International marketing strategy can be significantly more challenging than marketing within one’s own country simply due to the substantial number of environmental factors beyond the marketer’s control. When marketing solely within the borders of their home country, companies have to respond to the demands of their local customers, whose characteristics and expectations are presumably already known to them. Domestic marketers also have to respond to local competitors, adapt to changes in economic conditions, and keep abreast of new laws and regulations.
All of these environmental factors become much more complex as soon as a company enters a foreign market. The number of variables increases significantly, with a combined impact on marketing strategies. These variables include cultural norms, economic conditions, political developments, differential distribution challenges, varying competitive landscapes and finally, the global geopolitical environment.
A company entering another country for the first time must now deal with customers who may have customs, values and beliefs quite different from those of its home market. Among the new variables that international marketers have to consider are the local language(s), local norms and mores about acceptable behavior and good taste, gender roles, attitudes toward work and artistic aesthetics. For example, packaging that may be considered effective and attractive in a company’s home market may have to be totally redesigned to reflect one or more of these factors.
The economic environmental factors that international marketers have to deal with are also much more complicated than for domestic markers. Besides considering the overall health of a given country’s economy, international marketers have to look at its level of economic development. Do incomes in the country allow enough customers in that country to afford the company’s products? Are the company’s offerings too sophisticated given the country’s levels of education, technology and infrastructure?
The stability of the target country’s currency is also crucial. Unstable currencies that could drop in value quickly raise the risk that buyers in the target country may suddenly not be able to afford to buy imported goods. Unstable currencies also make it riskier for marketers planning on building facilities in the target country since the value of these investments could drop dramatically when expressed in the home country currency.
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The political environment also introduces a number of challenges for international marketers, variables which domestic marketers can usually ignore. Companies trying to enter a new country have to evaluate the state of relations between their home country and the new market. If relations are poor, the foreign government may impose restrictions on the entry of the company’s products. Alternatively, the marketer’s home government may impose selective sanctions or boycotts on sending goods to the new market.
Even if relations between a company’s home country and a new foreign market are good, there could still be barriers to trade such as tariffs or onerous regulations imposed on imported goods. While these are justified by governments on consumer or environmental protection grounds, their real aim is often to keep foreign products out. International marketers thinking of establishing a physical presence abroad have to look at the country’s level of political stability. Events such as riots, uprisings or civil wars could put a company’s physical assets and, more importantly, its employees in that country at risk.
International marketers also confront new distribution challenges when they enter a foreign market. The condition of the country’s infrastructure, including energy distribution and transportation, represents a key variable. Companies planning to market products in another country have to examine the ease of moving their products to places where customers can access them.
They may also have to contend with entirely different wholesale and retail structures. For example, American stores tend to be larger and more efficient than stores in developing countries where retail outlets are not only smaller but often lack the kinds of product storage equipment (e.g., refrigeration) that American companies take for granted. In many developing countries, a “store” doesn’t mean a 10,000 square foot air-conditioned supermarket, but rather a pushcart or stall in a busy street. American distribution channels tend to be relatively short, with a limited number of middle-people between producers and consumers. In contrast, many other countries have distribution channels characterized by far more middle-people. Since each of these entities expects some level of compensation for their work, an imported product could face exponential price increases by the time it reaches the final customer.
International marketers have to contend with an entirely different competitive landscape than the one they face in their home market. For some products in some countries, the major competitors may be the same large international firms the company faces in its home market. This tends to be the case for complex industrial products. However, for consumer products sold in developing countries, the competition is often composed of many small, locally powerful brands that have long track records of understanding and meeting the needs of local buyers.
As if all these country-specific factors were not enough, international marketing strategy can be impacted by the global political and economic environment. A war between two countries in the vicinity of the target market could disrupt shipping routes between a company’s home base and the target market. Worse, the target market’s economy could be disrupted by an inflow of refugees from a war zone.
More broadly, changes in the global economy could disproportionately impact the economy of a given foreign market. This is especially true for international marketers targeting countries that are highly dependent on exporting raw materials to global markets. Any downturn in the economies of wealthy countries almost always means reduced demand for the minerals or crops poorer countries produce, resulting in a dramatic drop in their purchasing power.
At the other extreme, rapid growth in wealthy countries’ economies typically leads to sharp increases in the prices of certain key, globally-traded commodities such as oil. These price increases are a bonanza for those countries that produce and sell these commodities. However, they can be a disaster for developing countries that lack these resources and now must devote more of their export earnings to pay for imports of oil or other essential materials. This squeeze ultimately works its way down to consumers in these countries, who will have to devote more of their incomes to paying for goods or services (e.g., bread in the case of wheat; transportation in the case of oil). They will therefore have that much less available to purchase other things.
International marketers face many more potential external environmental threats than domestic marketers. They also have to consider the possible interactions of several of these factors. To succeed and grow in other countries, international marketers have to continuously monitor and evaluate these environmental factors. They may have to adapt some of their strategies and tactics to appropriately respond to the unique needs and expectations of buyers in these countries while building on the core strengths which lead to the success of their products and brands at home.