The Scope of International Marketing - Importance in The Global Arena

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The Scope of International Marketing

1The Scope of International Marketing – Importance in the


Global Arena

International Marketing Leads to Peace Among Nations

All the activities associated with a business like – development, production, and
marketing, especially in case of high-tech products, involves people from
around the world to work together. Moreover, companies as a part of employee
interactions enable people from all countries to meet face-to-face for both
recreation and commerce. All this interaction leads to not just the mutual gain
associated with business relationships but also personal relationships and
mutual understanding. The latter are the foundation of global peace and
prosperity and widen the scope of International Marketing. e.g. Mobile Phone
Companies deploy different functions of their business in different parts of the
world – say manufacturing in China, R & D in London and sales teams across
the globe. In order to work as a team and drive a single agenda, the teams
interact with each other frequently and occasionally meet for important
agendas.

Global Markets Reduce Risk and Open Opportunities

Scope of International Marketing increases with global markets opening up for


business. At times manufacturing a product in a country can be much cost-
effective and the nation becomes the hub of all exports. e.g. Huge portion of all
consumer products sold globally is manufactured in China.

Global brands rake in significant portion of their revenues from outside their
parent country. Below is the example of few US-based companies and how they
widened the scope of International Marketing.
Factors Affecting the Scope of International Marketing

Of all the events and trends affecting global business today, four stand out as
the most dynamic, the ones that will influence the shape of international
business:

1. The rapid growth of the World Trade Organization and regional free
trade areas such as the North American Free Trade Area and the
European Union.
2. The trend toward the acceptance of the free market system among
developing countries in Latin America, Asia, and eastern Europe.
3. The burgeoning impact of the Internet, mobile phones, and other
global media on the dissolution of national borders.
4. The mandate to manage the resources and global environment
properly for the generations to come.

2The Scope of International Marketing – Major Types of


Businesses

Imports

This is the easiest form of International Marketing a company can get into –
Importing from one country and selling in the domestic market. This is possible
only in a scenario where there is demand in the domestic market for the
imported goods or services. Companies also localise the imported product
depending on the needs of the market.

Exports

Opposite of Importing and selling, companies export their finalized products to


international markets or on to their other franchises in far off markets where
they can sell the products to their localities for generating huge revenues.
Contractual Agreements

Whenever, business moves beyond their domestic boundaries, its scope of


international marketing exposes it to greater chances of doing a lot more
business. The market expands, the consumer base expands and even volumes
and profits expand. Companies grow exponentially by getting into contractual
agreements with several other partners overseas.

Joint Venturing

Two brands can come together and enter a potential market. The investments,
profit or losses are pre decided in terms of both value and time period. At time
it is beneficial for companies to enter into a JV for raise the scope of
international marketing as a result of barrier to new entrants in foreign
markets. A local partner can prove to be immensely useful for doing business
not only operationally but also from a domestic understanding of the market
dynamics.

Fully Owned Manufacturing

Relatively a higher level of engagement in the foreign soils, companies can own
a fully owned manufacturing in a country. The company can use this facility to
sell products within the country or export to nearby nations. Owning a fully
owned manufacturing helps companies control quality.

International Marketing - Advantages


The attainment of business exercises monitoring, directing and controlling the channel
of a company’s products and services to its customers at the global level to earn profit
and satisfy the demands internationally is the motto of international marketing.
The main advantages of international marketing are discussed below −

Provides higher standard of living


International marketing ensures high standard life style & wealth to citizens of nations
participating in international marketing. Goods that cannot be produced in home
country due to certain geographical restrictions prevailing in the country are produced
by countries which have abundance of raw material required for the production and
also have no restrictions imposed towards production.

Ensures rational & optimum utilization of resources


Logical allocation of resource & ensuring their best use at the international level is one
of the major advantages of international marketing. It invites all the nations to export
whatever is available as surplus. For example, raw material, crude oil, consumer goods
& even machinery & services.

Rapid industrial growth


Demand for new goods is created through international market. This leads to growth in
industrial economy. Industrial development of a nation is guided by international
marketing. For example, new job opportunities, complete utilization of natural
resources, etc.

Benefits of comparative cost


International marketing ensures comparative cost benefits to all the participating
countries. These countries avail the benefits of division of labor & specialization at the
international level through international marketing.

International cooperation and world peace


Trade relations established through international marketing brings all the nations closer
to one another and gives them the chance to sort out their differences through mutual
understanding. This also encourages countries to work collaboratively with one
another. This thereby designs a cycle wherein developed countries help developing
countries in their developmental activities and this removes economic disparities and
technological gap between the countries.

Facilitates cultural exchange


International marketing makes social & cultural exchange possible between different
countries of the world. Along with the goods, the current trends and fashion followed in
one nation pass to another, thereby developing cultural relation among nations. Thus,
cultural integration is achieved at global level.

Better utilization of surplus production


Goods produced in surplus in one country are shipped to other countries that have the
need for the goods in international marketing. Thus, foreign exchange of products
between exporting country & importing countries meets the needs of each other. This
is only possible if all the participating countries effectively use surplus goods, service,
raw material, etc. In short, the major advantages of international marketing include
effective utilization of surplus domestic production, introduction of new varieties of
goods, improvement in the quality of production & promotion of mutual co-operation
among countries.

Availability of foreign exchange


International marketing eases the availability of foreign exchange required for importing
capital goods, modern technology & many more. Essential imports of items can be
sponsored by the foreign exchange earned due to exports.

Expansion of tertiary sector


International marketing promotes exports of goods from one country to another
encouraging industrial development. Infrastructure facilities are expanded through
international marketing. It indirectly facilitates the use of transport, banking, and
insurance in a country ensuring additional benefits to the national economy.

Special benefits at times of emergency


Whenever a country faces natural calamities like floods & famines, it is supported by
other countries in the international market. The international market provides
emergency supply of goods and services to meet urgent requirements of the country
facing the calamity. This distribution can only be facilitated by a country which has
surplus imports.
A company exporting goods to other foreign countries earns substantial profit through
export operation as domestic marketing is less profitable than international marketing.
The loss a company suffers in domestic marketing can be compensated from the profit
earned through exports in international marketing. Foreign exchange can be earned by
exporting goods to foreign countries. Thus, the profit earned can be used for the import
of essential goods, new machinery, technology, etc. This would further facilitate large-
scale export in future.
Difference Between Domestic and International Marketing

Marketing is
defined as the set of activities which are undertaken by the companies to
provide satisfaction to the customers through value addition and making good
relations with them, to increase their brand value. It identifies and converts
needs into products and services, so as to satisfy their wants. There are two
types of marketing namely, domestic and international marketing. Domestic
marketing is when commercialization of goods and services are limited to
the home country only.

On the other hand, International marketing, as the name suggests, is the


type of marketing which is stretched across several countries in the world, i.e.
the marketing of products and services is done globally. In this article excerpt
you can find the difference between domestic and international marketing in
detail.

Content: Domestic Marketing Vs International Marketing


1. Comparison Chart
2. Definition
3. Key Differences
4. Conclusion
Comparison Chart
BASIS FOR
DOMESTIC MARKETING INTERNATIONAL MARKETING
COMPARISON

Meaning Domestic marketing refers to International marketing means the activities of


marketing within the production, promotion, distribution, advertisement
geographical boundaries of and selling are extend over the geographical limits
the nation. of the country.

Area served Small Large

Government Less Comparatively high


interference

Business In a single country More than one country


operation

Use of Limited Sharing and use of latest technology.


technology

Risk factor Low Very high

Capital Less Huge


requirement

Nature of Almost same Variation in customer tastes and preferences.


customers

Research Required but not to a very Deep research of the market is required because of
high level. less knowledge about the foreign markets.

 Challenges to International Marketing


 American marketing executives can err by assuming that what people in other

countries want or need exactly matches the wants and needs of American consumers. It

can be a long and expensive process to gain the trust of consumers who have used

their own local companies' products for years or even generations. International

marketing also has potential for miscommunication due to variations in language and

culture.

Identifying a True Market Need

A key to success in business is offering products and services for which customers have

a compelling need. The customer has a problem that needs to be solved, and the

product or service provides the solution in such an effective way that its benefits are not

difficult to communicate. Identifying the true needs of large numbers of people in a

foreign country is not easy. Not having lived in their culture experiencing their day-to-

day lives, American marketing executives can err by assuming that what people in

other countries want or need exactly matches the wants and needs of American

consumers.

Dilution of Brand-Name Power

Due to the Internet, movies and other forms of entertainment, American culture and the

corporate symbols of that culture – brand names – are well known across the globe. This

does not mean the American companies' products will be popular when introduced in

other countries. Being aware of a brand name isn't the same as preferring it. It can be a

long and expensive process to gain the trust of consumers who have used their own

local companies' products for years or even generations. The American companies can

be perceived as attempting to take over the position long held by local companies,

causing resentment.

Cultural Nuance Differences

Consumers are influenced to purchase products by marketing messages delivered

through the media, including print media such as magazines. Humor is often used in

commercial messages to get the consumer to pay attention. But what is considered

extremely funny in one culture can be perceived as confusing or insulting in another.


To produce effective advertising requires more than accurate translation of the

message from one language to another. It requires a deep understanding of the culture,

customs, morals and even religious views that predominate in that country. What

motivates consumers to buy products varies from country to country.

Communication Style and Language Differences

Business executives from different countries can encounter several barriers to effective

communication besides obvious language differences. The traditional pace of business

negotiations can be different. Americans sometimes want to hurry negotiations along,

whereas in some other countries emphasis is placed on building relationships before a

business deal is seriously considered. Executives from other countries may place a

higher value on things such as facial expression instead of just the words that are being

said.

Distance and Time

Even with technologies such as video conferencing, executives in other countries may

prefer to establish relationships on a personal level. For a smaller American company,

this can mean a significant investment in travel costs and having key executives out of

the office for extended periods. Time zone differences can make it difficult to coordinate

projects where collaboration is required. Executives on the West Coast of the U.S. are

just getting to work in the morning when their European counterparts are winding down

for the day.

Finding Reliable Partners

American firms often establish relationships with distributors located in the countries

whose markets they are seeking to enter. They hire sales reps based in those countries.

They may engage local marketing and public relations firms to assist them. Because the

American firm might have no prior experience in that country, finding people who are

trustworthy and competent can be a challenge.

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