International Marketing: Nature and Scope

Nature and Scope of International Marketing

• International marketing encompasses business activities directing a company's goods and services to consumers in multiple nations for profit, according to Cateora & Graham (2004).
• It involves applying marketing principles to satisfy diverse needs across national borders.
• International marketing addresses the 7Ps globally, directing the flow of goods and services to consumers worldwide for profit.
• A primary obstacle to success in international marketing is a person's Self-Reference Criterion in decision-making.

Market Segmentation

• Market segmentation is dividing a market into groups based on demographics, needs, priorities, common interests, and other behavioral criteria.
• Market segments can drive product development cycles by enabling targeted product offerings.
• The term "TARGET MARKET" refers to the specific segments a company aims to serve.
• The term "MARKET TARGETING" describes the process of selecting the target market after market segmentation.

Market Positioning

• Market positioning is a strategic tool used to establish a brand or product image in consumers' minds.
• Market positioning is achieved through the 7Ps.

Components of the Extended Marketing Mix (7Ps)

• Product: A product is a tangible or intangible commodity or service satisfying customer needs and wants.
• Companies use "Product Differentiation" to build brand image and value by distinguishing their products from competitors.
• Extensive research is crucial before product development to meet customer demand, with products having their own life cycle.
• Price: The price of a product is the amount paid by customers, deemed a critical element of a marketing plan that dictates a company's survival or profit.
• Factors to consider when setting prices include competitor pricing, list price, customer location, discounts, and terms of sale.
• Place: Place involves moving products from producer to user, focusing on how the product is brought and where it can be bought.
• "HOW" refers to the distribution channel (a reliable combination of middlemen).
• "WHERE" signifies the location for product positioning and distribution.
• Promotion: Promotion is a marketing communication process to acquaint customers with a product and publicize its features.
• Promotional methods include advertising, direct marketing, personal branding, and sales promotion.
• People: A company's employees are important in marketing because they deliver the service to clients.
• From a Human Resources Management (HRM) standpoint, people are the most critical asset.
• It’s important to select, hire, train, and compensate the right people to deliver good service.
• Process: Process refers to the flow of activities or mechanism in customer-business interactions.
• The ideal process takes the least time, costs less, and delivers maximum output.
• Electronic processes include barcodes, receipts, logos, and product information.
• Technological processes involve creating tangible products that meet customer needs and wants.
• Direct activities refer to distribution, sales, and customer reactions.
• Indirect activities are support actions before, during, or after service delivery.
• Physical Evidence: Physical evidence refers to the physical environment experienced by the customer.
• Physical evidence includes the design and layout of shops or websites.
• Branding is another aspect of physical evidence.
• Branding means that the name of the company easily comes to mind.

Marketing Process

• The marketing process involves understanding the customer, conducting research and development, identifying sales opportunities, and performing market research.
• A marketing plan is created.
• The marketing plan influences the product, price, promotion, and distribution strategies.
• Marketing actions includes advertising, sales force activities and physical distribution.
• The goal is to satisfy the customer

International Marketing Statistics

• Approximately 90% of Coca-Cola's operating income and 73% of revenue are generated outside the US.
• For Japanese companies, 85% of their potential is located outside Japan.
• For German and EU companies, 94% of their potential is outside Germany.
• Many companies operate globally, including Apple, Google, IBM, Microsoft, Walmart, Samsung, Vodafone, Amazon, ARLA Foods, and LEGO.

Reasons to Globalize

• Increase sales and profitability
• Enter new markets
• Create jobs
• Offset slow growth in your home market
• Outmaneuver competitors
• Enlarge the customer base
• Create economies of scale in production (cost advantage of increasing the output)
• Explore untapped markets with the power of the internet
• Make use of excess capacity off season
• Travel to new countries
• Sharing costs and risks between markets
• Extending a product life cycle
• Take advantage of less competitive markets.

Levels of International Marketing

• International/Export Marketing: The simplest level of marketing involvement, often called export marketing and where new entrants typically start.
• International marketing is based in a single HOME COUNTRY.
• Any importation or exportation qualifies as international marketing.
• Companies may import resources or export to generate revenues.
• Exporting is generally a low-risk approach to entering foreign markets.
• Products in the maturity stage might find new growth opportunities overseas.
• Exporting current products can be less risky and more profitable than developing new ones, which are more costly and time-consuming.
• Selling products in foreign markets during their "in-season" period to counter seasonal domestic demand.
• Less competition may exist overseas .
• Three Ways of Exporting
  • Indirect Exporting: Companies begin exporting through international marketing intermediaries, the intermediaries do the exporting.
  • International marketing intermediaries are domestic or foreign companies that assist exporters in finding foreign buyers, with little investment required.
  • Semi-Direct Exporting: Exporters initiate contact through agents, merchants, or manufacturers in their home country where the exporter resides.
    • Domestic agent intermediary that acts as an exporting department for several non-competing firms for trading.
    • Manufacturer's export agent (MEA) cater exclusively to manufacturing firms.
    • Export association act similar to DAI and MEA.
    • Piggyback exporting when a manufacturer handles non-competing complementary products.
  • Direct Exporting: When companies establish an export department to sell directly in foreign markets.
  • Conducting market research and establishing physical distribution.
  • Direct exporting requires greater investment and also carries a greater risk.
• Multinational Marketing: The second level, where multinational companies (MNCs) operate in multiple countries with foreign direct investment.
• MNCs have headquarters in the HOME COUNTRY and operate in various HOST COUNTRIES.
• MNCs may engage in exporting and importing, buying and selling licenses, and contract manufacturing.
• IN the Philippines, foreign investments may be establishing a domestic branch office (serves as extension of parent company).
• Philippine representative office (act as liaison office established to handle marketing, promotion for parent company)
• Via business association (corporation or partnership)
• Via local subsidiary (more than 50% owned by another company).
• Via joint venture with a local corporation
• Transnational Marketing: The third level is transnational marketing; transnational corporations (TNCs) operate in multiple countries. (more than 30 countries).
• Unlike multinationals, TNCs are decentralized, empowering local offices to make decisions adapting to local culture and demand.
• They can launch and make products not available in the home country.
• TNCs are able to gain more interest in the local markets, where they maintain their own systems. Showing a willingness to understand the culture of the area proves they are interested in understanding their consumer base and giving them a competitive advantage.
• Examples: Nestle, Apple, Starbucks.
• Global Marketing: The highest level of international business activity.
• Global companies maintain consistent branding regardless of the country of operation.
• Global businesses have worldwide operations without identifying with any specific home country, possessing their own unique identity.
• Examples: McDonald's, Philip Morris International, Toyota
• The primary objective of global companies is to achieve synergy in their overall operations.