Global Marketing
October 24, 2007
Global Marketing
Global marketing refers to marketing of goods and services across political boundaries i.e. in another country.
To succeed in global marketing, one has to understand the macro-environmental factors operating within that country, the principle difference between domestic and foreign marketing is the environment under which the two operate, although the 4Ps factors are generally the same all over the world the macro-environmental factors are unique to a country.
These macro-environmental factors are:
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Economic environment
This is the level of economic development a country is in. This affects the purchasing power of products i.e. in the poor countries like Zimbabwe the expensive products like Luxury cars, microwaves ovens are not bought in large quantities unlike in countries like US.
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Political environment
The political environment in a country may favorably or unfavorably influence international marketing e.g. issues like trade restrictions and tariffs, quotas, embargo or exchange controls affect international or global marketing.
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Social-cultural environment
The term culture can be said to be behaviour and ideals handed down from generation to generation as determinants of human behaviour. These are national culture, language, aesthetics, education, religion, attitudes and values and socialization.
Thus for an organization wishing to carry out international business need to consider various things like:
Deciding whether to go abroad
Most organizations prefer to stay domestic, if their domestic markets are large enough. The benefits of going abroad are:
The possibility of obtaining higher profits in foreign markets.
The possibility of obtaining higher sales volume with the consequent reduction in cost per unit.
The possibility of lengthening the product life cycle when the product is introduced into foreign markets.
The possibility “evening out” seasonal fluctuations in demand since some markets may buy the products during one period of the year while others will buy the same during another period of year.
The possibility of spreading the risk inherent in any business. The possibility of selling obsolete products in foreign markets.
Although going abroad has many benefits, it also has several risks.
The organization might end up dealing with volatile currencies in unstable country.
Managers may need to learn a new language, learn a new market and thus takes time and is costly.
The organization may face political and legal uncertainties.
The organization may end up redesigning their products to suit different customer needs in their countries.
Deciding which markets to enter
The organizations wishing to go abroad must have rational mechanism for ranking various foreign markets and deciding which one is the best to enter.
Organizations can rank them using size, growth, cost of doing business, competitive advantage and risk level and techniques such as IRR.
Deciding how to enter the markets
Once the marketer has decided or selected which markets he thinks have attractive opportunities, he must decide how to enter them. This may be through:
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Indirect or direct exploring
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Licensing
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Joint ventures
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Direct investment
Indirect or direct exploring
This refers to the process of selling abroad products which are manufactured in the seller’s home country. It can be carried out indirectly i.e. an organization’s products are sold abroad through independent intermediaries and not the organization itself.
Exporting can also be sold directly i.e. the organization is itself involved in the exporting activity rather than having intermediaries.
Joint ventures
This means the foreign organization can join up with local investors (nationals) to set up a production and marketing facilities in which they share ownership and control.
Direct investment
In this form, the international organization directly owns foreign based assembly or manufacturing facilities. If the market is large enough, foreign direct investment offers distinct advantages since the firm secures cost economics in the form of cheap labour or raw materials, foreign government investment incentives and shipping or freight savings. It also strengthens its image in the host country since it creates jobs. The main disadvantage is that the firm exposes large instruments to risks such as blocked or devalued currencies worsening markets.
Licensing
It is just like joint ventures but in this mode, the international organization licensing a company in the host country to use a manufacturing process trademark, patient, trade secret or other value for a fee or royalty. The foreign organization gain entry at little risk. The licensee will also gain in that he gets production experience; the licensor has less control e.t.c.
Deciding on an appropriate marketing mix.
Orgs that contemplate going abroad must decide to what extent they will adopt and the marketing mix to local environments one can use the 4Ps and for the promotion one must decide which strategy to use whether straight expansion, communication adaptation, product adaptation, dual adaptation or product invention.
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