As economies integrate and tariff barriers coming down the concept of globalization has truly taken the business world. To imp-rove efficiencies and create core competencies companies are increasingly looking forward to adopt global approach to leverage their skills and technology. But international markets are different from local markets in a sense that there are several factors which influence international markets hence while trying to part of global economy the company must consider the options carefully. The firms which have managed to grow locally and globally have reaped substantial fruits of their two pronged strategies. These companies were early starters in the international markets and their strategies right from product development to product innovations focused on global scale (Cavusgil, 2004)
Consumer goods companies’ fall in this category since their consumer base has similar usage patterns they have an advantage. We are witnessing growth in numbers of companies which can be called international. Companies have realized that global presence offers considerable leverage in operational terms and spreading of risks across the countries. Even though the resources like human capital, financial resources are scarce the companies which have started early have gained first mover advantage and reaped the rewards of their strategies.
Such companies are known as global start-ups. In contrast to the companies that have focused on domestic development first and global later this early start ups have little to lose since they are on the learning curve besides focusing globally widens their perspective about products and consumer behavior which is an added advantage over the domestic players. The management of such companies have shown dedication and commitment to adopting themselves on a global scale and have found it easy to manage transition at managerial levels. Normally managers take time and are cautious about entering the new markets which are entirely different in respect of demographics, consumer behavior, and different political environments.
Essentially the function of marketing is to satisfy the demand of the consumer through proper supply management, since the global markets are influenced by number of factors hence planning and proper implementation of strategy is essential to succeed in the globally competitive environment (McCall et. al 2004) Globalization has made product development easy in the sense that consumer is able to identify the brand regardless of markets, secondly the innovation in telecommunications, transport and logistics and production methods have been advantageous since it has lowered the transaction costs thereby adding to the profitability of the companies. Globalization has made companies more innovative and companies have successfully created a new knowledge base that has enhanced the organization’s capabilities making them more competitive (Knight et. al 2004)
International marketing is perse and complex than local marketing, the company which was used to the environment changes. Companies have to adept to newer cultures, new taste and preferences of consumers, they also have to deal with local legislations and people who often think differently then the companies. Such things are a big challenge for the company who has to be constantly alert and evolving and must have the ability to integrate with the local needs and culture.
Global markets are governed by number of forces, company must be focused on its goals not only short term but long term as well. There are parameters like markets, cost factor, government policies and competition at various levels. People who buy company’s products in home country do not translate into demand in global markets. The company has to standardize several processes at the same time should be willing to adept itself with the changes that are necessary for survival of the company in the global markets.
While deciding on the international marketing companies must pay attention to the economic power of that country. The easiest and simplest way is to measure PPP or Purchasing Power Parity of the people of the country concerned. This will give an indication of whether the company’s products would be able to create demand in short term or long term, Government policy too is very important, if the governments are unwilling to allow competition flourish and pursue the protectionist policy of local industry it would be difficult for company to manage effective growth.
Another factor worth considering is whether the company would start the Greenfield project or would enter the markets through mergers and acquisitions. Greenfield projects might delay the company’s plans to establish itself, while mergers and acquisitions would give an easy entry into the markets they might not always be effective. In such a scenario the company has to make conscious decision since an error in judgment may cause tremendous loss to the company putting at risk the strategy company has planned. Once the company gains entry its marketing mix has to change to adapt to the host country’s environment.
This may ask for shift in policies that company has followed for the longer period of time. Since global expansion synergies the operations of the company giving it leverage of production and marketing mix the companies stand to benefit from global marketing. Sometimes companies may face the dilemma of whether to standardize the product but these factors can only be reviewed once the company becomes familiar with the local conditions including taste and preferences of the consumers and their spending habits. Different marketing approaches are needed for different markets.
Let us examine the case of Nongshim, famous manufacturer of ramen noodles. Though it was a late starter in Korea way behind its competitors, its innovative marketing made the company market leader not only in Korea but in the world. What was the strategy adopted by Nongshim which catapulated it as market leader in the world in instant food business? Simple it followed what others were doing, but it was not plain imitation, it closely studied the food habits and preferences of Korean people and was successful in creating its own niche market. Today Nongshim sells 14 millions meals per day in the world.
That was not the end; Nongshim demonstrated how global companies must evolve. When market for ramen stagnated, Nongshim looked for innovation. It offered its products in styreofoam cups where a person just had to pour boiling water in it and eat it. This saved lots of time and hassles of cooking ramen in the pan. Again ramen saw its sales soaring. International marketing is not just about selling products but constantly innovating and adepting to the changing environment as perfectly demonstrated by Nongshim. (Yoon, 1998)
Thus companies not only have to focus on product development and market them but also have to learn to market the products creatively. In international markets knowledge plays vital role in determining the success of the company, thus companies have to focus on creating a knowledge value base internally, companies deriving knowledge from multiple sources are more likely to benefit as the fear of knowledge moving to competitors considera bly gets reduced (Knight et. al.) Organisational capabilities have assumed significance due to the volatile nature of the global markets the company is operating in and adapting to changed circumstances by generating faster response time thuis ensuring that the company’s core does not get affected or threatned.
To be successful in the fiercely competitive global world companies must be able to deliver consistent product developments conforming to high quality standards and ability to modify the products acording to the needs of the different countries. Rather then only focussing on selling the product through massive advertising campaigns or establishing distribution channnels companies have to focus on creative marketing (Manilla Bulletin, 2004) In other words creative m,arketing is also known as responsive marketing. Companies have to identify the needs of the consumer and design the product solution that best solves the problems the consumer is facing in using the product. This is not one time process but the continous learning curve the company has to walk through consumer’s mind.
Responsive marketing may create wonders for the company who has single line product channel. Amazon.com is the classic case of response marketing. After identifying that consumer needed the advantage of reviewing and purchasing the books from the convenience of his home Amazon.com started selling books through the internet. Nobody thought that traditional method of browsing books in the library can be replaced by electronic books. What happened next is history, Amazon.com is regarded as pioneer who changed the way books are bought. It brought a whole new book buying experience with the convenience of browsing them and purchasing them without going through the hassles of visiting the library. This is what companies willing to establish their presence internationally must emulate.
Though there are difficulties involved in international research and deriving the perfect solution that caters to the needs of the company the company must understand that international research involves trial and error and hence no strategy cannot be called as perfect and has to have provisions to evolve and improve over the period of time. International marketing strategy largely depends on the research data that the company has generated but even this research cannot be relied upon solely since it may contain the data which does not represent the data accurately for example the buying behaviour of Chinese may be different from Americans, Chinese may judge the product by its price while American consumer is concerned with utility that a product offers thus for the same product there are two inferences in two different countries.
Thus International strategy not only has to take into consideration the data obtained from the country but the comparisons between the two countries are equally desirable (Reynolds et. el.) The strategies that a company can persue in international context can be product based and and market based. While focus on product based strategy would test the advantages and disadvantages of vertical and horizontal integration within the product lines, market based strategy is influenced based on the experiences of the company in its home country. While vertical integration can be used to acheive economies of scale which would give the company the leverage in terms of cost effectiveness while horizontal integration might benefit company in terms of profitabilty.
Thus companies have to consider vertical and horizontal integration nwhich would guide the company in the making decisions in the extremely competitive global arena. The markets on global scale are continually evolving and experiences volatility hence a careful selection of the methods mentioned above are necessary while deciding to make an international foray. Managers are facing the challenge to effectively implement the strategies in the global markets combatting the forces which drive the markets. In such a scenario it becomes imperative for the manager to consider all the aspects carefully before venturing into the international foray.
Thus to sum it up companies in order to survive in the international markets must be ready at times to face the volatility or other factors which directly or indirectly affects the economies the company is operating and willing to change its strategies instead of relying on time tested methods. The companies should build an early warning systems that would indicate the necessity in shift in the policies of the companies, secondly the products of the company must be viewed with different perception, rather then classifying the product into a commodity companies must look upon the product as a tool to survive in the market.
The product innovation must be a continous process with innovations focussing on the need rather then creating simple brand extensions. Given the transformation of communication services which have resulted in easy access to the information companies must strive to know the minds of the consumer and must develop a mechanism whereby constant interaction with the customer can happen and companies can get instant feedbacks and react to them immediately. Development of efficient distribution channel is vital not to distribute the goods effectively but to create value in company’s offering. Distribution should be done in such a way that it reduces cost at the same time maximises the value been offered to the customer and finally companies through interaction with the consumers must develop a product that perfectly matches the need of the consumer as this will help company tide over the turbulent times in the international markets.
Reference:
- Cavusgil T.S., Knight G. A. (2004) Early Global Corporations. Journal of International Business Studies 35 (1),1.
- McCall J.B., Stone M. A. (2004). International Strategic Marketing: European Perspective. New York: Routledge. 47.
- Manilla Bulletin (2004) Business focus; creative marketing for local and international business. Newspaper N.A (N.A.), N.A.
- Reynolds N.L., Diamantopoulos A., Simintiras Ac. (2003). Theoretical Justification of sampling choices in International Marketing Research: Key issues and guidelines for researchers. Journal of International Business Studies 34 (1), 1
- Suck-Chun Yoon. (1998). A Successful Strategy of Follow the Leader Combined with Cultural Adaptation: A Food Company Case. . International Studies of Management & Organization. 28 (4), 49