International marketing

Walsh who states international marketing is perhaps is best regarded as a shorthand expression for the special international aspects of marketing, defines international marketing as:a) b) The marketing of goods and services across the national frontiers and The marketing operations of an organisation that sells and/or produces

within a given country when That organisation is part of,or associated with an enterprise which also operates in other countries, and There is some degree of influence on or control of the organisation marketing activites from outside the country in which it sells and/or produces.

y Objectives of international marketing Companies go international for a variety of reasons, but the goal is typically company growth or expansion. Whether a company hires international employees or searches for new markets abroad, an international strategy can help diversify and expand a business.

There are four basic reasons for taking a company into the international marketplace: 1. 2. 3. 4. Increase the profit potential of the company Provide for company growth Smooth out business cycles Extend the sales potential for existing products

And other reasons are:Growth Many companies look to international markets for growth. Introducing

new products internationally can expand a company's customer base, sales and

revenue. For example, after Coca-Cola dominated the U.S. market, it expanded their business globally starting in 1926 to increase sales and profits. Employees Companies go international to find alternative sources of labor. Some

companies look to international countries for lower-cost manufacturing, technology assistance and other services in order to maintain a competitive advantage. Resources Some companies go international to locate resources that are difficult to

obtain in their home markets, or that can be obtained at a better price internationally. Ideas Companies go international to broaden their work force and obtain new

ideas. A work force comprised of different backgrounds and cultural differences can bring fresh ideas and concepts to help a company grow. For example, IBM actively recruits individuals from diverse backgrounds because it believes it's a competitive advantage that drives innovation and benefits customers. Diversification Some companies go international to diversify. Selling products and

services in multiple countries reduces the company's exposure to possible economic and political instability in a single country.  International marketing environments 1. Techonological environment Technology can be defined as the method or technique for converting inputs to outputs in accomplishing a specific task. Thus, the terms 'method' and 'technique' refer not only to the knowledge but also to the skills and the means for accomplishing a task. Technological innovation, then, refers to the increase

in knowledge, the improvement in skills, or the discovery of a new or improved means that extends people's ability to achieve a given task.

Technology can be classified in several ways. For example, blueprints, machinery, equipment and other capital goods are sometimes referred to as hard technology while soft technology includes management know-how, finance, marketing and administrative techniques. When a relatively primitive technology is used in the production process, the technology is usually referred to as labour-intensive. A highly advanced technology, on the other hand, is generally termed capital-intensive.

Changes in the technological environment have had some of the most dramatic effects on business. A company may be thoroughly committed to a particular type of technology, and may have made major investments in equipment and training only to see a new, more innovative and cost-effective technology emerge. Indeed, the managing director of a multinational organisation manufacturing heavy machinery once said that the hardest part of his job had nothing to do with unions, pay or products, but with whether or not to spend money on the latest technologically improved equipment. Computer technology has had an enormous impact on education and health care, to name but two areas affected. The advancements in medical technology, for example, have contributed to longevity in many societies. In addition, the introduction of robots in many factories has reduced the need for labour, and the use of VCR's and microcomputers has become commonplace in many homes and businesses. Unfortunately, there is a negative side to technological progress. The introduction of nuclear weapons, for example, has made the destruction of the human race a frightening possibility. In addition, factories using modern

technologies have polluted both air and water and contributed to various environmental and health-related problems. Technology is a critical factor in economic development. Because of the advances of international communication, the increasing economic

interdependence of nations, and the serious scarcity of vital natural resources, the transfer of technology has become an important preoccupation of both industrialised and developing countries. For many industrialised countries, the changes in the technological environment over the last 30 years have been immense particularly in such areas as chemicals, drugs, and electronics. It is vital that organisations stay abreast of these changes - not only because this will allow them to incorporate new and innovative designs into their products, but also because it will give them a firmer base from which to anticipate and counteract competition from other organisations. When the Gillette company developed a superior stainless steel razor blade, it feared that such a superior product might mean fewer replacements and sales. Thus, the company decided not to market it. Instead, Gillette sold the technology to Wilkinson, a British garden tool manufacturer, thinking that Wilkinson would use the technology only in the production of garden tools. When Wilkinson Sword Blades were introduced and sold quickly, Gillette understood the magnitude of its mistake. The transfer of technology is essential for attaining a high level of industrial capability and competitiveness. Multinational corporations are playing an increasingly important role in technology transfer because they invest abroad to expand production, marketing and research activities. There is also a growing consciousness amongst governments of the need to increase technology transfer to the developing countries to help stabilise their economic and social conditions.

2. Socio-culture environment Humans essentially create their own cultural and social environment. Customs, practices and traditions for survival and development are passed down from one generation to the next. In this way, the members of a particular society become conditioned to accept certain "truths" about life around them. The increasingly competitive international business environment calls upon exporters to tailor or adapt their business approach to the culture and traditions of specific foreign markets. The inability or unwillingness to do so could become a serious obstacle to success. The task of adjusting to a new cultural environment is probably one of the biggest challenges of export marketing. Export marketing attempts are frequently unsuccessful because the marketer - either consciously or unconsciously - makes decisions or evaluations from a frame of reference that is acceptable to his/her own culture but unacceptable in a foreign environment. Therefore, business practices which are successful in one group of countries may be entirely inappropriate in another group of countries. For example, the Marlboro Company took its famous lone cowboy advertisement to Hong Kong in the early 1960's.However, the image of the cowboy riding off in the distance by himself led the Chinese to wonder what he had done wrong. In the context of the socio-cultural environment, there are a number of factors that you will need to consider. These are: Language Material culture Aesthetics Social organisation Religious beliefs, attitudes, values, space and time.

3. The legal environment Legal environment is derived partly from the political climate in a country and has three distinct dimensions to it: The domestic laws of your home country The domestic laws of each of your foreign markets International law in general

Legal systems vary from country to country. You are likely to find that the legal systems in operation in the buyers' country are in many respects different from that of South Africa. Domestic laws govern marketing within a country, e.g. the physical attributes of a product will be influenced by laws (designed to protect consumers) relating to the purity, safety or performance of the product. Domestic laws might also constrain marketers in the areas of product packaging, marking and labelling, and contracts with agents. Most countries also have certain laws regulating advertising, e.g. Britain does not permit any cigarette or liquor advertising on TV Different legal systems The legal systems of most of the non-socialist countries can be grouped into common law and code law. Common law is generally based on precedents or past practices while a code, which is a comprehensive set of volumes having statutory force and covering virtually the whole spectrum of the country's law, is established by arbitrary methods - e.g. a speed limit of 80 kph or a three-day period for cancelling a contract. South Africa's commercial legal system has been influenced by English law. English courts create and follow precedents just as South African courts do. Furthermore, English cases are regularly cited as authority in our courts in situations where there is no domestic decision on the point and the particular case concerns an area of our law (such as insurance or negotiable instruments) which derives from, or was considerably influenced by, English law.

Contracts Central to all commercial activities is the contract. The purpose of a contract is to specify the respective rights and obligations of the parties to an agreement and outline specific procedures or actions that must take place. In this way, the possibility of disputes arising between the parties is reduced. In the context of international business, with its inherent risks and complexities, contracts assume a vital role. The principal legal arrangement underlying an export transaction is the export sales contract. However, when a company obtains materials from a local supplier, engages the services of a freight forwarder or insurer, or concludes agreements with carriers, e.g. shipping lines, airlines and domestic road hauliers, it is also entering contracts. In many cases, a contract is entered into once agreement has been reached. It is important to agree at the beginning of the negotiations that all agreements are reduced to writing before contracts are formalised. When an international commercial dispute occurs, the problem must be settled in one of the countries involved according to the laws and regulations of that country unless the contract states otherwise. If the dispute cannot be settled amongst the parties involved, resolution can possibly be obtained through arbitration (i.e. through negotiations facilitated by a independent third party). Where the process of arbitration fails, for one reason or another, the option of litigation, i.e. going to court, might be considered. Disputes that go to court usually involve either large monetary transactions or the ownership of patents, copyright or physical property. Court actions can take from a few months to several years and can involve large expenditure in legal fees and lost revenues. Whose system of law (i.e. South African law or that of the importing country) is applicable at a particular stage of an international business transaction depends, inter alia, on the nature and terms of the agreement. International Law

Buyers and sellers are at times also subject to international law, which may be defined as that body of rules which regulates relationships between countries or other international legal persons. There is neither an 'international parliament' empowered to create international law; nor an 'international police force' to enforce it. The principal sources of international law are treaties and conventions. These are created when several countries reach agreement on a certain matter and bind themselves to it by authorising their representatives to sign a document embodying that agreement. Essentially, they have entered into a contract that obliges them to do something or to refrain from doing something. Failure to comply is the equivalent of breach of contract. Other sources of international law are custom (i.e. international practice that is accepted as law) and the general principles of law recognised by civilised nations or natural law (the basis of human co-existence). Although there is no organised body to 'enforce' international law, there is an International Court of Justice situated at The Hague in The Netherlands. This court decides any matter which the parties regard as suitable for submission to it for adjudication. This means that a country approaches the court voluntarily; it cannot be 'brought' to the court involuntarily. Before a country is liable to comply with the provisions of a treaty or a convention, it must have signed the original protocol (i.e. the original treaty document or minutes of the convention). Once a country has signed the protocol, the method of enforcement depends on the terms of the treaty or convention. A common way of bringing a defaulting country to heel is by imposing sanctions against it. Sanctions may take many different forms and can be applied with varying degrees of severity. Obviously, the more parties there are to the protocol, the easier it is to enforce by virtue of the weight of opinion and the efficacy of any measures that can be taken against an offender.

TheIncoterms (2000), as published by theInternational Chamber of Commerce, are not, strictly speaking, part of international law.

There has been no treaty or convention whereby countries have bound themselves to the use and meaning of Incoterms. The Incoterms have been published merely as an aid to international trade. Some countries have incorporated the Incoterms in their domestic laws by legislation but, in most cases, they are merely a guide. However, their usage has, largely, become a norm in international trade. Another area in which international law plays an important role is in controlling the use of the sea and the environment outside the territorial waters of countries. The control of international air travel by organisations such as IATA (International Airline Transport Association), or structures such as The HagueVisby Rules in relation to ocean freight, may also be regarded as part of international law. Exporters need to be able to recognise the legal significance of their actions in the general course of marketing and export-related activities both in South Africa and abroad. Potentially costly errors will be avoided and should develop greater confidence in conducting negotiations at both a domestic and international level.

4. Economic environment The economic environment Surveys have shown that the economic environment tends to receive the greatest amount of attention from export planners. The primary concern in analysing the economic environment is to assess opportunities for marketing the company's products abroad or possibly for locating some of the company's production and distribution facilities outside of South Africa. Indeed, when

striving to identify potential countries to focus on, one of the major differentiating factors will be the differences in the economic environments that exist between potential target countries. Decisions about how much of a product people buy and which products they choose to buy are largely influenced by their purchasing power. If a large portion of a country's population is poor, the market potential for many products maybe lower than it would be if they were reasonable prosperous. If a country is expected to enjoy rapid economic growth and large sectors of the population are expected to share in the increased wealth, sales prospects for many products would clearly be more promising than if the economy were stagnating. Thus, if you are comparing potential countries to focus your export efforts on, you must consider factors such as the general economic outlook, employment levels, levels and distribution of income, growth trends, etc. It should be borne in mind, however, that when income levels drop, people will generally cut back on their purchases of luxury items before they cut back on necessities. Thus, poor countries which are allocating scarce foreign exchange reserves only to necessities (e.g. cheap clothing, simple agricultural tools, etc.) may prove to be more reliable markets than rich countries for certain export products. Below are some of the economic factors which should be of interest to the exporter. To learn more about these factors, please follow the corresponding links: Gross domestic product (GDP) Disposable income Demographic factors Competitive and complementary products Industrialised vs developing countries Degree of government intervention International trade agreements Trading blocs

5. The political environment No matter how attractive the economic prospects of a particular country or region are, doing business there might prove to be financially disastrous if the host government(s) inflict(s) heavy financial penalties on a company or if unanticipated events in the political arena lead to the loss of income-generating assets. The political environment in which the firm operates (or plan to operate) will have a significant impact on a company's international marketing activities. The greater the level of involvement in a foreign markets, the greater the need to monitor the political climate of the countries business is conducted. Changes in government often result in changes in policy and attitudes towards foreign business. Bearing in mind that a foreign company operates in a host country at the discretion of the government concerned, the government can either encourage foreign activities by offering attractive opportunities for investment and trade, or discourage its activities by imposing restrictions such as import quotas, etc. An exporter that is continuously aware of shifts in government attitude, will be able to adapt export marketing strategies accordingly. Nearly all governments today play active roles in their countries' economies. Although evident to a greater or lesser extent in most countries, government ownership of economic activities is still prevalent in the former centrally planned economies, as well as in certain developing countries which lack a sufficiently well developed private sector to support a free market system. The implications of government ownership to a company marketing abroad might be that certain sectors of the foreign market are the exclusive preserve of government enterprise or that the company is obliged to sell directly to a state trading organisation. In either case, the company's influence on the market is greatly reduced. Similarly, if an exporter is seeking to establish a subsidiary in a

country where there is a high degree of state influence over the factors of production, the investor should bear in mind that marketing activities in the country concerned may be restricted and that the so-called controllable elements of the marketing mix will be less controllable. Of primary concern to an exporter should be the stability of the target country's political environment. A loss of confidence in this respect could lead to a company having to reduce its operations in the market or to withdraw from the market altogether. One of the surest indicators of political instability is a frequent change in regime. Although a change in government need not be accompanied by violence, it often heralds a change in policy towards business, particularly international business. Such a development could impact harshly on a firms long-term international marketing programme. Reflected in a government's attitudes and policies towards foreign business are its ideas about how best to promote national interest in the light of the country's economic and political resources and objectives. Foreign products and investment seen to be vital to the growth and development of the economy often receive favourable treatment from the government in the form of reduced tax, exemption from quotas, etc. On the other hand, products considered by a government to be non-essential, undesirable, or a threat to local industry are frequently subjected to a variety of import restrictions such as quotas and tariffs. It is also important to be aware of the nature of the relationship between South Africa and the foreign target market. This was a major consideration during South Africa's political isolation. Fortunately, South Africa's international relations have normalised and today South Africa is viewed very favourably, from a political perspective, by the rest of the world. The political environment is connected to the international business environment through the concept of political risk.

6. Demographic environment The demography of a region includes population size and composition, as well as key socio-economic attributes such as literacy levels and wide or narrow disparities in a society's distribution of income. Theoretically, the larger the total population in a region, the larger the potential market that will exist. In addition, the composition of a population in terms of age and sex will also influence the potential demand for specific products. For example, if a company wishes to market disposable nappies abroad, the number of women in a particular target market who are of child-bearing age is an important influence on the potential demand for that product. In effect, demographic factors such as literacy levels serve to stratify the total population into two different segments - those people who are likely to be potential consumers and those who are not. An overall increase in population size is therefore relevant to potential demand. Stratification of the overall market by demographic characteristics also helps to identify significant changes in potential marketing opportunities. For example, the ageing of the post-War 'baby-boomers' is creating a growing worldwide market for products and services geared to affluent and middle-income families.

 SPECIAL PROBLEMS OF INTERNATIONAL MARKETING International marketing has come to be of much greater significance, for more companies, than in the past. What special problems emerge as a company passes from strictly domestic activity to the stage of truly multinational marketing? There are four classes of problems: Selection of national markets. In most respects, appraisal of a foreign market involves the same logics as appraisal of regional market or local territory in a firm's home market. There are, however, two distinctive problems in appraising

foreign markets which should be mentioned. The first is inadequacy of market information. There are only a few marketing research firms & syndicated information services, which can give reliable information about foreign markets. The second is the need to evaluate political & monetary conditions. Some consideration must be given to the following factors: the possibilities of radical changes in government; changes in the value of a country's money; a country's present & future balance-of-payments situation, & its possible effects on tariffs, import-export controls, currency restrictions, & domestic economic policies.

Some of the problems are as follows:1. Political and legal differences:The political and legal environment of foreign markets are different from that of the domestic.the complexity generally increases as the number of countries in which a company does a business increases. It should also be noted that a political and legal environment is not the same in all provinces of many home markets. Example, the political and legal environment in not same in all the states of India. 2. cultural differences:The cultural differences is one of the most difficult problems in international marketing. Many domestic market, however are also not free from cultural diversity. 3.Economic differences:The economic differences may also vary from country to country. There are variations in the levels of income and living standards, inter-personal distribution of income, economic organisation, economic resources,

occupational structure and so on. These factors affects market conditions.

4.Differences in the currency unit:The currency unit varies from nation to nation. These may sometimes cause problem of currency convertibility, besided the problems of exchange rate fluctuations. The monetary system and regulations may also vary. 5.Differences in the language:An international marketer often encounters problems arising out of differences in the language. Even when the same language is used in different countries,the same words or terms may have different meanings or connotations. 6.Differences in the marketing infrastructure:The availability and the nature of the marketing available in different countires may vary widely. Example, an advertising medium very effective in one market may not be available or may be underdeveloped in another market. 7.Trade restrictions:Trade restrictions, particularly import controls is a very important problem which an international marketer faces.

8.High cost of distances:When the markets are far removed by distance, the transport cost becomes high and the time required for effecting the delivery tends to become longer. Distance tends to increase certain other costs also. 9.Differences in trade practices:Trade practices and customs may be differ between markets.

 International marketing decisions The concept of marketing are universal. But international marketing present a more complex task as compared to domestic marketing because of uncontrollable international marketing environment. In international marketing a company has to make broadly five strategic decisions:-

1.

International marketing decision:

The first decision a company has to make is whether to take up international marketing or not. This decision is based on number of factors such as the present and future overseas opportunities present and future domestic market opportunities the resources of the company, company objectives,etc.

2.

Market selection decision:

Once it has been decided to do international marketing, the next important step is the selection of the most appropriate market. For this purpose, a thorough study of the potentials of various overseas market and their respective marketing environment is essential. Companys resources in such market. A proper selection of the overseas markets, therefore, is very important.

3.

Entry and operating decisions:

Once the market selection decision has been made, the next important task is to determine the appropriate mode of entering the foreign market. If the company decides to do direct exporting it has make strategic decisions about physical distribution in the overseas market.

4.

Marketing mix decisions:

The overseas market is characterised by number of uncontrollable factors. The marketing mix consists of internal factors which are controllable. The success of international marketing therefore depends to a large extent on the

appropriateness of the marketing mix. The elements of the marketing mixproduct, promotion, price, physical distribution- should be suitably designed so that they may be adapted to the characteristics of the overseas mrket.

5.

Marketing organization decision:

A company which wants to do direct exporting has also to decide about its organisational arrangements so that the exporting function may be properly performed. This decision should be necessarily be based on a careful consideration of such factors as the expected volume of export business, the nature of the overseas market, the nature of the product, the size resources of the company and length of its export experience.