Saturday, November 23, 2013

International marketing planning model

International marketing planning model
A  surprisingly  large  proportion  of  sales  to  foreign  markets  are  made  in
response  to  chance  orders  coming  either  from  customers  who  are  international
players or from other sources such as foreign buyers attending a domestic exhibi-
tion. Such 'passive exporting' is not international marketing, although it contributes
to  international  trade.  It does  not  associate  with  the  central  principle  of creating
customer value  and  market  targeting,  there  i.s  little  assessment  of critical factors
for competitive success, and it is unlikely to build a long-term market position,
Limited  domestic  growth  and/or  intense  domestic  competition  is  a  key
reason  why  firms  enter  foreign  markets  and  was  a  prime  motivator  behind  the
Japanese  companies'  overseas  expansion   programme   during   the   1970s  and
1980s. In practice, many firms quickly suspend foreign market activity when the
domestic  economy  improves  or  when  they  fail  to  make  money  in  the  overseas
operation.  Finns  driven  to  exporting  because  of  domestic  recession  often  fail  to
anticipate  the  wider external constraints  to  doing business  in  a  foreign market
and tend to take a short-term orientation  to international marketing.3
Furthermore,  companies  that  are  struggling  to  survive  at  home  are  highly
unlikely  to  successfully  take  on  and  beat  sophisticated  competitors  in  foreign
markets.  The  domestic  market  must  be  secured  first  before  going  abroad  and  it
should  be  maintained  thereafter.  Japan's  top  two  car manufacturers,  Toyota  and
Nissan, are arch rivals at home. They took this rivalry overseas and in the process
have raised the level of competitive activity to new heights in North America and
Europe,  while striving to  remain strong performers in  their home base.
Geographic  market diversification to reduce country-specific  risk  -  that  is,
the  risk  of  operating  in  only  one  country,  due  to  different  political-economic
cycles  -  is  a  popular  reason  behind  firms'  international  expansion  drive.  Firms
must  understand  that  market  needs  may be  strikingly different,  even  for  appar-
ently similar products,  and  that different management skills and approaches are
needed  for  different  country  markets.  So,  managers  must  weigh  the  costs  and
barriers to global diversification against the benefits of risk reduction.

Firms spread  the costs of production over more units if output is expanded for
overseas  markets.  While  economies  of  scale  give  firms  a  strong  incentive  to
expand into foreign markets, the firm must also take on board additional adminis-
tration, selling, distribution and marketing co.sts. A 'cost-led' approach or a 'selling
orientation' in international marketing is unlikely to lead to long-term success.
Without  H  marketing-led  orientation,  where  customers'  needs  are  identified  and
satisfied, and  die  firm's  marketing  mix  adapted  for  the  foreign  market,  the  inter-
national business activity of the firm is unlikely to flourish.
In  summary,  firms  enter  overseas  markets  for  profits  and/or  survival.  But
firms  must  not  confuse  exporting  with  international  marketing.  The  latter  is
about taking a long-term perspective of foreign market potential and relentlessly
adopting a market-led  approach  to  identifying,  anticipating  and satisfying  the
needs of customers in target international markets.  Before going abroad,the firm
must weigh the risks and question its ability to ope rate globally. Can the company
learn to understand the preferences and buying behaviour of customers in other
country markets? Can it offer competitively attractive products? Will it be able to
adapt to other countries'  business  cultures  and  to  deal  effectively  with  foreign
nationals? Do the company's managers have the requisite international experi-
ence? Has management considered the impact of foreign regulations and political
environments? International marketing is really about exploiting market oppor-
tunities based upon sound environment and specific market analyses.