International marketing can be defined as the application of marketing strategies, planning and activities to external or foreign markets. International marketing is of consequence to firms which operate in countries and territories other than their home country or the country in which they are registered in and have their head office. The factors influencing international marketing are culture, political and legal factors, a country’s level of economic development and the mode of involvement in foreign markets. The reasons why a firm would engage in international markets are numerous, including the maturity within domestic markets or increasing general market share, sales or revenue.
[edit] Culture
Social norms, attitudes towards buying foreign goods, and the working practices of foreign markets are all cultural factors when opting to invest in foreign markets. Social norms affect business practices, since social norms are one factor in the demand for a product. In the tobacco industry, for example, adolescents in developing countries are often the focus for the marketing and advertisement campaigns due to their vulnerability. Tobacco companies will often use symbols and fabrications in western society associated with smoking as a means of attracting these prospective consumers.[23] A company marketing pork would experience less sales in an Islamic country, than it would in China (which is the world’s largest consumer of pork). In Western societies, sexuality and sexual topics are often used in marketing communications (such as advertising, for instance). However, in a comparatively more conservative society (such as India for instance) social attitudes may shun the use of sexual topics to advertise products.
[edit] Political and legal factors
The following political/legal factors are of bearing in international marketing:
- Government attitude to business
- The level of governmental regulations, red-tape and bureaucracy
- Monetary regulations
- Political stability
Not all governments are as open to foreign investment as others, nor are all governments equally favourable to business. Typically, a firm may opt to invest in an economy in which the government is more inclined to support business activity in a country. In other words, the “business-friendliness” of a foreign government is paramount in this instance.
Additionally, some economies are more “liberal” and less regulated, by comparison to other economies. Excessive regulations can be a hindrance on a firm, since they contribute to additional costs to a firm. Conversely, regulations can aid in assisting firms, by easing the path of doing business. A firm seeking to invest in foreign markets must gauge the regulatory arrangement of the economy it is looking to invest in. Monetary regulations, akin to the above points, can hinder the ability to do business. A high level of monetary regulations can hamper foreign investment within an economy.
Lastly, the political stability of a country is also a key factor in foreign investment decisions. Nation-states experiencing continual coup-d’etat can appear unattractive to invest in, since the continual changes in political system can compound the inherent risk in investing. Typically, a firm would opt to invest in a country which had a stable mode of government, in which handovers of power were peaceful and non-violent. Even if a country is not a liberal democracy, the level of political stability within a country may supersede the political system (or, more accurately, the perceived immorality of a government’s policies/constitutional structure) of a given nation-state.
[edit] Level of economic development
The level of economic development of an economy can affect foreign investment decisions. Within the field of developmental economics, differing modes of economic development can be identified. These are:
- Developing economy
- Newly-Industrialised country
- Industrialised country (also known as a developed country, advanced economy or first world economy)
A developing economy has a comparatively low general living standard (as defined by material lifestyle/level of material possession). Moreover, a developing economy may also be at subsistence level, or possess a large share of its Gross Domestic Product in primary industries. Accordingly, a developing country would not be a profitable market for high-end consumer goods, or fast-moving consumer goods commonly found in developed/advanced economies. Exports of machinery (related to the extraction and processing of raw materials) may be viable for a developing economy, due to primary industries possessing a large share of national income.
A newly-industrialised economy is an economy which has experienced high recent economic growth, and thus has experienced a rise in general living standards. Coupled with the rapid economic growth, the emergence of a middle class leads to the development of a consumerist culture in the society. A newly-industrialised economy would consequently possess a small general demand for high-end consumer goods, but not to the extent of an advanced economy. A newly-industralised economy may export manufactured goods to other countries, and often possess secondary sector industries as a high percentage of its economic output.
An industrialised economy is typically identified via a high Gross Domestic Product per capita, a high United Nations Human Development Index rating and a high level of tertiary/quaternary/quinary sector industries in the context of its national income. Thus, the high general living standard denotes the highest generalised demand for goods and services within all modes of economic development. Commonly, developed/advanced economies are high exporters of high-tech manufactured goods, as well as service sector products (such as financial services, for instance).
Other factors in international marketing include:
[edit] Globalisation
The greater economic ties/links between economies has presented a prime opportunity for firms trading internationally. The advantages to an international marketing firm are that regulations and costs are lower, which can promote the use of outsourcing to foreign economies. The disadvantages to a firm in a globalised economy include negative public relations resulting from the exploitation of low cost labour, concerns surrounding environmental degradation, etc.
[edit] Regional trading blocks
Within the past few decades, numerous regional trading blocks have emerged, as a means of encouraging and easing closer economic ties between neighbouring countries. Common examples of such blocks include the European Union, the North American Free Trade Agreement (NAFTA) and the Association of South East Asian Nations (ASEAN). Other examples are:
- CARICOM (the Caribbean Community)
- EFTA (European Free Trade Association)
- ECOWAS (Economic Community of West African States)
Regional economic blocks often permit free (and thus less inhibited/restricted) trade between member nation-states. As such, a British firm would find trading in Germany less problematic (and vice versa, as both the United Kingdom and Germany are both EU member states), by comparison with a British firm trading with Mexico or Thailand.
Such trading blocks can also, conversely, place restrictions/regulations on trade. To use the earlier example of the EU again, the EU may place regulations on the packaging, labelling and distribution of a product. Consequently, a UK firm trading in Germany would have to adhere to the European Union regulations, in order to trade legitimately within the European Union.
