Skip to content Skip to navigation

OpenStax_CNX

You are here: Home » Content » International business for entrepreneurs: Global marketing: Assessing potential markets overseas

Navigation

Lenses

What is a lens?

Definition of a lens

Lenses

A lens is a custom view of the content in the repository. You can think of it as a fancy kind of list that will let you see content through the eyes of organizations and people you trust.

What is in a lens?

Lens makers point to materials (modules and collections), creating a guide that includes their own comments and descriptive tags about the content.

Who can create a lens?

Any individual member, a community, or a respected organization.

What are tags? tag icon

Tags are descriptors added by lens makers to help label content, attaching a vocabulary that is meaningful in the context of the lens.

This content is ...

Endorsed by Endorsed (What does "Endorsed by" mean?)

This content has been endorsed by the organizations listed. Click each link for a list of all content endorsed by the organization.
  • GTP display tagshide tags

    This module is included inLens: Global Text Project's Lens
    By: Global Text ProjectAs a part of collection: "Business Fundamentals"

    Click the "GTP" link to see all content they endorse.

    Click the tag icon tag icon to display tags associated with this content.

  • College Open Textbooks display tagshide tags

    This module is included inLens: Community College Open Textbook Collaborative
    By: CC Open Textbook CollaborativeAs a part of collection: "Business Fundamentals"

    Comments:

    "Reviewer's Comments: 'I highly recommend this textbook. It is ideal for community college, trade school, and four-year university students as well as for anyone starting their own business. The […]"

    Click the "College Open Textbooks" link to see all content they endorse.

    Click the tag icon tag icon to display tags associated with this content.

Also in these lenses

  • London Escorts display tagshide tags

    This module is included inLens: Lens
    By: London EscortsAs a part of collection: "Business Fundamentals"

    Comments:

    "I think it is important to mention that nowadays marketing probably plays the most important role within any business. "

    Click the "London Escorts" link to see all content selected in this lens.

    Click the tag icon tag icon to display tags associated with this content.

  • UniqU content

    This module is included inLens: UniqU's lens
    By: UniqU, LLCAs a part of collection: "Business Fundamentals"

    Click the "UniqU content" link to see all content selected in this lens.

Recently Viewed

This feature requires Javascript to be enabled.

Tags

(What is a tag?)

These tags come from the endorsement, affiliation, and other lenses that include this content.
 

International business for entrepreneurs: Global marketing: Assessing potential markets overseas

Module by: Global Text Project. E-mail the authorEdited By: Dr. Donald J. McCubbrey

Summary:

Business Fundamentals was developed by the Global Text Project, which is working to create open-content electronic textbooks that are freely available on the website http://globaltext.terry.uga.edu. Distribution is also possible via paper, CD, DVD, and via this collaboration, through Connexions. The goal is to make textbooks available to the many who cannot afford them. For more information on getting involved with the Global Text Project or Connexions email us at drexel@uga.edu and dcwill@cnx.org.

Authors: Vlad Malamud, Yevgeniy Rotenberg

Editor: Douglas Allen

Reviewers: Dean Murray Young (Thompson Rivers University, Canada) Timothy B Folta (Purdue University)

Contributing authors: Wesley Scott Cables, Ricardo Cubillos, Mike Davis, Vesselin Dotkov, Loiuse Doyle, Barbara Gabhauer, Glenna Gagliardi, Melissa Harrison Hiatt, Katie Holtmeier, Alisa Jeffrey, Alexia Jennings, Tim Pitner, Ashley Randall, Dag Johan Sundby, Nathalie Tryon, Jeffrey Wiant, Sarah Wilson

What is legal risk?

Legal risk is the risk arising from failure to comply with statutory or regulatory obligations (http://www.ffiec.gov).

Generally, all laws in the host country will apply to an entrepreneur’s local business operations. Examples include filing procedures, employment law, environmental law, tax law, and ownership requirements. The World Bank has a rather extensive country business law library which can be accessed from their website. This can be helpful in the initial phases of considering the legal ramifications of direct investment in a given country.

Many countries limit foreign ownership of assets and legally force foreign companies into a joint venture with a local partner in order to do business there. Poland, for example, limits foreign ownership of farmland and will continue to do so for another decade under agreements with the EU (Dadak, 2004).

It is important to remember that while doing business outside of the home country certain home country laws will still apply. Applicable laws differ from country to country, but one common extension is employment law.

The extent of jurisdiction beyond national boundaries varies widely. In anti-trust for instance, the United States law covers only situations where the violation affects the US, (meaning that it does not matter where the act causing the violation took place), while the EU considers only where the antitrust offense was implemented (Shaffer et al., 2005, pgs 657-664).

In order to minimize exposure to legal risks arising from confusion and excess cost, a company should seek legal advice if possible. In making such arrangements, written contracts should be used. This can minimize confusion in case of litigation.

Political and legal risk for the small business entrepreneur

While Ms. Shahira may be accustomed to a certain set of rules and regulations in her home country of Pakistan, she must anticipate new and other laws when exploring the possibility of expanding internationally. While Ms. Shahira and her small business of running a sewing company faces different political and legal risk than those of a larger company, she is still liable and must understand the laws and regulations that she may face in any country.

Global marketing: assessing potential markets overseas

Case: Toyota has a vehicle for every market

Each market has unique cultural characteristics and contextual circumstances that must be considered. For example, in the United States roads tend to be wide; highways can accommodate a broad array of vehicles with a high number of lanes, and people demand a mix of cars based on their needs. Conversely, in Europe roads tend to be narrow, and the market demands smaller, more fuel-efficient vehicles. Therefore, while a Toyota 4Runner tends to sell extremely well in the United States, it would not be a very popular model in Europe for these very reasons. As a result, Toyota invests billions of dollars every year into market research and market development to make sure they meet the needs and wants of its customers, in each specific country that they sell their vehicles in. This has led to Toyota’s success in the US automotive market, as our earlier case suggested. With their #1 selling sedan, Toyota Camry, a wide array of hybrid models, trucks and SUVs to meet the United States constantly-changing expectations, Toyota is, arguably, the strongest player in the automotive industry.

What is global marketing?

One of the inevitable questions that surfaces concerning global marketing is: how does global marketing truly differ from domestic marketing, if at all? There has historically been much discussion over commonalities and differences between global and domestic marketing, but the three most common points of view upon which scholars agree are the following. First, all marketing is about the formulation and implementation of the basic policies known as the 4 P’s: Product, Price, Place, and Promotion. Second, international marketing, unlike domestic marketing, is understood to be carried out “across borders”. Third, international marketing is not synonymous with international trade (Perry, 1990). Perhaps the best way to distinguish between the two is simply to focus on the textbook definition of international marketing. One comprehensive definition states that, “international marketing means identifying needs and wants of customers in different markets and cultures, providing products, services, technologies, and ideas to give the firm a competitive marketing advantage, communicating information about these products and services and distributing and exchanging them internationally through one or a combination of foreign market entry modes (Bradley, 2005)”.

The 4 P’S of the Marketing Mix (NetMBA, 2008)

Exhibit 1: The 4 P’s: Product, Price, Place and Promotion are aspects of the marketing mix that are generally controllable
Price, place, product, and promotion in a venn diagram. The full intersection of the four Ps is labeled Target Market. Outside the venn diagram are constraints.

As the following table demonstrates, many decisions affect the marketing mix (NetMBA, 2008):

Table 1: All of these issues must be reconsidered in each market. The marketing mix will appropriately vary as different circumstances dictate.
Product Decisions
Brand Name
Functionality
Styling
Quality
Safety
Packaging
Repairs and Support
Warranty
Accessories and services
Price Decisions
Pricing strategy (price skimming, price penetration, etc.)
Volume discounting and wholesale pricing
Seasonal pricing
Bundling
Price flexibility
Price discrimination
Place Decisions
Distribution Channels
Market coverage (inclusive, selective, or exclusive distribution)
Inventory Management
Warehousing
Order processing
Reverse logistics
Promotions Decisions
Push, Pull Strategies
Advertising
Personal Selling
Sales Promotions
Public Relations and Publicity

Importance of culture on markets

Because international marketing is closely correlated to the cultures in which a firm wishes to sell its product, culture itself must be analyzed to understand the best way to integrate into both existing and emerging foreign markets. There are five essential areas within which culture must be continually studied in order to achieve success in dealing with culture as it affects international marketing.

These are (Tian, 2008):

  • culture impacts on marketing (international versus domestic)
  • cross-cultural dimensions of marketing research
  • cross-cultural aspects of marketing mix (products, price, promotion, and place)
  • cross-cultural marketing education and professional training
  • and cross-cultural practice in electronic marketing

Note:

Cross-cultural marketing occurs when a consumer’s culture differs from that of the marketer’s own culture.

Consumer behavior diverges across country lines with increased wealth, globalization, and technology; it does not converge (De Mooij, 2005). This simple fact proves the importance of culture knowledge in cross-cultural marketing endeavors. In fact, the importance of cross-cultural study has inspired a definition separate from that of international marketing. Cross-cultural marketing is defined as the strategic process of marketing among consumers whose culture differs from that of the marketer's own culture at least in one of the fundamental cultural aspects, such as language, religion, social norms and values, education, and the living style (Tian, 2008).

A standardized marketing model utilizes the same functions in all markets. Conversely, a customized marketing strategy adheres to the needs and wants of a particular target market.

Global branding—creation of a marketing strategy

An important decision that international marketers must make is whether to utilize standardized marketing, treating all markets in the same manner, or customized marketing, adhering to local customs and traditions for greater effectiveness. This is an important distinction when analyzing the creation, perception, and trends in global branding. In most countries and cultures, marketers do not compete with individual products, but rather with competing brands markets. Many writers have reasoned that a standardized approach to international markets is the most desirable strategy. The main arguments include that sales will increase when a company can market a consistent product image across different geographical markets, and that cost can be reduced through the formulation and implementation of a single standardized marketing plan. Still others argue that because few markets are comparable across country lines, it is necessary to adapt the marketing mix to ensure that sufficient customization exists to satisfy consumer needs in each market. Additionally, not all companies are able to adopt a standardized strategy as its appropriateness varies from industry to industry. One must remember that even within markets there is great diversity of behavior and taste. In the face of intensely increasing competition and globalization, studies show that people increasingly prefer brands with roots in their national or regional tradition. This would indicate that most firms should lean towards marketing customization in order to satisfy the increasingly nationalistic consumption tendencies of their consumers (Bradley, 2005).

Global marketing and the small business entrepreneur

While marketing the products of the highly successful sewing company that Ms. Shahira has started in Pakistan may not be something that she is looking to do today, it is critical for her, and small businesses like the one she has set up, to understand what it would take to market to a completely different set of clients, in a new country.

Companies like Toyota and Coca-Cola have created a dominant brand across the world with their global branding and positioning strategies, and as a result have sustained tremendous financial benefits from doing so.

Content actions

Download module as:

PDF | EPUB (?)

What is an EPUB file?

EPUB is an electronic book format that can be read on a variety of mobile devices.

Downloading to a reading device

For detailed instructions on how to download this content's EPUB to your specific device, click the "(?)" link.

| More downloads ...

Add module to:

My Favorites (?)

'My Favorites' is a special kind of lens which you can use to bookmark modules and collections. 'My Favorites' can only be seen by you, and collections saved in 'My Favorites' can remember the last module you were on. You need an account to use 'My Favorites'.

| A lens I own (?)

Definition of a lens

Lenses

A lens is a custom view of the content in the repository. You can think of it as a fancy kind of list that will let you see content through the eyes of organizations and people you trust.

What is in a lens?

Lens makers point to materials (modules and collections), creating a guide that includes their own comments and descriptive tags about the content.

Who can create a lens?

Any individual member, a community, or a respected organization.

What are tags? tag icon

Tags are descriptors added by lens makers to help label content, attaching a vocabulary that is meaningful in the context of the lens.

| External bookmarks