"Why is international marketing important for organisations?"
We live in a global market place and as the world continues to shrink, marketing opportunities expand. Mc Donald's fast food, Kathmandu Clothing and Motorola Cellular phones are available for sale around the world. You can now find on quite a lot of products and brands multi-language labelling or that certain products such as coffee beans have been labelled as "Free Trade Certified". After World War II there was an incomparable growth into global or international markets by companies that used to only serve patrons living in their native land. Drastic advances in communication and transportation continue to bring markets closer. Business people have started to make use of global marketing as they become aware to their companies' full business potential. This is the reason you may find multi-language labels on many products from clothing to electric appliances. However there is another main reason why companies must take international marketing seriously and that is for survival. Any company these days that does not have, or does not become global in their business outlook risks losing its domestic business to competitors from outside its borders such as Taiwan for example that bring lower costs, more experience and better products. The skill lies in identifying the areas of greatest potential profit, and developing global or international strategies that still function effectively in meeting local needs. Understanding the complexities involved in developing powerful international marketing campaigns is a key element in building successful sales advantages. I use the words international and global interchangeably throughout this document.
Marketing is one of the functional areas of a business separate from finance and operations and along with product design, manufacturing, and transportation, make up a company's value chain. Decisions need to be made at every stage from the outset of an idea to the support given to customers after the sale for example a 0800 help line to answer any questions consumers might have in using their new computer software or help with trouble shooting. These decisions should be assessed in terms of their ability to create value for customers. It used to be that marketing was just another link in the chain, but due to competitive pressures many organisations now highlight the effectiveness of linking marketing with other functional areas as above, like design, manufacturing or other value related decisions from the start. This technique is called boundaryless marketing and hopes to rid communication barriers that can exist between marketing and other functional areas.
The value chain and boundaryless marketing (Figure1.1 page 4, Global Marketing, 3rd edition, Warren J. Keegan)
For any organisation working anywhere in the world, the heart of marketing is to exceed the competition by creating apparent value for customers. Below is a value equation to use as a guide.
Value = Benefits/Price (Money, Time, Effort, Etc) (page 4, Global Marketing, 3rd edition, Warren J. Keegan)
The marketing mix is vital to the above equation as the benefits are a combination of the product, promotion and distribution. Value apparent to customers can be increased in two ways - offer improved benefits or lower prices or both methods can be used simultaneously. Marketers may design new channels of distribution, offer improved benefits by improving the product in some way such as adding a feature like a camera to a cell phone, create better communication strategies or some kind of combination of all three. Marketers can also increase value by finding ways to cut costs and prices. An example of a company that uses price as a competitive weapon is fisher and paykel now operating in China after moving from New Zealand due to cost and increased competition from overseas competitors, manufacturing white ware and benefiting from a plentiful supply of low-wage labour and/or access to cheaper raw materials. Companies may also reduce prices if costs are low because process efficiencies in manufacturing. If a company is able to offer a combination of superior product, distribution and lower prices than its competition it will have an extremely beneficial position. An example of this would be Microsoft's Xbox game console out selling Sony's Playstation 3 another would be say a manufacturing company that has acquired new technology like the company I work for in Elsdon Porirua called Effuzi international Ltd. They manufacture seating for cinema, lecture theatre, performing arts and stadiums. They acquired new robotic (robot) wielders in the late 90's enabling them to vastly increase their product output and decrease costs of labour at the same time while being able to distribute these products anywhere internationally but mainly in Australia and New Zealand as they were required.
So when a company succeeds in creating more value for customers than its competitors, they have competitive advantage in an industry. This is measured against rivals in a particular industry, for example a global/international industry maybe - cars, electronics, clothing, sports equipment, steel, oil and many others - the competition is therefore international as well. International marketing is essential if a company competes in any of these global industries or any that may become international reaching newer, bigger markets. International marketing presents great opportunities and also great challenges to companies that decide whether or not to offer their products or services around the world. Turning relationships into competitive advantages is also possible for example managing direct customer relationships in China.
The subject of marketing is common, although it does vary from country to country due to different cultures. These differences mean that the marketing approach proven to work in one country may not work in another. Consumer choice or liking, competitors, channels of distribution and communication may vary. It is important to recognise the degree to which marketing strategies can be used worldwide, as well as the degree to which they must be adapted. For example, If New Zealand wanted to attract Japanese tourists to Queenstown they would have to get familiar with the characteristics of the Japanese tourist and their travel plans, investigate which factors in regards to culture are influencing the tourism companies' promotion in Japan, and identify critical success factors for successful promotion of New Zealand tourism on the Japanese market, and identify similarities and differences between small and large companies when it comes to tourism promotion on the Japanese market. It is found that the numbers of Japanese tourists to New Zealand has decreased over the last decade, much due to macro factors such as changes in aviation and exchange rates, and increased competition from short-haul destinations. However, Japan still represents a main international interest, which makes it crucial for tourism companies to be familiar with the characteristics of the Japanese tourist and their travel patterns.
Tourism is also a great tool that companies can use to show off new products and enables tourists to experience new products sold in a foreign country. Aeroplanes have advanced a long way since first being invented using propeller strength to jet engines now a common sight everywhere around the world bringing more people, faster and cheaper than ever before. An indispensable feature of international business is face to face communication and without the use of aeroplanes this would be extremely hard to accomplish. As well as planes moving people, they can now move large containers up to 40 foot, full of all kinds of goods and they can be transferred to boats, trains or trucks and distributed easily all around the world or a country. All this helps a company to do business abroad much more easily too.
The importance of international marketing is titanic! With America representing about 25 percent of the total world market for all products and services they still miss 75 percent of the worlds market so to achieve maximum growth they must go outside their own market and go international. For example Coke realises the potential of outside markets as they earn 90 percent of their operating income and two thirds of their revenues made by its soft drink business outside of the U.S.A. (Page 12, part 1 introduction, the importance of Global Marketing). Numerous companies have already recognised that the companies that will survive and flourish in the twentieth century are the ones that become international, while some may fail to respond to the challenges and opportunities other companies maybe immersed or brought out by more successful powerful organisations, some will merely vanish.
Another very important reason for organisations to become international is technology. Technology crosses both national and cultural boundaries', it is in fact stateless as there are no cultural boundaries limiting its use. Once a technology becomes developed it very soon becomes available just about everywhere throughout the world. Both products and maybe even cultures are becoming more standardized. Technologies that have been invented helping to create this phenomenon include satellite dishes and world spanning television networks such as the BBC, CNN, ETV or MTV just to name a few reasons causing this creation of a global village. Other driving forces are the World Wide Web or internet as when a company establishes itself a website it automatically becomes international because it can potentially reach anyone with access to a computer with internet access. Internet usage is growing larger all the time with usage heaviest in the western world and then developing countries in the east such as the Middle East and Asian countries. Internet purchase transactions can be borderless so the opportunities are immense and the internet can translate languages helping to break communication barriers or be used to phone or video conference business meetings.
Product development costs are forever increasing and are generally considered the greatest barrier to new product introductions. To counter this, companies must recover costs in a global market because for some products such are drugs / pharmaceuticals or oil; no single national market is likely to be large enough to bear funds of this magnitude. To extract the maximum amount of oil from reservoirs worldwide, oil companies have to drill more complex, deeper wells in more aggressive environments. When wells run tens of thousands of feet underground it is very difficult to sustain stability in the wall of a borehole (The name of the hole that is drilled to get the oil). Industry analysts estimate that drilling problems resulting from wellbore instability cost oil companies in the region of $6 billion a year (http://www.mathworks.com). Further to this, global marketing does not always mean operating everywhere; maybe in just a handful or more countries for example, only 12 countries make up 70 percent of sales for the $40 billion market for recorded music (Page 24, introduction to global marketing, product development costs).
Quality is becoming more and more a large factor now for a company's products. Global companies are raising the bar for players in an industry. When a global company creates a benchmark in quality, other competitors in the same industry must then rapidly make their own improvements to their products or services and get up to the same level. Global marketing strategies can manufacture superior revenues and greater operating limitations that help support product design and manufacturing quality. Therefore if a national and international company were to spend 10 percent of their sales revenue on research and development, the international company's total revenue would be a great deal amount more than the national company given that it serves the world market not just its own country.
A compelling force in the opening out of the international economy and the growth of global marketing is economic growth. Economic growth in developing countries has created new market opportunities that give great motivation for organisations to expand internationally. It is this economic growth that has reduced resistance that may have been in some countries before in retort to the entry of foreign companies into domestic economies. For example, now China is experiencing this economic growth, its government may look more positively on outsiders. Therefore a growing country is also a growing market and new opportunities for more people. Outsiders can enter this market without threat of taking over the local existing firms.
International companies hold an advantage over firms that are not global. This advantage is called leverage because it has more experience in more than one country. This lets a company to use fewer resources when chasing opportunities in new environmental markets.
International marketing is very important for organisations, they must use the right tools such as the four P's, Place, Product, Price and Promotion to create global marketing programmes. Marketing, research and development, manufacturing and other activities make up a company's value chain which firms use to create superior customer value. International companies must persist in pursuing a competitive advantage over their competitors. Although all companies must use the marketing mix, value chain and competitive advantage whether they operate domestically or internationally, the global companies must not fail to pursue global opportunities or they face being pushed aside by bigger, stronger global competitors.
International marketing does not necessarily mean offering products all over the world but maybe in a few select countries. International marketing strategies can be based on different elements such as brands, product design, product positioning, distribution or advertising.
The importance of international marketing can be seen in rankings published in magazines such as the Wall Street Journal for their profits, revenues or other measurable categories. It does not necessarily matter the size of an opportunity depending on the product and more business people are learning that increasing profit and revenues indicate hunting for new markets outside their own home land.
Therefore I have to agree that international marketing should be such an important aspect of any business if they wish to compete against global giants that seek to operate within other domestic markets and threaten to devour existing local firms.
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Warren J. Keegan, Mark C. Green. Global Marketing: 3rd Edition Person Education Ltd 2006
Touch and talk, worldwide marketing, manufacturing and R&D http://www.touchnfun.com/html/company.htm
The Mathworks, accelerating the pace of engineering and science http://www.mathworks.com/products/matlab/userstories.html?file=2972&title=GeoMechanics%20Cuts%20Product%20Development%20Costs%20by%2050%%20Using%20MathWorks%20Tools