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Scope & Concept of International Marketing | Ma Baker's Study

799 Downloads1 I Published: 13 Nov ,2019

Introduction

International marketing refers to the process of applying marketing principles at a global level to fulfil the needs and demands of people in different parts of the world. This reflects that international marketing is focussed upon extension of an organisation's local marketing strategies with specific relevance given to market identification and targetting so as to take decisions in international context (Amankwah-Amoah, Boso and Debrah, 2018). This concept is based upon a strategy which is developed and devised by an entity in the home country and then distributed to their other offices. The present report is based upon Ma Baker which is a micro bakery situated in the middle of Fulham, London.

This report is divided into two tasks. The first part comprises of the scope and concept of international marketing, rationale for company to market globally, opportunities and challenges associated, routes to market internationally. Also, it contains description of market entry strategies along with their advantages and disadvantages as well as recommendations for entity. The second part consists of introduction to company and their existing market, difference between global and local marketing, description of international marketing approaches and comparison of home and international orientation.

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Task 1

Scope and key concepts of international marketing

According to Czinkota and Ronkainen (2013), international marketing comprises of activities, procedures and institutions across the national borders which tend to create, communicate and exchange offerings that hold significant value for society as well as stakeholders.

As per the views of Armstrong and et. al. (2015), international marketing refers to the application of marketing capabilities and orientation onto international business.

According to the perception of Akaka, Vargo and Lusch (2013), international marketing is assumed to be a set of activities which leads to an exchange that significantly satisfies the customers spread across the national borders.

Scope

In general terms, international marketing can be defined as the performance of business activities which align the flow of products and services of a company towards consumers within more than one country for the purpose of profit making.In today's modern world, this concept has a vast scope owing to the increasing awareness about globalisation within corporate world. The scope of international marketing is given below:-

Imports:This is one of the easiest forms of international marketing where the company import products from a country and then sell them to potential customers within domestic market. Most of the times, organisations take assistance through imports for their own use, in order to create or enhance their existing product line.

Exports: Here, companies export the semi-finished or finished goods to international market or their franchises in order to give them the opportunity to sell these products in their local markets for the generation of high sales (Baker and Saren, 2016). This revenue generated by way of exports is utilised for making payments of imports, covering cost associated with product development and increment of profits.

Contractual Agreements: When a business carries out expansion,international marketing provides opportunities to expand the market, customer base, volume of sales and profits. Here, organisations grow exponentially by entering in a contractual agreement with overseas partners.

Fully owned manufacturing: An entity which possesses significant interest within foreign market can establish fully owned manufacturing facilities within that country. The factors such as cost differences, government policies, trade barriers encourage the company to set up production unit abroad to gain total control over manufacturing and quality.

Key Concepts

A number of concepts are linked with international marketing, these are defined below:-

Domestic Marketing:In this, marketing is specifically targetted only towards the home country. A purely domestic enterprise operates domestically only and has no intentions of going global.

Comparative Marketing: When a number of marketing systems are together studied in order to ascertain the similarities and dissimilarities between them, it is known as comparative marketing (Beck, Chapman and Palmatier, 2015).

International Trade: This is largely concerned with flow of products and services among the nations. The major purpose here is to gain knowledge of influence of commercial and monetary conditions upon resource transfer between nations and BOP (Balance Of Payments).

Main differences between international and local marketing

Local marketing refers to marketing in the geographical boundaries of a nation while international marketing is taking the operations of an entity outside the confines of home country. In case of local marketing, the entity generally possesses deep knowledge of the domestic beliefs and values while international market is complex and it is difficult for an enterprise to judge the nature of consumers here (Bianchi and Mathews, 2016). Local marketing is generally done using relatively cheaper methods such as special offers, discounts and inserts in newspapers. On the contrary, international marketing is done through.

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Rationale for willingness to market internationally

Ma Baker is a micro bakery situated at the center of Fulham, London and deals in home-made, fresh and real bread. This entity has been constantly winning awards and recognitions in the home country. Looking upon the success gained by Ma Baker over a period of last few years, this enterprise is considering the option of expanding internationally. It is significant for this enterprise to market internationally as will provide Ma Baker the potential to enhance the existing base of customers and market share. When Ma Baker will enter international market, it can tap the advantage of gaining the attention of a large number of people by opening a outlet in the most attractive locality of a country. This will assist the enterprise in building a brand which is globally famous among the people and holds a high stake in marketplace.

Further, by gaining entry into international market, Ma Baker will be able to deal with the risks that are associated with conducting sale within just one nation. For instance: If Ma Bakers only market for local customers and there takes place an economic downturn, then a large proportion of consumers will not be able to afford the products sold by company. Thus, Ma Bakers is willing to market internationally in order to ensure stability of company's performance along with a consistent and constant flow of revenues and EPS (Earning Per Share). Thus, it is significant for this enterprise to gain entry into international markets and conduct marketing activities there(Brouthers, Nakos and Dimitratos, 2015).

Opportunities and challenges associated with international marketing

International marketing is a concept which can prove to be a bane or boon for any company depending upon the way it is being utilised and the measures that have been taken by the enterprise to deal with the challenges associated with this. In this regard, when Ma Baker will market internationally, it can tap the advantage of a number of opportunities while simultaneously facing a lot of challenges that will have to be tackled by marketing consultant of this bakery.

Opportunities

When Ma Bakers enter international market, they will have the opportunity to tap advantage of the following factors:-

Market Infrastructure: While entering into international market, Ma Baker will have the opportunity to gain advantage of the high level of infrastructural development in that market. This entity will be able to rely on energy infrastructure, communication and transportation system of that nation to tactfully sell and distribute the breads and pies manufactured by company (Christodoulides, Cadogan and Veloutsou, 2015). It will be cost effective and easier for the micro bakery to work in those countries where reliable and well developed infrastructure is available.

Increased profitability: International markets tend to provide opportunities to Ma Baker by providing excellent infrastructural facilities, material, labour that will assist in reduction of cost of production of bakery items. When costs are significantly controlled, company has a higher probability of earning huge margins over the products and ensuring its sustainability in foreign market for a long time.

Challenges

While marketing internationally, a number of threats or challenges have to be taken into account by the company in order to gain success, these are mentioned below:-

Language: Different words have different meanings across the various countries of globe. Ma Baker has to review the translation of the brand name as well as tag-line in different languages in order to make sure that such translations do not lead to unintended meanings and hurt the sentiments of local people. Examples of such misleading translations are given with the help of this table:-

Illustration 1: Different Cultural Meanings of Colours and Numbers

(Source: Different Cultural Meanings of Colours and Numbers,2019)

Religions and cultural values: Across the world, people belonging to diverse religions have cultural values and norms about food and beverages which have to be taken into account by Ma Baker otherwise it may become a challenge for the enterprise to sustain and enhance its profits there (Hoppner and Griffith, 2015). The example of beliefs of various religious groups are given below:-

  • Buddhism:Refrain from meat and desire vegetarian food
  • Eastern Orthodox:Restrain from fish and meat
  • Hinduism:Beef, meat, fish and alcohol are avoided or restricted
  • Islam:Pork, alcohol and some birds are prohibited while tea, coffee and stimulants are avoided
  • Judaism:Shellfish and pork are prohibited while dairy and meat at same meal are restricted

Laws and Regulations:While marketing internationally, Ma Baker has to consider certain legal aspects such as customs, trade barriers, advertising, taxation and intellectual property rights so as to avoid getting prosecuted or fined.

Routes to market internationally and recommendation

Any entity can market internationally to gain the attention of a large number of people towards the high quality and unique products of company. In this regard, Ma Baker provides breads that are preservative and additive free and all the ingredients that are utilised to make these are of high quality and organic. The flour which is used to make the breads is stone-ground (Jean and et. al., 2016). Thus, the company can consider the two routes to market internationally that are described below:-

Direct Route: This comprises of those channels where the enterprise directly comes in contact with the people in the international market so as to persuade them to make a purchase of the products sold by the enterprise. Ma Baker possess the capability to use channels such as sales representative, offering website deliveries, organising exhibitions, distributing the mail order catalogues to make direct contact with the consumers, leaving a good impression and retaining them for a long time by providing high quality and fresh breads.

Indirect Route: This consists of the channels where the company enters into a contract with third party and hand over the responsibility of influencing customer behaviour to them (Katsikeas and et. al., 2016). Ma Baker can consider opting for channels like Alliance partners, Channel partners, OEM partners, system integrators etc. to gain the attention of population within foreign country. Some of these are briefly described below:-

Alliance Partners:These are the groups which are relatively smaller in size yet possess the capacity to advise Ma Baker regarding the business initiatives that can be undertaken by the bakery to make an influential and strong entry into market.

Channel Partners:These are the organisations who have technical expertise to influence the minds of customers and make them see the benefits that company's products offer (Indirect Routes to Market, 2016). They include resellers, value-added resellers and distribution partners and the major players in this sector which Ma Baker can enter into a contract with are CDW, Carahsoft, Optiv, Insight etc.

It is recommended that Ma Baker should adopt channel partner as the route to market in new country as these are the personnel who possess sound knowledge of the latest techniques and technologies prevailing within any business sector. Thus, these can suggest and provide the equipments that can render an edge to this bakery over rivals entities within this industry.

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Key criteria and selection process while entering international market

Market selection is a crucial process for Ma Baker as this is the prerequisite for this bakery company to gain success in international marketplace. The steps of the selection process are given below:-

International marketing objective: The market is selected on the basis of the objective that the organisation is striving to achieve in foreign marketplace. This is done to make sure that the cultural, ethical, economical, legal and religious values of the nation are not violated by the bakery products that are provided by Ma Baker.

Parameters for selection: The various parameters which have to be taken into account by Ma Baker while entering international market are availability of infrastructure and materials, nature of rivalry, governmental regulations and market situations.

Preliminary screening: The markets which do not possess the potential to serve as lucrative location for the entity are eliminated here after considering factors such as consumer behaviour, population size, economy structure and per capita income (Process to select International market,2018).

Analysis and Selection: The short listed markets are then evaluated after conducting the feasibility study and cost-benefit analysis. The best market is then selected for carrying out the expansion of Ma Baker and making the breads and pies of this bakery accessible to population of international market.

Test marketing:Here, company sells the product in a particular segment of geographical location to gain an insight into the consumer behaviour and response to the items produced by Ma Baker.

Commercial Production: Once the results of test marketing are found to be positive, the enterprise then carries out mass production in the selected international market.

Key Criteria

The criteria for selecting the international geographical market is defined below:-

Infrastructure facilities: The market is selected on the basis of availability of adequate infrastructures to make sure that the production of bakery items of Ma Baker can be done easily.

Nature of Competition: The market is selected keeping in consideration the threat of rivals in the international marketplace and the success pattern of the specific industry in which firm operates (Martin and Javalgi, 2016).

Laws and Regulations: Ma Baker has to consider the rules and regulations prevalent in the international market to make sure that they do not indulge in any such actions which are against the laws of selected country.

After conducting the above mentioned selection process and taking into account the key criteria, the market selected by marketing consultant to carry out expansion of Ma Baker is Dubai.

Market entry strategies

There are a variety of ways by which a company can gain entry into an international market. These are known as market entry strategies and assists an enterprise in successfully facilitating expansion of operations and functions. There can be a number of market entry strategies that can be adopted by Ma Baker, these are given in the table below:-

Strategy

Sub Types/ Description

Advantage

Disadvantage

 

 

Export

 

 

 

Through foreign agent

·Low cost of entry

·Moderate financial risk

·Agent is able to overcome the difficulties of entry

·Low profits on transactions

·Immense reliability on foreign agent

·Inability to earn international experience

Through foreign distributor

·Low staffing requirements

·Lesser marketing cost

·High transportation cost

·Potential barriers of trade

Licensing

Sale of rights backed up by patent or intellectual property to be used for commercial purposes in foreign market

·Low entry cost

·Lower financial risk

·Knowledge of local conditions by the licensee

·Lack of control on maintenance of quality in foreign market

·Threat of disloyalty of licensee

·Relatively lower income (royalties)

Franchising

Sale of rights by domestic franchisor to carry out commercial activities through foreign franchisee

·Possibility of rapid foreign expansion

·Low entry cost

·Requirement of control cost

·Sharing profits between foreign franchisee and domestic franchisor

·Possibility of franchisee’s disloyalty

Application of market evaluation criteria, entry strategies and recommendations

After carefully carrying out the selection process and analysing the evaluation criteria, Dubai has been selected as the country for expansion. This owes to the strong economy of Dubai where excellent infrastructural and raw material facilities are available for new businesses to gain entry and carry out operations in order to get success in a rapid manner. UAE is estimated to be at the 66thrank in bakery products across the globe. The UAE bakery market witnessed a massive growth from 2010 to 2014 as the value and sales volume increased to US$682.9 million and 200,100 tonnes. This growth is expected to grow over a period of next few years. Ma Baker can tap the advantage of health-conscious behavioural pattern of majority Emirati customers by providing their organic as well as fresh breads and pies to the population of UAE, specifically Dubai. Bakery sector in UAE is continuously growing at a rate of 7% p.a. which is beneficial for this enterprise (Bakery Industries in UAE countries,2019).

Illustration 2: Retail Volume in Tonne - Bakery Products Subsectors in UAE

(Source: Retail Volume in Tonne - Bakery Products Subsectors in UAE,2019)

Further looking upon the advantages of licensing, it is recommended that Ma Baker should adopt licensing as the market entry strategy and ensure its sustainability for a long time in Dubai owing to the low cost of entry and lower financial risk associated with this mode.

Conclusion And Recommendation

On the basis of above discussion, it is concluded that international marketing in order to carry out expansion in a feasible manner is a lucrative way available to organisations operating at local level. Also, it has been analysed that local and international marketing are two totally different concepts. It is assessed that marketing internationally offers various opportunities and challenges to a company which must be taken into account by marketing consultant of an entity. Besides this, it has been observed that there are various routes available to a company to market on international level such as direct and indirect routes. It is recommended that company should adopt licensing owing to the lost cost of entry and lesser financial risk associated with its implication.

Task 2

Introduction to company and current market

Ma Baker, situated within Fulham, London is a micro bakery dealing in fresh and home-made bread made up of organic and stone-ground flour. Currently, this enterprise is functioning in London where it has been getting rewarded and recognised by a number of well renowned organisations and agencies for the excellent products and services that this bakery strives to offer to consumers (Richter and et. al., 2016). Also this enterprise provides online classes and is listed as one of the top classes to be taken in London.

Differences between global and local marketing

BASIS

LOCAL MARKETING

GLOBAL MARKETING

Scale of operations

Here, production, promotion, sale and distribution of products take place at local level.

Here, operations of enterprises take place at global level.

Risk and ease

This is relatively less risky and easier to facilitate and execute.

This is complex and contains a huge element of risk.

Financial Resources

It requires less funds as entity operates within local market.

This requires huge investment as it deals in various markets and countries.

Complexity

This is not complex as companies conducting local marketing have knowledge of culture, values, traditions and laws of home country.

This is challenging, complex and require commitment owing to the element of uncertainty associated with laws and regulations to operate in global marketplace.

Consumer behaviour

Here, behavioural characteristics of consumers are usually found to be similar.

This deals with consumers having different tastes, behavioural patterns and complexities.

Example

Ma Baker is an excellent example of local marketing efforts where they employ strategies such as social media and online classes to gain attention of population (Rosson and Ford, 2016).

An exceptional example of global marketing is Airbnb which launched a social media campaign called #OneLessStranger that assisted the company to expand to over 1.5 million listings and allowing users to book and list accommodations in 34,000 cities across the globe.

Key arguments in relation to local v/s global marketing

It is generally believed that global marketing is good for companies as it provides opportunities to the enterprise for increasing the customer base by serving the needs of people situated in foreign market and providing high quality products to retain them for a long time. Further, the excellent quality of infrastructural and communication facilities abroad tend to provide advantages to the entity in terms of increase in market share and consequently, the quantum of profits. In this regard, local marketing lags behind global marketing as this tends to lack the resources, raw materials, infrastructure as well as required technology to conduct production in a manner that can render competitive edge to company over international rivals (Skudiene, Auruskeviciene and Sukeviciute, 2015). Further, local marketing is also less preferable as the means to attract the attention of large number of people is not available to the enterprises in domestic country.

Some people also believe that local marketing has an edge over global marketing as the former is less complex and the entities are quite acquainted with the market scenario of domestic country. Further, the financial resources required for setting up the name and position of company in home country is much easier than while going global. Thus, the chances of sustainability is larger when a firm is involved in local marketing. In this regard, global marketing is observed to be less effective as the customer contact in international market is difficult to be maintained. This owes to the presence of large number of competitors who are always waiting for an opportunity to solicit the customers of an established company and decrease their market goodwill and share consequently.

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Investigation of product, pricing, promotion and distribution approaches

The marketing mix, namely the 4 P’s of marketing such as product, price, promotion and distribution are largely affected when a company moves from a domestic to international market. Every nation is unique in terms of culture, language, customer needs and preferences, consumer demographics etc. In this regard, while moving to Dubai and other international markets, the marketing efforts of Ma Baker will differ from the home country, UK.

Element

London, UK

International Markets

PRODUCT

The entity provides fresh, organic and home-made breads and pies to serve the needs and demands of people.

The products of Ma Baker can be adapted as per the consumer demographics, language, packaging preferences of population of the new markets.

PRICE

Here, the pricing of bakery items of company was high as the company had built up its loyal base of customers over years.

Ma Baker can apply penetrative pricing in order to attract the attention of people in international markets (Surugiu and Surugiu, 2015).

PROMOTION

Currently, promotion is being done by way of social media pages of company over sites such as Facebook, Twitter, Pinterest, Instagram etc.

Within international markets, company can make use of strategies such as marketing campaigns, social media and sales agents to influence people to make purchase.

DISTRIBUTION

Here, Ma Baker is providing online delivery one a person reflects interest in entity's products over the website.

In international markets, this bakery can make use of methods such as wholesalers, retailers, channel partners, international trade shows etc.

International marketing approaches

Ma Baker has the option of adopting one of the various international marketing approaches which are defined below:-

Multinational:These are the entities which have outlets or facilities situated in multiple countries yet every location operates and functions in its own manner. Example: McDonald's

Global: These are the which possess outlets spread across multiple countries but they follow a uniform company culture with consistent set of processes that assist in facilitating an effective and efficient single global entity (Bianchi and Mathews, 2016). Example: Airbnb, Starbucks, Apple etc.

Transnational: These are the entities which are of complex nature and operate substantial facilities while conducting business in more than one nation. They do not specifically give consideration to any particular country as their national home. Example: Nestle

Home v/s international orientation along with ways to assess competitors

Home orientationrefers to an approach where company personnel tend to notice only the similarities among markets and generally assume that the products and services which are successful in the domestic country will also be successful in other markets.

Implication:This tends to set a better coordination between the domestic and international country for Ma Baker.

Ways to assess competitors:This approach assumes that the power of competitors is not so effective that it can cause damage to the reputation and stake of company (Brouthers, Nakos and Dimitratos, 2015). Also, this orientation tends to possess confidence in the products and services provided by the company and thus consider the threat of rivals to be low.

International orientation refers to the approach which is based upon the basic assumption that there exist similarities as well as differences among the various markets spread across the world. Such similarities and differences can be understood to decide a strategy that can work in context of all the international markets.

Implication:This type of orientation tends to render Ma Baker a competitive edge over its rivals so as to ensure its sustainability in marketplace.

Ways to assess competitors:This approach generally assumes that the threat of competitors is high and they possess the capability to cause damage to the goodwill and position of entity in global marketplace.

Conclusion and recommendations based on marketing mix and structure of organisation

Thus, from the above discussion, it can be said that marketing mix differs in the context of local and international markets. This has to be taken into account by Ma Baker to make sure that they derive success in Dubai. It is recommended that the bakery should adopt penetration pricing in order to attract the attention of people in Dubai and retain them for a long duration of time in future. Further, it is recommended that Ma Baker should consider promotional activities such as marketing and social media campaigns. In case of products, it is recommended that the bakery should focus upon expanding the product line keeping in mind the health-conscious nature of population of Dubai. For distribution, Ma Baker is recommended to consider options like taking assistance from intermediaries such as wholesalers, value added resellers etc. to succeed within international market.

Conclusion

From the above report, it can be concluded that there are different marketing strategies that can be adopted by an organisation after taking out account their merits and demerits are licensing, joint venture, franchising etc. Also, it is comprehended that there are a number of international marketing approaches such as multinational, global, transnational and meta-national which can be opted by enterprise to increase the customer base and enhance current revenues and profits.

References

Books and Journals

  • Czinkota, M. R. and Ronkainen, I. A., 2013.International marketing. Cengage Learning.
  • Armstrong, G. and et. al., 2015. Marketing: an introduction.
  • Akaka, M. A., Vargo, S. L. and Lusch, R. F., 2013. The complexity of context: A service ecosystems approach for international marketing.Journal of International Marketing.21(4). pp.1-20.
  • Amankwah-Amoah, J., Boso, N. and Debrah, Y. A., 2018. Africa rising in an emerging world: an international marketing perspective. International Marketing Review. 35(4). pp.550-559.
  • Baker, M. J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.
  • Beck, J. T., Chapman, K. and Palmatier, R. W., 2015. Understanding relationship marketing and loyalty program effectiveness in global markets. Journal of International Marketing. 23(3). pp.1-21.
  • Bianchi, C. and Mathews, S., 2016. Internet marketing and export market growth in Chile. Journal of Business Research. 69(2). pp.426-434.
  • Brouthers, K. D., Nakos, G. and Dimitratos, P., 2015. SME entrepreneurial orientation, international performance, and the moderating role of strategic alliances. Entrepreneurship Theory and Practice. 39(5). pp.1161-1187.
  • Christodoulides, G., Cadogan, J. W. and Veloutsou, C., 2015. Consumer-based brand equity measurement: lessons learned from an international study. International Marketing Review. 32(3/4). pp.307-328.
  • Hoppner, J. J. and Griffith, D. A., 2015. Looking back to move forward: a review of the evolution of research in international marketing channels. Journal of Retailing. 91(4). pp.610-626.
  • Jean, R. J. B. and et. al., 2016. Assessing endogeneity issues in international marketing research. International Marketing Review. 33(3). pp.483-512.
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