opportunities:
1. increased customer base
- the size of a market can be enlarged by marketing products to overseas buyers this should lead to greater sales revenue and possibly higher market share for the business
2. economies of scale
- by operating on a larger scale, a business is likely to benefit from cost savings known as economies of scale
- these cost-reducing benefits of larger scale operations can enable growing firms to gain higher profit margins or
to reduce their
prices [thereby giving them a price advantage over their rivals].
3. increased brand recognition
- having a standardized marketing strategy across the world [such as using identical packaging and advertising] not only reduces average costs of production, but can also lead to greater
international recognition of a brand
- this can lead to improved brand loyalty and increased sales revenues
4. spread risks
- by operating in various international markets, a
business is less exposed to the risks in one
particular country [such as a recession or changes in fashion and tastes].
5. extend the product life cycle
- a business might find that the domestic market for its product is saturated or in decline by marketing the product overseas, the firm can expand its lifecycle to generate higher sales revenues.
e.g. Mobile phone companies use this strategy when selling older models of their phones in less affluent countries.
6. gain more profit
ultimately,
- all the reasons above for international marketing can help to generate more profits for the business overseas markets provide an extra source
of customers and can be financially lucrative
threats:
1. legal issues
- entry into international markets can also be a problem due to different legal systems, e.g. advertising cigarettes on television has been banned in the USA since 1971; advertising is largely prohibited in Cuba and in Sao Paulo, Brazil, so even for large
multinational companies this would present a major barrier to international marketing governments can set up other international trade barriers to protect their domestic industries [quotas, tariffs] copyright, trademark and patent legislation must also be adhered to; this covers issues such as brand names, slogans, inventions, works of art and processes already legally assigned
- to other businesses; marketers need to take this legal factor into consideration when devising their international
marketing campaigns
- differences in consumer protection laws must also be observed by international marketers; many countries have their own code of conduct on advertising and packaging information
and these must be respected; the British Advertising Standards Authority, for example, states that all advertisements must be "decent, truthful and accurate". In most EU countries, there are legally binding controls over the use of advertisements aimed directly at children, e.g. in Sweden it is
illegal to advertise products on television to children under the age of twelve
2. political issues
- businesses that market their products overseas need to consider the different political systems abroad countries that have a stable political climate tend to be less risky and more receptive to foreign businesses selling products in their territory
In countries like Singapore and Hong Kong, there are few political barriers, but there are huge political hurdles to deal with if
businesses wish to market their products in countries such as Afghanistan or North Korea
3. social and demographic issues
- different socioeconomic and demographic conditions mean that businesses may need to reconsider their international marketing when exporting to less affluent countries, the
product and price may differ from that sold in more prosperous nations
- overseas customers in Japan [expatriates and tourists] are not very well catered for as only about 1% of the
population are foreigners
- by contrast, in highly multicultural societies
such as Malaysia [see Figure 4.7.b], marketing caters for a much wider audience with the same advertisements in Malay, Chinese and Indian languages
- with growing prosperity and income in some parts of the world, international marketers can target different customers with different products; in 2006, supercar manufacturer Lamborghini opened its first showroom in China due to its phenomenal growth rate; Japan and
Italy have theworld's oldest populations [as measured by the average age of the population] so marketers take a different approach to pricing, product, place and promotion when targeting these countries than if they were marketing to nations with younger populations such as Kenya or Vietnam
- pressure groups concerned about the impacts of business activity on society can also create problems for marketers hoping to gain a foothold in foreign markets. Hong Kong Disneyland faced many problems
from animal activist groups when it opened in September 2005, including protests about sharks fin soup being on the food menu. People for the Ethical Treatment of Animals [PETA], the world's largest animal rights group, has caused many problems for companies such as McDonald's, KFC and Procter & Gamble operating in overseas markets.
4. economic issues
- a key argument for more and freer international trade is that it enables people to have a greater choice of products at more
competitive prices. International trade also allows citizens to have access to products that would otherwise be unavailable in their own country because domestic producers cannot supply such products in a cost effective manner, such as tropical fruits being grown in cold countries. These arguments can present major international marketing opportunities for large businesses However, international marketing of products also increasesthe degree ofcompetitionin the marketplace. Transportation costs,
exchange rate fluctuations, interest rates and communication costs are further economic issues that need to be considered when marketing products overseas.