Unit 4: Marketing — 4.6 International Marketing
What is International Marketing?
International Marketing refers to the process by which firms plan and conduct transactions across national borders to satisfy the objectives of individuals and organizations. It involves identifying, anticipating, and fulfilling the needs and wants of customers in different countries.
Key difference:
Domestic marketing is confined to a single country.
International marketing targets customers in multiple countries, facing greater complexity, wider competition, and more adaptation.
Domestic marketing is confined to a single country.
International marketing targets customers in multiple countries, facing greater complexity, wider competition, and more adaptation.
Why Do Businesses Go International?
- Expand their customer base for growth.
- Diversify market risks.
- Access new sources of revenue and profit.
- Capitalize on economies of scale.
- Leverage unique products in new markets.
- Respond to global competition and trends.
Considerations & Challenges in International Marketing
- Cultural differences: Language, beliefs, customs, and social norms.
- Legal and regulatory issues: Trade laws, tariffs, taxes, and standards.
- Economic climate: Currency exchange, inflation, local income levels.
- Political stability and government policies.
- Logistics and distribution complexities.
- Ethics and social responsibility variations.
Strategies for International Marketing
| Strategy | Description | Example |
|---|---|---|
| Exporting | Producing goods in one country and selling them in another. | Apple iPhones made in China, sold worldwide. |
| Licensing & Franchising | Allowing a foreign company to produce/sell your product. | McDonald's, Starbucks franchises globally. |
| Joint Ventures | Partnering with local firms in target markets. | Spotify's joint ventures with telecom companies. |
| Direct Investment | Establishing owned facilities in foreign markets. | Toyota manufacturing plants in the US and Europe. |
Standardisation vs. Adaptation
Standardisation means offering the same marketing mix in all markets.
Adaptation means customising the marketing mix for each market.
Adaptation means customising the marketing mix for each market.
Decision factors:
- Nature of product
- Similarity of target markets
- Cost considerations
- Brand positioning strategy
- Nature of product
- Similarity of target markets
- Cost considerations
- Brand positioning strategy
| Standardisation | Adaptation | |
|---|---|---|
| Pros | Consistent brand, lower costs, easier control | Meets local needs, higher acceptance, competitive edge |
| Cons | Ignores local needs, may fail in diverse markets | Higher costs, complex operations |
The Ansoff Matrix in International Marketing
The Ansoff\ Matrix helps businesses decide their product/market strategy. Its four growth strategies are:
| Strategy | Market | Product |
|---|---|---|
| Market Penetration | Existing | Existing |
| Market Development | New | Existing |
| Product Development | Existing | New |
| Diversification | New | New |
Market\ Development in international marketing involves taking existing products into new international markets.
Global Branding & Positioning
- Global brands present a consistent image worldwide.
- Brand positioning may need to adapt slogans, product names or packaging for cultural resonance.
- Example: Coca-Cola uses the same logo globally but adapts advertising and flavors locally.
International Marketing Mix — 4Ps with Examples
- Product: Adapt product features to local tastes and standards (Nestlé's local flavors).
- Price: Adjust pricing for currency, income, and local competition.
- Place: Alter distribution strategies for different infrastructure or channel preferences.
- Promotion: Change marketing messages or media to fit cultural norms and languages.
Formulas & Metrics in International Marketing
- Market Share: Market\ Share = \frac{Firm's\ Sales\ in\ Market}{Total\ Market\ Sales} \times 100\%
- Market Growth Rate: Market\ Growth\ Rate = \frac{(Current\ Period\ Sales - Previous\ Period\ Sales)}{Previous\ Period\ Sales} \times 100\%
- Profit Margin: Profit\ Margin = \frac{Profit}{Revenue} \times 100\%
- Exchange Rate Impact (important for sales in different currencies): Revenue_{Local\ Currency} = Revenue_{Foreign\ Currency} \times Exchange\ Rate
Conclusion
International marketing opens up significant opportunities and new growth avenues for firms, but also adds layers of complexity. Understanding local markets, adapting strategies, and calculating risks versus rewards are key to global success in marketing.