It is a reality that world trade has now assumed an importance hitherto unknown to the global community. The modern marketer or manager cannot manage a business without looking at the global arena where economic transactions take place even if a marketer decides to confine his own business within the national borders. The fact now is: while in the past trade was undoubtedly conducted internationally, but never before did it have the broad and simultaneous impact on nations, firms and individuals that it has today.
International marketing is the application of marketing principles to satisfy the varied needs and wants of different people residing across the national borders. Such a process necessitates undertaking the marketing activities in more than one nation. It is often called Global Marketing, i.e., designing the marketing mix (viz. product, price, place, promotion) worldwide and customising it according to the consumer preferences of different nations. Actually, the foremost decision that any company has to make is whether to go international or not. A company may not want to globalise its business because of its huge market share in the domestic market and may not be interested to learn the laws and rules of international market. Still, there are ample reasons that might attract it to be global: increased economies of scale, high-profit opportunities in the international market compared to domestic market; elongated life of the product etc.
In a specific sense international business essentially covers international transaction of economic resources as well as international production of goods and services, and as such the broad forms of business internationalisation cover trade, technical collaboration and investment. International marketing is the application of marketing principles to more than one country. However, there is a crossover between what is commonly expressed as international marketing and global marketing. For the purposes of this lesson on international marketing and those that follow it, international marketing and global marketing are interchangeable. That is to say, international marketing is a simple extension of exporting, whereby the marketing mix is simply adapted in some way to take into account differences in consumers and segments. It then follows that global marketing takes a more standardised approach to world markets. Keegan nicely stated that 'the international market goes beyond the export marketer and becomes more involved in the marketing environment in the countries in which it is doing business.'=
What is more, trade growth on a global level has consistently been outperforming the growth of domestic economies in the past few decades, as a result of which many new countries and firms, especially in the emerging economies, have found it highly desirable to become major participants in the international market. Global marketing has thus emerged as number one -- more so since the emergence of computers and internet has reduced the world to a global village where producers and customers can just log onto the internet to interact and exchange goods and services.
On a broader vision, international marketing has emerged as a targeted area of highest priority among the progressive nations globally. International business expanded at a jet speed in the current decade -- reasons mainly being rapid growth in technology, coming up of supportive institutions, openness of the different economies as well as increase in competition. Even minnows like Myanmar are now making a foray into the energy sector, in particular. Not only this, even a latecomer like Bangladesh has emerged to be a tough competitor in the field of readymade garments making full use of its competitive advantage (a country has a comparative advantage over another if in producing a commodity it can do so at a relatively lower opportunity cost in terms of the foregone alternative commodities that could be produced) in the arena of cheap labour. The EU's internal market is all about removing barriers to free movement of goods and services, people and capital. Organisations are also there to encourage the removal of barriers to free global trade.
It is beyond any shade of doubt that openness of economies has been gaining ground -- described as total foreign trade (exports plus imports), as a proportion of GDP, and as such the degree of openness of an economy plays the dominant role. Openness of the goods market refers to free exchange of commodities across national boundaries indicating greater interaction with the global market. Side by side, openness of the factor market also deserves attention; labour and capital have more freedom to choose between domestic and foreign assets. In fact, the MNCs are moving their operations with greater ease around the world in search of lower costs. For example, workers can move freely from one country of EU to another without facing much restriction.
The fact is that for both the developed as well as the developing world, marketing has not only been considered from the point of view of being an integral component in the context of economic development, but as a rich gold-mine as well (earning foreign exchange which is described as claims on a country by another held in the form of a currency of that country). Reaping adequately from modernised, highly fluid and fast-changing global business/commercial environment does depend on its abundant natural/ human/ technological/ financial resources as well as crucially on the very ability to undertake expanded task of adapting to befitting marketing strategies.
What is more, the very management functions in the sphere of international business differs widely from those engaged in domestic business, mainly visible in areas like accounting and finance, personnel, marketing and production. For example, multinational companies operate in many countries simultaneously and the different units are linked through common ownership responding to common strategy (although the degree of integration varies from case to case). During the last five decades, MNCs have registered a phenomenal growth. The trend is all set to continue provided the reputation risk factors (as normally experienced in countries like China) are adequately taken care of.
Naturally, the challenge is to create exportable surplus (trade surplus refers to an excess of export receipts over import payments as compared against trade deficit which means an excess of import expenditures over export receipts measured on the current account and also known as merchandize trade deficit) and at the same time producing goods/ rendering services at the least comparative cost so as to get a strong foothold on the international market in the face of intense competition.
As such although both domestic and international marketing use all the basic marketing principles, international marketing is more challenging and requires more commitment from the company because of the uncertainty and differences in laws and regulations in the global market while domestic marketing deals only with the laws and regulations of one country.
Dr B K Mukhopadhyay, a Management Economist, is Principal, Eminent College of Management and Technology, Kolkata, India.
© 2017 - All Rights with The Financial Express