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INTERNATIONAL MARKETING THEORY,
THE PRINCIPLES ,CONCEPTS & PRACTICE
MARKETING MODULE PART 1
Definition of marketing.
As marketing has developed as a technique, numerous definitions have been offered. Today there are several different, authoritative and entirely acceptable definitions .
The U.K. Institute of Marketing defines marketing as:
"the management process responsible
for identifying, anticipating and satisfying customer
requirements profitably".
The essentials of marketing.
Whatever the formal definition, it is generally accepted that true marketing requires, on the part of the supplying organisation:
a genuine attention to customers' needs and wants (usually a specific
target segment is selected);
satisfaction of those needs and wants at a profit;
orientation of the whole organisation towards the
customer-satisfaction process.
The marketing mix.
Marketing includes such business activities :
the planning and development of products that customers require, with appropriate packaging and support services, e.g. repair facilities;
the distribution of those products through appropriate channels, e.g. wholesalers, retailers, etc., which will provide the services required by the customers;
the establishment of prices which offer both value to that customers and a satisfactory profit for the supplier;
promotion of the products, including advertising, sales promotion, public relations and personal selling.
These four activities (often referred to as product, place, price and promotion) constitute the marketing mix.They include, in summary, all the elements of marketing decision-making under the supplier's control, i.e. controllables.
The marketing environment.
The marketer must also take into account environmental factors over which he has no control, i.e. uncontrollables, but which will significantly affect the degree of success he achieves. These environmental factors include:
economic development;
technological development;
social and cultural influences;
political and legal decisions;
business practices and institutions;
competitive activity.
The task of marketing management is to formulate and implement the marketing mix which will enable the organisation to adapt to its environment in such a way that its profit and other objectives are achieved as nearly as possible.
The international marketing environment.
The task of international marketing management is, similarly, to adapt the marketing mix to the environment, but in this case the environment is vastly changed. Although environmental differences may readily be discerned within any one nation, those differences between nations are, as a rule, far more marked.
(a) Economic development. There is, of course, a striking disparity in levels of economic development between nations, from subsistence economies still dependent on primitive agriculture, through nations relying largely on raw-material exports (Chile) and industrialising nations (Brazil), to the industrialised economies of North America and Western Europe.
(b) Technological development. Each country has developed to a different technological level. The marketer is concerned not merely with high-level technology but with the whole range of technology, right down to manpower skills.
(c) Social and cultural influences. Adaptation to social and cultural differences between nations is a major concern of the international marketer, particularly in advertising and promotion
( d) Political and legal decisions. Some governments may he hostile to imports, or even to foreign investment; other countries may actively encourage investment from abroad. These attitudes may change suddenly in politically unstable countries; expropriation is to be feared. Price controls or exchange restrictions may be imposed.
(e)Business practices and institutions. As regards business practices, reference need only be made to the fundamentally opposed views held in the U.S.A.and Russia.As regards institutions the field is wide, but banks may be taken as an example: in some Western European countries banks play a much more direct and influential role in business than, say, in the U.K.
(f) Competitive activity.The international marketer may face different competitors in different countries.In some, local competition may be well entrenched, perhaps enjoying governmental or customer discrimination in its favour.
International aspects of marketing.
The environmental differences summarised above, significant though they are, do not imply any fundamental change in marketing as a technique. There still remains a basic similarity of human motivation and economic practice throughout the world. The principles of marketing are of universal application.
International environmental differences, however, do require a change of emphasis Certain aspects of marketing that are largely irrelevant in a purely national context, such as barter trading , achieve real importance. Other aspects of marketing require, in international trade, a far more detailed knowledge than might be necessary within any one nation, e.g. licensing , joint ventures and the use of agents in the selling function .
It is with these special international aspects of marketing, and as , far as possible with these aspects only, that these modules are concerned with .
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Definition of international marketing.
Although "international marketing" is a common enough expression among marketers, there is no generally accepted formal definition. It is perhaps best regarded as a shorthand expression for the special international aspects of marketing already discussed (see 6).
An appropriate formal definition of international marketing however, might be:
the marketing of goods and services across national frontiers; and
the marketing operations of an organisation that sells
and /or produces within a given country when:
that organisation is part of, or associated with, an enterprise which also operates in other countries; and
there is some degree of influence on or control of that organisation's marketing activities from outside the country in which it sells and/or produces.
It is in this sense that the expression international marketing is used throughout this module, i.e. covering the whole gamut of international marketing operations, from indirect export on the one hand to the marketing operations of multinational companies (see 9) on the other.
The International marketing approach.
Another view is that international marketing is simply an attitude of mind, the approach of a company with a truly global outlook, seeking its profit impartially around the world, "home" market included, on a planned and systematic basis. The following passage illustrates this point of view.
EXAMPLES: (1) International marketing offers a difference in basic philosophy: it starts with world markets, including the U.K., and aims to maximise profits from these markets. It takes a global and profit-oriented view. It will still be concerned -vitally concerned -with export marketing, but it will be actively seeking wider profit opportunities. How many successful exporting companies could make more money by investment in productive capacity overseas?
How many have considered the advantages of third-country manufacture, combining low labour costs with access to otherwise protected markets?
How many, if capital costs are a problem , have considered local contract manufacture, or have actively sought local partners in a joint venture?
How many have taken into account the benefits from international transfer pricing?
How often do companies seriously consider component assembly abroad in low-labourcost areas?
How often does the make-or-buy decision take into account components from abroad?
How many quite small companies are neglecting opportunities of obtaining profitable licences for their research or even simple design skills?
How many such companies, having sold one or two such licences ,almost by chance, fail to seek further licences on a systematic basis?
How many more have sold such licences without adequate market research, leaping at the chance of a short-term gain, only to find their licensee taking the lion's share of the profits?
How many exporting companies regularly take advantage of the established distribution facilities of overseas manufacturers, but never even attempt to sell abroad the use of their own similarly established distribution network, a capital asset often of immense value to a would-be importer?
How many companies import compatible but non-competitive products on their own account to make full use of their domestic distribution network?
(2) Another definition of international marketing is that it is the marketing function of multinational companies. Those mammoth prestigious corporations which, it is whispered with awe, wield more power than many a sovereign state. With no obvious national identity, and a polyglot executive staff, such companies sell their products in any or all of the world's markets, manufacture in perhaps a dozen or more countries where costs are lowest, make their profits in those countries where tax rates are most advantageous, and hold these profits in tax sanctuaries, or where interest rates are highest. The mistake many smaller companies make is to assume that the concept is of relevance only to these multinational giants, and that it has no advantages to offer to the vast majority of companies of more modest size.
The multinational company.
The term multinational company is loosely used and has been variously defined.
As a minimum, a multinational company would have a manufacturing investment (or service operation) in at least one foreign country, and would also have adopted a global outlook, making its production, marketing and other decisions in the light of the options open to it anywhere in the world.
Many, however, would regard such a company as merely international. For them the term multinational implies, in addition, international operations of some significance .
The multinational corporation is defined as a company:
which has a direct investment base in several countries; and
which generally derives from 20 per cent to 50 per cent or more of its net profits from foreign operations; and
whose management makes policy decisions based on the alternatives available anywhere in the world.
Transnational companies.
Multinational companies are usually organised around a national headquarters, from which international control is exercised-they still have a national identity, even though their subsidiaries may not always care to allow that identity to obtrude in the markets they serve. Some authorities distinguish the transnational company, a multinational in which both ownership and control are also dispersed internationally: there is no principal domicile and no one central source of power. Examples are Royal Dutch-Shell, Unilever. Mcdonalds, And Coca-cola.
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WHAT DO YOU ALREADY KNOW?
SELF TEST
INTERNATIONAL MARKETING THEORY,
THE PRINCIPLES ,CONCEPTS & PRACTICE
PROGRESS TEST MODULE 1
What is marketing? (1)
What are the three essential characteristics of market-oriented organisation? (2)
What is meant by the "marketing mix"? (3)
What is meant by the "marketing environment"" (4)
How does the international marketing environmental differ from the domestic marketing environment? (5)
What is international marketing? (7)
How would you define the term "multinational'.company"? (9)
What is a transnational company? (10)
Complete these questions in your own words and return
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