Thursday, July 12, 2012

Marketing

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A firm’s international marketing program must generally be

modified and adapted to foreign markets. This international

marketing program uses strategies to accomplish its

marketing goals. Within each foreign nation, the firm is

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likely to find a combination of marketing environment and

target markets that are different from those of its own home

country and other foreign countries. It is important that in

international marketing, product, pricing, distribution and

promotional strategies be adapted accordingly. In order for

an international firm to function properly, cultural, social,

economic, and legal forces within the country must be

clearly understood. The task of International marketing is

more difficult and risky than expected by many firms.

One of the most controlling factors of international

marketing is management. It is very important for managers

to recognize the differences as well as similarities in buyer

behavior. Many mistakes can occur if managers fail to

realize that buyers differ from country to country. It is the

international differences in buyer behavior, rather than

similarities, which cause problems in successful international

marketing. An international marketing manager is a

manager responsible for facilitating the exchange of

products between the organization and its customers or

clients. Sometimes an international marketing manager will

find difficulties in completing the exchange of products.

Many surprises in international business are undesirable

human mistakes. An international corporation must fully

understand the foreign environment before pursuing

business matters. Problems constantly crop up and many

times have unexpected results. Sometimes these

unexpected results are unavoidable. Other times they are

avoidable. To be sure those avoidable situations do not

occur, international marketing managers must be aware of

cultural differences.

Cultural differences take place among most nations of the

world. Differences in culture are one of the most significant

factors in an international company. All nationalities posses

unique characteristics, which are unknown to many

foreigners. Many of the top international businesses are

unaware of these cultural differences. It is very important to

understand these cultures in order to market a product

successfully. As an example, different nationalities have

different beliefs on how business matters should take place.

Where some countries prefer to work with a deadline other

countries can take this as being offensive. Many countries

feel it is an insult to be asked to work under a set time

period. A country may feel that a deadline is threatening

and may feel backed into a corner. On the other hand,

other countries try to expedite matters by setting deadlines.

To be effective in a foreign market it is necessary to

understand the local customs. Knowing what to do in a

foreign country is as important as knowing what not to do.

Failure to understand local customs can lead to serious

misunderstandings between business people. The simple

rejection of a cup of coffee can lead to total confusion. The

decline of an invite is sometimes considered an affront. To

avoid making blunders, a person must be able to discern

the difference between what is acceptable behavior and

what is not acceptable behavior. Violations of a local

custom can be insulting, and can cause uncomfortable

situations. To be a successful manager of international

marketing, one must be able to discern the differences as to

what must and must not be done. It is almost impossible to

attain complete knowledge and understanding of a foreign

culture.

As established, culture plays an important role in the drama

of international marketing. Of all the cultural aspects,

communication may be the most critical. It is certain that

communication has been involved in a number of cultural

confusion. Good communication linkages must be set

between a company and its customers, suppliers, its

employees, and the governments of the countries where it

performs business activities. Poor communication can

obviously cause various difficulties. One source of difficulty

among starting companies is that of effective

communication with potential buyers. The problem is that

there are many possible communication barriers.

Sometimes messages can be translated incorrectly,

regulations overlooked, and economic differences can be

ignored. Other times when the message does arrive, its

ineffectiveness can cause it to be of no value. Every now

and then a buyer will receive the message, but to the

companies disappointment, the message was sent incorrect.

It is normal in multinational businesses to send and receive

messages on a regular basis. Many well-known people

have incapacitated public speech introductions by using

inaccurate titles and names. Not all communication

problems are verbal. Some serious problems have

occurred as a result of non-verbal communication.

Non-verbal communication exist in numerous forms.

Sometimes a person’s appearance can convey a stronger

message than intended. Untidy attire, for example, can be

more offensive in some nations than in others. The local

people often are willing to overlook most of the mistakes

made by tourist. On the other hand, locals are less tolerant

of the errors of business people. It is very important to be

able to interpret the different means of communication in

international marketing.

In America, we sometimes take for granted the display of

products on the market. However, in other nations such

product array and selection do not always exist. It is

important to understand that even if local customers can

afford a certain product, they may not always want it. If by

chance are interested, it may be only if it is substantially

modified to fit their local preferences and taste. These

adaptations exist in the form of product and package. The

alteration of a material product is sometimes required to

match the product to local taste and conditions. Adaptation

of the package is often needed to attract customers to the

product. Many times adaptation is also used to maintain a

product’s righteousness in a unique environment. A firm is

occasionally forced to modify both the product and the

package to create an appropriate product for the new

market. Some products may require more technical

modification than others may. Measurement systems vary

between countries, and often components need to be

adjusted to cleave to local standards. The need for product

adaptation has existed for many years. In 1857 England’s

East India Company possibly lost control of India because

it failed to modify a product it provided. A product may be

well acceptable in markets, but may not sell if housed in an

inappropriate package. Packages promote the product and

they protect it. International packaging must be able to

withstand the journey. Some countries have exported their

products only to witness the return of crushed and

half-empty containers. Packaging can sometimes bring

embarrassment to a company. Medical containers made in

the U.S. drew unwanted attention because they carried the

instructions Take off top and push in bottom. These

messages was harmless here in America, but were sexual

and humorous connotations to the British. Often the choice

of package and product is difficult. Sometimes companies

have failed to sell their products overseas because of the

packaging of a product. Each firm must determine the area

most appropriate for its product. Determining the region

where it is most appropriate to market a product is not an

easy task. Wherever the location of these places, they must

be found because market testing is essential in international

marketing.

Many countries maintain regulations concerning their

products and packages. Countries have expectations that

foreign marketers will adhere to the rules. Failure to abide

by the rules of a country can prove to be very costly. The

legal and political atmosphere varies across national

borders. Different countries have different legal policies.

There are laws to which a marketer must abide by when

marketing internationally. Some countries enact laws to

protect consumers or to preserve a competitive

atmosphere in the marketplace. Since many countries

maintain regulations concerning their products and

packages, the wording or color of a package can create

difficulties. In some countries giving gifts to authorities is a

standard business procedure. In other countries, such as

the United States, these gifts would be considered as

bribes or payoffs and are strictly illegal. If an error occurs it

can be costly, but with the appropriate alterations it can be

corrected. The General Agreement on Tariffs and Trade

(GATT) reforms imposes on national governments the

obligation to sacrifice local and state laws that protect

customers, and the environment. Plans were developed in

the mid-180s to broaden GATT’s mandate by extending

its police powers to the areas of foreign investment and

trade in services. If such reforms are enacted, GATT will

have the authority to remove barriers to foreign investment

and to override or knock out local laws for protecting a

nation’s insurance, brokerage, an banking businesses.

Removing local laws can definitely make the international

work place easier, when it comes to the legal aspect.

In the field of marketing, a product promotion can be the

most difficult. Timing is the most critical element in the

launching of a new product. Most firms understand this and

also perceive that varied peoples hold different conceptions

of time. Since some nationalities are more conscious of time

factors than others, extra time must often be allocated to

guarantee that everything is completed as schedule. An

international marketer can adopt several strategies

regarding its product and promotion. Marketing a product

internationally through a single promotional message

worldwide can be effective for products that have

standardized appeal for the majority of the people. Most

times this could be the least expensive strategy. When it is

hard to translate promotional messages or to adapt an

overall promotion to local customs, companies market one

product. This promotion is designed to market one product

but vary its promotions. Some products are well known

among the nation and need little advertising. The

advertisement can be on American influence located in

China. If a theme works exceedingly well in one country,

then it naturally becomes very tempting for a firm to want to

use it in another country. There is a big risk involved in

doing this, because admirable themes are culturally

oriented. For example, consider the very popular Marlboro

advertisements. The Marlboro man projects a strong

masculine image in America and in Europe. In Hong Kong,

attempts to use this advertisement were unsuccessful

because the urban people did not identify with horseback

riding in the countryside. Several firms have tried to use

old, reliable promotional methods in countries where they

simply do not work. Billboard advertisements, for example,

are perfectly legal in most parts of the Middle East, but it

does not mean one should use them. In some cases

companies have been know to advertise in the wrong

language. Such mistakes can cause major problems.

It is often the promotional strategy that creates mistakes.

The perception of the product characteristics plays an

important role in the international marketing strategy. One

must realize that the importance’s of a certain product traits

vary from country to country. Multinational corporations,

therefore, must consider varying promotional tactics.

Adapting the product but using the same promotional mix is

a strategy used when a product will not appeal to different

local tastes. For example an American cheese company

may need to use different ingredients when making cream

cheese for the markets of different countries. The most

expensive strategy is adapting to both the product and its

promotion. This strategy may be required when neither the

existing product nor its promotion would appeal to foreign

markets. In some cases, the international firm may develop

a completely new product for a foreign market. It can be

very costly to create a new product line for a foreign

market. The distribution strategy used sometimes depends

on the firm’s international organization. It does not matter if

it is licensing, exporting, or manufacturing in the host

country. International marketers use existing distribution

channels for the most part. Distribution channels link the

producer of a product to the consumer or industrial user.

This international marketing channel is sequence of

marketing organizations from nation to nation that directs

the flow of products. Most industrial products use shorter

channels.

One of the most basic levels of international marketing is

licensing. A license is a contractual agreement in which one

firm permits another to produce and market its product and

use its brand name in return for a royalty or other

compensation. This grant may be in the form of a direct

sale of rights or be limited to a certain period of time.

International licensing can be tied to joint ventures between

the parent and the subsidiary. For example, an American

candy manufacturer might enter into a licensing arrangement

with a British firm. The British producer would be entitled

to use the American firm’s candy formula, and packaging

to advertise the candy as though it were its own. The

advantage of licensing is that it provides a simple method of

expanding into a foreign market with no investment.

However, if the licensee does not maintain the licensor’s

product standards, the product’s image may be damaged.

Another disadvantage is that a licensing arrangement does

not usually provide the original producer with any foreign

marketing experience. Technology licensing is a

conceivable alternative to the exportation of finished

products through intermediaries or to the different types of

capital involvement, which could be chosen as an

international strategy. Many companies use intercompany

licenses to protect the intellectual property of the parent

company that is held by the subsidiary, and to allow for

payments by the subsidiary to the parent of certain license

fees. Licensing is also dependent upon product

characteristics. Products subject to rapid technological

change are also good licensing candidates. For most large

companies licensing is designed as a means to enter

secondary markets. The potential licensor must look at

legal and financial considerations. Many times the decision

to license has been made since the company has no other

alternative because the government restricts direct

investment through controls on foreign ownership or

because it restricts the development of marketing network

by a number of tariff barriers. Licensing allows the licensor

to enter into foreign markets with a low financial risk. The

decision to license is a complex one. Many licensing

relationships do not succeed because the parties fail to

understand each other’s agenda.

The creation of joint ventures sometimes prevents all the

problems encountered by a company when going overseas

from occurring. With the combined expertise and efforts of

local and foreign firms, many problems will be eliminated.

A joint venture is a partnership that is formed to achieve a

specific goal or to operate for a specific period of time.

International corporations may enter into joint ventures.

Most joint ventures were formed to share the extremely

high cost of exploring for offshore products. A company

should create a joint venture only after giving it some

consideration. Many problems occur when company’s fail

to thoroughly investigate potential partners. Licensing

decisions are as difficult to analyze as those decisions

involving the creation of a joint venture. Failure to make the

correct decisions at the right time can result in the loss of

substantial long-range business prospects and profits.

A firm can also manufacture its products in its home

country and export them for sale in foreign markets. Like

licensing, exporting can be a relatively low-risk method of

entering foreign markets. Unlike licensing, it is not an easy

task. Exporting opens up several levels of involvement to

the exporting firm. On the basic level, the exporting firm

may sill its products to an export/import merchant. This

merchant assumes all the risks of product ownership,

distribution, and sale. It may purchase the good’s in the

producer’s home country and assume responsibility for

exporting the product. The exporting firm may also ship its

products to an export/import agent. The export/import

agent arranges the sale of the products of foreign

intermediaries for a commission or fee. The agent is an

independent firm that sells and may perform other

marketing functions for the exporter. The exporter retains

title to the products during shipment and until they are sold.

An exporting firm may also establish its own sales offices in

foreign countries. These installations are international

extensions of the firm’s distribution system. The exporting

firm maintains control over sales, and it gains both

experience and knowledge of foreign markets. Eventually,

the firm may develop its own sales force to operate in

conjunction with foreign sales offices or branches.

Pricing is a very important factor in international business.

The pricing system more common in international marketing

is cost-based pricing. Cost-based pricing is not as popular

in domestic marketing as it is in international marketing.

Using this simple method of pricing, the seller first

determines the total cost of producing or purchasing one

unit of the product. The seller then adds the amount to

cover additional cost and profit. The cost added is called

the markup. The total cost of the markup is the selling price

of the product. Many smaller firms calculate the markup as

a percentage of their total cost. Markup pricing is easy to

apply, and it is used by most businesses. However, it has

two major flaws. The first is the difficulty of determining an

effective markup percentage. If this percentages too costly,

the product may be overpriced for its market. On the other

hand, if the markup percentage is too low, the seller is

giving away profit that could have earned simply by

assigning a higher price. In other words, the markup

percentage needs to be set to account for the working of

the market, and that is very difficult to do. The second

problem with markup pricing is that it separates pricing

from other business functions. The product is priced after

production quantities are decided upon, after cost are

incurred, and almost without regard for the market or the

marketing mix. To be effective, the various business

functions should be integrated.

The different types of pricing can vary in international

marketing. Geographic pricing strategies deal with delivery

cost. The seller may assume all delivery cost, no matter

where the buyer is located. The seller may share

transportation cost with the buyer to pay the greatest part

of delivery cost. When a foreign product enters a country,

there is a tax added to the cost. Import duties are designed

to protect specific domestic industries by raising the prices

of competing imported products. The importer first pays

most of the import duties. After the importer pays the price

it is then passed on to the customers through higher prices.

These higher prices are usually less competitive. The cost

of shipping and complying with other various regulations

can also add to the pricing method. Prices are also effected

by exchange rates, especially by changes in these rates.

Financial limitations are normally imposed through

exchange rates. It is required to convert local currency to

foreign currency at government-imposed exchange rates.

Because of the added cost and uncertainties in the

exchange rate, prices tend to be higher in foreign markets

than in domestic markets.

An important economic consideration is the distribution of

income. The distribution of income, especially discretionary

income, can widely vary from nation to nation.

Discretionary income is of particular interest to marketers

because consumers have more input in the spending of it.

Income creates purchasing power. International marketers

tend to concentrate on higher income countries as either

personal, disposable, or discretionary. For obvious

reasons, marketers tend to concentrate on higher income

countries. Some producers have found that their products

are more likely to sell in countries with low income. As in

domestic marketing, the determining factor is how well the

product satisfies its target market.

International marketing encompasses all business activities

that involve exchanges across national boundaries. A firm

may enter the international market for many reasons.

Whatever the reason international marketing can provide

and efficient way of entering the market. A firm’s marketing

program must be adapted to foreign markets to account for

differences in the business environment and target markets

form nation to nation. The marketing mix may require the

modification of cultural, social, economic, and legal

differences. Foreign marketing requires the understanding

of various additional costs, which tend to increase the

prices of exported goods. The marketing program of an

international company must adapt to the necessities of a

foreign market. The strategies it uses to accomplish a firm’s

marketing goal should be the main priority of the marketing

program. False assumptions frequently cause expensive

mistakes in the market. The importance of international

marketing

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