Discuss the major steps or decisions in International Marketing.

The major steps or decisions in International Marketing are –

1) Deciding on entering International markets –
Major factors that drive organisations to go international are –
Market – First reason in because of no growth opportunities in the domestic market. To sustain its growth, an organisation moves to lure customers in more attractive markets. Since the organisation has a vast experience in marketing in domestic market, they rely heavily on the experience and brand value to enter new markets.

Competition – It is because of entry of competitors that can be domestic as well as international that an organisation sees no new customer base in the domestic market. The organisation tries to invest in international market to maintain its profitability and counter competition. Sometimes the organisations enter into the competitor country. This helps reduce the organisations dependence on one market.

Environment (technology, Government policies) – The world is constantly shrinking into a global village with the advent of technology in past few decades. The organisations today have ample of opportunities in different countries to market their products. To improve standard of living and invite investments in their country, governments have also relaxed their laws which paved the way for international trading and foreign investments.

Cost – Some of the foreign markets are more profitable than domestic markets. Exporting is most of the times favourable than domestic operations. To achieve economies of scale an organisation needs high sales. This can be achieved by gaining more customers in new markets.

2) Analyse Marco and Task environment –
An organisation operates in the Macro and Micro environment.

Macro Environment in International markets exists in the form of cultural forces, political forces, economic forces, competitive environment, and Geography of the region.

Culture is passed on from generation to generation. It affects the regions social structure, habits, life-style, customs, traditions, etc. These vary from country to country. Adjusting to the nation’s culture is the biggest challenge that marketers face. In one country the customer may be independent in making a purchase, while in other country the elders in the family have a final say due to great respect for elders in that country. In such cases the promotion campaigns will have to be designed accordingly.
Political forces have a major influence on price, effect on the host nations organisations, legal processing, employment generation advantages, etc. For example, in some Muslim countries, a salesman cannot see the women of the house.

Economic condition is the attractiveness basis the income level of the majority of the population, their savings habits, exchange rates, GDP, etc. For example, in some markets, the majority of the population likes to spend the earnings, while in others, people like to invest more in savings.

Competitive environment in the target nation will have a huge impact on the marketing plans and program. For example, Imagine Apple trying to enter an Asian market where Samsung is the market leader. The Marketing program will be different from that implemented in Canada or UK.

Geography of the country will impact the distribution, communication as well as product specifications. Climate, topography, natural resources, etc. affect the marketing functions. There will be changes to support services like guarantees, services, delivery timelines, etc. These have to be analysed for each country of operation to make correct marketing decisions.

Micro environment is further divided into two parts, the Task Environment and the Internal Environment.
The Task environment is made up of suppliers, Intermediaries, customers and competitors. The task environment has factors external to the organisations but are partially controllable by the organisation. Analysis of the infrastructure, roads, transportation and communication facilities affect the distribution and promotion activities in foreign land. For example, Apple attributed less sales of its iPhone’s in India because of no LTE network launch in 2015 and 2016. LTE network was available to customers in late 2016. This was made available by only few mobile carriers.

Internal Environmentincludes factors that are internal to the organisation and are partially controllable by the organisation. The Internal environment refers to the Company itself which is also partially controllable and sometimes referred to as 7M’s of an organization – Members, Make-up, Management, Money, Machinery, Materials and Markets.

3) Selecting the markets –
The decision to enter the markets is based on the opportunities in international markets and also meeting challenges that the organisation has never faced in the domestic markets (Threats). The process starts with analysis of the international market. It mostly depends on the attractiveness, low market risk, low competition, and organisations capabilities (strengths). Most of the organisations first try to enter the neighbouring nations. For example. Canada is the largest US market, Mexico is the second largest market for US. Similarly, a small nation besides political and economic stability with high income class may not be attractive because of small population (Singapore).

The organisation should first align the company and country needs. If found attractive, the Marketing mix analysis is done for adapting to the new market. Analysis is done on the costs involved, projected sales, risks involved and profit predictions. Basis these factors the organisations takes a decision to enter or not to enter the international markets individually.

4) Select entry strategies –
The organisation has broadly these options for entry – Exporting, licencing, joint venture or direct investing.

i) Exporting can be indirect as well as direct. In Indirect exporting, the organisation gets into contract of another domestic organisation which takes responsibility for moving products overseas. The different kinds of such firms are –

Commission agents locate the buyer firms in foreign countries. They negotiate the price and get commission from the foreign clients.

Export management companies (EMC) carry out business transactions in the name of the manufacturer. They receive a commission, salary, etc. for their service.

Export trading companies (ETCs) purchase products for resale in international markets.

Export Merchants purchase products from manufacturers, and package and market the products basis their own requirements to their clients. The business is done in their own name, and they are themselves responsible for the risks involved.

Export Agents on the other hand represent the manufacturer. They don’t carry the risks associated with the business.

Country-Controlled Buying Agents are governmental agencies in the foreign country that locate and purchase goods basis the requirements.

In Direct Exporting, the organisation has no independent intermediaries involved. It sells its own products in the international market or markets. This is achieved by any of the following options-
Foreign Sales Representatives or Agents are sales representatives working on a commission basis. They travel to foreign countries to get business. They do not take responsibility of the risks involved and work on a contract basis. They may have the exclusive rights with the sellers.

Foreign Distributor sells the products at a profit and takes the title to the products bought.
Foreign Retailers sell the products in foreign country. They are contacted by organisations sales representatives, etc.

Overseas sales branch or subsidiary handles sales and distribution of the products in a foreign country. The functions may even include promotion and warehousing.

ii) Licencing – The organisation licences a foreign organisation to use a manufacturing process, trademark, patent, trade secrets, etc. at a fee or loyalty. This provides for low cost and easy entry into the international market. Both the organisations are benefitted by licensing. The licensor doesn’t needs to handle all the processes except sharing knowledge, and the licensee gets the expertise, brand name and established business processes.

iii) Joint venture takes place when a foreign investor joins hands with a domestic investor to form a new company. This is done for many reasons like government policy, expertise of one organisation benefitting the other like financial investment, managerial resources, etc.

iv) Direct investing involves ownership of the manufacturing facility in a foreign country. This involves greater risks as well as high returns if successful. The organisation enjoys patent and trademark protection, sops or tax incentives from the government for creating jobs in the country, free hand in controlling marketing and production functions.

5) Designing the Marketing Program –
The marketers need to decide at this stage the extent to which changes should be made to the existing 4P’s – Product, Price, Promotion, and Place (distribution) to adapt to the market in the new country. The organisation can implement the same strategy as part of Global Marketing, but there should be some adaptation done to suit he local needs and make profits.

Product decision –
There are 3 options for product decisions in international markets. First, Product extension, in which the same existing product is introduced in the international market. For example, Coca-Cola drink, electronic items like laptops, etc. This strategy not always successful for all products because of lifestyle, religious and cultural differences in different countries. In India, cow is revered by Hindus so beef products are rarely sold by international food chains. Product extension requires less R&D, investment in newly designed equipment, staff training, etc. The transfer of knowledge to the staff is also easy. Second, Product adaptation is making changes to the product to suit the needs of the new market. Needs, preferences, culture, habits, and attitudes vary from country to country. In Japan people use small refrigerators and microwaves because of space constraints as compared to US. Similarly, metric system also requires product redesign. Thirdly, Product Invention is introducing a new product for the market in the new country of operation. McDonald’s introduced Veg-burgers in Indian markets as majority of the population is vegetarian. Similarly, packaging of the product is changed suiting the country’s beliefs, culture, climate, etc.

Pricing decision –
The conditions in foreign markets is mostly different from domestic markets. The cost structure, demand, competition, tax structure, and economy of the foreign market have direct effect on pricing of the products in the foreign market. Pricing is mostly affected by costs related to taxes, transportation, promotion, product innovation, tariffs and profit margins for intermediaries, etc. The Organisations set the price basis the cost, market, environment, or a uniform price in all international markets.Study of Environment takes into consideration inflation, monetary exchange rate fluctuations, pricing policies of the government, etc. The last option of setting a uniform price is risky as the product will be considered very expensive in a developing country or low priced in a rich country where people may consider it of low quality. An organisation has to analyse all the factors and arrive at pricing of the product to meet its set objectives.

Promotion decisions –
The organisation has the option of using the same promotion message or adapting it to the new international market. Similarly there are factors like availability of media which affect the promotion strategy. The barriers to using the same communication are usually related to language, government policies, culture, media availability, and agency availability. In most of the Asian countries, partial nudity in advertisements is not ok while in European countries people are open to partially nude females in message campaigns. In Arabic countries women cannot work in ads, in some countries children cannot promote products. Advertisements on cigarettes and alcohol are banned in India.
Language will be a barrier in country where majority of people are not literate. Similarly, where people feel pride in using their local language, organisations have to crate message campaigns in the local language. Translating the same message in the local language can have many problems. For example, KFC in late 1980’s translated its slogan “Finger-licking good” as “Eat your fingers off”. HSBC’s “Assume Nothing” campaign was scrapped when it was brought overseas and was translated in many countries as “Do Nothing”.

The availability of media such as Print, radio, television, direct mail, etc. also has great impact on promotion in foreign countries. A country with poor mail service will impact direct mail. In most Muslim nations, personal selling cannot be done with the women of the house.

Distribution decisions –
The distribution channels in international markets are more complex than the domestic markets. This is basically because of the existence of Exporters and Importers in the channel.
The organisation has to study how the products are distributed to the final consumers once they are produced at the manufacturing facility.

Major decisions are made to ensure channel efficiency, level of control on distribution, and the engagement of the channel partners.

The channel structure varies from country to country due to various geographic, technological, channel availability and economic condition. In one country, like Japan, Procter & Gamble sells its soap through a complex distribution network. The product moves from 4 kinds of wholesalers before actually being sold to a retailer. While in developing countries like Iran or Philippines, the same kind of product is sold door-to-door. The product storing capacity of retailers, the buying habits of the buyers also affects the distribution strategy. In some countries, people like to buy in small quantities. Similarly, unlike US or UK, most of the developing countries have small retailer shops serving a neighbourhood where people buy in small quantities. So bulk breaking which is an important function of intermediaries has to be taken into account for the country of operation. Changes in packaging of product basis the quantity needed and weather conditions for long and quality storage adds to the costs.

The organisation should analyse all the relevant factors associated with distributors and work closely for a long term relationship with them for successful channel functioning.