INTERNATIONAL MARKETING

What is Marketing?

Marketing is defined as a process by which the producer and final consumer are linked together.  Thus the above definition of Marketing has got two points.

1.    Producer

2.    Consumer

Producer                                                          Consumer

                               Marketing

The producer manufactures a product to satisfy specific needs/wants of a consumer.  The process by which these products are made to reach the consumer is called as Marketing.

            Marketing deals with markets.  A Market is a place where buyers and sellers meet.  The following are the activities that usually takes place during marketing.

1.    Merchandising: Buying and selling

2.    Physical Distribution:  Transpiration and warehousing (warehouse: Building for storing goods before distribution to retailers. A store house).

3.    Facilitation:  Financing, risk bearing, standardization, sales promotion, Marketing Research etc.

What is international Marketing?

            Marketing activities carried across national boundaries is called as International Marketing.  It is also defined as flow of goods and services across the boundaries from one country to another’s.

            In other words, all the marketing activities such as buying, selling ,transportation warehousing, financing, risk bearing, pricing, standardization, advertising and sales promotion when performed in foreign markets across national border is called as international marketing.  Hence international marketing can be country to another.

            Some anthers observe that international marketing has got two main domains namely

1.    Foreign Marketing:  Marketing with in foreign countries.

2.    Global Marketing:  Co- coordinating marketing in multiple markets, in the face of global Competition.

            Hence international Marketing deals with globalization of business.

International trade, International Marketing and International Business

Before we proceed further it is very essential to know the shades of difference of meaning between the terms:  International trade, International Marketing and International Business.

No two nations are alike.  (For. eg) Tea plantation is very abundant in Sri Lanka. Wood is very famous in Malaysia.  These two items namely tea and wood are scarce in Maldives.  But on the other hand, Maldives is very famous for Tourism and Fisheries. This difference of scarcity between nations lays the foundation for international trade.  This scarcity between Nations/Countries forms the driving force for international trade between nations.  Hence international trade includes import and export of goods across countries.

The Marketing process which takes place during the international trade between two nations is called as International Marketing.

International business includes any type of business activity that crosses international borders.  Thus international business is broader than international trade and international Marketing.

The nature of Global Marketing:

The world today has become a global village.  This is because of the availability of the internet facilities.  The flow of information between the countries / continents is not only easy but also very fast.  This fast flow of information across the globe has led to the shrinkage of world space.  The world has now become a global village.  This phenomenon is called as globalization.

Because of the internet facilities, consumers across the world are increasingly becoming global in their shopping.

A patient for example in Maldives can log on to the internet and get details about the disease, treatment, hospitals and doctors known for the treatment of that particular disease, the cost in different hospitals in India.  Hence the consumer is not only aware of what is happening in the domestic market but he is also well aware of what is happening in international market.  In short, consumer has become global.

This Globalization has made business environment increasingly global even for domestic firms. The Mayor competition which many firms encounter in the home market now, for instance, is from foreign firms - Multinational Companies (MNC’S).

            Faced with the growing global Competition a number of companies have bought about highly commendable improvements in their operations and marketing strategies.  In other words, their operations and marketing strategies have also come very close to achieving global standards.  This is one of the major advantage brought about by - Globalization - quantity improvement in business procedures done domestically.

Special problems in International business (Or) Important features of International business

Some people talk about differences between domestic marketing and international marketing.  But the fact is, there is no actual difference between these two.  The principles of marketing does not change.  It is universal.  What are referred to by some people as differences are actually special problems or features of international marketing.

            What makes international business strategy different from the domestic is differences in business environment.  The important special problems encountered in international business are as follows.

1.    Political and legal differences:  The political and legal environment of foreign markets is different from that of domestic market.  The best example for this are MNC’S.  They do business in many countries.  Hence they encounter different political and legal systems in each country.  It does not remain same or constant throughout the world.  This may pose serious problem to international business.

2.    Cultural differences:  Let us imagine a company doing export and import business between Maldives and India.  Maldives is a Muslim country where as India is a country that follows Hinduism.  The culture experienced in both the countries is entirely different and this may pose a great problem for the smooth functioning of business.

3.    Differences in currency unit:  The currency Unit varies from nation to nation.  Let us imagine a MNC doing business between two countries namely Maldives and USA.  In Maldives the currency Unit is Rufiyaa where as in USA it is dollars.  The unit of this currency also greatly varies 12.85 Moldavian Rufiyaa is equivalent to us dollar.  This difference of currency Unit creates a great problem for the functioning of business.

4.    Difference of language:  An international Company often encounters problems arising out of differences in language.  In Maldives people speak Dhivehi, where as in USA it is English.  Hence there is a problem of understanding the language.  Many MNC companies which function in various regions of the world have effectively solved this problem by appointing a linguist in their organisation.  A linguist is a person who is skilled in foreign languages.

5.    Differences in the Marketing Infrastructure:  The nature of marketing facilities available in different countries may vary greatly.  (For eg.) An advertising medium that is very effective in one market may not be equally effective in another market.  The best example for this Maldives and India.  In India, print media (Newspaper) is a very effective way of advertising.  But the same advertising media if followed in Maldives would prove disastrous.  In Maldives most of the people watch TVM channel rather than read newspaper.  Hence using television in ad campaigns is more effective in Maldives rather than print media.

6.    Trade and investment restrictions:  Trade and investment restrictions are very important problems in international business.  (For eg.) Use of alcoholic drinks in Maldives is prohibited. Hence liquor trade with Maldives may not be very profitable.  On the other hand Maldivians use lot of perfume.  Hence perfume trade in Maldives can be very profitable business.

7.    High Cost of distance:  When the markets are a away by distance, the transport cost becomes high and the time required for effecting delivery tends to become larger.

8.    Differences in business practices:  Trade and other business practices and customs may differ between markets.

A Special note on Cultural differences in International Marketing

            One of the most common aspects of International Marketing is Culture.  International Marketing is conducting business across national boundaries.  Hence, going across national boundaries means dealing with different cultures.

            Multi - National Companies which have their operations in different countries face the problem of cultural differences that exist between various Nations.

            An extensive study on the impact of difference of culture in international Marketing is studied by Hofsteds.  His studies are base in an organisation called IBM – a Multinational software company which operates throughout the world in 50 countries in three regions.  The three regions are

A  The Arab region:  Consisting of Egypt, Iraq, Kuwait, Lebanon, Saudi Arabia.

A  The East African region:  Consisting of Ethiopia, Kenya, Tanzania, Zambia.

A  The West African region:  Consisting of Ghana, Nigeria etc.

            Hofsted investigated the values held by 1,16,000 employees of IBM ranging from unskilled workers to professionals.

            Hofsted sorted the findings derived from his questionnaire into four dimension.

a.         Power Distance

b.        Uncertainty avoidance

c.         Individualism versus collectivism

d.        Masculinity versus feminity

a.  Power distance:

            When power distances are relatively high, Organisational hierarchy are more respected.  In the Organisations with greater power distance, Managers take decisions autocratically.  They don’t consult with their sub-ordinates or with their boss to take a decision for the organisation.

            In cultures where power distances are relatively low, decentralization is common and subordinates are consulted.

            The table 1 shows that power distance Index are greatest in Malaysia and least in Austria.  The PDI Score in Malaysia is 104 where as it is least in Austria.  Hence in Malaysia the work culture is very boss centered.  In Austria it is employee friendly.

  

b.  Uncertainty about the future:

Uncertainty avoidance, means accepting ‘Uncertainty about the future’

            In cultures, that have higher needs to avoid uncertainty; people suffer from higher anxiety and job stress.  They take only very less risk on job.  Hence, in such work cultures, innovation is considered very dangerous.  Change in organisation is usually resisted.

            The table 2 shows the Uncertainty avoidance index (UAI) of various Courtiers.

The table 2 shows that need to avoid uncertainty are greatest in Greece and least in Singapore.

c.  Individualism Versus Collectivism:

            This dimension describes the relationship between the individual and the group to which he/she belongs.  In individualist culture, competition is expected and considered healthy.  Individual decisions are valued more than the group decisions. (Individualism)

            In the more collectivist culture, group interests prevail over individual interests and the individual derives his social identity from the groups of which he she is a member.  The relationship between employer and employee is perceived in moral terms, like a family link. (Collectivism)

(Table: 3 give the individualism index (IDV) values for 50 countries.)

From the table it is clear that IDV score of USA is 91 where as it is least in Guatemala the score being 6. Hence the work culture in country like USA is individualistic in nature.

d.  Masculinity Versus Feminity:

            In the more masculine culture, material success and progress are dominant ideas.  Sex roles are sharply differentiated.  Men are supposed to be competitive and assertive, women tender and able to take care of relationship.  In organisation with feminine culture, achievement is measured in terms of human contacts rather than power and property.

Important:  Sex roles are less differentiated and both men and women are found in the highest ranks in all professions.

Table: 4 shows the Masculinity index (MAS) Values for 50 countries.

From the table it is clear that countries like Japan, Austria and Venezuela have high MAS values.  These countries exhibit very high level of sex differentiated roles at work.  On the other hand, countries like Sweden, Norway exhibit very low MAS values of 5 and 8 respectively.  This shows that sex differentiated roles in countries like Sweden is very low.

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