The research essay focuses on International Marketing Strategies in international business context. Essay starts with an introduction to international market entry in brief and identifying possible motivations behind market expansion. Essay gives an overview of how a firm internationalizes its operations from an analysis of the social, political, business and competitive environments, to the development of strategies for entering international markets. The essay discusses international marketing strategies are implemented through advertising and marketing campaigns.
The main emphasis is placed on the effect on cultural differences, consumer behavior, and governments intervene in international business and how international marketing strategies can be used to overcome these barriers.
There are many attractions to international trade. The general concept has been that bigger the international trade coverage better market opportunity. Having broad-based trade and the ability provide value added services and products will result in high demand and increased profit. With the availability of advanced technology, improved transportation and communication facilities the world has become smaller, distance between countries have reduced making them closer more than ever before.
The Globalization has changed the way business is carried out in most part of the world. The commercial market place has become more and more competitive. As a result many companies looking for better opportunity not only in their respective local markets, but focusing on foreign markets. Due to all of above reasons companies have identified the market potential in foreign countries and rushing in to untapped markets to be the first enter in to these market, capitalize and establish themselves.
As suggested by Yeniyurt and Townsend, “… in order to maintain momentum, and relative position, firms must enter broader and more diverse set of markets” (2003).
Having said that, there are many barriers to international trade, these can be defined as cultural, geographical, lingual, political or any number of other barriers. International marketer should always consider these dissimilarities and address them correctly before venturing in to a new market. Some of the main factors that company must consider when expanding to a foreign market is, political stability, growth of economy and improved business environment of the targeted market. Sales potential can be determined by identifying Firm’s capability to learn and to adopt quickly, in-depth understanding of opportunities and threats, focus on most attractive market segments, strong relationship with reliable and qualified partners and distributors, professional and well trained local management and staff.
“International marketing is usually, as the name suggests, international, but rarely is it marketing. Especially for businesses in large and dominant economies, such as the USA, and perhaps former colonial powers, which tend not to market internationally but just sell what worked in the past back home. Marketing would require knowledge of other countries, but it often seems that there are more ignorance and ethnocentrism than actual marketing practice” (Jevons, 2000)
There are various processes that the company should follow when entering in to a new market such as; Identifying correct and suitable market through country, market, and segment screening process, determining the company’s potential in target market by assessing target market demand. Followed by determining appropriate marketing strategies, such as decisions on concentration verses diversification, whether to standardize or localize products as per target market, pricing policies, distributor & re-seller channel and finally advertising & promotional policies (Czinkota et al, 2003).
Even though company may have consider all the necessary aspects when entering in to a new market, many of the international marketers have found that culture has become ultimate barrier in International Business. For example: China has attracted many of Multi National Companies (MNCs). These MNCs are from various industries entered in to China as the country is considered to be one of the big emerging markets (BEMs) (Cui and Liu, 2000). While some of the companies were successful, “A number of well-known firms have scaled back or eventually withdrawn from this fabled market.” (Cui and Liu, 2000). This can be pointed out as companies not been able to understand and identify cross-cultural differences in foreign markets.
Thus understanding target market culture plays a major role in international marketing. Language and geography may be overcome; the ability to negotiate politically and the increased developments in terms of technology all decrease the levels of man barriers. However, these do not increase the ability of different cultures to understand each other, to appreciate and become closer as far as culture is understood. Understanding of a foreign language and their processes may still not be able close the gap in cultural differences. “Culture remains an elusive, multi-faceted dimension that difficult to harness and understand completely; in the most simplistic of terms, it is typically considered as a shared set of values and beliefs.” (Yeniyurt and Townsend, 2003). One of the first considerations must be the way in which any strategy is adopted internationally. For any product being sold the global environment will present many challenges due to the diversity of culture and social conditions and the variation in commercial structure already in place.
In order to understand cultural barriers, we must first define what we mean by culture differences. A Firm could enter in to any market if they were similar in terms of their characteristics such as cultural and religious beliefs, consumer behavior, customer needs and wants, tastes, product usage, and government rules and regulation, etc. (Czinkota et al, 2004). But all of the above-mentioned factors remain dissimilar from one market to another. It can be seen as the way in which as society or community works and when trying to define it may seem as intangible. It is also the total way of life and thinking patterns that are passed from generation to generation. It consists of norms, values, customs, art, and beliefs (Cui and Liu, 2000). Culture is the patterns of behavior and thinking that people living in social groups learn, create, and share.
Culture distinguishes one set of people from another. When traveling the world cultural differences can be seen between the various countries characteristics from the way that people talk to each other and the way that they relate to the world around them. This can also illustrate as commercial values as well as the religious background of the country. The culture represents the various aspects such as morals, ethics and the social structures and organizations (Cui and Liu, 2000). Therefore culture is wide and varied, but considering the amount of different aspects it covers we can see that it will also be easy to cause offence or communicate the wrong message if the culture is not correctly understood. By understanding cultural diversity can help firm’s to deploy appropriate marketing strategies, such as marketing and advertising campaigns.
When trying to identify correct and suitable marketing and advertising campaign it is important understand the target market. There are many ways that international market can be segmented. For example by purchasing power of the targeted consumers, cultural diversity and lifestyle (Cui and Liu, 2000). Segmentation also can be done by the cultural values or by any one of a number of other measures, which can include the different way that language is used. For example in United States or many western countries it is normal to use a very casual form of English. Such as slang and shortened words are acceptable not only in everyday language but in formal occasions and business settings. Other countries such as Japanese culture is different,
The typical Japanese consumer is extraordinarily sensitive to how a salesman says something, how an advertising pitch is written; if the language is not exactly right, the consumer will be rebuffed rather than attracted regardless of the product or service being sold. Due to the nature of the Japanese society and the Japanese language, both the seller and the consumer are exceptionally language conscious at all times (Herbig, n.d.)
In Japanese culture the native language is not so informal therefore, there is a great deal of value placed in the way language is used as well as the accents and terms used.
“A manufacturer ‘who does not take the necessary care not to offend me’ with his commercial, can not be relied on to be meticulous with its product (Herbig, n.d.).
There are many other more common cultural aspects which need to be recognized in order to prevent giving offence and ensure that a marketing campaign can be aimed at the right audience and be culturally acceptable.
There are also other cultural differences which may be seen as even more important than that of language, these may be social or religious values. In the case of religion it will normally be a macro environmental factor of the wider community influence the society to a greater degree. For example if we look to the differences that exist between many western predominately Christian countries as compare to the Muslim countries.
These differences will be noticeable in a variety of ways such as the portrayal of masculinity or femininity and the role of the genders in many societies, This may mean that the actual target groups to which a product needs to be marked may be different from one market to another. So that the entire marketing concept may need to be changed as the target group may need to be reformulated as well as the social differences needing to be amended for the marketplace (Cui and Liu, 2000). Therefore we can also see another categorization where the difference of the culture may influence the way in which the product can be successfully advertised
There are many different aspects that need to be considered when it comes to marketing. These include the use of brands and marketing, market placement of goods, and the larger barriers such as international and local trade laws. The development of branding is one area that has gained attention in international marketing. There are many examples of branding that has operated successfully with similar images that are designed to be culturally generic, such as Pepsi-Cola in United States and Japan, where there have been huge success with initial marketing campaigns that were accepted in both culture and later encountered major setback in subsequent campaigns.
To illustrate further on above example, the first campaign took place in 1988, when Coca-Cola was holding majority of market share in “Cola” market in Japan, Coke was holding 90% of the total market share (Cutler, 1998). During this period Pepsi started sponsoring the world wide “BAD” tour of Michael Jackson, which began in Tokyo, Japan and later tour continued in Australia, New Zealand and Europe (Cutler, 1998). The idea of brand endorsement by a celebrity spokesperson or sports star can be seen to be cross cultural, and as an international star the young were perceived by Pepsi as being attracted to Michael Jackson, in this case Pepsi marketing team judgment seems to be correct, as after Michel’s appearance in Japan and TV commercials, Pepsi sales in Japan were tripled (Cutler, 1998). This shows a true cross cultural marketing where similar or identical marketing campaign has been successfully carried out in two countries, where both the countries have vast differences in their cultural and social values. This can be defined as “celebrity influence on the behavioral intentions of teenagers and young generation” (Bush et al, 2004).
After their huge success in Asian countries, Pepsi launched similar campaign in Russia (Cutler, 1998). Even with many International barriers like older generation of Russians not favouring western music in general and also teenagers facing trouble finding his music tapes in local market place, Pepsi was able to overcome all the cultural barriers and reach 280 million of Russian market (Cutler, 1998). According to Pepsi spokesperson “Jackson fans and the soda drinkers are the same demographic segment around the world” (Cutler, 1998). Here we can form an argument that the cultural differences were minor enough for the same idea, adapted to local language, to be usable in both countries to good effect.
However, the next advertising campaign that Pepsi launched in Japan was not as successful as the previous campaign. Even though Pepsi followed the same marketing strategies by associating another celebrity icon (in this case it was M.C. Hammer), but the creative strategy of the advert was different. “Pepsi’s ad with M.C. Hammer comparing Pepsi to Coke was an attempt to go against the cultural grain; it was not successful and was subsequently pulled by Pepsi” (Herbig, n.d.). Although Japan’s Fair Trade Commission (FTC) during the late 1980s eased restrictions on comparative advertising, most Japanese companies and media networks have been reluctant to air them (Herbig, n.d.) From above given example it is evident that similar marketing strategy and marketing campaign may not work and acceptable across international borders all the time.
Considering that cultural dimension have a significant effect on the penetration rates of new products, it is recommended that managerial teams take into consideration the cross-cultural differences between groups when designing marketing plans for new products introductions (Yeniyurt and Townsend,
As in this case marketing strategy failed due to cultural differences in target market (in this case Japan). Therefore International marketer must aware of these kinds of risks and conduct proper market research and studies when expanding in to foreign markets. Here we can clearly see that the marketing message that was communicated in United States was not received in same manner due to cultural belief and local regulations in Japan, and it was interpreted in a different way.
Integrating local consumers’ attitudes and media usage patterns can help improve cost-effectiveness of marketing programs. Thus, MNCs need to “plan nationally and act locally” – focusing the overall market trend while paying attention to regional differences (Cui and Liu, 2000).
Cross cultural advertising can also be seen as occurring within a country, there are also many cultural groups within a single country and in many cases they may be lucrative niche markets or even mainstream markets, for example the fastest growing consumer group in the United States at the current time is seen as being the Hispanic market, and as such there are different family, social and organization values than that of the regular American customers.
Therefore a different emphasis can be placed on the products as well as the adverts to make them more attractive to certain cultural sections of a community, For example there are business management applications that are specifically designed and adapted for Hispanic market segment. These applications software-such as Accounting, Point of Sales and Customer Relationship Management-can support and function with not only English but Spanish language as well (ACCPAC International Inc, 2004.).
It is important to point out that most of the researches and practitioners have faced problems gathering relevant data when trying to identify cultural differences that effect international business. Also many of the researches were focused on specific markets segments and groups. In a large market such as China and India it may seem not very particle to conduct extensive market research. It’s evident from the research’s reports that most of these studies were focused on urban consumers in some of the big cities (Cui and Liu, 2000).
Despite all these differences company must remember what ever the product or service they are selling, there are some basic rules that can be seen as remaining the same. These can be defined as: Identification of clear marketing objectives based on target audiences and market segments. Company can gain a perspective on the differences as well as the similarities in order to be able to get a balance. The company does not need to forget al the lessons from one country or culture to sell to another, but it does need to be aware of the differences and be able to adapt and change it and remain successful in the global market as well as the local one. “International marketing is not a one-way street any more. It is at least two-way, and many would argue that it is increasingly becoming a Web” (Jevons, 2000)
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