How Does Marketing Work in International Environment

International Marketing Environment

            Business organizations across the world are constantly engaged in developing and implementing innovative strategies and business practices to expand their business operations and activities on the international platform. Globalization has played a key role in eliminating the conventional barriers that deterred organizations to efficiently conduct their business operations in the international arena. International marketing environment plays a dominant role in determining how well organizations will perform on the global platform since it consists of critical components such as social, cultural, economic, legislative, environmental, and political that impacts a business in varied ways eventually determining its fate in international market. This essay will discuss and provide critical insights on international marketing environment.

International Marketing 

            International marketing is a broad concept that includes application of complex marketing mix decisions across national boundaries. In simple terms the concept of international marketing involves a firm’s marketing strategy and marketing decisions to conduct its business operations and activities internationally to ensure it derives anticipated business profit ("What is International Marketing?", 2017).

            International marketing environment impacts organizations in varied ways that may determine, depending on the capabilities of an organization, whether it would survive and sustain in the international platform or quit. Some of the critical drivers of international business include costs, market competition, technology, and business environment.

Costs- in order to ensure a strong and effective presence internationally organizations need to be financially sound to ensure they can efficiently meet business operations costs such as outsourcing, price of products or services, cost effective labor and manufacturing costs, etc. Efficient management of these costs determines the growth and success of an organization abroad.

Competition- this is a critical component that constantly drives organizations forward. Operating in international environments organizations need to ensure that their products or services are capable of competing with its competitors in terms of quality and price.

Business environment- this factor plays a key role in making businesses aware of consumer’s emerging demands and preferences allowing organizations to develop effective marketing strategies to win consumers.

Technology- today technology plays a key role in determining what is the best product or service allowing consumers to quickly compare and determine what to buy. Consumers make their purchase decisions based on the survey that conduct online on what is the best they can get for a price. Thus, these drivers constantly pose a challenging business environment for organizations compelling them to develop innovative products and strategies and earn revenue   ("4 drivers of international business", 2017).  

Absolute and Comparative Advantage

            Absolute advantage is defined as the capacity to produce a product using less of a resource than a competing entity. For example, if A produces 10 laptops and 20 mobiles in a given day and B produces 5 laptops and 10 mobiles, then it we can say that A has absolute advantage over B in manufacturing both laptops and mobiles. Similarly, countries that produce goods or products in lesser time and costs are said to have greater absolute advantage.

             Comparative advantage is the ability of a business to produce a product at a lower opportunity costs than its competitor. This implies that countries that produce products with varying opportunity costs are in a position to trade with each Advantage Versus Comparative Advantage", 2017).  

Marketing Environmental Analysis

                A business organization is affected by various external factors that constantly impact its performance and productivity in foreign lands. PESTLE analysis allows marketing experts to analyze the external environment of a firm in foreign regions since it consists of critical external factors such as Political, Economic, Social, Technological, Legal, and Environmental. However, despite the fact that all these factors exert varying yet definite impact on a business it important to understand that the economic and (Social factors) cultural factors in particular exert a dominating influence on the organization due to the fact that many countries are dominated by their traditional and cultural value systems even today that do not easily allow certain products or services of foreign origin to grow and succeed within the region. This is perhaps social factors primarily consist of cultural setup, people’s life styles, and domestic structures. For example, countries like China or Japan that is strongly ruled by their respective culture and value systems does not easily surrender their preferences and demands for the sake of modernity. Since culture forms an integral component of a country’s social setup, it can be said that the culture of a country can strongly resist or attract particular businesses, products and services. Culture determines the way people live, their perspectives towards things and life, attire, life styles, language, beliefs, customs, and creed. These important factors constantly interfere with their choices, needs, and demands restricting foreign businesses to grow. For example, western fast food chains such as McDonalds, Dominos, etc. find it difficult to sell food items made of beef since cattle is believed sacred in Hindu religion. This demonstrates that despite the fact that item of beef are highly preferred and widely sold in America and other western nations, it would never gain similar popularity and preference in India due to its strong India religious and cultural setup. It is evident that consumer buying behavior and purchase decision making are significantly influenced by the local culture, tradition, customs, and beliefs that dominate the society. Therefore, for every business, in order to become successful in a particular region or country it is imperative that it understands the country’s culture and tradition that primarily determines consumer needs and preferences. Mismatch between products or services and local culture and consumer preferences only means business failure.          

            Economic factors are deemed equally important for a country operating its business abroad. Various components such as exchange rate, taxes rates, central bank interest rates, etc. simultaneously affect a business (Smith, 2017). Other factors such as rate of inflation, rate of interest, disposable income of buyers, credit accessibility, unemployment rates, financial policies, and foreign exchange rates are known to significantly affect the performance of a business operate in foreign lands.

            Political factors that include government policies, taxes, political stability in a country, and business regulations impose limitations on foreign businesses and determining their functioning within a particular country.

            Technological factors that mainly include innovative software, internet technologies, social media, and electronic devices significantly determine the scope and growth of a business within a region. This is due to rapid growth of information technologies and e-commerce that has created a boom on the virtual platform.

            Legal limitations that include laws relating to products, jobs, patents, health and safety that are binding on all organizations too impact the business.

            Environmental factors such as weather, climatic and temperatures of a region that are impacted by organizational business activities influence an organization. Today, world governments are particularly concerned about the environment and therefore environmental laws are stringent and obligatory for all businesses regardless of its nature of business (Frue et al, 2017). Therefore, based on the PESTLE factors it can be understood that a business need to ensure it is capable of meeting all external constraints, rules, and obligations that are binding in order to efficiently execute its business activities in a foreign land.

           

Market Segmentation  

            The process of identifying potential consumers within a target region based on their needs and preferences is known as market segmentation. Various parameters may be applied to systematically classify consumers for conducting market segmentation. However, some of the most important are demographics factors that mainly consist of consumer related information such as age, gender, income, education, marital status, family size, occupation, creed, etc. These factors allow a business to systematically categorize its target consumers based on which product distribution can be done (Hanlon, 2017).         

Psychographic factors- as the name suggests this factor mainly relates to behavior based personality and emotional orientation that can be connected to habits, attitudes, preferences, dislikes leadership traits, etc. The difference between demographic factors and psychographic factors is that the former reveals who the buyer is while the latter reveals why consumers buy a product. Information pertaining to psychographic components can be easily gathered through surveys, interviews, consumer related data, reliable secondary sources, etc. (Hanlon, 2017)

Lifestyle factors- it mainly includes things and activities that people prefer in their lives such as fashion and accessories, clothing, food, sports, music, entertainment, and all other activities that signify people’s casual orientation towards life.          

Beliefs and values- it mainly comprises of religious, political, nationalistic, and spiritual beliefs and value systems that that even forms a partial culture in itself. For instance, Islamic bank of Britain provides banking facilities that comply with Sharia laws of Islamic religion.

Life stages- relate to the consumer’s age group that a business intends to target as its potential consumers. For example, Saga Holidays targets only people over the age of 50+.

Geography- it refers to the location or region a business considers as a target market. It could be a city, town, rural regions, and may even consider aspects such as climatic conditions and temperature.

Behavior- it refers to consumer behavior exhibited by customers of a business. It may be in the form of consumer loyalty towards a particular product or service, switching behavior from one brand to another, consumption patterns, etc.

            The process of positioning involves placement of a product or a service in a particular market so as to ensure it is sellable to the identified target consumers. Positioning is an important component of marketing concept that outlines a business on how to sell its products in a particular market. On the basis of the identified target market, the marketing department of the business creates an image for the item it intends to sell to a particular class of consumers. This is achieved by way of considering the 4 Ps, namely, product, promotion, price, and place. The intensity of the positioning strategy is directly proportional to the marketing strategy of the business. Therefore, today, organizations are keen to adopt innovating marketing strategies to ensure their products are positioned aptly and effectively to derive optimal anticipated business benefit.

            Market positioning can be achieved effectively by considering the 4 important components, namely, product, place, promotion, and pricing. Regardless of the nature of business and environment it operates in this consideration is imperative to ensure products are sellable in a particular market. However, when considering the international marketing environment it is not only important to consider all these said factors but to understand the culture and value system of the targeted region as well to derive maximum benefit from the marketing strategy. This is because of the fact that regardless of the effectiveness and intensity of a marketing plan, cultural barriers can play a determining role in business performance. An effective positioning strategy is one that not only educates and informs consumers about the product and its features but also convinces and compels him to make a purchase and derive positive anticipated experience. Market positioning can be effectively achieved in international markets by way of placing adverts in electronic as well as print formats through internet, newspapers, magazines, social media, and websites/blogs too.

Conclusion

            The discussion and analysis presented in this essay clearly reveals the critical components involved in the process of marketing. The essay has provided critical insights on the importance of marketing in international environments, product segmentation and product positioning to demonstrate that effective marketing strategies applied post thorough consideration of external influencing factors not only generates anticipated business benefits but also provides strong and loyal consumer base for the brand involved. The essay has well explained how external factors impact business performance and productivity. Based on the discussion of the key concepts and components of the subject it is highly suggested that organizations aspiring to expand internationally build an effective presence by adopting innovative marketing strategies and technological tools to ensure they reach the farthest corners of the world and consumers. In today’s era of e-commerce, implementation of technological tools such as social media and internet are indispensable and inevitable for every organization that aims to achieve a global business leadership.  

            Therefore, organizations are required to develop and implement advanced business strategies and marketing plans to ensure they are capable of sustaining in a highly competitive and volatile international business environment.