high as USD$100,000 per year while some poor countries have GDP per capita as low as USD$1,000 per year or even less. The truth is that consumers must have the appropriate level of income to be able to afford the prices charged by foreign companies. This is especially obvious when a business from a highly-developed economy wants to sell its products into a developing economy.
Different socioeconomic and demographic conditions mean that businesses may need to reconsider their international marketing. With growing prosperity and income in some parts of the world, international marketers can target different customers with different products.
b. Roles of man and women. The importance of marriage and family in society differs between societies. So does the role of men and women. All these fundamental social factors may have a considerable impact on the products to be sold and the international marketing strategies used to sell them.
c. Level of bureaucracy. Bureaucracy means a hierarchical administrative, government, or social system with complex rules and regulations. The less bureaucratic the country is, the easier it is for an international company to do business in that country. According to The World Bank rankings, countries such as Singapore or Denmark are those where doing business is open and straightforward hence efficient. Whereas, the more bureaucratic the country is such as India or Brazil, the more difficult it is for an international company to do business in that country.
d. Age structure. The age structure of the population also has an impact on business activity. In some countries where the population has a high proportion of young people, the needs and wants of customers will be different from the needs and wants of the society which has a high proportion of old people. Younger societies will drive the demand for products such as entertainment while older societies will demand medical facilities.
e. Pressure groups. Existence of pressure groups which are comprised of individuals with a common concern who seek to place demands on organizations to act in a particular way can make it either easier or more difficult for the business to operate. Whether the local pressure groups perceive the foreign business as unethical, they may cause difficulties by influencing purchasing decisions of local customers and attitudes to further expansion, especially by the national government.
4. LEGAL DIFFERENCES
a. Legal & Illegal products. Different countries around the globe have different legal systems, and sets of laws and regulations. Some countries will have very strict laws on what can and cannot be advertised and sold to the public. There are many of these laws and they will have direct impact on upon strategic and operational decisions of international marketing. Some goods are illegal to sell freely in some countries such as guns, certain medications, light narcotics, etc.
Example 4: Some goods, such as guns, can be sold freely in some states in the USA, but are illegal in countries in Europe.
b. Packaging & Product labeling. Some countries have very strict legislation governing product labeling, the amount of information which should be included on the packaging of the product and product safety requirements. Additionally, even the same law within a country regarding packaging and labeling of food products may have different standards. This means that it might be more difficult and hence more expensive to sell the same products in overseas markets.
On the contrary, some other countries are far less stringent about consumer protection laws. For instance, product safety and product labeling controls are much stricter in the EU countries than in some African states.
Example 5: In Islamic countries, the law requires that food producers provide ingredient information on the food labels as the law forbids use of animal fat. Especially lard which a saturated fat obtained from pigs. It is because any food containing lard is completely forbidden in Islam.
Example 6: In Venezuela, prices must be stated on the product while in China they do not have to.
c. Advertising. There are many restrictions regarding advertising. What is more, ads of certain products may even be completely prohibited in some countries. This mainly applies to advertising cigarettes and other tobacco products, spirits and alcoholic drinks, advertising to children or birth control medical products.
Example 7: Cigarette advertising on television has been banned in the USA since 1971 and is outlawed in the European Union. In Sweden, it is illegal to advertise on the TV directly to children below the age of 12 on Swedish TV.
Example 8: Pester power marketing, which is high-pressure marketing aimed at very young children, is forbidden within EU countries, but not in many other parts of the world.
d. Copyrights, patents, trademarks. Copyright, patent and trademark legislation must be adhered to. These regulations mainly apply to issues such as the company name, brand names, slogans, inventions already assigned to other businesses. These legal issues are additional restrictive trade practices.
e. Pricing. Most countries have their own laws and regulations to protect consumers from unfair or dangerous business activity. Some countries have very strict regulations on market power which companies expanding internationally need to take into consideration when making pricing decisions.
Anti-competitive legislation is established to prevent monopolies from raising prices to exploit customers. It is especially followed in the US, the UK, Australia and Canada.
5. CULTURAL DIFFERENCES
a. Symbolism. Because cultural differences are not written down as laws and regulations, yet they can hugely impact on people’s behavior. Businesses need to consider different meanings and importance of symbols for religious or other reasons. Symbols in culture mainly include colors, images, words and numbers – they have different importance in different places.
Colors for example have completely different meanings throughout the world. These might be key factors to consider in international marketing, especially in advertising.
Example 9: Colors have different significance depending on geographical location. In the Western countries, black is associated with death, while in the Far East white is associated with mourning.
b. Local taste preferences. International marketers need to consider local taste preferences when coming up with their international marketing strategies. This is especially important for restaurants, interior design and fashion companies.
Additionally, people in different countries might have different levels of health consciousness. While ready-to-eat frozen food is popular in some Western European countries, meals in many Southeast Asian countries such as Thailand and Vietnam are almost always cooked on the spot using fresh ingredients.
Example 10: In China, KFC and McDonald’s restaurants rely more heavily on poultry products such as chicken wings and chicken legs as well chicken hamburgers than in other international markets.
c. Religion. Religion and religious beliefs often determines what is acceptable and what is not, especially in countries with strong religious traditions. Some things may fit in one country and some may be considered odd, out of place or even offensive. Therefore, religion may influence the way products are marketed.
In some countries, for religious reasons, it is not appropriate to use certain images such as Jesus and The Cross in advertisements (Christianity), promote drinking alcohol and gambling (Islam) or killing a cow (Hinduism).
d. Ethics. Ethics may present a very big issue for international marketing. Many marketers tend to ignore the fact that what is acceptable in one country may not be acceptable in another. Ethical issues which are related to international marketing mainly extend into promotion of products and employment practices – how large businesses treat local employees.
While employment of children may still be legal in few countries, it is certainly not ethical. The same applies to advertising smoking cigarettes – still allowed to be advertised in some parts of the world. Some other ethical issues may include lack of payments of mandatory overtime for workers, low wages.
e. Behaviors. It is important that marketers do not assume that people overseas behave in the same way that they themselves are personally accustomed to.
It is rude for Japanese to say ‘No’ during discussions, so any critical disagreements are expressed using diplomatic language. In China, people do really stare at each other and pointing fingers in public is discouraged that is why customer service involves minimal eye contact. Pace of doing business in Hong Kong is fast so quality of customer care may be low. Staff in the US is helpful and friendly, German customers are accustomed to shopping on their own, things are formal and conservative in the UK, whereas French, Italian and Spanish have relaxed and laid back attitude to life.
In some countries, giving a ‘bribe’ is highly illegal while in some other countries, bribing is a common business practice required to get things done spanning from running the smallest errands up securing large contracts.
f. Business etiquette. It is quite easy to understand the difference in language between countries, but much more difficult to know the differences between business etiquette in different cultures. Business etiquette refers to the mannerism, customs and traditions by which business is conducted in different countries, in other people’s territory. The firm should be aware and try to understand the different culture, the local business context and the people involved in business transactions.
International business etiquette is important to facilitate a more successful international marketing strategy. A lack of awareness of the different ways in which business is conducted throughout different parts of the world could mean that the business fails in international marketing.
g. Language differences & Translations. Language is embedded in culture. However, both cultural and language differences can cause problems for a business wanting to sell its goods and services in another country. The difference in language creates a language barrier causing difficulty in communication, comprehending important documents and reading legal papers. Ignorance of languages and failure to recognize language differences can have detrimental effects on a firm’s marketing strategy.
Although English is the official language of business in many parts of the world, it is not the main language in many countries, not even the second language. That is why businesses trying to market their products to different people should always use their local language – the language in which people think.
Language differences may also lead to misinterpretations, especially when it comes to naming a product, brand or slogan. It cannot be offensive, have negative connotations or be misleading. Remember that a product name that is suitable in one country may have a totally different meaning in another.
Additionally, some words may have a completely different meaning in another language, unfortunate meanings after translations or do not translate from one language to another at all.
Example 11: Swedish company Electrolux had discontinue using its slogan in the USA which read ‘Nothing sucks like Electrolux’ as the translation was culturally inappropriate.
Example 12: When KFC entered into China with its famous slogan ‘Finger licking good’, the translation turned out to be ‘Eat your fingers off’.
h. Cultural exports. Cultural exports mean the commercial transfer of ideas and values from one country to another. Both cultural goods and cultural services can be exported throughout the world to bring commercial opportunities for businesses. And both Westerners and Easterners export cultural norms and values. Trade in cultural exports has grown exponentially as a result of freer international trade and caused by growth in globalization.
Business must consider cultural differences between different countries and regions of the world when selling cultural exports. Careful understanding of different cultures is required to ensure the success as the export of cultural values will affect the local populations. This will have implications for the development of a country as cultural exports can even cause economic, cultural and social reforms.
Example 13: USA: fast-food along with drive-through outlets, Hollywood movies thanks to satellite TV and the Internet, sports apparel such as T-shirts and sneakers, and Halloween.
Example 14: India: Bollywood movies and curry chicken.
Example 15: Japan: sushi and adult videos.
Example 16: France: the French wine.
Example 17: The UK: British education and Harry Potter books helping to make J.K. Rowling the world’s first author to earn more than USD$1billion.
6. DIFFERENCES IN BUSINESS PRACTICES
a. Setting up the business. The ease of setting up a limited company varies widely between countries. It can take as short as a few days in the UK or Singapore, up to more than a year in some African countries. Companies thinking of expanding abroad need to keep up to date with formalities, business practices and legal changes. Businesses operating in foreign countries may be asked to analyze, evaluate and change their business strategy any time.
b. Payment terms. The usual amount of time to receive payments from customers and to pay suppliers may vary in different countries. It is always useful to make specific references between your home country and other countries.
c. Accounting standards. Accounting rules, accounting techniques and accounting standards may not be identical in different parts of the world. Other differences related to accounting relate to company ownership structure, legal documentation to report company transactions and the length of time financial paperwork must be stored in the business.
d. Product adaptations. Adapting products to fit in with local, national and regional needs may turn out to be necessary, but it can be costly. Obviously, it is easier and cheaper to have only one product under one brand name and with the same Marketing Mix to fit all markets. Ideally, businesses need to cater for local consumer tastes, whilst trying to benefit from economies of scale from operating in international markets.
e. TAX laws. TAX laws differ from country to country. These for sure will be very different from the TAX controls in the business’s home country. That is why before a business organization makes a decision to enter any foreign markets, it must make sure that it is aware of different types of TAXes when conducting business to satisfy the laws of the countries it is looking to expand into. Such differences in TAXation can affect the way in which a business produces and markets its products. Because TAXes increase the costs of running a business organization, it is important to know well in advance how much profit can be made.
7. DIFFERENCES IN INFRASTRUCTURE
a. Transportation networks. Stage of development of the country’s transportation networks has an impact on international marketing. It is because channels of distribution rely heavily on transportation networks such as railways, airports and airplanes and sea routes and seaports. The better the transportation networks the faster, cheaper and more convenient it is to do business in that country. The worse the transportation networks the slower, more expensive and less convenient it is to do business in that country.
b. Technological advancement. Communications technologies in foreign countries are also important as more and more companies use E-Commerce for distributing their products. Also, international marketers can use social media such as Facebook and Twitter to take orders from customers, provide customer service and collect feedback. Some countries restrict or ban access to certain social media websites and websites.
8. DIFFERENCES IN MARKET KNOWLEDGE
a. Missing knowledge. When a business enters into a new market abroad for the first time, it certainly does not know that market very well. Nor do customers in that market know the business and its brand image or have any customer loyalty. Missing knowledge might include things such as tastes and preferences of customers, sources of media for promotion, channels of distribution competitors, etc. The more of the ‘missing’ knowledge the business has, the more difficult it is going to be to reach target customers.
b. Knowledge required. A business required market knowledge in order to conduct successful business operations. The knowledge required to make good business decisions includes mainly features of markets such as: market growth, customer base, market size, market location, competition, barriers to entry, market share, etc. The market situation and market problems need to be fully understood if a business is to succeed when entering a new market in another country.
Example 18: A leading supermarket retailer Tesco has been very successful in its home market in the UK, but failed to succeed in entering many foreign markets.
In summary, the biggest difference between domestic marketing and international marketing is the consideration for cultural diversity. Businesses marketing their products overseas need to appreciate and respect cultural differences. This is an important element of success for marketers with international ambitions.
As the world continues to globalize at a fast pace, it is useful to remember the saying, ‘When in Rome, do as the Romans do’. A deep understanding and strong awareness of different cultures as well as adaptation of marketing to local markets can give companies a competitive advantage in a globally competitive business world.
Some of the solutions to problems caused by differences in international marketing include appointing local staff, solving problems through thorough market research or moving production facilities abroad.
