Domestic Marketing And International Marketing

The report has been prepared to highlight whether International marketing is really no different from the study of domestic marketing. It comprises the insight of domestic marketing, international marketing, and evolution of global marketing. The objective of this report is to explore various differences between International and domestic marketing. It focuses on various issues that need to be overcome before moving from domestic marketing to international marketing. This report illustrates various examples which moved from domestic to global marketing and experienced remarkable increase in the revenue. This report highlights various ethical problems faced in International Marketing.

TABLE OF CONTENTS

Topics Page No.

Introduction…………………………………………………………………………4

The evolution of global marketing………………………………………………….4-6

Domestic Marketing………………………………………………………………..6-7

International Marketing…………………………………………………………….7-9

Domestic vs. International………………………………………………………….9-11

Empirical Examples…………………………………………………………………12-13

Biggest International Marketing Mistakes………………………………………….13

Ethical Problems in International Marketing……………………………………….13-15

Conclusion …………………………………………………………………………15

Reference and bibliography…………………………………………………………16

INTRODUCTION

The marketing aspect is as important as other business aspect in every business engagement. The marketing aspect deals as how to make the product being introduce and sell in the market. There are many kinds of organizations created such as the domestic business, multinational business, international business, etc. The marketing strategies of each kind of business depend on the nature of the business involvement. Therefore, the Domestic and International markets should have separate marketing strategy. The differences of the two markets are obvious from the point of their market host and demand domain.

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The evolution of global marketing

The long held tenants of marketing are “customer value”, “competitive advantage” and “focus”. Organizations hence studied the market, developed the product which satisfied the customer. They followed correct marketing mix to satisfy its own objectives. However this strategy proved to be very narrow as time elapsed and hence evolved “Strategic Marketing”. The focus was shifted from knowing only customer requirements, to knowing the customer in a context which includes the competition, government policy and regulations, and the broader economic, social and political macro forces that shape the evolution of markets. In global marketing term this means forging alliances (relationships) or developing networks, which works closely with home country government officials and industry competitors to gain access to a target market. The marketing objective has changed from satisfying organizational objectives to one of “stakeholder” benefits – including employees, society, government and so on.

Table 1.1 outlines a typology of terms which describes the characteristics of companies at different stages in the process of evolving from domestic to global enterprises.

Table 1.1 Stages of domestic to global evolution

Management emphasis

Stage one Domestic

Stage two International

Stage three Multinational

Stage four Global

Focus

Domestic

Ethnocentric

Polycentric

Geocentric

Marketing strategy

Domestic

Extension

Adaption

Extension

Structure

Domestic

International

Worldwide area

Adaption creation matrix/mixed

Management style

Domestic

Centralized top down

Decentralized bottom up

Integrated

Manufacturing stance

Mainly domestic

Mainly domestic

Host country

Lowest cost worldwide

Investment policy

Domestic

Domestic used worldwide

Mainly in each host country

Cross subsidization

Performance evaluation

Domestic market share

Against home country market share

Each host country market share

Worldwide

In stage one domestic marketing was in focus, with all activity concentrated in the home market. Organizations like milk marketing, solely domestically oriented organizations.

In stage two home marketing is focused, but with exports (ethnocentric). Organization probably believes only in home values, but creates an export division.

In stage three stage two organizations which realize that they must adapt their marketing mixes to overseas operations. The focus of theses organizations switches to multinational (polycentric) and adaption becomes paramount.

In stage four global organizations which create value by extending products and programs and focus on serving emerging global markets (geocentric). This involves in recognizing the markets around the world which consist of similarities and differences and that it is possible to develop a global strategy based on similarities to obtain scale economies, but also recognizes and responds to cost effective differences. The strategies are a combination of extension, adaptation and creation.

Domestic Marketing

A domestic market is a financial market and trades are aimed toward a single market. A domestic market is also referred to as domestic trading. In domestic trading, organization faces only one set of competitive, economic, and market issues and essentially must deal with only one set of customers, although the company may have several segments in a market.

Following are four guiding principles that governs the marketing strategy –

Knowledge Based Promotion – The marketing platform is to deliver the huge benefit of products through ethically designed promotional strategies. The product will be promoted in the marketplace with a message that is focused, competitively advantageous, relevant and evocative to target audience segments, clinically supportable, and sustainable over time.

Building Loyalty – The marketers ensure that their product is always superseded by any other alternatives and it doesn’t go out of fashion. Brand loyalty is integral part in adding value to their business.

Parameters Not Formulas – There is no set formula to devise the marketing and sales strategies and every product is different and respectively faces its own unique confluence of factors influencing its performance over time. The parameters governing should be with respect to sales and market share. Each of these parameters should be reviewed frequently through external market conditions, other corporate priorities, pricing changes, and new or revived competitors.

Meeting the Genuine need – The organization should aim to meet customer needs recognized by them.

Japanese domestic market

The term Japanese Domestic Market (JDM) is used by companies in Japan to refer to the services and product they offer in local market, as opposed to the international, non-Japanese market. The automotive hobbyist uses this term most commonly to refer Japanese-brand automobiles and parts designed and constructed to conform to Japanese vehicle and equipment regulations and to suit Japanese market preferences. Vehicles made in JDM migrate to other markets through ordinary commerce and the grey market.

Vehicles made in JDM often differ in features and equipment from vehicles sold elsewhere. For example, Honda to sell its product worldwide has produced different versions of the B18C 1, B16A and K20A engines. This was done to suite varying emission regulations laws followed in different countries.

Vehicles built based on JDM specifications will have stiffer suspensions and improved throttle response over vehicles built for different global markets, due to differing driving styles and different road types. For example, the USA features long highways and a smoother ride is always preferable, whereas Japan’s features short and twisty roads, where a stiffer suspension is desired for improved handling capability. For the US and European market versions, some features may be removed in order to meet certain price level, conventional rear suspension can be used instead of a double wishbone suspension and electronic devices like Active Yaw Control. Furthermore, engine power of JDM sports cars may be removed to meet stricter emission standards in other countries.

The JDM headlamps would be a major concern when it comes to safety in countries where traffic flows along the right side of the road, because JDM headlamps are engineered for use on the left side of the road.

International Marketing

International marketing is a kind of marketing carried out by organizations overseas or across national borderlines. The strategy used is an extension of the techniques used in the home country of a firm. According to the American Marketing Association (AMA) “international marketing is the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.” Global Marketing Strategy gives a practical managerial orientation to international marketing in complex, rapidly changing global business environment. The marketing strategy focuses on customer analysis, competitor analysis and company analysis. Once marketing strategies are established the focus is done for segmenting markets, targeting markets and market positioning in the international arena.

Following are the factors that need to be considered before moving abroad –

Demographic and physical environment should be assessed in categories like population size, growth, distribution channels, etc.

Economic environment should be reviewed that goes around with the income and expenditure activities, inflation, currency stability, etc. that will contribute for the new service or product’s success.

Social and cultural environment should be assessed that encompasses a wide range of anticipations and assumptions with regards to the culture and social differences.

Legal environment should be considered which includes the limitations on trade and tariffs, proper documentation and import regulations.

Political environment should be reviewed in which the government’s system is included.

In terms of strategies, the international market is truly different and more complicated than domestic markets.

Individualized Marketing Strategy: This strategy is followed by companies that conduct international business in several nations and is often utilized by smaller businesses involved in only one or two foreign markets. In this strategy, political, social, and economic factors are important components of the marketing process.

Global Marketing Strategy – This strategy ignores differences between nations and based on the notion that consumers around the world are growing more and more similar and a standardized product and marketing mix can achieve enormous economies, especially in advertising, packing, and distribution because they would not be changed.

Domestic Marketing vs. International Marketing

Global marketing decisions requires months of research. They require high degree of planning and formation of internal strategies, factors affecting strategies are target audiences, spending and profit margins.

Global marketing is more complex, and must take into consideration numerous factors such as –

Language and translation: Some countries share similar language but every country has nuances of language that should be considered before marketing globally. The marketing pieces should be shared with native speakers in the countries targeted for marketing, even if the language is the same as domestic market. For example – Spanish is a language shared by millions worldwide, yet the Spanish spoken in Mexico differs from the Spanish spoken in Spain.

Cultural considerations: Cultures vary worldwide and marketing pieces must reflect cultural nuances accordingly. It is wise to examine cultural context before to save money later by helping you avoid costly advertising and marketing mistakes. For Example – In the United States, advertisements depicting scantily clad models sell everything from shaving products to soft drinks but in more conservative cultures, such advertisements would be offensive or even banned.

Price and payment methods: Online sellers should facilitate currency converters or payment processing systems that accept multiple currencies, sellers must be aware of pricing sensitivities by country, by product and by market. Before launching the product into global market, competition and competitive pricing models should be investigated. The price should be tagged depending on whether product is targeted for domestic or global market.

Marketing methods and the media mix: Marketing methods such as websites and print advertisements are used in most countries while others countries prefer to have direct mails. Countries with large rural populations, such as China and India, may not have as robust a mail service as industrialized countries so they may rely more heavily on radio or television rather than printed messages to share new and information. Before investing in any media we need to understand audience being targeted.

Distribution methods and shipping concerns: Each country has its own restrictions and law as to what goods can be imported. Costs, time delay and country restrictions must be accounted for worldwide shipping. Every organization must comply with all importation laws, and if required they should be willing to invest the time into learning rules and regulations concerning exports and imports.

While planning is an important aspect of any successful campaign, there are certain considerations which are vital for successful launch of a product in domestic market and global market. Table 1.2 lists the instances required to be considered before marketing.

Table 1.2 Considerations vital for successful launch of a product

Domestic Planning

International Planning

Single language and nationality

Multilingual/multinational/multicultural factors

Relatively homogeneous market

Fragmented and diverse markets

Data available, usually accurate and collection easy

Data collection a large task requiring significantly higher budgets and personnel allocation

Political factors relatively unimportant

Political factors frequently vital

Relative freedom from government interference

Involvement in national economic plans; government influences business decisions

Individual corporation has little effect on environment

“Gravitational” distortion by large companies

Chauvinism helps

Chauvinism hinders

Relatively stable business environment

Multiple environments, many of which are highly unstable (but may be highly profitable)

Domestic Planning

International Planning

Uniform financial climate

Variety of financial climates ranging from over-conservative to wildly inflationary

Single currency

Currencies differing in stability and real value

Business “rules of the game” mature and understood

Rules diverse, changeable and unclear

Solid Global Marketing decisions involve months of research with high degree of planning to achieve company’s ultimate goals.

Advanced planning gives a number of advantages –

Helps coordinate activities

Helps prepare for emergencies

Gives activity continuity

Integrates functions and activities

Helps in a continuous review of operations

Following are the common differences –

Domestic Marketing

Domestic marketing is marketing aimed at a single market.

This single market is the firm’s domestic market.

The firm faces only one set of competitive, economic and market issues.

International Marketing

International marketing goes beyond exporting and calls for direct involvement in the local marketing environment within a given country.

Understanding different cultural, economic and political environments becomes necessary for success in international markets.

Empirical Examples

The domestic businesses samples probably rise in the range of local suppliers whereas the internationally engaged business strives to keep their business growing such as the Nike, automobile business’s, and even beauty products.

QVC shopping leader

The QVC shopping leader started as a shopping channel. The show hosts could only demonstrate a limited number of products per day. In 1996, QVC thought of expanding its business by getting into an Internet business where customers could browse online at their iQVC web site for a much larger selection of products. The QVC marketed majority of its product online which resulted in quantum leap in QVC e-business, spurring development of a technologically elegant system of warehousing and shipping the items as well. iQVC noticed a profit only after three months, made $97 million in profits by the year 2000, and has enjoyed ever-increasing sales each year since then.

McDonald’s Strategy

McDonald has succeeded in growing as a consequence of its strategic choices. The analysis of the external and internal environment of the company shows, McDonald’s strengths are more significant than its weaknesses. The primary strength is its brand, which is recognized all over the world, and its position at the head of its industry makes it a force to be reckoned with. The ability to determine what consumers want and need and adapt to new requirement is a major strength of company. This is the one that requires McDonald’s to keep reinventing itself. Previously McDonald’s used to close in the evenings just after dinner, but now almost 40% of McDonald’s restaurants stay open round the clock, this is done to focus on between-meal and late-night options such as snack foods and fruit smoothies. On top of this McDonald’s keeps on generating new products more aggressively than in the past. The new selections are tried out in one market for several weeks to see how the sales, costs, and margins grow and how easy they are to prepare by the company’s constantly-changing staff. McDonald’s strategies add on to company’s strengths, such as the delivery service. It offers services in crowded cities such as Shanghai, this way company not only make more sales by catering to the traffic-challenged, time-constrained, and lazy, it also saves itself some money at the same time, because delivered meals require no table clean-up at the restaurant.

Biggest International Marketing Mistakes

Few companies faced huge losses due to insufficient planning and research done before launching the product in global market.

In South East Asia Pepsi Cola lost it dominant market share when they changed the color of its vending machines and coolers from deep “Regal” blue to light “Ice” blue as Light blue is associated with death and mourning in SE Asia.

Few years back when Pepsi started marketing products in China, they translated their slogan, “Pepsi Brings You Back to Life” pretty literally. The literal meaning of slogan in Chinese was, “Pepsi Brings Your Ancestors Back from the Grave.”

During Chevrolet’s attempt to launch the Nova proved a mistake as Spanish translation of it was “Doesn’t Go”, and in Mexico translation was (turns out this one appears to be an urban legend and cannot be verified).

Ethical Problems in International Marketing

The ethical standards are frequently not defined or always clear even within the country, which to leads dilemmas for domestic marketers. The business ethics is infinitely more complex in international marketplace, because value judgments differ widely among culturally diverse groups. The ethical standards commonly accepted in one country may be completely unacceptable in other countries. In US, giving business gifts of high value is highly condemned, whereas in many other countries the business gifts are not only accepted but also expected. Once the existing ethical framework is examined in the field of international marketing from a macro marketing perspective, it is argued that marketers cannot always rely on universally accepted ethical norms, such as hyper norms or core values that have been suggested by a deluge of marketing. We can use some basic moral values in evaluating international marketing ethical issues. We should accept violations of basic moral values in international marketing settings as ethical problems.

Following are Major International Marketing Ethical Problems derived from applied researches by Armstrong –

Traditional Small Scale Bribery- This involves the payment of few concurrency to a foreign official in exchange for him/her violating some official duty or responsibility or to speed routine government actions (grease payments, kickbacks).

Large Scale Bribery- This involves relatively large payment intended to allow a violation of the law or designed to influence policy directly or indirectly (eg, political contribution).

Gifts/Favours/Entertainment- This includes a range of items such as: lavish physical gifts, opportunities for personal travel at the company’s expense, gifts received after the completion of transaction and other extravagant expensive entertainment.

Pricing – This involves unfair differential pricing, questionable invoicing – in which the buyer requests a written invoice showing a price that is different from the actual price paid, pricing to force out local competition, dumping products at prices well below that in the home country, pricing practices that are illegal in the home country but legal in host country (eg, price fixing agreements).

Products/Technology – This includes products and technology that are banned for use in the home country but permitted in the host country and/or appear unsuitable or inappropriate for use by the people of the host country.

Tax Evasion Practices – This is used specifically to evade tax such as transfer pricing (i.e., where prices paid between affiliates and/or parent company adjusted to affect profit allocation) including the use of tax havens, where any profit made is in low tax jurisdiction, interest payments on intra-firm loans, questionable management and service fees charged between affiliates and /or the parent company.

Illegal/Immoral Activities in the Host Country – This includes practices such as: polluting the environment, maintaining unsafe working conditions; product/technology copying where protection of patents, trademarks or copyrights has not been enforced and short weighting overseas shipments so as to charge a country a phantom weight.

Questionable Commissions to Channel Members – This includes unreasonably large commissions of fees paid to channel members, such as sales agents, middlemen, consultants, dealers and importers.

Cultural Differences – This is between cultures involving potential misunderstandings related to the traditional requirements of the exchange process (e.g., transactions) may be regarded by one culture as bribes but be acceptable business practices in another culture. These practices include: gifts, monetary payments, favours, entertainment and political contributions.

Involvement in Political Affairs- This is related to the combination of marketing activities and politics including the following: the exertion of political influence by multinationals, engaging in marketing activities when either home or host countries are at war and illegal technology transfers.

Conclusion

Typically, the first area where companies seek to market their goods or services is within its own country (domestic marketing). Since the market, customer needs, tastes, geography, demographics, and distribution methods are familiar, it’s often the easiest place for companies to launch a product. The four P’s of marketing – product, price, place and promotion – are often easier for companies to determine within the domestic market. Companies begin marketing their goods or services within their domestic market, and expand to the global market to capture greater market share and open up new avenues for sales. Global marketing means to offer one’s goods or services worldwide. Global marketing requires months of research and planning before getting into global market. It is necessary to understand different cultural, economic and political environments for success in international markets

Reference and bibliography

Text referencing:

Reference book – The Global Marketing Imperative by Michael R. Czinkota, Ilkka A. Ronkainen, John Tarrant

News paper articles

Electronic sources:

Websites

Publications available from websites

Unpublished works:

Personal communication