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International Marketing Assignment
This international marketing assignment will give a glimpse of the international marketing based on the several areas which are important to be considered. The geographic and historic factors essential for the foreign marketing then it is necessary to understand the concept of foreign marketing. In case of foreign marketing in the business organisation will like to expand its boundary due to increase the sales turnover and also to achieve the economies of scale. All this factors drives the organisation to go for the foreign marketing or international marketing to expand its operation of the business in the overseas market. But there are several methods and influencing factor involving in the foreign marketing. An organisation will like to adopt the market entry modes like licensing, exporting, franchising, wholly owned subsidiaries etc. The report will also highlight the non tariff barriers are the mechanism which restricts the exporting or importing of the goods or services on the ground of several purposes. The countries used to control the trade in the form of quotas, subsidies, embargo, standards, Government participation, import charges etc. Lastly the international product life cycle model will support the organisation who will like to start their business operations across the national borders. When the market of the developed country becomes 100 % saturated then moving out of the domestic country is the best way to expand its operation of the business.
Critically explain to your client company that geography and history are two of the environments of foreign marketing that should be understood and that must be included in foreign marketing plans to a degree commensurate with their influence on marketing effort. Use examples to illustrate the key points of your discussion. Answer with reference to business format Licensing operations.
To discuss critically about the geographic and historic factors essential for the foreign marketing then it is necessary to understand the concept of foreign marketing. In case of foreign marketing the business of the organisations will like to expand its boundary due to increase the sales turnover and also to achieve the economies of scale. The factors influencing the foreign marketing is the globalisation of the taste and preference of the people, sound communication, high growth markets of the emerging nations, differential taxation structure, intense competition in the domestic market etc. All this factors drives the organisation to go for the foreign marketing or international marketing to expand its operation of the business in the overseas market. But there are several methods and influencing factor involving in the foreign marketing. An organisation will like to adopt the market entry modes like licensing, exporting, franchising, wholly owned subsidiaries etc (Doole and Lowe, 2012). The factors that will create an impact in the decision making process of the marketing based on the overseas market are the concerned culture of the nation, geographical aspects, historic values, social beliefs, political factors, legal factors etc. All these factors are needed to be analysed to get the overall picture of the nation and accordingly the product line or service portfolio will be designed. The analysis is important because it is the common people who are the end consumers of the business and each of the factors are related with the taste and preference of the consumers. (Onkvisit and Shaw 2011).
For instance Dermalogica is the client company which is operating in the beauty products for the women in UK. They have selected the female segment due to the high preference given by the females for the beauty products all over the world. They like to enter into the markets of the BRIC countries which are showing a high growth rate. Among them China and India are showing a remarkable growth rate and huge opportunities due to the density of the population. But apart from the growth factor there are other driving forces which are needed to be considered before entering into the market of China and India.
If I consider the historic factor then in China it was the rule of Qing dynasty where the women are restricted only towards their family. But after the era of Qing dynasty in 1911, the People’s Republic of China implement a change in the society and also frames the rules for the welfare of the people. The communist rule in China allows both the women and men to take part in any affairs of the life starting from family, business, job, education etc (Sullivan, 2012). After the globalization the scenario has changed we can observe both the male and females are working in the organisations holding leading post. Many multinational companies have opened their manufacturing sites in China like Samsung, Sony, and LG etc. They are now recruiting the women as well men equally without any discrimination due to the Government support of China. But till now there is an inequality in the gender discrimination as per the report stated by the UN Development Program. They mentioned China is positioned much below than many countries. So from the history we can able to gather several aspects of the concerned nation like the attitudes of the Government in China, attitudes of the foreign corporations etc. As our client company is based on the female products so the major focus will be on the females. But from the history of China it was clear that women were deprived due to the male domination but after the intervention of the communist rule scenario has changed, foreign companies are coming to China employing women, building their sites etc. Still now also inequality is high as the major proportion of males are given opportunities than the women. So in this perspective Dermalogica can select the market of China which is growing at a faster rate by implementing the licensing mode.
Licensing is the business model used in the international marketing where the client company. Dermalogica can give permission to other local company in China for manufacturing or selling the products on behalf of Dermalogica by using the trademark, brand logo etc in return of payment. The advantage will be the risk mitigation. The domestic company operating in China is aware of the local history or geography and based on that products modification or localisation can be achieved. The resources required to manufacture or sell the products to the overseas market will be the issue for the foreign company but with the help of the licensing they can give the permission to the domestic business in the overseas country in exchange of the onetime payments, royalty fees and other technical fees. (Paliwoda and Thomas, 2013).
The other influential force is the geographic factors that include the location, climate of the concerned country. If we consider India, then maximum of the days in a year are hot and humid. So the product of the Dermalogica must aligned with the climatic conditions otherwise the consumers will reject the purchase. Apart from that India has several regions surrounded by mountains, deserts, seas, plain lands etc. In this respect the segmentation of the target audience should be based on the locations. Apart from that the marketing activities should be deigned considering the geographical factors, for instance the distribution strategy will be different from place to place. In this respect Licensing will be an effective one to distribute and promote the product as per the geographical factors are concerned. But licensing can also result to a diverse effect if the efficiency of that organisation is lacking. Thus careful considerations for selecting the organisation for licensing must be done to get an effective result (Delener, 2012).
Critically evaluate the commonly held belief that there is no single market entry strategy which is appropriate in all circumstances. Answer with reference to business format Licensing operations.
International marketing refers to the expansion of the business operations in the overseas market but to expand the business there are several market entry strategies. The market entry strategies which are generally followed in the international marketing are needed to be analysed in the following way:
- Exporting: It is the way where the companies used to manufacture their products in their home country and sell those in the overseas market. It can be of two types which are direct export or indirect export. Direct export will be effective if the volume of the product is less. Protectionism can influence the large volume. In this type focus is given on the distribution to maximise the reach and availability. But if we see the other side which can increase the cost of the operation and will be insignificant in the overseas market. Suppose if Dermalogica manufacture their product and sells it in India then the cost of the transportation, taxation, acceptance by the customers will be questioned. But selecting the organisation and giving them the license to sell in India will help to cater the market effectively due to the familiarity of the domestic organisation in the concerned country India or China. The risk to get failure due to the taste and preference can be mitigated with the licensing. (Katsioloudes, 2012).
- Franchising:It is the marketing strategy used in the international marketing where the independent business owners take the trademark or logo of the parent company that is the franchisor in return of the fees and royalties. The franchisees who have taken the trademark of the other company can use the logo of that company. The franchisees have to pay the registration, royalty fees to take their logo or trademark. For instance the brand Dermalogica in UK can give franchisee to some independent business owners in China and India to open their outlets or manufacturing or selling responsibilities. The period of the franchising is longer than that of the licensing. The foreign company generally provides training, resources, operational advice, and equipments to the franchisees. But if we compare franchising to the licensing system then there is limitation. But in case of licensing agreements involves the intellectual property, trade secrets etc. The advantage in franchising is the less political cost due to the local independent business owners, expansion of the business of the foreign company is enhanced without having high risk, income will come to the foreign company in the terms of the royalties, renewal, etc which is fixed in nature. But the negative side of the franchising can be the less control over the franchisees as the management of the company is situated far away and thus any tactical decisions are mainly taken by the local franchisees which may affect the goodwill of the brand. Legal disputes are the part of the franchising which occurs very often. We know that Dermalogica has a good brand image in the cosmetics market in UK but the franchisees in China and India can make the goodwill hamper due to the inappropriate decision or lack in the efficiency level. Apart from that constant monitoring, evaluating the performance of the franchisees required expenditure as well as time. There is also a risk that the franchisees who are selected in the market of China and India can become the future competitor due to the knowledge of the business operations or marketing activities. So we can observe several positive and negative areas in Franchising. (Ghauri and Cateora, 2010).
- Manufacturing Abroad: It is the market entry strategy where the organisation set up their manufacturing site in the host country for selling the products to the abroad. The advantage behind this strategy can be the tax advantage from the Government to set up their industry and serve their economy by giving employment opportunity. Suppose Dermalogica can set their manufacturing site in India and sell their products to China. This will help them to get the tax reliefs from the India Government to set up their industry and giving employment. From the point of view of the organisation it will be profitable because the resources available in India specially the human resource are cheap and very much competent as per the industry standard. Thus the economies of the scale can be achieved. But the negative side can be the risk of getting the strategy leaked as the rivals can adopt this strategy and do the same. The interest of this strategy is questionable to the people in India as the organisation Dermalogica is giving importance to China for selling its product. This is a psychological factor that may influence the productivity of the work force. (Johnston, 2013).There are also other market entry strategies like the joint venture, wholly owned subsidiaries etc. In case of joint ventures the foreign organisation is going for a contract to expand the business operation in the concerned country by having common goals. But there is a chance for future conflicts and misunderstanding which can separate the business and can bring losses. But if we consider licensing then there is also some disadvantages like maintaining the same quality standard is dependable on the licensee, reputation or the goodwill can be damaged due to the inappropriate operation of the licensee, the partner in near future can also become the competitor due to the detailed knowledge of the manufacturing, strategic decisions, trade secrets etc. So we can observe from this discussion none of the market entry strategy is purely perfect in all respect of the international marketing entry. Thus an evaluation is needed to adopt the market entry strategy in the international market.
Critically discuss what strategic options are open to marketing firms when attempting to deal with the problems of non-tariff barriers in developing and economically developed and industrialised countries? Choose at least one industrialised country and one developing country to illustrate the points made. Answer with reference to business format Licensing operations.
Non tariff barriers are the mechanism which restricts the exporting or importing of the goods or services on the ground of several purposes. The countries used to control the trade in the form of quotas, subsidies, embargo, standards, Government participation, import charges etc. Non tariff barriers discourage the importing or exporting activities in a country especially in developed countries like US, Australia. For example the products which are coming outside the country required testing procedures which are very much strict. For example in US a commission is there that look after the imported goods to ensure the consumer protection. Certificates are issued to the importers in US before selling them in the market (US Consumer Product Safety Commission, 2016). Lets taken example of a developing country that is Philippines whose mangoes and bananas are banned by the US and Australia due to the failure to meet the strict requirements on phytosanitary. In US the import quotas are categorised in two ways absolute and tariff. For instance, absolute quotas are mainly applied to the textile industry and also restrict certain quantity of goods to be entered into the market of US for a specific period of time. Export quotas are also the form of the non tariff barriers where the limit of the export is fixed for meeting the sufficient consumption in the country should be fixed. If we consider the developing country India then we can find that the Government of India has fixed the export quota in sugar around 10, 000 tonnes in EU and 8,424 raw sugar to the US The (Economic Times, 2015). Here we can find there is a limit which has been fixed by the Government of India and it clearly meets the characteristics of the non tariff barriers. Another form of the non tariff barriers is Embargo which implies the prohibition of the trade with some specific country due to the political situation or relation. For example the developed country like US had adopted this strategy with Cuba and which has lasted for a very long period around 50 years. For example in China as a developing economy established several restrictions on the developed country US like the Ministry of Industry and Information Technology passed a internal circular for the telecommunication companies to buy the electrical equipments from the local sources other than the US firms. Another is the restrictions imposed by the Chinese Government in the insurance sector by limiting the access of the US companies in China with the legislations passed by the Government.
There are different strategies that can be adopted to reduce the effect of the non trade barriers. United nation plays a major role in this aspect where the General Agreements on Tariffs and Trade (GATT) is formed. The basic objectives of this agreement are:
- The trade should be operated in the countries by strictly following the non discrimination policies.
- Protection must be done by following the customer tariffs rather than the import quotas.
- Consultation is the primary way to find the solution of the global issues of the non trade barriers.
For instance there are mutual platform of the US and EU to maintain the trade flow smoothly. Both the nation has come to the mutual agreements in the trade which reduces the impact of the non trade barriers. Joint platforms can be the strategic decision which will help to manage the business smoothly by reducing the effect of the non trade barriers. Suppose a joint forum of a developed country US and developing nation Philippines can be formed where the issue will be discussed on both the end and come to the point which will be win-win for both the nation. Philippines are having competent human resources which are cheap and available. But in US it is expensive for the business. So a joint forum can be made to sort out the issue of the banning of the mangoes of Philippines in US in exchange of the cheap human resources. Both the nation can get advantage in this respect. But it is solely depend on the motives of the Government; if they are serious then it can possible otherwise by creating a forum it will be useless. So negotiation is required for each of the country by highlighting the positive areas of the trade. Apart from that the companies can form a form and request the Government with the form of a discussion about the trade quotas. The business organisations have to present the discussion in a positive way by simplifying the objectives of the exports which can bring significant amount of foreign investments in the economy. The management of the company have to draw the attention of the Government in order to quit some restrictions in the form of the non trade barriers by applying to the concerned authority. They need to convince the Government about the losses they are facing due to the non tariff barriers and also highlight the sound return on investment which will increase the revenue generation for the company and also for the country in the form of taxes.
Critically evaluate the concept of the product life cycle as a strategic marketing tool in international markets. Use examples and a diagram or figure to illustrate the points made. Answer with reference to business format Licensing operations.
International Product Life cycle is a model which describes the industry that evolves in a specified period of time over the national borders. The developments of the marketing program for both the domestic and the international markets are related with the theory developed by the international product life cycle. The primary attributes of the International Product life cycle are the demand of the concerned product in the market, manufacturing process, competition based on the international perspective and marketing strategies. But these elements are influenced by the stages of the traditional product life cycle which are introduction, growth, maturity and decline.
- Introduction:The product is new and the awareness level is very less to the market. Manufacturing depends on the efficiency level of the employees where several strategies are needed to be followed in the dynamic business environments. The innovator markets occasionally sell the products to the people in the developed countries. Competition in the international level is non-existent. (Walsh, 2013).
- Growth: In the Growth stage competitors from the developed countries will like to follow the same policy by coping it and will like to sell in the domestic market. The competitors will like to expand its operation beyond the local boundary and export it in the country which has done the initial innovation of the product. Price wars will begin due to the competition of introducing the product in the untapped market.
- Maturity stage:At this stage the global market scenario is saturated as the people has already purchased the product from the innovating company or from its competitor. Cost-cutting methods are generally applicable in this stage. Features of the product will be modified to attract the rest of the people who have not considered the purchase.
- Decline Stage: At the decline stage the innovator company will like to close the production in the developed country and transferred them into the developing countries for boosting the sales. There is a chance of the product to get obsolete in the developed countries due to the close saturation.
Apart from that three phases are equally important to understand the concept of the International Product life cycle which is: (Katsioloudes, 2012).
- New Product: The innovator company will bring the product into the developed country or its home country in order to meet the requirements of the high income groups. Production will also commence at local level to reduce the chances of the risk. At the end of this phase export to the countries which are industrialised are generally happens which will increase the revenue generation of the innovator company
- Mature products: It will help to fetch more foreign direct investments which will lowers the unit cost due to the decrease in the labour and the transportation cost. The orders will generate from the low income countries gradually in this stage.
- Standardised product:The principal market will fall due to the over saturation. Functional benefits will be lowered in the domestic country and the product will be focused on the less income countries.
While catering in the international market traditional plc will not be effective due to the absence of the international perspective of the new product, matured product and standardised product. The simple PLC will not give the strategies or the concept based on the international transactions. The adaption of the product by the consumers is depend on the taste and preference. For example when Kellogg’s launched in India it fails in the first three quarters due to the sales which were going down. But in the developed country Kellogg’s is the well established brand. But in the product life cycle we have observed that after the introduction stage when the product launched has happened, the sales have fallen due to the failure in the market of the developing country. The taste and preference of the consumers are different from Europe to that of India and this has been neglected by the company initially which bring certain losses. But after the market research they have developed the product and bring them into the market which was successful. In this perspective to plan the marketing tools it is not sufficient to only consider the PLC model. The marketer needs to carry a detailed research process where the localisation, taste and preference, standardisation is needed to be followed. (Deardorff, 2013)
But the international product life cycle model will support the organisation who will like to start their business operations across the national borders. When the market of the developed country becomes 100 % saturated then moving out of the domestic country is the best way to expand its operation of the business. The economic condition of the nation will support this planning process in respect of the international background.
In this report international marketing is being focused. The report will highlight the geographic and historic factors that are essential for the foreign marketing. In case of foreign marketing the business of the organisations will like to expand its boundary due to increase the sales turnover and also to achieve the economies of scale. An organisation will like to adopt the market entry modes like licensing, exporting, franchising, wholly owned subsidiaries etc. The factors that will create an impact in the decision making process of the marketing based on the overseas market are the concerned culture of the nation, geographical aspects, historic values, social beliefs, political factors, legal factors etc. But if we consider licensing then there is also some disadvantages like maintaining the same quality standard is dependable on the licensee, reputation or the goodwill can be damaged due to the inappropriate operation of the licensee, the partner in near future can also become the competitor due to the detailed knowledge of the manufacturing, strategic decisions, trade secrets etc.
Deardorff V., A. (2013). Measurement of Non-tariff Barriers. University of Michigan Press.
Delener., N. (2012). Ethical Issues in International Marketing. Psychology Press
Doole., I and Lowe., R. (2012). International Marketing Strategy: Analysis, Development and Implementation. Cengage Learning
Ghauri, P.N. and Cateora, P.R., (2010). International marketing (pp. 15-16). McGraw-Hill Higher Education.
Johnston., S. (2013). Foundations of International Marketing. Cengage Learning
Katsioloudes., M. (2012). International Business. Routledge.
Onkvisit., S and Shaw J., J. (2011). International Marketing: Analysis and Strategy. Psychology Press
Paliwoda., S and Thomas., M. (2013). International Marketing. Routledge
Sullivan O., K. (2012). The role of Women in China. [Online] Available: http://www.fairobserver.com/region/central_south_asia/role-women-china/, Accessed as on 7.6.16
The Economic Times. (2015). Government fixes sugar export quota to EU & US for this year. [Online] Available: http://economictimes.indiatimes.com/news/economy/agriculture/government-fixes-sugar-export
quota-to-eu-us-for-this-year/articleshow/49341775.cms , Accessed as on 7.6.16
US Consumer Product Safety Commission. (2016). [Online] Available: http://www.cpsc.gov/en/Business--Manufacturing/Testing-Certification/ , Accessed as on 7.6.16
Walsh S., L. (2013). International Marketing. Pitman.