Essay Solution- International Marketing Strategy
Today, there is a market where multinational corporations (MNCs) have transferred expertise to other, less industrialized, countries. These provide sources of cheap labour for manual skills as in Indonesia and Thailand, intellectual skills such as the computer software industry in India, and production expertise as in the example of the Republic of Korea. Bangalore, indeed, the centre of the Indian high-tech business, is becoming a fully fledged research and development centre to rival Silicon Valley in the US. In an economy where competitiveness is global, companies have to take advantage of resources available in organizations in other countries to retain competitive advantage whether in innovation, cost, quality or speed of production and delivery.
Technology and communication have combined to provide an infrastructure in which information flows are immediate and facilitate the movement of funds around the world. The transfer of processes associated with production technology such as ordering, delivery documentation, invoicing and the payment of goods and services were not possible ten years ago. The development of these technologies, aided by the plummeting cost of computer memory, has given an added fillip to the globalization process. This, in turn, has created new organizational forms in which companies have to cross borders not only to access customers, but also to communicate with other parts of the organization, exposing personnel to new forces which they have to learn to handle. People in other cultures, whether as consumers, colleagues, partners, suppliers or legislators and functionaries, constitute groups which often think and act in different ways from their counterparts in the domestic market and indeed from each other. International marketing is distinguished from its domestic form by a high level of diversity.
Framework for international marketing:
and (1978) emphasized the pre-export behaviour of firms within their model of export propensity. Generally, these models identified three states of international expansion through which firms can proceed. and (1998) highlighted these states as being: (1) stimuli for international experimentation; (2) active international involvement; (3) committed international involvement.
State 1 occurs when a firm operating in the domestic market experiences external and/or internal stimuli which encourage it to begin exporting. External stimuli can take the form of unsolicited orders from buyers, of having distributors abroad, and/or of using domestic export agents. Firms that start exporting through external enquiries exemplify a passive approach to international marketing. This involvement is fortuitous, marginal and intermittent with short-term profits. As the firm becomes more involved, it moves to State 2, becoming active internationally. It undertakes systematic exploration of marketing opportunities that often impose considerable physical, financial and managerial demands on the firm’s resources. At this stage the firm can still retract from its international interests, but it may choose to proceed to State 3, as a committed participant in international marketing. Until the early 1980s, international expansion was viewed as a stage of incremental growth. Earlier studies had considered international development in terms of exporting from the domestic base, e.g. (1966) explained international expansion using a model showing the export planning process. It proceeded through three stages which were: (1) identifying and measuring market opportunities; (2) developing the export marketing strategy; (3) implementing the strategy.
Later, (1987) broadened his concept of international marketing beyond simple exporting (selling domestic goods to a buyer in another country) to show marketing practices with the marketing mix encompassing an international dimension, involving a measure of overseas investments and co-operation with an overseas business firm. He emphasized the importance of the marketing research contribution to successful international expansion. Models were developed that used marketing research to prioritize management decision-making associated with international expansion. In these, after studying the enduring international characteristics of a market such as target market geography, topography and demography, market segmentation was used to identify critical characteristics of the market such as consumer buying patterns and consumption ( & 1972)
International marketing planning and implementation:
The process of international marketing requires careful planning to achieve the organization’s strategic goals. Different marketing approaches are likely to be used for different markets. The plans should consider these variations. The planning process should provide direction regarding the ways in which marketing is to be implemented. It should also be sufficiently flexible to incorporate adaptation of marketing tactics that may become necessary in the light of unpredicted changes in market conditions.
Usually the marketing plan will aim for growth, in which case, in terms of international market expansion, the firm may undertake ‘initial entry’, ‘local market expansion’ or, at a much later stage, ‘global rationalization’ ( & 1989). The international marketing plan should incorporate these phases of expansion emphasizing the methods expected to be used to achieve the desired growth. For example, initial entry might require establishing appropriate channels of distribution, such as agents and distributors, to support export activity. Local market expansion might need marketing to focus on promoting a particular message using ‘above the line’ media such as television and the press as well as ‘below the line’ sponsorship and public relations. Global rationalization could be undertaken by concentrating on cost cutting throughout the operations to achieve more competitive prices.
Whatever the level of international expansion, an international marketing plan has to be prepared. The marketing plan is a document that details the methods and tactics for attaining the strategic goals of the organization. It shows the actions needed to achieve the strategic objectives. Strategic plans usually have long-term vision, providing direction for the organization for upwards of two, three, four or five years ahead. Marketing plans most commonly run on a one-year time scale with provisional guidelines for the subsequent years two and three. Usually marketing plans are prepared on an annual cycle that fits the firm’s financial accounting year.
A marketing plan sets out to provide a framework for the proposed marketing to take place. It identifies the objectives of the plan together with the methods and resources to implement it.
Further details of the market planning process are provided in (1995) and simplified illustrations are shown in and (1987). and (1996) concentrate on applying market planning within the service sector. (1998) identifies some of the problems associated with implementing formal planning systems and provides insights in to how they can be overcome.
International marketing plan
For international marketing planning, firms extend the traditional marketing plan to the international arena. Such plans start by defining the firm’s business mission and strategic objectives showing the strategic direction in which the firm wishes to move. The plan proceeds to analyse the environment in which the firm operates, showing the external influences on the firm. The environmental analysis examines the political (and legal), the economic, social and technological influences on the firm’s activities. At this time competitor activity within the market is assessed and the firm’s competitive position is ascertained relative to the competitors examined.
The firm’s business mission, strategic objectives, the environmental analysis and the firm’s competitive position provide the framework for assessing the firm’s strengths, weaknesses, opportunities and threats (SWOT analysis) within the market. The resource constraints are also considered, including the finance, human resources and time available to reach the defined goals. The plan provides an assessment of the firm’s internal strengths and weaknesses as well as those of its competitors. Internal strengths and weaknesses relate to internal operational and organizational factors such as product characteristics, management expertise, research capability as well as financial position. External strengths and weaknesses concern the firm’s performance relative to its competitors.
The plan should also consider the internal and external opportunities and threats facing the firm. Opportunities may relate to issues ranging from new product developments and new markets to mergers and acquisitions. Threats can include an assessment of the firm’s vulnerability to over-extending resources through too extensive geographical coverage, dependence on importing agents, lack of transferability of products and service to new markets, etc.
Traditionally, international marketing plans have followed the theoretical framework of a firm’s international growth taking place in incremental steps. Initial plans detailed proposed marketing operations in one country. As expansion occurred, they were extended to encompass the other countries involved ( & 1989). Typically, international marketing plans for smaller firms have shown this type of incremental growth. The plan set out to establish marketing in one country. Gradually, according to the firm’s resources, marketing was extended across borders to encompass more and more countries. However, many firms, especially the larger organizations, have established international, even global, operations. In these cases the international marketing plan is much more extensive, often being a combination of national plans that fit the corporate strategy. These large firms have passed the initial market entry stages of the newcomer and have established marketing operations in the countries concerned.
In the situation of the large firm, usually management operating within each country, or territory, prepares its own marketing plan. The plans have to fit the corporate strategic plan and have to be agreed with central, head office management. Considerable negotiation between all parties concerned may be required before the plans are accepted. The mission, the strategic goals and objectives, will be common for all concerned, but the method of implementing the goals may differ. For example, in the case of the global detergent supplier Unilever, the marketing plan used in Chile or Canada, while similar, is likely to differ in detail from the marketing plan used in Hong Kong or the UK. But the country plans will fit into the overall corporate plan.
A further complication in international planning is the potential for rapid international expansion using IT. With the support of IT, especially the increased use of the Internet and its associated services, firms can internationalize their operations almost instantaneously, should they so desire. Since most of the developed world and many parts of the less developed economies have access to the Internet, there is the potential for global coverage at the early stages of international expansion. The major constraint, apart from access to the Internet, is the limitation of logistics support for the product or service to reach the consumer, as is evident at peak demand periods such as Christmas when demand cannot always be met within the time constraints. Indeed, some firms concentrate entirely on using the Internet, almost to the exclusion of the conventional marketing mix. Firms such as Amazon.com and easyJet.com develop their marketing mix in terms of the product/service, promotion and pricing tactics in response to customer demand as evident through their use of websites within the Internet channel. In this way, the market planning process is increasingly used to consider cross-border international expansion on a shorter and more extensive scale than had previously been practicable.
The international marketing plan aims to provide a framework for implementing marketing tactics, covering approaches to product development, pricing, promotion and distribution. The plan identifies the financial, human and time-scheduling resource implications of the recommended actions.
Usually, international marketing plans are derived through a process of combining individual national (and even regional) marketing plans into a corporate plan. Such plans have to be agreed by all the parties concerned to be effective, a process that can take considerable management skill to effect. It is this skill that is necessary for the successful implementation of international marketing across national borders.