International Marketing: Strategies, Drivers, and Cultural Considerations
International Marketing (IM)
Types of International Marketing
Domestic Marketing (DM)
Focuses on a single country or specific geographic region. Companies engage in DM when they sell their products and services to a target audience within their own country. Marketing strategies are tailored to the specific needs of the local market, considering culture and language.
International Marketing (IM)
Involves marketing activities in multiple countries. The target audience includes consumers from various countries, requiring marketing strategies to be adapted to different cultures and situations.
Global Marketing (GM)
Encompasses a worldwide approach, treating the world as a single market. The target audience is the global consumer base, focusing on creating standardized products or services that can be marketed uniformly across various countries. Companies develop marketing strategies, branding, and products to achieve economies of scale.
Imperatives of International Marketing
External Drivers
- Lowered trade restrictions
- Market saturation
- Global competition, cooperation, and collaboration
- Communication and internet revolution
- Transportation revolution
- Emerging markets (increased wealth and growth in developing countries)
Internal Drivers
- Increased market potential (expansion of the business)
- Economies of scale
- Competitive advantage (offering unique products and services)
- Brand recognition and reputation
- Innovation and learning
- Technological advancement
Factors Influencing Global Integration
Demand Factors
- Direct exporting
- Market competition in the host country
- Parent company’s productive capacity
- Declining home-country sales
- New host markets and sources of demand
Internal and Cost Factors
- Acquisition of essential raw materials and commodities
- Improved management and technology
- Decreased transportation costs
- Higher average labor productivity
- Reduction in production costs (economies of scale)
- Higher rates of return on investment
Key Facets of Globalization
- Globalization of trade (facilitated by transportation, communication, technology, and low trade barriers)
- Globalization of markets and consumers
- Globalization of resources (natural resources, minerals, agricultural products)
- Globalization of knowledge
- Globalization of money (digital currencies)
- Globalization of consumerism and material culture
Main Challenge of International Marketing
Balancing economies of scale and economies of scope to offer a diverse product portfolio that satisfies the varied and local needs of consumers in different countries.
Gains from International Trade
Specialization
Countries export goods made with abundant resources and import goods made with scarce resources. Specialization allows countries to achieve high levels of productivity by focusing on what they do best.
Efficiency
Countries focusing on producing specific goods and services benefit from economies of scale, leading to reduced production costs and enhanced efficiency.
Sourcing
Countries may gain by trading current resources for future resources through international borrowing, lending, and migration.
Drivers and Impediments to International Trade
Drivers
- Distance between markets
- Cultural affinity
- Multinational corporations
Impediments
- Borders (documentation, time)
- Political factors (wars, political instability)
- Access to infrastructure and technology
Glocalization
The adaptation of global and international products and services, technologies, and resources to local markets to meet unique needs and preferences. Glocalization increases the relevance and appeal of products to end users.
Patterns of Trade
Understanding who sells what to whom and the factors influencing trade patterns.
Economic Integration and Trade Agreements
The process by which countries collaborate to reduce barriers to trade, investment, and economic operations. Integration can take various forms, including multilateral trade liberalization and regional integration.
Types of Economic Integration
Multilateral Trade Liberalization
Reduction of trade barriers (quotas, tariffs) through negotiations among a group of countries, such as the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO).
Regional Integration
Establishment of economic ties within a specific geographic region, reducing trade barriers through trade agreements and economic unions.
Internationalization Motives for Firms
- Market seeking (new customers, increased revenue)
- Efficiency seeking (lower costs of distribution and operations)
- Resource seeking (access to resources unavailable or cheaper abroad)
- Strategic asset seeking (obtaining tangible or intangible assets)
Think Global, Act Local
Businesses develop marketing strategies globally while adapting to specific characteristics and preferences of local markets.
Proactive and Reactive Internationalization
Proactive
Factors that motivate companies to expand internationally as part of a planned, long-term decision, such as seeking market opportunities and improving competitiveness.
Reactive
Factors that lead companies to internationalize due to external pressures and challenges, such as competition, low demand, or market saturation.
Inward and Outward Internationalization
Inward Internationalization
The process where a country or company focuses on attracting foreign investment and technology into the domestic economy.
Outward Internationalization
Expanding business activities, seeking new markets, and making investments in foreign countries.
Cultural Considerations in International Marketing
Culture
Culture includes knowledge, art, and beliefs acquired by individuals as members of society. It reflects how people live together and is influenced by religion, education, and family habits.
Types of Culture
- Social Group Culture
- Symbolic Culture
- Individual Culture
- Organizational Culture
Cultural Heritage
The tangible and intangible aspects of a society’s culture passed down through generations, encompassing traditions, beliefs, and expressions that define a community or group.
Etiquette
The customary code and social norms of a society or community, including expressions of respect, communication styles, and dress codes.
Types of Etiquette
- Hygiene Manners
- Courtesy Manners
- Cultural Norms Manners
Layers of Culture
- Individual behavior
- Company culture
- Global culture of consumerism and material culture
- National culture
Elements of Culture
- Language
- Religion
- Values and attitudes
- Customs
High-Context and Low-Context Cultures
High-Context Cultures
Rely on implicit and indirect communication, prioritizing relationships and trust. Individuals are expected to understand meaning without explicit clarification.
Low-Context Cultures
Emphasize explicit verbal messages and direct communication, prioritizing individual expression.
Readiness for International Expansion
Internal Factors and Indicators
Ownership and Managerial Readiness
- Ambition and leadership aspirations
- Commitment to international expansion
- Knowledge of foreign markets and languages
Strategic Readiness
- Clear purpose for going abroad
- Risk appetite and tolerance
- Strategic intent and approach
Marketing Readiness
- Strategic marketing expertise
- Market research capability
- Market mix readiness (product, pricing, promotion, place)
Operational/Production Readiness
- Technical readiness and preparedness
- Production preparedness
- Supply chain, logistics, and distribution readiness
- Regulatory documentation preparedness
Financial Readiness
- Financial health of the company
- Access to funds for international expansion
Functional and Organizational Readiness
- Adapting organizational structure and processes
- Employee learning and development
- Proactive process improvement
Brand Global/International Value Proposition
- Innovation and adaptation on an international scale
- Economies of scale and scope
- Quality assurance
- International/universal appeal