What Factors Encourage Organisations To Internationalise Marketing Essay

In today’s competitive global environment, being competitive is a process rather than a particular situation. Maintaining competitiveness requires a continuous improvement of the strategic advantage of the company in terms of products, markets, technologies, business image and executives’quality. The international dimensions, nowadays, affect all business and individual marketing decisions.

Just as the domestic market, international market has also in turn quite a particular environment. This environment often differs because it is characterized by conditions other than the local ones. For this very reason, the marketing executive should always carefully analyze the international market before taking major marketing decisions marketing.

In all cases, a marketing executive should start from the outset that the general state of the environment is usually pretty much different in the international market and as a result it should be calculated how much this difference would affect the strategic marketing decisions.

The main variables of the environment which are not usually not under the control or influence of a company are the following:

The Economic Environment. The various foreign markets may differ greatly in relation to the stage of their economic development. So it is important to determine the level of economic development of the countries where the business seeks to operate, since economic development defines the nature and the kind of needs to be met.

Based on the criterion of industrial structure, the economies of different countries can be distinguished as follows:

First, economic self-sufficiency. This economic stage is characterized from self-satisfaction of the needs of primary agricultural products.

Second, economy which is based on exporting raw materials. Here, the economy of a country is based on the extraction of raw materials (ores,oil, etc..) or in the production of agricultural products (coffee,tea, bananas, cotton, etc.).

Third, developing economy. Here, the processing industries have an important economic role.

Fourth, developed economy. It is characterized by the fact that exports of industrial or consumer products to other countries are highly developed.

The Social and Cultural Environment. The social and cultural environment that significantly affects consumer behavior and directly affects the design of the marketing program can only have a significant importance in the field of international marketing. This is because the socio – cultural environment is associated with all

values, beliefs and symbolic meanings conveyed by one generation to another and may change very slowly over time.

Moreover it should not be overlooked when analyzing the different markets abroad that in them ,particular cultural subsystems appear, such as the special cultural background of today’s modern cities .

The Political and Legal Environment. The political and legal factors prevailing in a country strongly influence the decisions taken in international marketing.

The political system that exists in a country is very important. Today, with the

collapse of regimes in the former Eastern bloc, the existing political systems in different countries tend to have a greater uniformity.

The following should also be carefully examined:

First in several countries the involvement of government in economic life is too big, and secondly, in many countries there is great economic instability which makes international marketing a risky venture.

The governments of different countries affect the activities of marketing with following ways:

– By setting duties or other taxes on imports

– By establishing quotas or other restrictions on imports of many products

– By placing restrictions on foreign exchange

– Setting higher prices on products sold within the country’s products.

In some cases, governments of various countries offer incentives for foreign companies to invest in other countries but they impede the operation of foreign companies. Also political unrest or changes may pose risks or opportunities

to foreign investors.

The differences in the political context and climate among countries are reflected

eventually in their legislation. A multinational company must address the legal factors at three levels. The first level refers to legislation that exists in the country where the company is based on.

The second level refers to the national laws of countries and the third level concerns the law which is shaped internationally particularly in political and economic blocs (such as the EU)

MARKETING FOR THE INTERNATIONAL STRATEGY OF A COMPANY AND INTERNATIONALIZATION TRENDS

Increasing globalization means that companies exploit global opportunities whenever and wherever they arise, and reap benefits such as economies of scale in production. As Levitt suggested «the world is becoming a common market where people – wherever they live – want the same product and lifestyle. »

Behind this attitude to globalization, there are the concerns,views and attitudes of more and more educated, well knowledgeable citizens and customers affected by increasing and more sophisticated pressure groups and are inundated with information from the mass media whose international scale and speed of coverage is almost terrifying.

From management’s perspective, the concerns of citizens in the world that constantly changes, are the most fundamental changes in all. They are certainly the most critical in corporate partnerships. Technology has many achievements, but in open societies “consumers” are those that finally “decide” how it will be used. Even the greatest companies compete to understand and respond to the needs and aspirations of consumers. For example, this task is even more complicated in view of the reduction of the power of advertising regarding the influence of the competitive behavior of consumers.

The rising costs of time and space in the media, the increased segmentation of their public and the intensification of competition for getting the attention of the public, all have contributed to a growing realization that we can no longer rely solely on advertising to bring the results which seemed possible in the decades of 1960 and

1970 (Kotler 1986: 14).

The phenomenon of internationalization varies more and more – by connecting a larger number of industries as well as a greater range of countries as a source of attracting foreign direct investment. For example, while in the past internationalization was limited mainly to process companies, recent trends indicate an increasing rate of internationalization of service companies in the advertising, banking, consulting and insurance sectors.

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THE DECISION TO INTERNATIONALIZE

A critical question is when a company needs to do export and who will help it. A firm will export if:

€ – it expects sales growth with its entry in the foreign market.

its international will increase production, thereby its costs will be reduced and the company will have economies of scale.

the€ competition can be confronted.

It has the ability to export products because they are in great€  demand abroad.

The product prices abroad are much higher than the corresponding ones in the domestic Market.

MARKET ENTRY

The entry of a business in the international market is a process that has the following

stages:

1. The decision to internationalize. Before a company decides to internationalize, it must weigh the risks of this action. It is the stage where companies need to do

calculate the costs of product prices and their potential market opportunities. This way, they will assess the potential of the new market, will make forecast about future sales and will eventually decide to internationalize or not.

2. Decision for specific markets. When the company decides to entry into foreign markets, it should set the international goals and marketing strategies to follow. The choice of countries depends on the product, geographical and other factors, population’s income but also on the preference of top management.

3. Decision on how to enter a foreign market.The main options are:

A) Indirect export. The simplest way of exporting is to use a specialized exporter or agent. The operational risk for the company is usually very small and the whole

engagement is achieved with relatively little capital investment

B) Direct export. The company in the case of direct exports carries its own export processes. This policy can be become more profitable for the export business, if it increases sales abroad to a greater extent than the cost of having export partners. Direct export is usually done by a collaboration with a number of intermediaries who are in the internaltion market, or by setting up a sales branch of the parent company that can replace the operations of a merchant.

Production abroad. There are the following alternative solutions:

1.Licensing. It is an agreement between foreign and home business, whereas the first offers to the second the right to uses a patent etc. in exchange with some reward.

2. Franchising. According to it, a parent company called “franchisor” gives the

right to a subsidiary unit called “licensee” to sell (or produce) products or services, to

use its name and adopt its policies in a specific region.

3.Provide expertise to producers abroad. This is an alternative way for the company to come into contact with one or more manufacturers operating in markets abroad, that have been selected as a target. These firms get the authorization and knowledge to produce, distribute and maintain a particular product.

4. Production through own production facilities. Many times a business prefers to meet a market abroad by its own production facilities. This new production unit may belong solely to the company, which tries thereby to achieve an export of its product

and know-how, or it can be done with the participation of producers or funds from the international market.

5. The custom€ – production. The company, in this case, gives orders to another company that is on the market abroad and which is interested in producing a specific

quantity of its product, renting, therefore its factories abroad, while it remains responsible for general marketing support.

6. Production in cooperation. The export business agrees with another company in the target country for the production and marketing of its products on a common cooperation basis.

Decision on the marketing program that will be followed.

There are two major but interesting aspects of the marketing program required for the export process. One aspect concerns the use of a standardized marketing mix worldwide. This means standardizing the product, the distribution networks, etc.. The other aspect refers to the adaptation of the marketing mix in each target -market. These are the cases when a different approach to consumers is required because they, for various reasons,need a differentiated product.

DESIGN OF INTERNATIONAL MARKETING PROGRAMS

Product

The marketers should take into consideration four factors when they design products (or services) for the global market. These are the preferences of consumers, costs, regulations and compliance. The attitude of consumers in the country of origin must be taken into account as well.

There are five strategies that can be applied by companies that pursue a geographic expansion: a) expansion of product / services, b) product expansion – adaptation of communication, c) product adaptation – extension of communication, d) double adaptation e) product creation.

Price

The pricing decisions should take into account internal factors such as costs of production and distribution, and external factors such as exchange rates, inflation, taxation, competition and demand.

Generally, companies use three ways of pricing: the rigid cost-plus pricing, a flexible cost-plus pricing and dynamic incremental pricing.

In rigid cost-plus pricing all costs incurred by the company until the product reaches the customer are calculated on the selling price of the product.

In flexible cost-plus pricing the same occurs but prices can vary depending on market conditions.

In dynamic incremental pricing (which is the method used by experienced in international marketing organizations), the basic idea is that a firm has fixed costs even if it operates internationally or not, so what should be taken into consideration is the variable and international marketing costs. In addition, an important issue, mainly for tax reasons, is the transfer pricing.

Distribution

The distribution decisions are more difficult to be obtained because of the complexity of distribution channels in different countries. The characteristics of the consumers, product, intermediates, etc. influence the design and distribution channel strategy.

Promotion

Although the marketer can ascertain opportunities for creating international advertising campaigns, it is usually necessary to localize or even create a purely local campaign. One good reason for a company to try to create an international campaign is that this makes it work harder to find a global market for its product. Moreover, this way the company is “forced” to better analyze the purchasing motivations of consumers.

Conclusions

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The rapid changes that have occurred in recent years in the international

technological, economic, cultural and political environment now put in danger many industries and countries which should make quickly the necessary changes in the new environment to be able to survive and adapt to the new realities of the global

market.

It is necessary for businesses to face the opportunities and risks entailed in the international environment to assimilate the principles of international marketing, principles that will contribute decisively to convert overseas markets into a source of profit, growth, experience, technological progress and satisfaction.

As businesses adapt to new conditions so their strategy should be adjusted, which should meet the needs of the global market by offering high quality products and services in order to be able to differentiate from its competitors.

While the basic features of marketing are the same, there are usually greater difficulties in implementing the international marketing program because of the increased complexity of the environment. The export and international businesses must be able to understand these complexities to be able to plan, prepare and apply the most effective marketing mix.

One of the key questions is whether and to what extent the firms should diversify or adapt their product to respond in the best way to the needs of foreign consumers. The best response might be the continuous assessment of the effective product policy in relation to the business goals.

In the case of a branded product, the company is able to use the same brand worldwide, with some variations in certain foreign markets, different names in

each of the markets, and finally, a business brand “umbrella” for all products abroad. Some of the important problems the international arena are piracy product names

or a variety of unfair practices.

On the other hand, these services include certain features such as their intangible

character, their failure to store or transport and the need to do simultaneously their distribution together with their production. Services have more problems than physical goods in their promotion in the international market. The main difficulties are associated with the inability of complete standardization in their production and the economies of scale involved.

Pricing decisions play an important role in the export marketing program.The general rule is that long-term export prices will have to outweigh the various costs, by taking always into consideration the competitive prices.

The pricing policy in the international arena faces many specific problems arising from the different competitive and cultural conditions in different countries. That is why the company should monitor closely the market, competition, operational costs and the legal framework that can affect its pricing strategy.

International communication includes international advertising, promotion, personal sales and public relations. An important decision for the international advertisers is whether or not to adopt a standardized campaign at international level without any major adjustments.Local differences and the absence of market data require additional attention.

Public relations aim at communicating the business image to different target audiences and to address any negative issues for the company , its products or policy in different international markets.

The last element of the marketing mix is place. The possibility of penetrating foreign markets is closely linked to the effective selection and management of the distribution channel. The interdependence relationship required in a channel demands minimum

cooperation from its members to achieve the goals of the marketing program. The complexity and the large number of intermediaries interfered in an international channel make the need for cooperation a determinant factor.