International marketing - expanding business

Introduction

International marketing is the extension of business activities in more than one nation for a profit. International marketing means that people around the globe have different needs. Organizations must accept that differences in culture, values and currencies will mean that some products suit certain countries. So Knowledge and information of markets in which firms operate are important for all business activities. In international market, geographical distances and cultural differences are of vital importance and knowledge and understanding of a particular market in respect of geography and culture becomes very important.

The growth of world trade has a strong demand for information about markets throughout the world. Company expanding business needs information about market demand and market conditions. At the same increasing cultural diversity makes it important to collect information with regard to changing lifestyle and consumptions patterns in different parts of the world. Rapid changes around the world make it imperative that firms understand what consumers are thinking and how their values changing. (Douglas &Craig P.1-3, 2005)

Any business environment it is obvious to realize the major aspects which motivate the clients to whom you hope to sell. It becomes true when you trade in international markets where the religious, social and business culture may be entirely different to your own. While it is not possible to become an expert on every set of differing social, cultural and commercial values but you should try to know the main aspects of the markets in which you wish to deal. (Brassington & Pettit. 2000). So it is very much important that the environment of market has to be assessed particularly when entering a new market.

SELF REFERENCE CRITERION DEFINED:

It is of crucial importance that when examining foreign markets the culture is seen in the context of that country. It is better to regard culture as different from, rather than better or worse than the home culture. "Self reference criterion characterises our unconscious reference to our own cultural values when examining other cultures". (Doole&Lowe. p.84.2008).The SRC refers to the tendency of individuals, often unconsciously, to use the standards of one's own culture to evaluate others. "Self reference criterion is the influence of one's culture on the behaviour in a given situation. When put in a situation people tend to respond in a way that is closely associated with their culture. In international marketing scenarios, we are talking about working in different cultural environments and hence a self referenced behaviour may not be the "correct" behaviour from the perspective target culture. Hence realization of this difference of culture and the possibility of self reference criterion is important in international marketing".

Part (A)

IMPORTANCE OF SRC IN INTERNATIONAL MARKETING:

While planning to enter international market firms must be able to interpret the impact of each uncontrollable environmental element for each market in which they hope to do business. To be more specific the uncontrollable elements constitute culture. The most challenging and important one confronted by international marketers is the cultural adjustment. Marketers must adjust to cultures to which they are not attuned. Dealing with unfamiliar markets, marketers must be aware of the frames of reference they are using in making their decision, because judgements are derived from experience that is the result of acculturation in the home country. Once a frame of reference is established it becomes important factor in determining marketer's reaction to situation social or even unsocial. For example western marketers must learn that white is a mourning symbol in parts of Asia which is different of westerns culture use of white for bridal gowns. Also time conscious American is not culturally prepared to understand the meaning of time to Latin Americans. All these differences must be learned to avoid misunderstanding that can lead to marketing

SRC can influence an evaluation of the appropriateness of a domestically designed marketing mix for a foreign market. If US marketers are not aware, they might evaluate a marketing mix based US experiences (i-e their SRC) without fully recognizing cultural differences that require adaptation. Esso the brand name of gasoline was a successful name in use and would harmless for foreign countries however in Japan it means "stalled car "an undesirable image for gasoline. For example "pet" in pet milk it's been used for decades yet in France it means "flatulence "not the desired age for canned milk. There were real mistakes made by major companies stemming from reliance on SRC in making a decision. In US culture a person's SRC would not be a problem with either ESSO or Pet but in international marketing relying on ones SRC could produce an inadequately adapted marketing programme that ends in failure.

While marketers who go beyond there own SRC there results are more positive. A British manufacturer of chocolate biscuit ignoring its SRC, knows that its must package its business differently to adjust in Japanese market because the cookies are used as a gift in Japan and it must look as special. (Online)(The scope and challenge of international marketing cited-02-10-09 url (httphighered.mcgrawhill.comsitesdlfree0073080063343222chapter1.pdf)

So SRC is important to understand cultural and cross cultural differences and firms must go beyond their own SRC to create positive results. As in the above cases US companies relied on their own SRC and faced problems in other countries.

"The primary obstacles in international marketing are a person's SRC in making decisions. Unconscious reference to one's own cultural values, experiences and knowledge as a basis for decision. The SRC impedes the ability to asses a foreign market in its true light". For example when faced with a problem in another culture the tendency is to react instinctively referring to our own SRC for solution and our decision is based on meaning, values and behaviour relevant to our own culture usually different from foreign cultures. Such decisions are not often good ones. To illustrate the impact of the SRC, consider misunderstandings that can occur about personal space between people of different cultures. In the United States, unrelated individuals keep a certain physical distance between themselves and others when talking or in groups. We do not consciously think about that distance; we just know what feels right without thinking. When someone is too close or too far away, we feel uncomfortable and either move farther away or get closer to correct the distance. In doing so, we are relying on our SRC. In some cultures the acceptable distance between individuals is substantially less than that which is comfortable for Americans. When someone from another culture approaches an American too closely, the American, unaware of that culture's acceptable distance, unconsciously reacts by backing away to restore the proper distance, and confusion results for both parties. Both react according to the values of their own SRCs, making both victims of a cultural misunderstanding.

Your SRC can prevent you from being aware that there are cultural differences between people of different countries for example a common mistake made by American is to refuse foods when offered, in America polite refusal is acceptable but in Asia or middle east you do have to accept the offering of hospitality. (Ghauri&cateora, p.15.2005).

To avoid errors in business decisions, the knowledgeable marketer will conduct a cross Cultural analysis that isolates the SRC influences and will maintain a vigilance regarding ethnocentrism. The following steps are suggested as a framework for such an analysis.

Define the business problem or goal in home-country cultural traits, habits, and norms.
Define the business problem or goal in foreign-country cultural traits, habits, or norms through consultation with natives of the target country. Make no value Judgments.
Isolate the SRC influence in the problem and examine it carefully to see how it complicates the problem.
Redefine the problem without the SRC influence and solve for the optimum business goal situation.

An American sales manager newly posted to Japan decided that his Japanese sales representatives did not need to come into the office every day for an early morning meeting before beginning calls on clients in Tokyo. After all, that was how things were done in the United States. However, the new policy, based on both the American's SRC and a modicum of ethnocentrism, produced a Precipitous decline in sales performance. In his subsequent discussions with his Japanese staff he determined that Japanese sales representatives are motivated mostly by peer pressure. Fortunately he was able to recognize that his SRC and his American "business acumen" did not apply in this case in Tokyo. A return to the proven system of daily meetings brought sales performance back to previous levels. The cross-cultural analysis approach requires an understanding of the culture of the foreign market as well as one's own culture. (online..international marketing scope &challenges)

PART (B)

International marketing entry is the most important decision to be taken by the firm's engaging in international business. Business in the age of globalization has necessitated a move towards the internationalization of firms of all sizes. (Woods & Robertson. 2000). However firms lacking information while entering a new market consequently finds themselves unprepared for the environment they entering.

The task of international marketers is more difficult than those of domestic marketers because international marketers must deal with two level of uncontrollable uncertainty instead of one. This uncertainty is created by uncontrollable elements of all for business environments and each foreign market adds its own uncontrollable elements in which a firm operates.

Firms deciding whether to keep their business on a local level or whether the firm should move their business activities to new market on a geographical level, there are many factors which need to be considered before taking a decision. Apart from internal factors firms entering a foreign market for the first time needs to considered external factors such as, political, economical, legal, geographical and cultural environments of the market where firms extending its business

Perhaps the most important among such factors to be considered is culture when entering a new market for the first time. Firms exporting for the first time generally select foreign markets that have same market and cultural similarity with the firms domestic market (Erramilli, 1991). In some instances markets are selected because they are seen as 'psychologically close' to the domestic market (Papadopoulos & Denis, 1988; Dow, 2000).

According to cherunilam the degree of involvement in international business of companies varies widely. There are four orientations.

Ethnocentrism (home country orientation): In ethnocentric company overseas operations are viewed as secondary to domestic operations and primarily as a means of disposing surplus domestic production
polycentrism (host country orientation): The environment of each market is considered while making marketing strategy. There is market segmentation on at least a country basis. Emphasis is put on local laws, customs and great care is taken to understand local way of business.
Regiocentrism (regional orientation): A Regioncentric Company views different regions as different markets
Geocentrism (world orientation):The geocentric company views the entire world as a single market.(cherunilam.p.16,17.)

Whatever the company international strategy may be it is obvious that social and cultural influences on international marketing are immense. International marketing means that people around the world have different needs and international marketers must realize the differences in cultures, Values, tastes and preferences. What is liked by the people of one culture may not be liked by people of different cultures. One of the most important reasons for the failure of companies in foreign market is their inability is to understand the culture environment of that country.

Many companies modify their products in order to meet the taste and preferences of people of other countries. As British manufacture of chocolate biscuit modify packing of its product in order to meet Japanese market. significant differences in taste and preferences may exist in people of same country when country is vast, populous and multi cultural such as India for example Nest caf� has � share of Mumbai market while its has s very low share in Bangalore and insignificant in Chennai. It may be noted that Nest caf� projects an international image of the product. On the other hand Brue has a very big market in Chennai and Bangalore while has a low share in Mumbai. Which has south Indian backdrop? (cherunilam.p.75) these differences could be specially when there are different subcultures such as United States where there are different subcultures such as Hispanic subculture.

Culture Defined:

Geert Hofstede defined culture as "the collective programming of the mind that distinguishes the members of one category of people from another" (lewis.p17.2006, when cultures collide)

Culture according to another writer "that complex whole which includes knowledge, belief,art,morals,custom and any other capabilities and habits acquired by a person as a member of society".

Culture is part of external influences that impact the consumer. Culture is a problem for many marketers as it is often difficult to understand. One may violate the cultural norms of another country without being informed of this. There are often significant individual differences within cultures.

For example, In Muslim tradition, dog is considered a "dirty" animal, so portraying it as "man's best friend" in an advertisement is counter-productive. Packaging, seen as a reflection of the quality of the "real" product, is considerably more important in Asia than in the U.S., where there is a tendency to focus on the contents which "counts." ( online...consumer psychologist.com) The task of the global marketer is to find the similarities and differences in culture and account for these in designing and developing marketing plans. Failure to do so can be disastrous.

WHAT IS SUB-CULTURE

Definition:

Subculture refers to "cultural variants displayed by certain segments of the population". Subcultures are distinguished not by one or two isolated traits, they constitute cohesively social systems. They are worlds within the larger world of our national culture. (jenks.p7.2005)

The members of specific subcultures possess' beliefs, values, and customs that set them apart from members of the same society. They adhere to most of the dominant cultural values, beliefs and behavioural pattern of the larger society. So subculture is defined as "as a distinct cultural group that exists as an identifiable segment within a larger or more complex society" (schiffman&kanuk.p438.2004)

Within a larger culture there are subcultures and may be based on religion, nationality, geographical areas or racial groups America could be a good example of subculture which has a history of attracting people from all over the world. For example Hispanic subculture in America, and racial subcultures such as Caucasian, African American, Asian American

Subculture might be based on age, ethnic background and special interests. For example Goth culture is different from mainstream UK culture and has a different set of beliefs and behaviours. Geographical subcultures are very significant for marketers. And most countries have geographical subculture for example Friesland has different language and traditions from Netherlands. In UK Wales and Scotland regard themselves as separate and have different food, Culture and language from those of England. (blythe.p197-98.2008).

Even a single political country does not mean that there is a single culture. For example in Canada there are two major cultural groups French and English Canadian. Studies compared consumption and life style differences between these two groups. English Canadian were more price conscious and less fashion conscious while French Canadian consumer can be considered as more sensate and more conservative than their English counterparts. Author noted that French were less educated and had lower income that English Canadian and this difference in social class must be taken into account by marketers so as to understand consumption differences between the two cultures. (Rao.p13.2006) India is another example which is discussed above.

SEGMENTATION:

Segmentation is the identification of buyers within a market who have similar needs and demonstrate similar buyer behaviour. The world is made up of buyers who have different needs and behaviour. Segmentation is to match group of purchasers who have similar needs and buyer behaviour.

WHY SEGMENT:

Successful segmentation depends on successful understanding of the market. There are a number of reasons why organizations undertake segmentation. One of the main reason is to meet the needs of the customer more efficiently. Segmentation is one of the most proper way of gaining profit and retaining customers. (Drummond&ensor.p67.2005 intro to marketing concept)

Culture has a strong influence on all consumer behaviour. Segmenting in terms of culture factors, marketers also segment overall society in smaller subgroups (subcultures).these subcultures division are based on a variety sociocultual, dempgraphic variables, such as nationality, religion, geographic location, race, age and sex. Subcultures analysis enables marketers to focus on sizable and natural segments. The marketer must determine whether the beliefs and customs shared by members of a specific subculture make them desirable candidates for special marketing attention.

For example evidence shows that Hispanic subculture in America differs in terms of a variety of important buyer behaviour variables. Hispanic consumers have a strong preference for well established brands and prefer to shop at smaller stores. So identification of Hispanic subculture is the most important variable when targeting Hispanic market. Apart from that Hispanic market can be segmented by using a combination of country of origin and geographic concentration in the United States. Some Hispanic American are concentrated in Texas, some in New York while others in Florida. Some marketers believe that it is better to target each market separately while others have targeted it as a single market. Market can also be segmented on the basis of geographic and regional subcultures. Anyone who has travelled across the US noted many regional differences especially when it comes to food and drink for example a cup of black coffee is preferred in west, while a cup of coffee with milk and sugar is preferred in the east. There also geographical differences in the consumption of staple food like bread in the south and mid west white bread is preferred whereas on the east and west coasts firmer breads are favoured. So identification of subculture is important in segmenting market in a country like USA. ( schiffman&kanuk.p437-446.2004)

Essay Writing

Resources