4 International marketing in turbulent times
In this final section we consider the challenges of international marketing and; how current economic conditions are problematic for international marketing. In particular:
- how price competition leads to lower quality, and
- indifference from the customer.
This is discussed in a podcast that introduces the topic of the challenges of international marketing. Specifically, Albrecht’s (2006) reference to the growing internationalisation of Chinese organisations and Goldsmith’s (2004) trend of increasing globalisation are reviewed.
Before you listen to the podcast it is important to provide a brief overview of some of the environmental factors that may affect organisations in a globalising market.
Specifically, an organisation should ask itself these questions:
- What are the levels and type of competition that exist in foreign markets?
- How will they respond to the market entry of a new competitor?
- To what extent can the organisation quickly and efficiently change from being a domestic orientated organisation to an international one?
Once the organisation has answered these questions, it should undertake an international PESTLE analysis. Themes that it may wish to explore in deciding which markets to enter may include:
- To what extent does the political system in other countries actively encourage competition from foreign organisations?
- What international and domestic laws do other countries adhere to and are these free from political interference?
- Is the foreign market a member of any international trading groups, such as the World Trade Organisation or the European Union? If so, to what extent will this benefit the organisation?
- What are the historical connections between the countries identified and the organisation’s own? If there is a connection, is this a positive or negative one? What are the implications of these connections?
- How would foreign exchange fluctuations affect the organisation’s decision to enter a foreign market? For example, China has a relatively fixed exchange rate, unlike that of the USA, which is determined by market forces.
- What is the level of disposable incomes and how is this spread across the social strata? For example, in Japan disposable incomes are high but the Japanese have recently favoured saving their money rather than spending it on consumer goods. In the USA, high levels of disposable income appear to be biased towards higher earners, with low earners using their money to buy necessities.
- What is the level of new industrial growth in the desired foreign markets? For example, while China continues to experience rapid economic growth, the African and Indian sub-continents are expected to develop economically in the next decade.
- How do cultural, ethnic, religious and societal values differ from those of the organisation’s country?
- Is the organisation able and willing to accommodate these differences in its marketing?
- To what extent will the organisation’s patents, intellectual property and copyrights be protected in international markets? For example, although China, under its membership of the World Trade Organisation, is obliged to stop the production of copied/fake products, this has not prevented numerous Western organisations from accusing Chinese organisations of blatant copying.
- Does the organisation’s technology conform to local laws? For example, electrical items that run on non-domestic currents could be dangerous.
- What is the current level of technology offered in products in international markets? For example, Renault cars of France bought the Romanian car manufacturer, Dacia to gain entry into international markets that want a low-priced car. Dacia achieves this low cost by offering cars that lack the modern technologies of mainstream cars sold in Western markets.
- Consumer laws differ between countries and international marketers need to be aware of this. For example, descriptions of products’ benefits may be affected by trade description law.
- Competition laws regarding how organisations can compete differ. For example, in the USA advertising is allowed to discredit competitor products directly, while in Europe this activity is often illegal.
- How are climate differences likely to affect the performance of the organisation’s products? Are its products suitable for consumers in extreme examples of heat and cold?
- Are its products likely to be affected by countries that operate punitive taxes against those organisations that produce large amounts of carbon?
Perhaps two of the biggest international challenges facing the international marketer in the first part of the 21st century have been the opportunities and threats raised by China’s increasing economic power, and the financial crisis that at the time of writing (2013), continued to cripple the Eurozone countries.
Now listen to Adrian Lindridge’s podcast in which he discusses his experiences of establishing the European operations for a Chinese company and the wider marketing implications of doing business in both China and Europe.
Stop and reflect
- To what extent has your organisation been immune to the wider international economic environment?
- Has it been able to be truly independent of economic events occurring in other countries?
Even if your organisation has no overseas markets, it is still likely to be affected by international economic problems. You should consider the extent to which your organisation can protect itself from the international economic environment, if at all.