International Marketing: Market Entry
International marketing refers to the performance of business activities across borders for a profit. The extent of international penetration further describes the business. Several determining factors underlie the nature of success in doing international business. International marketing takes place when the marketer goes beyond the boundaries of the domestic market and explores new regions that offer a potential for the business. The starting point is either on direct or indirect exports to other countries (Azzi, Silva & Rocha 2001, p. 590). The target of an international marketer is to find needs similar to those of the domestic markets and, which can be satisfied by similar goods and services. In international marketing, several factors come into play in the overall process. First is the organisational structure, which is critical in the decision-making tool in the organisation or company. In doing international marketing, proper and effective structure forms a critical tool in the whole process.
Another crucial factor is the nature of the international environment, which the organisation wishes to explore. A correct understanding is prerequisite in the process of internationalisation (Leonidu 2000). Lacking accurate information on such trends can lead to total failure. Marketing mix is another tool companies need to use in entering the global market. All elements of the marketing mix apply in the global market, though it may need considerable modification from one country to the other, depending of individual country characteristics.
In business, growth and expansion form the benchmark for the overall progress in the business entity. A business can only grow and enter new territories when it has the capacity to do so, which in other words is a measure of its growth. In venturing into new markets, the choice of the correct strategy is critical in determining the overall success of the company. The organisation of a company is critical in setting the pace towards international marketing. An American historian by the name Alfred Chandler came up with the theory that the structure always follows a strategy. This theory can be expounded in giving the meaning that a company or organisation first needs to establish an operating strategy, which will enable it define its organisational structure suitable for the pursuit of the spelt strategy. The influence of structure on levels of the organisation is imperative, according to studies done by Chandler. The structural design of a company is depicted in its organisational chart. The organisational chart is a representation of the underlying activities and processes, including the flow from the starting point to the end (Sanchez 2003).
There are three critical components in organisational structure that are universal. One is the formal reporting relationships comprising the number and levels of hierarchy and control of managers. The second is the classification of individuals into sections and departments and the further grouping of such organisations into the whole organisation. The last component is system design that will ensure proper and productive communications, coordination and the integration across the departments.
Such organisational structure pertains to both the vertical and horizontal systems of organisational plans. The first two form a structural framework, which can be represented on the organisational chart of the company. The third element gives the horizontal information flow and interactions. Differentiation in vertical flow impacts on the general communication; and the greater the differentiation the higher the chances of distortion. International marketing requires management skills that are global and account for different cultural and regional adaptations (World Trade Organization, 2007). This calls for effective and clear communication and organisational structure that is comprehensible to follow and also accounts for the diverse differences. For example for international business management, different country regulations may be different and contradict across the involved countries. It is up to the organisation to implement effective organisational structure that will enable easy flow of information across the regions.
Horizontal differentiation refers to the nature of differentiation between the organisational units in carrying out their daily activities. A well developed horizontal structure is critical in the success of organisational, international marketing strategy and plan (Cavusgil & Zou 1994, p.5). There is no correction between these two forms of structural differentiation in an organisation.
The international environment has a significant impact on any business involved in the global market. It is critical for organisations to provide careful considerations on the contemporary developments in the international environment they are dealing with; otherwise, such organisation would have minimal survival chances. The current global trends have made the global markets more hostile and unfriendly than before, this is because of the dynamics and unpredictable changes in the global economy and individual country economies (De Mooij, 1998). Difference in global marketing environment can be fixed in adjustments, made in the marketing mix elements, and the movement of surplus production oversees in economic times.
The planning, implementation and management of the marketing mix appreciably rely on the organisation and structure of the exporting department and even the whole company (Ghauri, Lutz & Tesfom 2003, p. 730). In engaging in international business companies need to be more cohesive and constructive in dealing with the international market. It is quite common to realize and adopt a management strategy that accounts for a country to country difference during decision making and policy formulation. In other words, global market can be classified as a collection of more than one domestic market and, therefore, there are distinct marketing systems within the one market. This leads to international marketing elements that account for the different effects and emphases on the uncontrollable marketing elements, which require different marketing mixes to handle the differences. The global environment market can be regarded as borderless and encompass the participation of all countries. The global market is coupled with integrative global structures such as free trade areas, relative and common markets and trade agreements such as the world trade organisation, which operationalise easier international trade relations. However, within such agreements and environments cases of protectionism and conflicts exist, which, in most cases, end up complicating the market environment (Mohamad 2002, p. 6).
In this wide and extensive market, consumer preferences no longer control the direction of business, since there is a reshaping of such preferences by common exogenous forces leading to the convergence of consumers’ needs and desires. One boost for global market is the environment offered by technological advancement and communication systems. These developments have made consumers become more homogeneous and foreign markets become more accessible. The barriers, offered by national borders, have become ineffective in bearing external influences in the arena of trade. A clear example is the use of the internet to get around local advertising regulations due to its availability to anyone who accesses it despite the region, country or location.
For companies to win and establish a niche in the global market, they need to understand the impact of the dynamics on the global market trend to the company’s planning and organisational strategy (World Economic Forum 2008). As earlier noted, the company develops its strategy from an organised input from the market it wants to serve. The influences of the global environment whether hostile or friendly, significantly influences on the international business marketing plan. To have an effective marketing strategy, one has to be familiar with the nature of the target market. It is analogous to driving into a new land, where one has to learn the terrain in order to navigate well. Global consumers differ in their consumer behaviours, depending on the regions and season. To market effectively in this larger area, one has to understand the difference in consumption behaviours, especially on the target population or consumer. This, on the other hand, will affect the strategic planning for international marketing that is such a factor has to be considered. Marketing is generally for the people; there are several global brands, but there are no global people (United Nations 2000).
Therefore, the availability of these brands is not a grantee of direct and immediate consumer use. When people lack the motivation to use that product, then, they may go unnoticed. The global company seeks to lever its products across political, geographical and cultural differences in search of a market niche that will give it competitive advantage. In some cases, the marketing strategy may have to consider changes in production so as to make geographic and cultural customized products that are not globally universal. For instance, products that are sensitive to temperature may not gain popular market in regions that have extreme and opposite temperature and weather conditions. In such a case, the product needs to be customized so as to satisfy the unique needs of the target consumer or community (Andrey 2011).
In most international companies, there is a trend to adopt a global perspective in marketing strategy than country customized plans. Within such companies, the strategy will involve the transfer of resources to the new regions so as to achieve its goals and maximize the value of stakeholders in these new regions by globalizing marketing processes. The result to this is operation in business as if the global market is such one large market without the boundaries. This make business organisation overlook and ignore superficial regional as well as national differences in business. However, the company has to make sure that the products and services it is giving to the global market can satisfy the practises and cultural characteristics of the regional markets. Rapid changes in global marketing environment such as the recent, experienced economic recession and oil crises in the Middle East and oil-producing regions are of paramount importance in the planning for global marketing strategy (Svensson 2002, p. 575).
It should be noted that the global market environment is highly fragile and faces instability in most of the times. This means that companies need to develop strategies that are elastic and can rapidly adapt to any unexpected changes in the market due to its dynamics. Since the global market is open to everyone and every country, the stability of these countries in terms of political and economic stability is critical. For example, western Africa countries are major producers of natural resources such as oil, which is contributed to the global market. However, one common characteristic about these countries is political instability that mostly erupts to civil wars, thus, hampering their contributions to the global market. Interruption of such critical products has great destabilising effect on the overall operation of the global market. With an elastic marketing strategy, such huddles are easy to prevent its negative effects if not to overcome it.
Product competition is another dynamic experienced by global marketers. The global market, however, still has a stiff competition that requires proper planning and strategic planning. The advancement in technology has made the globe as a small village, where people interact easily and freely (Ling-Yee & Ogunmokun 2001). Hence, products have become easily accessible, and consumer needs more varied. With this accessibility, several companies offering closely similar products to the same market, increasing the competition. In coming up with market strategy, such considerations will enable the company effectively adapt to this dynamic and rapidly changing market.
The strategy formulation process requires international orientation, in addition to research to examine the role of managerial bias and mental maps in strategic formulation process. In most cases, internationalisation processes are highly affected by export activities. Marketing mix is a business marketing tool that utilizes products uniqueness in the marketing strategy of that product. It is this unique selling point that determines the products performance in the market. In marketing identification, utilization of the marketing mix is critical in the overall success of the product in the market whether local or global market. The effect of internationalisation of the company on the implementation of the marketing mix is equally indispensable. Internationalisation will determine the variety of selling points of the product on the dynamic market, which is highly specific and customized.
In the marketing mix, several terms are used in the implementation process so as to ensure the unique characteristic of the product is well captured. These are described as the four Ps, which stands for price, product, promotion, and place. Recent developments have added other Ps, which includes process, physical evidence and people (Leonidu 2004, p. 280). Internationalisation process will also determine the appropriate place and people, where the product can sell most. Place and people are among the new elements applied in the marketing mix in recent researches and marketing tools.
A product to be marketed abroad needs to factor in several variables such as people, which can focus on the culture and tastes of these people and ethical issues, concerning the product if they exist. Geographical difference may either boost or limit the product performance on the end user. This is essential to products that are sensitive to climatic factors and weather variations. Internationalisation also affects the pricing of the product in the marketing mix (Grönroos 1994). Difference in regional currencies and their exchange rates are considerable factors in strategizing.
Products that are not regionally customized or those that are universal need to have stable and standardized prices even with the variation of the currencies. This means that the pricing of such products will be affected by variation in exchange rates of foreign currencies. In carrying out promotion activities of the product, regional and international factors have to be considered. For instance, some communities in other regions of the world prohibit the use of promotional products due to culture ethics and tastes. Some see such products as inferior, and therefore, unsuitable for human use. In the promotion of the product, the marketer identifies the appropriate communication tool that will sell the product more efficiently and effectively. In some regions, code of communication is paramount such a way that presenting the product with a wrong communication channel can cost its performance. Therefore, the internationalisation process should also consider such variations in cultural differences in the marketing strategy of the product (Leonidu 2000).
Another decisive factor, affected by internationalisation, is the process and physical evidence of the product. In some regions, the process, involved in the production of the product, affects the product features and, hence, the usefulness of it to the people. To ascertain product function ability and relevance some regions will require the physical evidence of the product, while to other regions that may not be a determining factor. The place of the product should also be convenient for consumer accessibility. It is synonymous to distribution despite polished product features and advantages, when it is inaccessible then it is as good as nothing. The people and consumers are the end users of products, even if the product acts as a primary product for the production of a secondary and final product, and therefore, should have easy access to the product if it is to perform in the market. Alongside the Ps, the market mixes include Cs, which compass the model framework in co-marketing. The seven Cs stand for corporation, commodity, cost, channel communication, consumer and lastly circumstance. All these elements go hand in hand with internationalisation strategy, which affects the overall marketing mixes process.