CC BY
105Yeritsyan H.
PhD in economics, European University, Yerevan
THE ROLE OF INTERNATIONAL MARKETING IN THE SCOPE OF COMPANY
DEVELOPMENT
Keywords: globalization, international marketing, marketing mix, 4 Ps of international marketing, multinational companies.
Ключевые слова: глобализация, международный маркетинг, комплексный маркетинг, 4 Ps международного маркетинга, транснациональные компании.
Аннотация
Компании выбирают выход на глобальный рынок или на международные рынки по разным мотивам, и эти разные цели на момент выхода на рынок должны создавать особые стратегии, цели исполнения и даже методы проникновения на рынок. Тем не менее, компании часто придерживаются стандартной стратегии выхода на рынок и развития. Наиболее распространенный метод иногда называют методом «увеличения обязательств» развития рынка, при котором выход на рынок осуществляется через независимого локального партнера. По мере роста бизнеса и доверия часто происходит переключение на дочернюю компанию с прямым контролем. Этот подход к интернационализации обусловлен желанием построить бизнес на рынке страны как можно быстрее и исходным желанием минимизировать риск в сочетании с необходимостью приобретения необходимых знаний о данной стране и данном рынке. Разработка маркетингового микса для целевой страны осуществляется через международный маркетинг. Это может быть достигнуто за счет превращения имеющихся маркетинговых стратегий в международные стратегии и полной настройки системы маркетинга (4Ps) для целевых стран.
International marketing is becoming a major trend in modern business. To this effect, several researches regarding the purchase behavior and consumer demand for various products across national boundaries have been and are still being assumed. The international marketing is characterized as the process of management responsibility in identifying, anticipating and satisfying customer requirements across international boundaries. In frames of the international marketing, companies are concerned in taking general decisions in one or more variables of the marketing mix. Therefore, companies targeting to enter international markets deal with the task of whether to adapt or standardize the elements of marketing mix, that is, four Ps (product, price, place, promotion)1.
During the last ten years, business has generally grown and the majority of companies have respectively expanded their service or product offerings in international market and different cultures2. Moreover, the scientists have noted that in the challenge to hold a market share in the growing competition in international markets in addition to achieve benefits, multinational corporations (MNCs) continuously deal with the problem of economical survival by understanding which product strategy to choose while entering in international markets.
Companies choose to go global and enter international markets for different motives, and these diverse goals at the time of entering should generate special strategies, execution objectives, and even methods of market penetration. Yet companies frequently pursue a standard market entrance and development strategy3. The most common is sometimes referred to as the «increasing commitment» - method of market development, in which market entry is done via an independent local partner. As business and confidence grows, a switch to a directly controlled subsidiary is often enacted. This internationalization approach results from a desire to build a business in the country-market as quickly as possible and by an initial desire to minimize risk coupled with the need to learn about the country and market from a low base of knowledge. A few of the more widespread reasons are provided below4:
1. Increase sales. If the company has a unique product or technological advantage not available to international competitors, then this advantage should result in major business success abroad. For example, if you run a software company and add a French and German language version, you are extending your total market by nearly 200 million.
1 Yeritsyan H. International Marketing: Methodological and theoretical guideline. - Yerevan, 2018. - P. 22-25.
2 Yeritsyan H. Barriers To Enter International Markets, Marketing Analysis // Akunq Collection of scientific articles. - Yerevan, 2018. - N 3 (19). - P. 171-180.
3 Yeritsyan H. La stratégie des multinationales: du local au global // European Academy Abstract Collection. 2013. - P. 52-55.
4 Biggs R.P. 10 Reasons to go International. 2014. - P. 2-4.
2. Improve profits. Many export markets are not as competitive as the U.S. and therefore price pressures are far less -ever wonder why a Jaguar car made in Coventry, England costs more in Coventry than in California? It is a common practice for U.S. products to be sold at a higher price (and margin) in many export markets - software translated into German is much appreciated by users in Germany and they will become loyal customers and pay a premium. A U.S. company will often enjoy a far less competitive landscape if it goes to the trouble of localizing.
3. Short-term security. Your business will be less vulnerable to periodic fluctuations and downturns in the U.S. economy and marketplace.
4. Long-term security. The U.S. is a large, mature market with intense competition from domestic and foreign competitors. Additionally, the U.S. currently has excess capacity so international business trade may become a necessity if you want to keep up in an increasingly global marketplace and enjoy the potential for cost savings.
5. Increase innovation. Extending your customer base internationally can help you finance new product development.
6. Exclusivity. Your company's management may have exclusive market information about foreign customers/prospects, marketplaces or market situations that are not known to others.
7. Economies of scale. Exporting is an excellent way to expand your business with products that are more widely accepted around the world. In many manufacturing industries, for example, internationalization can help companies achieve greater scales of economy, especially for companies from smaller domestic markets. In other cases a company may seek to exploit a unique and differentiating advantage (intellectual property), such as a brand, service model, or patented product.
8. Education. Under certain circumstances, a company might undertake an international market entry not solely for financial reasons, but to learn1. In most sectors, participation in the «lead market» would be a prerequisite for qualifying as a global leader, even if profits in that market were low. Lead markets include: United States for software, Japan for consumer electronics, Italy for fashion, Germany for automobiles and so on. It should be noted that if a company is to maximize learning from a lead market, it should probably participate with its own subsidiary. Learning indirectly, via a local distributor or partner, is obviously less effective and will contribute less to the company's development as a global player.
9. Competitive Strike. Market entry can prompt not by the positive characteristics of the country identified in a market assessment project, but as a reaction to competitors' moves. A common scenario is market entry as a follower move, where a company enters the market because a major competitor has done so. This is obviously driven by the belief that the competitor would gain a significant advantage if it was allowed to operate alone in that market. Another frequent scenario is «offense as defense», in which a company enters the home market of a competitor-usually in retaliation for an earlier entry into its own domestic market. In this case, the objective is also to force the competitor to allocate increased resources to an intensified level of competition.
10. Government Incentives (i.e., cash). It is common for governments to «incentivize» their country's companies to export. This often results in many companies entering markets they would otherwise not have tackled. The U.S. government offers a wealth of help when a company decides to begin exporting. Export assistance centers provide a one-stop resource and can be found in over 100 U.S. Cities. The Small Business Administration (SBA) offers Export Working Capital Programs that include guaranteed loans of $50,000 to $100,000 to help exporters grow their business.
International marketing is the adoption and use of marketing principles into another country, by companies overseas or across national borders2. The base of the international marketing is the expansion of local marketing plan especially concentrated on international marketing concept and international targets. It may be realized when a company is exporting its product which can be fulfilled through licensing, franchising or direct investment in the target foreign country. The elaboration of the marketing mix for targeted country necessitates international marketing. This can be enabled by extension of current marketing strategies to international strategies and totally customizing the marketing mix (product, price, place and promotion) for target countries.
Global marketing occurs when a company looks at the entire world as one market and markets to almost all countries worldwide. A global company needs to understand the requirements to service country-specific customers with global standard solutions and products. The key to success is a worldwide marketing system that retains a strong local country customer focus along with a global marketing strategy.
Globalization has had an important influence on international marketing. Increasingly markets have become open to international organizations as the cost and complexity of overseas operating has been reduced by globalization3. Companies can access lower cost resources and labor in developing countries. This permits companies to price their products lower and open up a broader market of people across various ranges of disposable income.
There are several factors that progressively drive international trade and marketing efforts. It is possible to increase market share by developing the business not only in domestic market, but also by expanding the activity abroad. In any case it requires respect to language, culture, market demand, economies, market infrastructure and laws. The extension of the activity in foreign markets finally precedes multinational companies to get a presence in all main regions of the world, to achieve large scale of international marketing experience and for some expansion within these regions to achieve a very broad breadth of international marketing. The last one gives to MNCs to build a global brand and a global marketing company.
In addition, a widespread customer base provides a hedge against the risks associated with only selling into a single market. For example, if the company only markets to domestic consumers and there is an economic downturn, many of the consumers may not be able to afford the product. Averaging the sales variance of the domestic and international markets re-
1 Biggs R.P. 10 Reasons to go International. 2014. - P. 2-4.
2 Cateora Ph.R., Graham J., Gilly M.C. International Marketing. 2015. - P. 472-475.
3 Levitt Th. The Globalization of Markets // Harvard Business Review. 1983. - Vol. 61, May-June. - P. 92-100.
duces the company sales variance over time. This adds more stability to company performance and a more consistent flow of sales and earnings per share. In addition, as domestic markets mature, international markets can provide the added opportunity needed for a company to continue to grow.
Not all businesses enter international markets as part of a strategic market plan. As shown below, many businesses are forced to consider international markets due to global competition1. The U.S. automotive and consumer electronics industries were forced to enter international markets reactively due to the competitive challenge of foreign brands; overproduction and excess capacity; and saturating domestic markets. If they had not made this move, many of these companies may not have survived a world of global competition. Others like McDonald's, Yum Brands, Starbucks and Apple have pursued a "proactive" international market strategy. They saw an opportunity to leverage their competitive advantage; to grow sales and profits; to take advantage of lower cost production; and to enjoy tax benefits. To succeed in global markets, however, depends heavily on knowledge accumulation and deployment of an efficient and effective global marketing strategy2.
Table 1
Reactive and Proactive Market Entries
_Reactive Market Entry
• Competitive pressure and survival
• Overproduction and excess capacity
• Saturated domestic market
_Proactive Market Entry
• Competitive advantage
• Sales profit growth
• Low cost production and tax benefits_
Developing a globally recognizable brand provides a company with new opportunities to more easily enter new or emerging markets and build customer loyalty. Consumers are naturally drawn to and trust brands that they recognize and are more inclined to purchase from those brands.
A common first step in international marketing is to expand into an adjacent market as depicted below. For example, a U.S. company would expand into Canada or a German company would expand into Austria. Similarly, a Japanese company might expand into South Korea or China; a Brazilian company into Argentina; or Russia might enter a nearby country in Eastern Europe. The adjacent countries are generally more familiar to the domestic business, closer and better known with respect to market demand, language, economies, laws, culture and market infrastructure.
The next step is to enter other country markets within the region. For Europe, Asia and Latin America this includes a wide variety of countries. For North America there are only two choices for the domestic company.
Figure 1.
Breath of International marketing
For grown companies this will eventually lead to market entry into much more attractive countries outside the region of the domestic market. For multinational businesses this leads to a presence in all major regions of the world and for some, expansion within these regions to achieve a very broad breadth of international marketing. As a company builds a greater breadth of international marketing it is in the position to build a global brand and a global marketing management system.
1 Craig C.S., Douglas S.P. Responding to the Challenges of Global Markets: Change, Complexity, Competition, and Conscience // Columbia Journal of World Business. 1996. - Vol. 31, N 4, Winter. - P. 6-18.
2 Farell D. Assessing Your Company's Global Potential // Harvard Business Review. 2004. - Vol. 82, N 12, December. - P. 85.
