International Marketing

This article focuses on how organizations use international marketing to gain entry into foreign markets. In order to have a successful international marketing strategy, organizations adapt, manage, and oversee marketing campaigns in foreign locales. Most organizations that choose to venture into the international market tend to have two similar characteristics. Many organizations have contemplated going into the global marketplace in order to remain competitive and increase their growth. However, this move may not be for all companies. Each organization will need to conduct a SWOT analysis to determine if it should enter this arena. As more businesses seek global opportunities, marketing research that is timely and accurate is a requisite. Marketing researchers must be able to identify creative ways to use the new technologies in order to engage in activities that will assist their organization's marketing strategies.

Keywords Computer Assisted Personal Interviewing; Computer Assisted Telephone Interviewing; Developing Countries; Expatriates; Export Management Company; Information Flow; International Marketing; International Marketing Research; Localization Services; Mixed methodology; Qualitative Research; Quantitative Research; SWOT Analysis

Marketing > International Marketing

Overview

International marketing involves attempts by businesses to sell their products and services to consumers in another country. Although the concept of marketing is the same, an organization's marketing plan can be different based on the geographic location of the target market. Issues such as price, advertising, and distribution, tend to be different across geographic locations, and the marketing team will have to address them based on the demands of the various markets. In order to have a successful international marketing strategy, organizations will need to adapt, manage, and oversee a marketing campaign in a foreign territory. Most organizations that choose to venture into the international market tend to have two similar characteristics. They tend to go abroad to market products and services that they believe have a high potential to earn money in the specified foreign markets, and they have committed themselves to make an international presence.

Many organizations have contemplated going into the global marketplace in order to remain competitive and increase their growth. However, this move may not be for all companies. Each organization will need to conduct a SWOT analysis to determine if it should enter this arena. There are many factors to consider before embarking on such an endeavor. Lisle (n.d.) has provided a guideline to assist organizations with determining whether or not international marketing is an option. Each organization should research and respond to the following questions:

• Determine if the organization has advantages as compared to other possible entrants or existing organizations.

An organization may be able to overcome barriers to entry due to its uniqueness in the market. When an organization has an advantage over other possible entrants or existing competitors, it is the best time for market entry.

• Identify an unmet market need or underserved market niche.

Organizations will need to research and identify market niches that have not been discovered or are underserved. There may be a possibility that the organization can meet the need before competitors discover that it existed.

• Find the "Goldilocks" sized market.

Organizations should take the size of the market opportunity into consideration. Sometimes, the best market is one that is not too large or too small. It's safer to go with a market that is average size.

• Growing markets are advantageous so that an organization’s success does not have to come at the expense of other organizations.

A market’s growth rate is an important factor to consider; growing markets are easier to enter than those which are overcrowded. If there are too many players in the game, organizations will be forced to steal from each other in order to survive.

• Conduct a competitive analysis of each market under consideration.

The level of competition in the industry is an important factor. A perfect market would be one that has a customer base that is dependent on the industry's competitors, a large number of similar suppliers to the organization and its competitors so that the customers' bargaining power is low, an innovative industry with barriers to entry which lower the threat of substitute products and new competitors, and enough competitors and price elasticity so that competition would not be too high.

• Identify markets that are in a state of "disequilibrium."

When a market is in disequilibrium, it means that it is experiencing some type of change or transformation. Stagnant industries tend not to welcome new entrants, whereas, an industry seeking new solutions would provide opportunities for entry.

• Seek out dissatisfied customers with low switching costs.

Customer satisfaction is a hot issue in many industries. Although many organizations spend substantial amounts of money soliciting customers, they lack the personnel to maintain quality customer service. Therefore, opportunities rise for new entrants who can market their ability to service customers after the sale has been made.

• Understand that the customers' purchase decision is essential.

Organizations will need to research the potential markets to determine what would be successful. Unfortunately, many organizations have attempted to take a product's marketing campaign and product development to foreign countries only to fail. Different markets have different preferences. For example, a French manufacturer cannot utilize the process for its French facility to produce the same product in Germany. The German customer base may have a different set of needs and standards. Therefore, it would be best to determine what those needs are versus assuming the same process can be successfully duplicated in another country.

• Choose the more profitable of two markets.

If an organization has followed all of the above-mentioned steps and found two viable markets, it should enter the market that is the most profitable.

• Observe macro-level trends.

Organizations should consider "big picture" issues as reason to justify entering a market. For example, are there any themes involving baby-boomers, education and healthcare reform, or global warming? If so, gaining entry may be easier for an organization.

• Be aware of regulatory obligations.

Identify limitations on trade (i.e. tariffs). Some countries may offer better regulatory conditions than others.

• Identify the most attractive segment or segments.

Once an organization has identified the ideal market, it will need to be specific about which segments (i.e. in terms of product type, geography and customer type) are the most attractive.

The decision to go into international marketing must be made only after careful thought has been given to its viability, and organizations should weigh the advantages against the disadvantages. Although doing business internationally can yield great profits, there are some issues which need to be considered. First, cultural and language barriers may be a problem. "Language barriers may present an obstacle when trying to communicate the benefits and advantages of a company's products and services overseas" (Khan, 2005).

Economic and political risks are two additional concerns which need to be considered prior to entering into a foreign market. Organizations will have to research and determine the stability of the host country's government in order to make sure that there are no security threats, and if the foreign exchange is stable and whether there is a risk of not being paid for products and services.

"Developing the required organizational processes and allocating appropriate resources to an international effort often requires creating a separate export department within an organization that is responsible for all aspects of dealing with foreign markets" (Khan, 2005). Organizations will have to decide if it is best to establish the international business function internally or externally. It is important for organizations to assess their current workforce to determine if they will need to rely on expatriates to establish a presence in the host company or whether it is more feasible to hire employees from the host country in order to minimize cultural and language barriers.

If the organization elects to start internally, it may assign a team to set the budget, ship products and develop the international marketing plan. However, this can become expensive so the organization may evaluate two other options. One option is to hire employees from the host countries. Many organizations elect this option in order to minimize cultural and language barriers and secure labor that is cheaper than its current workforce. If the organization elects to hire employees from the host country, it is important that it assimilates these new hires into its corporate culture so that they will have an understanding of what the organization values and how it operates.

Another option is to use an export management company (EMC). EMCs are beneficial to a company entering the international market because they are organizations focused on this type of business. Such an organization can be a company's international marketing and sales initiative. Some important characteristics of a good EMC are it is a reputable organization with established international relationships and has access to key decision makers and buyers; it can provide localization services; and it has years of experience with negotiating with foreign governments and banks.

Application

International Marketing Strategies

"The growing integration of international markets as well as the growth of competition on a worldwide scale implies adoption of a global perspective in planning marketing strategy" (Agnihotri & Santhanam, n.d.). International market efforts take many forms. There are various strategies an organization may take once it has decided to enter the global market. Ways to enter a foreign market include:

• Exporting “Exporting is the marketing and direct sale of domestically-produced goods in another country, and is a traditional and established method of reaching foreign markets” (“Foreign market entry modes,” 2007). New companies tend to enter international markets through exporting. One reason may be because this type of entry does not require the organization to produce the goods in the targeted country, which means that the organization would not have to invest in foreign production facilities. Marketing expenses are one of the biggest costs of exporting. There are two ways an organization can make sales in exporting — directly or indirectly. Direct sales can be made via mail order or through offices set up abroad. Indirect sales are made via intermediaries who locate the specific markets for the organization's products. The four players in the exporting business are the exporter, importer, transport provider and the government. Many organizations are able to successfully establish themselves abroad and do not have to expand beyond exporting.
• Licensing Licensing occurs when a target country grants the right to manufacture and distribute a product under the licenser's trade name in a target country. In exchange for manufacturing rights, the licensee pays a fee. Small and medium-sized companies tend to grant licenses more often than large companies. Since there is little investment required, licensing has the potential to provide a large return on investment. However, it is seen as the least profitable way to enter the market because most companies use licensing to supplement manufacturing and exporting. Licensing tends to be a viable option to enter a market when the exporter does not have sufficient capital, when foreign government import restrictions forbid other ways to enter the market or when a host country is not comfortable with foreign ownership.

• Joint Venture

• Joint ventures occur when an organization enters a foreign market via a partnership with one or more companies already established in the host country. In most cases, the local company provides the expertise on the target market while the exporting company manages and markets the product. A joint venture arrangement allows organizations with limited capital to expand into international markets, and provides the marketers with access to its partner's distribution channels. According to QuickMBA.com (2007), these types of partnerships are an asset when:

1. The partners' strategic goals converge while their competitive goals diverge.

• 2. The partners' size, market power, and resources are small compared to the industry leaders.
• 3. The partners are able to learn from one another while limiting access to their own proprietary skills.

Key issues in a joint venture are ownership, control, length of agreement, pricing, technology transfer, local firm capabilities and resources, and government intentions. Potential problems include conflict over new investments, mistrust over proprietary knowledge, how to split the pie, lack of parent company support, cultural clashes, and when and how to terminate the relationship if it is necessary to take such action.

• Direct Investment Direct investment occurs when there is direct ownership of infrastructure in a desired country. This requires high amounts of resources and is a large commitment. This type of market entry may be made via the acquisition of an existing entity or the establishment of a new enterprise. It requires the transfer of resources such as capital, technology and personnel. Direct ownership can provide a high level of control in the operations as well as provide the opportunity to better know the potential customers and competitive environment.

Issues

International Marketing Research

As more businesses seek global opportunities, the role of timely and accurate marketing research becomes critical. Organizations will need this type of information in order to make decisions which affect the business on a daily basis. Information must be evaluated in both developed and developing countries. "Established markets in industrialized countries are becoming more geographically integrated as direct vertical links and information flows are established between customers, retailers and suppliers" (Douglas, 1999). As this continues to occur, international marketing research becomes essential in order to gather information across many borders “in order to identify regional or global market segments and evaluate opportunities for creating and integrating strategies across national boundaries” (Douglas, 1999). Also, the timely collection and interpretation of data from various sources is crucial in anticipating changes in the market and creating an effective response strategy. Market researchers must have the “ability to interpret and integrate complex data from diverse sources and environments” so that they can provide efficient recommendations for their organization's marketing strategy (Douglas, 1999).

In order to assist this effort, Douglas (1999) has identified four areas where progress must be made. These areas are:

• Aligning research efforts and capabilities with market growth potential As Douglas recounts (1999): “Although marketing research expenditures are concentrated in the industrialized countries of North America, Europe and Japan, the countries with the highest growth potential are the emerging market economies in Asia, Latin America, Eastern Europe and countries of the former Soviet Union.” In order to be successful in the 21st century, market researchers must evaluate markets in these regions and develop the capability to conduct research in these markets. They will need to understand and be sensitive to the differences in these marketing environments as well deal with the lack of a sophisticated market research system. Given the low level of literacy in some of these countries, market researchers will need to develop questions that the respondents are able to understand. In addition, it will be important for market researchers to develop instruments that do not have cultural biases as well as make sure that they do not have any biases when interpreting the data, especially if they are from another culture.
• Conducting and coordinating research spanning diverse environments Researchers must develop research questions as well as “adapt research instruments and administration procedures to different environments” (Douglas, 1999). Having the skills to interpret the results at a global level will be crucial. In order to avoid bias, research instruments, data collection and sampling procedures may need to be reformulated to adapt to the environment so that meaningful results can be obtained (Craig & Douglas, 2000). One way to ensure that this goal is accomplished is to have a research team consisting of individuals from different cultural backgrounds and sites.
• Developing and using new tools International market researchers will need to develop new approaches in interpreting the results of changing markets. Although most researchers have a preference for quantitative research, a mixed methodology approach may be the best approach given the benefits of qualitative research with international market research. Based on the techniques of the method, researchers may be able to better understand and interpret the collected data in diverse cultural contexts. Additional benefits of qualitative research are that it is unstructured and does not impose the researcher's conceptual model on the respondent. "Qualitative techniques are helpful in probing attitudes and behaviors, providing a deep understanding of situational and contextual factors, and providing input into interpreting observed differences between countries and cultures” (Cooper, 1996).
• Incorporation of technological advances into research design and methodology International marketing researchers must “incorporate the latest technological developments in data collection and dissemination into the research design” (Cooper, 1999). This step will allow the researchers to significantly reduce the time required to collect data across global territory and enhance the methods of attaining international marketing data. As advances in computer technology (i.e. scanners, Computer Assisted Telephone Interviewing and Computer Assisted Personal Interviewing) continue to evolve, they will present new ways to attain data that is conducive for international research issues.

Also, the Internet will have an impact on how international marketing research is conducted. It will provide access to secondary data as well as provide a new way to collect primary data. Researchers can surf the Internet for information versus going to a brick-and-mortar library, and they can collect data by using an electronic survey to send to the respondents. Questionnaires can be sent to potential participants and they can return the information via e-mail or complete the survey via a link.

Conclusion

Organizations may elect to enter into the international marketing business in order to remain competitive. Although such an act can extend the life cycle of a particular product or service, there are other issues that a company should investigate before entering this arena. Companies need to investigate issues such as cultural and language barriers, political atmosphere and business negotiation styles in order to determine if international marketing is a good fit for the organization. Khan (2005) has identified two steps that an organization can take in order to prepare it for foreign entry. The first step is to develop an international marketing plan and the second step is to determine how it will enter the new market.

An organization's nature provides the foundation for the type of international marketing plan it can develop. Organizational structure, management process, personnel, and culture are four factors that affect an organization's ability to create and implement a successful global strategy (Yip, Loewe & Yashino, 1988). In order to become globally competitive, organizations will need to focus on developing a marketing plan with global appeal, helping employees understand its global vision, selecting the right partners for joint ventures in foreign markets, and learning from mistakes that other organizations have made.

Marketing researchers must be able to identify creative ways to use the new technologies in order to engage in activities that will assist their organization's marketing strategies. In addition, they must develop methods to conduct market research in developed and developing countries simultaneously. There has been an increase in the number of multinational marketers who design and sell global brands, and they need international market research to assist them in making decisions in a diverse business market (Douglas, 1999).

Terms & Concepts

Computer Assisted Personal Interviewing: “A surveying technique that uses a computer-based questionnaire. As an alternative to paper questionnaires, CAPI allows the interviewer to customize the survey, so that respondents answer questions only about subjects they're familiar with and receive questions in a random order to avoid biases” (“CAPI,” 2007).

Computer Assisted Telephone Interviewing: “A method of data collection by telephone with questions displayed on a computer and responses entered directly into a computer. A component in the modular data management network, CASIC” (“Abbreviations & acronyms,” 2000).

Developing Countries: Countries with low annual incomes, usually relying upon the export of crops harvested through fairly primitive methods. Food supply and citizen well-being are often issues of concern for these nations.

Expatriates: Individuals who go overseas to accomplish a job related goal.

Export Management Company: Within international markets, an organization which sells and distributes goods for domestic companies.

Information Flow: The transference of data throughout an organization; usually in the form of graphs, data processing and reports.

International Marketing: The coordinated marketing of a product or service in various countries; intended to encourage the exchange or transfer of goods internationally.

Localization Services: A service that adapts a company's entire image to fit another culture.

Marketing Research: The act of gathering, recording and analyzing customer, competitor and market data so as to aid in the selling of products or services.

Mixed Methodology: A research approach that utilizes both quantitative and qualitative research models.

Qualitative Research Model: A research approach that consists of defining a problem, developing a model, acquiring input data, developing a solution, testing the solution, analyzing the results, and implementing the results.

Quantitative Research Model: A research approach that forecasts by using judgments, experiences and subjective data.

SWOT Analysis: A method for evaluating the strengths, weaknesses, opportunities, and threats involved in a project, business venture or in any other organizational situation; includes external and internal monitoring.

Bibliography

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Foreign market entry modes. (2007). Strategy. Retrieved May 3, 2007, from http://www.quickmba.com/strategy/global/marketentry/

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QuickMBA.com (n.d.). Foreign market entry modes. Retrieved May 3, 2007, from http://www.quickmba.com/strategy/global/marketentry/

Seggie, S. (2012). Transaction Cost Economics in International Marketing: A Review and Suggestions for the Future. Journal Of International Marketing, 20, 49-71. doi:10.1509/jim.11.0119 Retrieved November 19, 2013 from EBSCO online database Business Source Complete with Full Text:http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=76488174&site=ehost-live

Tan, Q., & Sousa, C. P. (2013). International Marketing Standardization. Management International Review (MIR), 53, 711-739. doi:10.1007/s11575-013-0172-5 Retrieved November 19, 2013 from EBSCO online database Business Source Complete with Full Text:http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=90471170&site=ehost-live

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Suggested Reading

Dong, M., Li, C., & Tse, D. (2013). Do Business and Political Ties Differ in Cultivating Marketing Channels for Foreign and Local Firms in China?. Journal Of International Marketing, 21, 39-56. doi:10.1509/jim.12.0088 Retrieved November 19, 2013 from EBSCO online database Business Source Complete with Full Text:http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=85872957&site=ehost-live

Douglas, S., & Craig, C. (2006). On improving the conceptual foundations of international marketing research. Journal of International Marketing, 14, 1-22. Retrieved May 3, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=19918696&site=ehost-live

Katsikeas, C., Samiee, S., & Theodosiu, M. (2006). Strategy fit and performance consequences of international marketing standardization. Strategic Management, 27, 867-890. Retrieved May 3, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=21786389&site=ehost-live

Young, R., & Javalgi, R. (n.d.). International marketing research: A global project management perspective. Business Horizons, 50, 113-122. Retrieved May 3, 2007, from EBSCO Online Database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=23868537&site=ehost-live

Zhou, L., Wu, A., & Barnes, B. R. (2012). The Effects of Early Internationalization on Performance Outcomes in Young International Ventures: The Mediating Role of Marketing Capabilities. Journal Of International Marketing, 20, 25-45. Retrieved November 19, 2013 from EBSCO online database Business Source Complete with Full Text:http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=83698981&site=ehost-live