Marketing Environment
The key difference between domestic marketing and marketing on an international scale is the multi-dimensionality and complexity of the many foreign country markets a company may operate in. An international manager needs a knowledge and awareness of these complexities and the implications they have for international marketing management.There are many environmental analysis models. These are - Social, Legal, Economic, Political and Technological – (SLEPT) as depicted in Figure below:-
Socia1/Cultural Environment
The social and cultural influences on international marketing are immense. Differences in social conditions, religion and material culture all affect consumers' perceptions and patterns of buying behavior. It is this area that determines the extent to which consumers across the globe are either similar or different and so determines the potential for global branding and standardization.
A failure to understand the social cultural dimensions of a market is a prime reason for failure as McDonald's found when they moved into India following the opening up of that market a few years ago.
Cultural factors
Cultural differences and especially language differences have a significant impact on the way a product may be used in a market, its brand name and the advertising campaign. Coca-Cola had to withdraw their two-litre bottle from Spain when they found that Spaniards did not own fridges with sufficiently large compartments. Johnson's floor wax was doomed to failure in Japan as it made the wooden floors very slippery and Johnson's failed to take into account the custom of not wearing shoes inside the home. Initially, Coca-Cola had enormous problems in China as Coca-Cola sounded like 'Kooke Koula' which translates into 'A thirsty mouthful of candle wax'. They managed to find a new pronunciation 'Kee Kou Keele' which means 'joyful tastes and happiness’. Other companies who have experienced problems are General Motors which experienced difficulties with its brand name 'Nova' in Spain ('no va' in Spanish means 'no go'), Pepsi Cola which had to change its campaign 'Come Alive With Pepsi' in Germany as, literally translated, it means 'Come Alive Out of the Grave' '1nd McDonald's whose character Ronald McDonald failed in Japan because his white face was seen as 'a death mask.
To operate effectively in different countries requires recognition that there may be considerable differences in the different regions. Consider Northern Europe versus Latin Europe, the Northwest of the USA versus the South or Tokyo and Taiwan. At the stage of early internationalization it is not unusual for Western firms to experience what appear to be cultural gaps with their counterparts in Latin America and Asian countries as well as in different regions of those countries.
There are many examples where companies simply do not find their way into a market or where their performance is less than successful. Only a very small proportion of the failures or the major difficulties are made public. Euro Disney in France received considerable media attention but any careful scrutiny of the performance of a company in different markets will show the number of disappointments in foreign markets exceeds the success
Derwent Valley were highly successful in the UK but met huge problems facing the cultural complexities of the continental European market which they were totally unprepared for.
On the other hand, there are visible trends those social and cultural differences are becoming less of a barrier. This has led to the emergence of a number of world brands such as Microsoft, Intel, Coca-Cola, McDonald’s, Nike etc., all competing in global markets that transcends national and political boundaries.
However, there are a number of cultural paradoxes which exist. For example, in Asia, the Middle East, Africa and Latin America there is evidence both for th westernization of tastes and the assertion of ethnic, religious and cultural differences. These differences do not necessarily constitute unbridgeable cultural chasms in all sectors of a society. Instead there are trends towards similarities both in cultures and outlooks of consumers. There are more than 600 000 Avon ladies now in China and a growing number of them in Eastern Europe, Brazil and the Amazon.
In northern Kenya you may find a Sambhuru warrior who owns a cellular telephone. Thus, whilst there is a vast and, sometimes, turbulent mosaic of cultural differences, there is also evidence that a global village is potentially taking shape which as Kenichi Ohmae (1994) said, ‘will be a nationless state market by the convergence of customer needs that transcends political an cultural boundaries’.
Social factors
Growth and movement in populations around the world are important factors heralding social changes. Over the next half century, Africa's population will almost treble. In 1995 700m people lived in Africa: by 2050 there will be "just over 2 billion. China's population will rise much more slowly from 1.2 billion to 1.5 billion. With a population of 1.53 billion People, India will have more inhabitants than China in 50 years time. Europe is the only region where the population is expected to decline. There are also visible moves in the population within many countries leading to the formation of huge urban areas where consumers have a growing similarity of needs across the globe. The world is moving into gigantic conurbations. The population of Greater Tokyo is soon to be close to 30 million and Mexico 15 million. Cities such as Lagos, Buenos Aires and Djakarta will soon outstrip cities such as Paris, London and Rome. In the year 2015, no European city will be in the top 30 and 17 of the world's mega cities of 10 million plus will be in the Third World.
This has powerful implications for international marketing. These cities will be markets in themselves. Urban dwellers require similar products (packaged conveniently and easy to carry). Similarly, they demand services, telephones and transportation of all kindsand modern visual communications. It also means for the incoming company that customers are accessible. They are identifiable and firms can communicate with them efficiently via supermarkets, advertising and other marketing communication tools.
Legal environment
Legal systems vary both in content and interpretation. A company is not just bound by the laws of its home country but also by those of its host country and by the growing body of international law. Firms operating in the European Union are facing ever increasing directives which affect their markets across Europe. This can affect anyaspect of a marketing strategy - for instance advertising - in the form of media restrictions and the acceptability of particular creative appeals. Product acceptability in a country can be affected by minor regulations on such things as packaging and by more major changes in legislation. In the USA for instance, the MG sports car was withdrawn when the increasing difficulty of complying with safety legislation changes made exporting to that market unprofitable.
It is important, therefore, for the firm to know the legal environment in each of its markets. These laws constitute the 'rules of the game' for business activity. The legal environment in international marketing is more complicated than domestic since it has three dimensions: (1) local domestic law; (2) international law; (3) domestic laws in the firm's home base.
Local domestic laws.
These are all different! The only way to find a route through the legal maze in overseas markets is to use experts on the separate legal systems and laws pertaining in each market targeted.
International law.
There are a number of 'international laws' that can affect the organisation's activity. Some are international laws covering piracy and.hijacking, others are more international conventions and agreements and cover items such as IMF and World Trade Organization (WTO) treaties, patents and trademarks legislation and harmonisation of legal systems within regional economic groupings e.g. the European Union.
Domestic laws in the home country.
The organisation's domestic (home market) legal system is important for two reasons. First, there are often export controls which limit the free export of certain goods and services to particular marketplaces and second, there is the duty of the organisation to act and abide by its national laws in' all its activities whether domestic or international. It will be readily understandable how domestic, international and local legal systems can have a major impact upon the organisation's ability to market into particular overseas countries. Laws will affect the marketing mix in terms of products, price, distribution and promotional activities quite dramatically. For many firms, the legal challenges they face in international markets is almost a double-edged sword.
In many mature markets they face quite specific and, sometimes, burdensome regulations. In Germany for instance, environmental laws mean a firm is responsible for the retrieval and disposal of the packaging waste it creates and must produce packaging which is recyclable, whereas in many emerging markets there may be limited patent and trademark protection, still evolving judicial systems, non-tariff barriers and an instability through an ever evolving reform programme.
Recently, McDonald's had a legal case they brought to win the right to use their brand name in South Africa dismissed, on the grounds that it was already used by several indigenous firms in the fast-food market. Some governments are reluctant to develop and enforce laws protecting intellectual property partly because they believe such actions favour large rich multi-nationals.
Piracy in markets with limited trade mark and patent protection is another challenge. Bootlegged software constitutes 87 per cent of all personal computer software in use in India, 92. per cent in Thailand and 98 per cent in China, resulting in a loss of US$8 billion for software makers a year.
India has been seen by many firms to be an attractive emerging market beset with many legal difficulties, bureaucratic delay and lots of red tape. Companies such as Mercedes Benz, Coca-Cola and Kelloggs cornflakes have found the lure of the vast potential of India's market somewhat hard to break into. Its demanding consumers can be difficult to read and local rivals can be surprisingly tough. Political squabbles, bureaucratic delays, infrastructure headaches and unprofessional business practices create one obstacle after another. Foreign companies are often viewed with suspicion
Economic environment
Amongst the 200 or so countries in the world, there are varying economic conditions and levels of economic development and GNP per capita. Thus it is important that the international marketer has an understanding of economic developments and how they impinge on the marketing strategy. This understanding is important at both a world level in terms of the world trading infrastructure such as world institutions and trade agreements, at a regional level in terms of regional trade integration and at a country/market level. Firms need to be aware of the economic policies of countries and the. direction in which a particular market is developing economically in order to make an assessment as to whether they can profitably satisfy market demand and compete with firms already in the market.
One of the key challenges facing companies trying. to develop an integrated strategy across a number of international markets is the divergent levels of economic development they have to dea1 with, making it often very difficult to have a cohesive strategy, certainly in pricing. The Economist 'Big Max' Index is a useful illustration of the impact this has on firms. This index gives a guide to the comparative purchasing power across countries by examining their economies in terms of how many minutes somebody needs to work to buy a 'Big Mac'.
Meet Amarendra Bhushan, A leading Strategic Human Resource Consultent, MBA from American university of athens, greece, also editing The European journal of NRI finance magazine TRIBUNE). As one of the leading article writer, and corporate hotel professional. Advisor to various organizations and hotels. He is an elected member of south Indian hotel and restaurant federation. Now staying at city of Athens Greece. Amarendra bhushan Dhiraj Athens, Greece PH-0030-6947667507 abdhiraj@mail.gr
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