The business environment is changing and firms cannot neglect advice from international marketing consultant. The increasing dependency of national around world on each other’s goods and services has raised awareness among companies of the need for a more international marketing consultants outlook in their approach to business.
Global marketing is concerned with integrating or standardising marketing actions across a number of geographic markets. This does not rule out adaptation of the marketing mix to individual countries, but suggests that firms where possible ignore traditional market boundaries and capitalise on similarities between markets to build competitive advantage.
Doing international business successfully requires firms to take a broad market perspective.
Understanding the global environment
Before deciding whether or not to sell abroad, a company must thoroughly understand the international marketing environment. The environment has changed drastically resulting in the globalization of the world economy. There has been a growth of global brands in motor vehicles, food, clothing, electronics etc. In some country markets, foreign companies face increasing trade barriers, erected to protect domestic markets against outside competition.
The international trade system
Companies looking abroad must develop an understanding of the international trade system. When selling to another country, the firm faces various trade restrictions. The most common is the tariff, which is a tax levied by a government against certain imported products. Tariffs are designed to raise revenue or to protect domestic firms. The exporter also may face a quota, which sets a limit on the amount of goods that an importing country will accept in certain product categories. It is designed to conserve on foreign exchange and to protect local industry and employment. An embargo or boycott, which totally bans some kinds of import, is the strongest form of quota. Firms may face exchange controls which are government limits on the amount of its country’s foreign exchange with other countries and on its exchange rate against other currencies. The company may also face non- tariff trade barriers which are non- monetary barriers to foreign products, such as biases against a foreign company’s bids or product standards that go against a foreign company’s product features.
The General Agreement on Tariffs and Trade (GATT) is a more than 50 year old treaty designed to promote world trade by reducing tariffs and other international trade barriers.
Regional free- trade zones
Some countries have formed free- trade zones or economic communities- groups of nations organised to secure common goals in the regulation of international trade. One such community is the European Union, which aims to create a single European market by reducing barriers to the free flow of products, services, finances and labor among member countries and developing policies on trade with non- member nations.
The international marketer must study each country’s economy. Two economic factors reflect the country’s attractiveness as a market: the country’s industrial structure and its income distribution.
The country’s industrial structure shapes its product and service needs, income levels and employment levels. Four types of industrial structure should be considered:
Substance economies: In a substance economy, the vast majority of people engage in simple agriculture. They consume most of their output and barter the rest for simple goods and services. They offer few market opportunities.
Raw- material- exporting economies: These economies are rich in one or more natural resources, but poor in other ways. Much of their revenues come from exporting these resources. These countries are good markets for large equipment, tools and suppliers, and trucks. If there are many foreign residents and a wealthy upper class, they are also a market for luxury goods.
Industrializing economies: As manufacturing increases, the country needs more imports of raw textiles, paper products and motor vehicles. Industralisation typically creates a new rich class and a small but growing middle class, both demanding new types of imported goods. In these countries, people with rising disposable income want to spend on items such as fashion, video recorders, CD players and instant coffee.
Industrial economies: Industrial economies are large exporters of manufactured goods and investment funds. They trade goods among themselves and also export them to other types of economy for raw materials and semi- finished goods. The varied manufacturing activities of these industrial nations and their large middle class make them rich markets for all sorts of goods.
The second economic factor is the country’s income distribution. Countries with subsistence economies may consist mostly of households with very low family incomes. In contrast, industrialised economies may have low, medium and high- income households. Still other countries may have households with only either very low or very high incomes. However, in many cases, poorer countries may have small but wealthy segments of upper- income consumers. Also, even in low- income and developing countries, people may find ways to buy products that are important to them. Thus, international marketers face many challenges in understanding how the economic environment will affect decisions about which global markets to enter and how.
Political- legal environment
Nations differ greatly in their political- legal environments. At least for political- legal factors should be considered in deciding whether to do business in a given country: attitudes towards international buying, political stability, monetary regulations and government bureaucracy.
Attitudes towards international buying
Some nations are quite receptive to foreign firms and others are quite hostile.
This is the extent to which the host government runs an efficient system for helping foreign companies: efficient custom handling, good market information and other factors that aid in doing business.
Governments change hands, sometimes violently. Even without a change, a government may decide to respond to new popular feelings. The foreign company’s property may be taken, its currency holdings may be blocked or import quotas or new duties may be set. International marketers may find it profitable to do business in in an unstable country, but the unsteady situation will affect how they handle business and financial matters.
Most international trade involves cash transactions. Yet many nations have too little hard currency to pay for their purchases from other countries. They may want to pay with other items instead of cash, which has led to a growing practice called countertrade. Countertrade is international trade involving the direct or indirect exchange of goods for other goods instead of cash. Countertrade takes several forms. Barter involves the direct exchange of goods or services. For example, Boeing 747s fitted with Rolls- Royce engines, were exchanged for Saudi oil. Another form is compensation (or buyback), whereby the seller sells a plant, equipment or technology to another country and agrees to take payment in the resulting products. Another form is counterpurchase. Here the seller receives full payment in cash, but agrees to spend some portion of the money in the other country within a stated time period. For example, Pepsi sells its syrup to Russia for rubles and agrees to buy Russian vodka for reselling in the United States.
Each country has its own traditions, norms and taboos. The seller must examine the way consumers in different countries think about and use certain products before planning a marketing programme. The cultural barriers in target country markets must be identifies. Culture is defined as the set of basic values, perceptions, wants and behaviours learned by a member of society from family and other important institutions. The dimensions of culture include the social organisation of society, religion, customs and rituals, values and attitudes towards domestic and international life, education provision and literacy levels, political system, aesthetic systems.
Culture and people’s general behaviours influence the customer’s actions in the marketplace.