Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 6

MARKETING IN GLOBAL MARKETS

Finally, there are several inherent problems associated with pricing in international

markets. Often companies find it difficult to coordinate and control prices across their activ-

ities in order to enable them to achieve effective fi nancial performance and their

price positioning. Simply, how can prices be coordinated by the company across the vari-

ous markets and still make the necessary profit? Difficulty answering this question has led

to two serious problems. Dumping (when a firm sells a product in a foreign country below its domestic price or below its actual costs) is often done to build a company's share of the

market by pr:cing at a competitive level. Another reason is that the products being sold may

be surplus or cannot be sold domestically and are therefore already a burden to the com-

pany. When companies price their products very high in some countries but competitively

in others, they engage in a gray market strategy. A gray market, also called parallel importing, is a situation W;1ere products are sold through unauthorized channels of distribution.

A gray market comes about when individuals buy products in a lower-priced country from

a manufacturer's authorized retailer, ship them to higher-priced countries, and then sell them

below the manufacturer's suggested price through unau thorized retailers .

Considerable problems arise in foreign transactions because of the need to buy and

sell products in different currencies. Questions to consider are : What currency should a com-

pany price its products? How should a company deal with fluctuati ng exchange rates?

Finally, obtaining payment promptly and in a suitable currency from less developed

countries can cause expense and additional difficulties. How should a company deal with

selli ng to countries where there is a risk of nonpay ment? How should a company approach

selling to countries that have a shortage of hard currency?

Distribution and Logistics

Distribution channels are the means by which goods are distributed from the manufacturer to the end user. Logistics, or physical distribution management, is concerned wi th the planning, implementing, and control of physical flow s of materials and final goods from points

of origin to points of use to meet customer needs at a profit.

Essentially there are three channel links between the seller and buyer. The firs t link

is the seller's

organization, which is responsible for supervising the channel,

and acts as part of the channel itself. Channels between countries represent the second link.

They are responsible for getting products to overseas markets and payment in return. Finally,

the third link is the channel structure (logistics) within countries, which distributes the prod-vcts from their point of entry to the final consumer.

Distribution st:ategies within overseas markets are affected by various uncontrollable

factors. First, wholesaling and retailing struc ture differs widely fro m one nation to the next.

So, 100, does the quality of service provided. Differences in the size and nature of retail-

MARKETING CAPSULE

•

The international marketing plan includes concern for

2. The internatio nal marketing environment inc lude s

a. Corporate level conSiderations-determining the

concern for:

resources to be allocated

a. the social!culturul environment

b. Business level considerations, including:

b. the political/legal environment

•

assessment of stakeholders

c. the technological environment

the situation analysis

d. the economic environm ent

c. Functional

considerations that delineate the var-

e. the competitive environment

ious activities that will achieve objectives

THE INTERNATIONAL MARKETING ENVIRONMENT

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ers are even more pronounced. Retailers more closely reflect the economic conditions and

culture of that country; many small retailers dominate most of these countries.

Physical distribution LO overseas

often requires special marketing planning.

Many countries have inadequate docking facilities, limited highways, various railroad track

gauges, too few

and too few warehouses.

product inventories requires

consideration of the availability of suitable warehousing, as well as the costs of shipping

in small quantities.

THE INTERNATIONAL MARKETING ENVIRONMENT

A number of

constitute the international environment: social, cultural, political, legal,

competitive. economic, plus technology. Each should be evaluated before a company makes

a decision to go international.

T he Social/Cultural Environment

The cultural environment consists of the influence of religious, family, educational, and social in the marketing system. Marketers who intend to market their products overseas

may be very sensitive to foreign cultures. While the differences between our cultural back-

ground in the United States and those of foreign nations may seem small, marketers who

ignore these differences risk failure in implementing marketing programs. Failure

con-

sider cultural differences is one of the primary reasons for marketing failures overseas. Table

6.1 provides some illustrations of cultural

around the world.

This task is not as easy as

as va.-ioilS features of a culture can create an

illusion of similarity. Even a common language does not guarantee similarity of interpre-

tation. For example, in the U. S. we purchase "cans" of various grocery products, but the British

"tins." A number of cultural differences can cause marketers problems in

attempting to market their products overseas . These include: (1) language, (2) color,

(3) customs and taboos, (4) values, (5) aesthetics, (6) time, (7) business norms, (8) religion,

and (9) social structures. Each is discussed in the following sections.

Language

The importance oflanguage differences cannot be overemphasized, as there are almost 3,000

languages in the world. Language differences cause many problems for :narketers in design-

ing advertising campaign s and

labels.

problems become even more seri-

ous once the people of a country speak several languages. For example, in Canada, labels

must be in both English and French. In India, there are over 200 different dialects, and a

similar situation exists in China.

Colors

Colors also have different meanings in different cultures. For example, in Egypt, the coun-

try 's national color of green is considered unacceptable for packaging, because religious

leaders once wore it. In Japan, black and white are colors of mourning and should not be

used on a product's package. Similarly, purple is

in Hispanic nations because

it is associated with

Customs and Taboos

All cultures have their own unique set of customs and taboos. It is important for marketers

to learn about these customs and taboos so

they will know what is acceptable and what

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