International Marketing
The process of penetrating an international market is a difficult task for most companies in the current international business environment. Most companies, even multinationals, still identify this task as an Achilles’ heel in their global capabilities. Generally in the start-up phase most firms lack experience in sales, marketing infrastructure and knowledge of the market. Despite this, companies usually treat this situation as if it were an extension of their business, a source of incremental revenues for existing products and services.
There are two issues which are important in the context of international marketing.
• Companies often pursue international marketing as a new business opportunity. They are aware that with a focus on this approach they can minimize their risk and investment.
• Most firms are also aware that from the marketing perspective it would be good to start by analyzing the market, and then, and only then, decide on its offer in terms of products, services, and marketing programs.
The difference between the selling and marketing approach has been well highlighted by Theodore Levitt (1960) in his classic article ‘Marketing Myopia ‘ in the Harvard Business Review:
“Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is pre-occupied with the seller’s need to convert his product into cash, marketing with the idea of satisfying the needs of the customer by means of the product and whole cluster of things associated with creating, delivering and finally consuming it.”
Definition of Marketing
Till date, no universally accepted definition of marketing has been formulated. The reason, to a large extent, is that since companies have to operate in dynamic exogenous conditions,
they adapt their business philosophies to what seems to be appropriate at the time.
The definitions of marketing have altered accordingly.Let us go with the following definition by Philip Kotlar (1988):
“Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.”
Note that instead of being ‘company centered’, the above definition focuses on ‘exchange’ by individuals and groups. By implication, the company and customers have been considered as equally important parties in the exchange process. For marketing to take place, both the parties should be able to obtain what they need and want, i.e., there should be beneficial exchanges rather than one-sided rip offs.
Companies want to earn profit and consumers want value for their money. In simple terms, consumers want that the product should be able to satisfy their specific needs and wants. Profit for the company comes through creating consumer satisfaction.
Our definition of marketing suggests that the needs and wants of the customers should be the deciding factors in all our marketing efforts. However, the markets for any product consist of a large number of customers having different characteristics.
Another term which is now being widely used is ‘global marketing’. Some authors distinguish between this and international marketing.
“An organization that engages in global marketing focuses its resources on global market opportunities and threats. A company that engages in global marketing conducts important business activities outside the home country market.”
This definition shows that the decision of countries to enter the global market is made on an assessment of their potential. Companies do not enter the most convenient market, but the one which offers the best ‘returns’. The customers and their needs and the business environment may differ between countries. Accordingly, different countries will offer different levels of potential or profit. International marketing involves evaluating and selecting the best of these. It does not mean entering every market throughout the world.
Difference in customers or practices often means that aspects of products, their promotion, distribution and pricing may have to change if a company is to be successful. Very few products (indeed, some people say that there are no products) can be sold in an entirely standardized way throughout the world.
International Marketing Definitions
The above discussion has focused on aspects of international business, and not exclusively on international marketing. What is the difference?
First, international business concerns the full range of activities involved in bringing about inter-firm trade in international markets. This includes human resources, production, sourcing, distribution, advertising and finance. International marketing is concerned with the organization’s marketing decisions in other countries.
An examination of definitions shows what this involves. From your previous studies, you will be aware that:
Marketing is the management process responsible for anticipating, identifying and satisfying customer’s requirement profitably.
So, effective marketing relies on a company being able to meet customer requirements better than competitors in a changing business environment. This will involve getting all aspects of marketing-including the management of the marketing mix of product, price, place and promotion-designed around customer requirements. It is about creating a competitive advantage through the management of these areas.
Historically, most companies start by meeting the needs of customers in their home country. After a time, they get involved in selling to customers in other countries. So marketing activities are extended to cover:
“…that segment of business concerned with the planning, promoting, distributing, pricing and servicing of the goods and services desired by intermediate and ultimate consumers…….. marketed across political boundaries.”
This takes our definition of marketing to an international context, that is across political borders. It also defines some significant tasks-those which detail the key areas of marketing mix management.
Traditionally, companies chose to enter new countries gradually. Often they would select one market, and opt to export there. Over time, they started extending their activities to other markets, often one after another. Management decisions moved from being made in the borne market, to being made on a market basis to meet the needs of each market. Thus, in this way they moved over time from domestic marketing to marketing internationally.
People differ in their preferences, buying habits and geographical locations besides many other things. Their needs and wants, therefore, are different. Take, for example, any consumer product like shoes or detergent.
