International Marketing | Features, Scope and Significance

What is International Marketing?

International Marketing can be defined as the act of marketing the products and services outside the domestic boundary. International Marketing is also known as Global Marketing. When the business decides to go beyond the domestic audience to reach the foreign audience, the concept of international marketing arises. International Marketing includes understanding the culture, language, values, and beliefs of the international audience and making one’s products and services useful for them. Practices to overcome language barriers, different cultural norms, and other barriers are undertaken with effective marketing strategies. The main objectives of international marketing involve interaction with a foreign audience, growth and expansion of business and customer base, etc.

Geeky Takeaways:

• Under international marketing, recognizing and adapting to diverse cultural norms, preferences, and behaviors is essential.
• Thorough market research is crucial for understanding the unique characteristics of each target market.
• Flexibility is the key to the dynamic international market.

In the words of Kotler, “Global Marketing is concerned with integrating and standardising marketing actions across a number of graphic markets.”

According to Cateora and Graham, “International Marketing is the performance of business activities designed to plan, price, promote and direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit.”

Features of International Marketing

1. Scope: As under the practice of international marketing, the business tries to communicate and interact with international audiences, the scope of international marketing is wide in comparison to domestic marketing. Various activities, like product packaging and branding, market research, etc., are to be customised as per the needs of foreign audiences.

2. Foreign Exchange: International marketing and trade brings foreign exchange inside the domestic borders. The inflow of foreign exchange is a positive sign for the economy. The inflow of foreign exchange balances the exchange rates and redefines the country’s financial health in the international market.

3. Research: International marketing requires a lot of research about the country in which the business wants to enter. International Marketing is a long-term process, and businesses should do it with intense care as internal marketing involves so much time and cost.

4. Market Access: International Marketing offers a wide variety of markets for the business. Businesses can effectively use international marketing to grow their business and to get global recognition in the international market. This can further help in expanding the business and customer base, as well as in generating higher revenues and profits.

Examples of International Marketing

1. Airbnb: Airbnb is a San Francisco-based vacation rental facility, founded in 2008 by two friends. Due to international marketing, the brand is now operating in 34,000 cities worldwide. The brand set up a localised department to facilitate the public all around the globe.

2. Nike: Nike established its brand name and gained recognition worldwide due to its effective international marketing strategies. Nike interacted with a wide range of customers by entering into a long-term standing arrangement with Manchester United.

Scope of International Marketing

International Marketing involves interaction with foreign audiences, and as the business tries to go beyond the domestic boundaries, the scope of international marketing becomes wide too. It includes,

1. Exporting/Importing: Selling goods and services to a company in a foreign country is referred to as Exporting. For instance, Gulab sold sweets to a store in Canada. Purchasing goods from a foreign company is known as Importing. For instance, the purchase of dolls from a Chinese company by an Indian dolls dealer. Exports and imports are the typical way through which businesses begin their activities overseas before moving on to other kinds of international trade. Important ways to Export and Import are:

• Direct Importing/ Exporting: The company handles all of the necessary paperwork for the shipment and financing of goods and services and deals directly with foreign suppliers or purchasers.
• Indirect Importing/ Exporting: The company uses a middleman to handle all the paperwork and negotiate with foreign suppliers or customers. The firm’s involvement is limited.

2. Contractual Manufacturing: According to this, every well-known company in a nation accepts responsibility for promoting the goods and services created by a business in another nation. Here, the company is specialised in the manufacturing process but lacks marketing skills, whereas the other company, due to its established reputation, is capable of selling those items and services. Offering these items and services is not the primary business of these organisations, but they do it for the benefit of their name and reputation, as well as to provide high-quality products at a low cost to their customers. Multinational firms, like Maybelline, Loreal, Levi’s and others use contract manufacturing to have their products or component parts produced in developing nations. Contract manufacturing is also known as International Outsourcing.

3. Licensing: When a corporation from one country (the Licensor) grants a license to a company from another country (the Licensee) to use its brand, patent, trademark, technology, copyright, marketing skills; etc., to assist the other firm sell its products, this contractual agreement is referred to as Licensing. The licensor corporation receives returns in proportion to sales. For instance, Pepsi and Fanta are made and distributed globally by local bottlers in other nations under the licensing system. 

The company that provides such authorisation is known as the Licensor, while the other company in a different country that receives these rights is known as the Licensee. The mutual sharing of knowledge, technology, and/or patents between the companies is called Cross-licensing.

4. Franchising: The franchise is the unique right or freedom that a producer grants a certain person or group of people to establish the same business at a specific location. The producers use this contemporary business model to market their products in far-off locations. In general, producers who have a good reputation use this system. Individuals are motivated by their goodwill and try this mode of business in order to earn profit. Franchising is a contractual agreement that involves the grant of rights by one party to another for the use of technology, trademarks, and patents in return for the agreed payment for a certain period of time. The business that gives the rights (i.e., the parent company) is referred to as the Franchisor and the business that purchases the rights is referred to as the Franchisee.

5. Joint Ventures: A joint venture is formed when two or more businesses decide to work together for a common goal and mutual benefit. These two commercial entities could be private, public, or foreign-owned. Joint ventures are those types of businesses that are established in international trade where both domestic and foreign entrepreneurs are partners in ownership and management. The trade is carried out in collaboration with the importing nation’s firm. For instance, the Joint venture of the Indian company Maruti with the Japanese Company Suzuki.

6. Wholly Owned Subsidiary: When a foreign company establishes a business unit or acquires a full stake in any domestic company, then they are called a Wholly-owned Subsidiary. Wholly owned subsidiaries are set by a foreign company to enjoy full control over their overseas operations. A wholly-owned subsidiary in a foreign country may be established in two ways: Setting up a wholly-owned new firm in the foreign land, also called Green Field Venture. Acquiring an established firm in a foreign country and using that firm to do business in a foreign country.

Significance of International Marketing

I. Significance of International Marketing to Marketers

1. Market Access: International Marketing offers a wide variety of markets for the business. Businesses can effectively use international marketing to grow their business and to get global recognition in the international market. This can further help in expanding the business and customer base, as well as in generating higher revenues and profits.

2. Utilisation of Surplus Production: In case the domestic business is producing more than what is demanded by the domestic consumers, the business can export its excess production to other countries through international marketing. In this way, there will be no wastage of resources.

3. Competitive Advantages: International marketing can help businesses gain a competitive advantage. Businesses operating in the international markets will have access to the latest technologies, advanced knowledge, skilled staff, etc.

II. Significance of International Marketing to the Economy

1. Foreign Exchange: International marketing and trade brings foreign exchange inside the domestic borders. The inflow of foreign exchange is a positive sign for the economy. It balances the exchange rates and redefines the country’s financial health in the international market.

2. Prevention of Economic Downturn: Today’s time is more dynamic than ever. There are multiple external, internal, micro, and macro variables that can affect the domestic economy anytime. International marketing can provide an extra source of income that the country can use to avoid an economic downturn and ensure economic stability.

3. Increased Standard of Living: In the presence of international marketing, people of any country can consume goods and services produced in some other countries. It helps in improving the standard of living of those people and the country in general.