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Chapter: Business Science - International Business Management - Production, Marketing, Financial and Human Resource Management of Global Business

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International Marketing Strategy

Usually, selling focuses on the needs of the seller, marketing on the needs of the buyer (customer). The purpose of business is to get and keep a customer.

INTERNATIONAL MARKETING STRATEGY:

 

Usually, selling focuses on the needs of the seller, marketing on the needs of the buyer (customer). The purpose of business is to get and keep a customer. Or, to use Peter Drucker`s more refined construction to create and keep a customer. (Through product Differentiation and price competition)

 

International marketing involves the marketing of goods and services outside the organization`s home country. Multinational marketing is a complex form of international marketing that engages an organization in marketing operations in many countries. Global marketing refers to marketing activities coordinated and integrated across multiple

 

Markets.

 

A firm`s overseas involvement may fall into one of several categories:

        Domestic: Operate exclusively within a single country.

 

          Regional exporter: Operate within a geographically defined region that crosses national boundaries. Markets served are economically and culturally homogenous. If activity occurs outside the home region, it is opportunistic.

 

        Exporter: Run operations from a central office in the home region, exporting finished goods to a variety of countries; some marketing, sales and distribution outside the home region.

 

         International: Regional operations are somewhat autonomous, but key decisions are made and coordinated from the central office in the home region. Manufacturing and assembly, marketing and sales are decentralized beyond the home region. Both finished goods and intermediate products are exported outside the home region

 

         International to global: Run independent and mainly self-sufficient subsidiaries in a range of countries. While some key functions (R&D, sourcing, financing) are decentralized, the home region is still the primary base for many functions. 6- Global: Highly decentralized organization operating across a broad range of countries. No geographic area (including the home region) is assumed a priori to be the primary base for any functional area. Each function including R&D, sourcing, manufacturing, marketing and sales is performed in the locations around the world most suitable for that function.

 

CREATIVE ANALYSIS:

 

In the Hoover case, an imaginative analysis of automatic washing machine sales in each country would have revealed that

 

          Italian automatics, small in capacity and size, low-powered, without built-in heaters, with porcelain enamel tubs, were priced aggressively low and were gaining large market shares in all countries, including West Germany.

 

         The best-selling automatics in West Germany were heavily advertised (three times more than the next most promoted brand), were ideally suited to national tastes, and were also by far the highest-priced machines available in that country.

 

        Italy, with the lowest penetration of washing machines of any kind (manual, semiautomatic, or automatic), was rapidly going directly to automatics, skipping the pattern of first buying hand-wringer, manually assisted machines and then semiautomatics.

 

Detergent manufacturers were just beginning to promote the technique of cold-water and tepid-water laundering then used in the United States.

 

The growing success of small, low-powered, low-speed, low-capacity, low-priced Italian machines, even against the preferred but highly priced and highly promoted brand in West Germany, was significant. It contained a powerful message that was lost on managers confidently wedded to a distorted version of the marketing concept according to which you give customers what they say they want. In fact, the customers said they wanted certain features, but their behavior demonstrated they’d take other features provided the price and the promotion were right.

 

Accepting the Inevitable:

 

The global corporation accepts for better or for worse that technology drives consumers relentlessly toward the same common goals alleviation of life’s burdens and the expansion of discretionary time and spending power. Its role is profoundly different from what it has been for the ordinary corporation during its brief, turbulent, and remarkably protean history. It orchestrates the twin vectors of technology and globalization for the world’s benefit. Neither fate, nor nature, nor God but rather the necessity of commerce created this role.

 

In the United States, two industries became global long before they were consciously aware of it. After over a generation of persistent and acrimonious labor shutdowns, the United Steelworkers of America had not called an industry wide strike since 1959; the United Auto Workers had not shut down General Motors since1970. Both unions realize that they have become global; shutting down all or most of U.S. manufacturing would not shut out U.S. customers. Overseas suppliers are there to supply the market.

 

Technical Challenges:

 

American companies have done a good job of standardizing technology, but so have other countries, and those standards don’t always match. Standard electrical voltage differs from country to country, so products must be designed to run on different voltages, and they need different plugs to fit different receptacles. Local water pressure might be different. Lettering on dials, knobs, levers or buttons might need to be in different languages. Some use Fahrenheit systems to measure temperature while others use Celsius. Some use metric measurements, while some use other measurement systems. Raw materials readily available in America might not be available in other countries. Phone, radio, television and ISP signals might be totally different from country to country.

 

Promotional Challenges:

 

In America, we have a variety of effective methods to promote a product and communicate with our customers. We can use television, radio, direct mail, magazines, social media, billboards, telemarketing and product placement in movies. Many other countries just don’t have these promotional methods, certainly not to the extent we have here. You may have to use a grass roots approach, which is much harder. In addition, there may be cultural limitations. Our promotions tend to have a sexual orientation. The beautiful model as spokesperson, shot in reveling swimwear or with plunging neckline might be taboo in many companies. You may find you have to use methods with which you have no experience. You might have to completely redo packaging or promotional materials at considerable expense.

 

Global Marketing Strategies:

 

Although some would stem the foreign invasion through protective legislation, protectionism in the long run only raises living costs and protects inefficient domestic firms (national controls). The right answer is that companies must learn how to enter foreign markets and increase their global competitiveness. Firms that do venture abroad find the international marketplace far different from the domestic one. Market sizes, buyer behavior and marketing practices all vary, meaning that international marketers must carefully evaluate all market segments in which they expect to compete. Whether to compete globally is a strategic decision (strategic intent) that will fundamentally affect the firm, including its operations and its management. For many companies, the decision to globalize remains an important and difficult one (global strategy and action).

 

Typically, there are many issues behind a company`s decision to begin to compete in foreign markets. For some firms, going abroad is the result of a deliberate policy decision (exploiting market potential and growth); for others, it is a reaction to a specific business opportunity (global financial turmoil, etc.) or a competitive challenge (pressuring competitors). But, a decision of this magnitude is always a strategic proactive decision rather than simply a reaction (learning how to business abroad). Reasons for

 

Global expansion is mentioned below:

 

         Opportunistic global market development (diversifying markets)

         Following customers abroad (customer satisfaction)

         Pursuing geographic diversification (climate, topography, space, etc.)

         Exploiting different economic growth rates (gaining scale and scope)

         Exploiting product life cycle differences (technology)

        Pursuing potential abroad

         Globalizing for defensive reasons

         Pursuing a global logic or imperative (new markets and profits)

 

 

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