International Marketing Vs Domestic Marketing

INTERNATIONAL MARKETING VS DOMESTIC MARKETING - KEY DIFFERENCES AND SPECIAL PROBLEMS International marketing refers to the application of marketing principles across national boundaries. While the fundamental principles of marketing remain the same whether applied domestically or internationally, important differences exist in terms of the marketing environment when operating in foreign markets. As such, international marketing strategy often needs to be adapted from the domestic approach. This article examines the key differences between domestic and international marketing and outlines the special problems faced in international marketing. Defining International Marketing International marketing involves the application of marketing principles to more than one country. There are two main elements:  Marketing of goods and services across national frontiers. This refers to the typical export/import activities of a company.  Marketing activities of an organization operating in a foreign country, where the parent company overseas and coordinates activities. Multinational enterprises (MNEs) carry out international marketing on this basis. International marketing is effectively marketing on a global basis. Companies undertake international marketing for strategic reasons such as growth opportunities, cost reduction, diversification, or competitive pressures. Fundamentals of Marketing Apply Universally The core principles and practices of marketing are universal in application. Marketing concepts relating to analyzing customer needs, market segmentation, positioning, and the marketing mix can be applied whether in a domestic or international context. The best way to think about international marketing is marketing in a globally competitive environment. However, the strategies and tactics employed in international marketing often differ substantially from domestic marketing due to differences in the marketing environment between countries. When entering foreign markets, marketing strategies need adapting to account for country-by-country variations. Key Environmental Differences There are several important differences in the international marketing environment compared to the domestic market:  Political/Legal - The political system and regulatory environment often vary greatly across international markets. Issues such as political stability, trade agreements, legal protections, and government bureaucracy need evaluating.  Cultural - Differences in culture, values, customs, and language are a major issue in international marketing. Adapting products and communications for different cultural norms is critical. This poses a very difficult problem.  Economic - Factors such as income levels, distribution of wealth, infrastructure development, and consumer spending patterns may be radically different between markets. Pricing and promotional strategies must fit local economic conditions.  Currency - Dealing in multiple currencies brings risks of exchange rate fluctuations and currency controls. Marketing plans must account for varying monetary environments.  Language - Communicating in local languages is important when marketing internationally, even when using a common language like English where meanings/nuances differ across countries.  Marketing Infrastructure - The availability and role of marketing channels such as media, distribution channels, market research agencies, etc. vary enormously across countries. Marketing strategies must utilize available infrastructure.  Trade Restrictions - Tariffs, quotas, customs procedures, and import/export paperwork are substantial trade barriers. Negotiating these restrictions is a key consideration.  Geographical Distance - International marketing often involves greater physical distances between producer and consumer. This results in higher transport costs and longer lead times compared to domestic marketing.  Business Practices - How business is conducted can differ markedly, from how meetings are organized to how contracts are negotiated. Marketers must understand local business etiquette. Adapting To Different Environments The various environmental differences outlined above demonstrate why marketing strategies must be tailored for each market rather than applying a standardized approach everywhere. An international marketing orientation involves understanding local environments and adapting accordingly. Marketers must research local conditions regarding culture, politics, economics, laws, infrastructure, trade policies, and business customs. International marketing plans can then be developed that are suited to each target country. In reality, very few companies adopt a fully adaptable approach. Most pursue an approach between full standardization and full adaptation. Elements of marketing mix such as product quality and core features are standardized worldwide to achieve efficiencies and consistency. Aspects like promotional messages and channels are adapted locally. This dual approach provides a balance between marketing efficiency and local market needs. In summary, while marketing principles apply universally, the differences across international markets mean that marketing strategy and practice must be tailored country-by-country. An international marketing orientation recognizes these differences and adjusts strategy appropriately. Objectives of International Business Companies pursue international business for reasons that ultimately relate to supporting overall growth and profitability objectives:  Sell Surplus Output - Exporting excess production can allow companies to optimize productive capacity and lower average costs. Marginal cost export pricing improves profitability.  Sales/Production Stability - International business can help stabilize sales and output by mitigating seasonal or cyclical demand patterns in domestic markets.  Finance Imports - Export revenues can be used to pay for necessary imports of products, technology, or components. This improves access to needed resources.  Contribute to National Goals - Some companies pursue international business out of a sense of social responsibility and a desire to support national economic development.  Growth Opportunities - Expanding overseas provides an avenue for growth beyond saturated or declining domestic markets. Developing countries offer major growth potential.  Lower Costs - Shifting production activities to lower cost locations offshore reduces operating costs and boosts international price competitiveness.  Enhance Image - Success in international markets improves corporate prestige and brand image, which also supports domestic positioning.  Industry Nature - Some industries like natural resources and commodities are inherently global. International business is mandatory for such sectors.  Political Reasons - Host countries may require international firms to export a portion of local production as a condition of market access.  Economic Incentives - Many countries offer incentives like tax breaks and subsidies to encourage export activity and attract foreign investment.  Profit Advantage - International business can be more profitable than saturated and competitive domestic markets. New growth markets offer higher margins.  Competitive Pressures - Global competitors may force firms to internationalize defensively to counter the threat. Preemptively entering a rival's home market is an example.  Monopoly Advantages - Control of resources, intellectual property, brands, or technology may allow international business on a monopoly basis.  Strategic Vision - Systematic international expansion is driven by a long-term strategic vision and the desire to build global competitive advantage. In summary, companies internationalize for diverse reasons spanning commercial objectives, competitive strategy, exploiting advantages, and policy motivations. All support overall goals of growth, higher profits, and strategic positioning.