Here is a compilation of essays on ‘International Marketing’ for class 11 and 12. Find paragraphs, long and short essays on ‘International Marketing’ especially written for school and college students.
Essay on International Marketing
- Essay on the Meaning of International Marketing
- Essay on the Nature of International Marketing
- Essay on the Transition from Domestic Marketing to International Marketing
- Essay on the Importance of International Marketing
- Essay on the Factors Influencing International Marketing
- Essay on the Problems and Challenges Faced in International Marketing
Essay # 1. Meaning of International Marketing:
International marketing refers to the buying or selling of goods and services beyond the boundaries of a country. When a country crosses its national frontiers to market its products it is indulging in international marketing.
Marketing activities carried on by a marketer in more than one country may be termed as international marketing. In simple words, when two different countries exchange the products and services with the motive of business trade, the process is called International Marketing.
Understanding of international marketing is easier if one has good knowledge of the concept of marketing. As per the definition by the American Marketing Association. ‘Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to greater exchanges that satisfy individual and organisational objectives.’
This definition can be extended to define international marketing too. Thus “International marketing is the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives.”
If we examine this definition, we realize that only the word Multinational has been added to the definition of marketing given by American Marketing Association. By adding the word ‘multinational’, it implies that marketing activities undertaken in several countries are known as international marketing.
Essay # 2. Nature of International Marketing:
Generally the nature of domestic marketing and international marketing is the same.
However, there are some differences as given below:
1. Protective Nature:
International marketing is protective by nature. Each country has its own sovereign political entity. Therefore, in international marketing, there may be a number of restrictions. These restrictions are mainly to protect domestic industries from foreign competition and to restrict trade in the specific commodities.
2. Competitive Market:
International marketing is competitive in nature. In international market the exporters have to face three tier competition, i.e.- (i) from local manufacturers, (ii) from manufacturers of own county, and (iii) from manufacturers of other foreign countries. Therefore, international market is more competitive in comparison to domestic market.
3. More Risk:
There is a greater degree of risk involved in international marketing than in domestic marketing. When trade is made between two far distant countries either by road or sea, then the risk element of accident is there. The sea voyage calamities and other unforeseen accidents are taken in consideration. The damage is also possible in loading and unloading.
Besides the above, greater degree of risk is involved in international marketing than in domestic marketing, the reasons being longer time period involved due to longer time in transit and the longer credit period involved, large volume and high value of transactions and comparatively less knowledge about the reputation and credibility of foreign firms.
4. Different Legal Systems:
Each country has its own legal system and very often the legal systems operating in different countries differ from each other. Some of the countries follow English Common Law while others follow the Civil Law. Some of the European countries and some Muslim countries are having their own legal system.
This difference in the legal system among different countries increases the difference in the legal system among different countries increases the difficulties of businessmen. The existence of different legal systems makes the international marketing more difficult in nature, as firms are not sure as to which particular system will apply to their transactions.
5. Different Monetary Systems:
Monetary system and exchange value of each country’s currency are different from that of the other. The monetary system of each country is decided by the government of that country and the exchange value of the country’s currency is determined by the forces of supply and demand.
6. Credit Oriented:
Generally, international marketing is credit oriented. Developing countries prefer to buy goods from those countries which offer liberal credit facilities i.e., period of payment should be long and interest charged should be low. There is sufficient difference even between two advanced countries in the approach towards supply of goods and payment duration.
7. Problem of Market:
In international market, their fashion, customs, tradition, religion, government policy, customer’s beliefs etc., are likely to be totally different. It is necessary to know about it in advance.
8. Controlling Nature:
Another feature of international marketing is its controlling nature. Developed countries control about 75% of world trade. Developed countries have made great strides in industrial and technological fields. They have created a name for themselves in international marketing due to their new and modern products.
9. Political Nature:
International marketing is political in nature. There is virtually no trade between those countries which are not having cordial relations. Political motives of the countries play an important role in international trade. Normally developed countries prefer to import goods from those countries which buy their manufactured products.
Essay # 3. Transition from Domestic Marketing to International Marketing:
International marketing is different from domestic marketing in many ways. Therefore, the decision to enter international market should be based on economic factors, as the risks and complexities associated with foreign trade are higher in comparison to domestic trade. Therefore, while entering to foreign market all factors.
The complete involvement and firm determination is the key factor to success in international marketing and it is based on the basic economic necessities of the corporate firm. Increase in sales volume, higher profit, and saturation of demand in domestic market, social responsibilities, and product life cycle, technical changes etc. are some main reasons while made a firm to go for export business.
Besides this, the factors which influenced a non-exporting firm to go in for export trade can be classified as under:
1. Characteristics of Corporate Firm:
If the firm predicts no future market potential for its products or services in the local market, it motivates the firm to go for the export trade. The characteristics of the firm are studied to evaluate the weaknesses, strengths, opportunities and threats regarding foreign trade. It includes the analysis of- (i) Characteristics of product—product life, demand, production capacity etc. (ii) Analysis of financial resources, (iii) Existing market of product and its growth potential and (iv) Potential of export market. On the basis of these factors, final decision regarding export is taken.
2. Recognition of International Market Conditions:
It includes- (i) Export potential (ii) Market opportunities and (iii) Government policies and assistance to promote export. Management of the firm has to recognise these export market conditions and decide about the firms to go in for international marketing.
3. Management’s Expectations:
The management’s decision to go in for export market is always taken by keeping in mind the potential of business in the international market. Therefore, the management’s expectations about the export business is always in positive side.
Essay # 4. Importance of International Marketing:
Foreign exports make a significant and necessary contribution to the economy and the country’s development particularly in underdeveloped countries. It provides a sound base for the country’s economy. The rapid progress of underdeveloped countries in the industrial field is mainly due to their exports. Today most business activities are global in scope.
Finance, technology, research, capital and investment flows, production facilities and marketing and distribution etc., have global dimensions. Today, global marketing is essential not only for the realisation of the full potential of a business, but even for the survival of the business. A company that fails to go global may lose its domestic business to international competitors with lower costs, greater experience, and better products.
Foreign trade is regarded as an engine of growth and the consequent need for both public and private sectors of business to understand the nature of international marketing has occurred for number of reasons. The most influential factor has been the remarkable growth in communications and transportation. Trade barriers have broken down and customs tariffs have been greatly reduced. Trading blocks have emerged.
Some of the major trading blocks are listed below:
(i) AFTA (Asean Free Trade Area).
(ii) EU (European Union).
(iii) NAFTA (North American Free Trade Agreement).
(iv) ASEAN (Association of Southeast Asian Nations).
(v) APEC (Asia-Pacific Economic Cooperation).
(vi) OPEC (Organization of Petroleum Exporting Countries).
The European Union comprising 25 countries across Europe has eliminated barriers to trade and allowed free movement of goods, people and capital. Similarly, the North American Free Trade Area comprising USA, Canada and Mexico with population of 390 million allows free trade between USA, Mexico and Canada. The ASEAN group comprises ten countries of South East Asia—Thai land, Malaysia, Singapore, Indonesia, the Philippines, Brunei, Vietnam, Myanmar, Laos and Cambodia—a market of 500 million population.
Similarly there are other trade groups, for example, SAARC comprising of India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan and Maldives. Around 63,000 multinational companies with nearly half a million affiliates and subsidiaries have come up in last four decades and account for over a third of global trade. The importance of international marketing has grown several fold in the context of the global changes.
In addition to these factors, there are several reasons for a business firm to go international.
Important reasons for going to international market are as under:
1. Domestic Market Constraints:
Demand constraints in the home market compel many companies to expand the market beyond the national boundaries.
The following are the main constraints in the domestic market:
(i) Small Domestic Market:
If the size of the domestic market is very small, companies look forward to markets of other countries to achieve the economies of scale. For example, many Japanese companies in electronics and automobile sectors go global because the size of the domestic market is small.
Therefore, when the production is in excess of domestic demand, the company tries to enter the international market. In export marketing, there is a huge potential to increase sales. Generally, the export orders are always huge in export business in comparison to domestic market. Huge sales volume also increases the volume of profit.
(ii) Due to Recession:
If there is recession in the domestic market, companies may not be able to sell full production in the home market. Sometimes there is excess production capacity in the country which the companies are not able to utilise fully, because of their inability to sell in the domestic market. Recession in the automobile industry in India in 1990 encouraged several Indian auto component manufacturers to explore foreign markets.
(iii) Sale at Saturation Point:
The markets for a number of products tend to saturate in some developed countries. This often happens when the market potential has been almost fully tapped, and when the population in some of the developed countries would saturate or decline. Such trends have
very adverse effects on certain products. For example, the fall in the birth rate implies contraction of market for several baby products. To overcome such problems in the domestic market, companies look for international markets.
(iv) Growth in International Market:
Growth in international markets causes the growth in demand for some products, attracting the manufacturers of these products towards international market. Many Indian software companies entered international markets when the international demand for software products was first getting underway. Cipla, an Indian pharmaceutical company, entered Africa with its HIV treatment drugs as there exists a vast market for its products.
(v) Change in Demand in Domestic Market:
Sometimes, excess production capacity arises because of changing demand in the domestic market. As domestic markets switch to new and substitute products, companies making such products, develop excess capacity and are compelled to enter foreign markets. In some cases, the domestic market may be completely closed but the company may be producing for international markets. For example manual washing machines are totally outdated in the United States, but such machines are popular in underdeveloped countries.
(vi) Economics of Large Scale Production:
Another type of domestic market constraint arises from the scale economies. The technological advances have increased the size of the optimum scale -of operation substantially in many industries making it necessary to have foreign market to take advantage of the scale economies, in addition to home markets.
2. Government Policies and Regulations:
Government policies and regulations also motivate the firm to go to international market. Government may impose certain restrictions on further growth and capacity expansion within the domestic market in order to achieve certain social objectives. But there may not be any such restrictions on making investments in foreign countries or the restrictions may be relaxed even in the domestic market, provided the additional production is only for exports.
In such a situation, a firm may contemplate export operations. Many governments give a number of incentives and other positive support to domestic companies to export and to invest in foreign countries. Similarly, several countries give a lot of incentives to attract foreign investment. For example, in India, units established in the Export Processing Zones (EPZs) and 100% Export Oriented Units (100% EOUs) get excise and other tax benefits and have to export their production compulsorily.
New foreign trade policy announced on 31st August, 2004 for 2004-09 by UPA Govt., proposes to set up Service Export Promotion Council to help the services including non I.T. services like entertainment, medical, tourism, accounting and financing. Also a new scheme named ‘Serve from India’ will be initiated. Besides setting up of free trade warehouse zones through which service exports will be encouraged.
3. Increased Productivity:
Increased productivity is essential for the ultimate survival of a firm. This itself may lead a company to increase production and then export to foreign markets.
Moreover, due to technological developments, some companies have to spend a lot on research and development. To meet the cost of research and development, larger markets become necessary and exports become unavoidable. Foreign markets constitute a large share of the total business of many firms. IBM, for example, sells more computers abroad than at home. International sales account for more than 80 per cent of Coca Cola’s operating profits.
4. Counter Competition:
Many companies enter foreign markets to counter competition. The strategy of counter-competition is to penetrate the home market of the potential foreign competitor so as to diminish its competitive strength and to protect the domestic market share from foreign competitors.
5. Relative Profitability:
International business could be more profitable than the domestic. The price realised in export markets may be relatively higher than the home market. This is so, for example, in the case of readymade garments and jewellery. In some cases, export incentives provided by the government may make exporting more profitable than domestic market. Thus by international marketing, the overall profitability of domestic business can be improved.
6. Reducing Business Risk:
A diversified export business helps the exporting firm in mitigating the risk of sharp fluctuations in the business activity of the firm. When a firm is selling its product in a number of markets, a downward trend in one market may be partially or fully counter balanced by a rise in sales in other markets in the domestic country or in overseas countries. Secondly, geographic diversification also provides momentum to growth inasmuch as a single or a few markets will have only limited absorptive capacity. Thus sales in international market may reduce the business risks.
7. Control Inflation and Price Rise:
On several occasions, governments allow import of goods to increase the supply and control prices. Whenever domestic prices increase, normally imports are allowed to increase the supply and control the prices. When imported products are available in the domestic market at lower price, domestic producers also reduce their prices. Without imports, there is no pressure on domestic producers to reduce their prices. The lack of imported product alternatives forces consumers to pay more, often resulting in inflation.
8. Product Obsolescence:
Every product has its own life cycle and is to die as soon as the cycle (innovation, growth, maturity and obsolescence) is over. Some products (which are generally used by well-to-do people) may become obsolescent in domestic markets, but there may be markets for such products in the foreign countries.
There are so many products which have reached a stage of obsolescence in developing countries yet they can be sold easily in underdeveloped or undeveloped countries. Thus, the firm producing a product that has become obsolete in domestic market may take a decision for its export in market where it can be sold easily.
In addition to the above mentioned factors, the following factors are also responsible for the need for International Marketing:
1. Unequal Distribution of Natural Resources:
There is no equal distribution of resources among various nations of the world. For example Arab countries have oil in abundance whereas Britain has coal and iron in large quantities. In addition, the climate for agriculture is also different in all countries. In this condition, every country produces goods or services favourable to its climate and natural resources and do the marketing in foreign countries and, in exchange, gets back other requirements. In nutshell International Marketing has become necessary because of inadequate distribution of resources.
2. Advantages of Specialisation:
In every country, in addition to natural resources, human skill and technology are also different. So every country specialises in producing goods and services according to their skill and technology and exports them to foreign countries and in exchange imports the needed products. For example, Switzerland has specialised in watch making while Brazil in producing coffee.
3. Technological Development:
Countries of the world have been divided into developed, developing and underdeveloped, according to their technological development. Developed countries by way of international marketing sell the technology to developing and underdeveloped countries. In India the technology is developing and technical education is increasing. USA, Australia and many other countries are attracting Indian technicians by way of making the control easy on passport and visa.
4. To Create Research Opportunity:
Every country is trying to make the research base more powerful to face international competition. Indian scientists have done remarkable progress in the field of space through International Marketing and has got seventh place in the world. India is self-reliant in the field of missiles and satellites. Many researches of Ayurvedic medicines have created opportunities for International Marketing.
5. Economic Development of a Country:
International marketing is a dynamic force in the development of a country.
(i) Rapid Economic Growth:
International marketing helps a country to earn necessary foreign exchange required for its economic development. The export helps a country to improve its level of development. Foreign exchange can be utilised for the rapid growth of the country. The developing countries require science and technology for their economic development. Their import bills are quite high and need to be financed by exports.
(ii) Profitable Use of Natural Resources:
There are certain countries which possess an abundance of a particular natural resource as others have less of it. International marketing helps best and profitable use of such products.
(iii) Increase in Employment Opportunities:
In an effort to increase the export, many export-oriented industrial units are established on the one hand, and the existing units produce more to get exportable surplus on the other. This generates new opportunities for employment and increases the existing level of employment. Moreover, new markets are surveyed for exporting the goods and so many other persons are also engaged directly or indirectly in the export trade. Employment opportunities can also be explored by entering new areas for exports.
(iv) Role of Exports in National Income:
Exports play an important role in the national income of the country which can be increased to a sizeable extent through organised export marketing. Shares of export income in the national income of some countries are Hungary 43%, Netherlands 42%, Japan 11 %, Canada 21 %, Belgium 42%, Germany 19% and England 17%. This shows the contribution of exports in the national income of a country.
(v) Increase in the Standard of Living:
International marketing improves the standard of living of the countrymen in the following ways:
(a) The imports of necessary items for consumption can be made which may help improve the standard of living of the people.
(b) Exports increase the employment opportunities which, in turn, increase the purchasing power of the people.
(c) Exports are responsible for the rapid industrialisation of the country. New items are produced for consumption in the domestic market. It increases the level of standard of living.
(d) In order to face the competition in the international market, the producers improve the quality of the product by using the latest technology. Moreover, cost of production is also reduced due to large-scale production and use of improved technology.
(vi) International Collaboration:
International marketing results in international collaboration. Developed countries fix their import quotas for different countries and for different commodities. A country can export various commodities to these developed countries to the extent of its quota. In order to settle certain common issues some countries form a group or a common platform to discuss various issues concerning their international trade and take decisions jointly. In this way, international trade leads to international collaboration.
(vii) Closer Cultural Relations:
International trade brings various countries closer. Better trade relations are established among the countries. Government and non-government trade commissions or trade representatives visit other countries from time to time. The local representatives and other related persons come into contact with foreign representatives and come to know their habits and customs.
Apart from this, exporting firms open their selling depots, agencies or manufacturing units abroad. Their employees also come into contact with the persons of the countries of their posting. In this way closer cultural relations among various countries develop.
6. Helps in Political Peace:
The economic relations between two countries help improve their political relations. Various countries having different political ideologies import or export their products. Russia imports food grains from America, though they have a different, rather opposite political ideologies. Thus, to some extent, international trade helps maintaining political peace in the world.
To sum up, it is now undisputable that export trade contributes to the national economy, national exchequer, and individual exporting firms and maintains international economic, cultural and political relations among various countries.
Essay # 5. Factors Influencing International Marketing:
There are two types of factors influencing international marketing:
1. Internal Factors:
The internal factors may include the strength of a business organisation to operate in an alien country. Its knowledge about the customer’s wants and needs in that country. The investment capacity of the company to pursue its goals to make the product as per the requirements of the customers. It may have to evaluate its production capacity and strength to withstand the competition in that country.
2. External Factors:
The external factors which influence the international marketing decisions of a Business Organisation can be:
(i) Economic Environment
(ii) Social and Cultural Environment
(iii) Political Environment
(iv) Legal Environment
(v) Physical Environment
(vi) Demographics Environment
(vii) Technological Environment, and
(viii) Business Environment.
(i) Economic Environment:
In different countries the economic conditions are different.
It depends on the following factors:
(a) Population growth rate
(b) Rate of economic growth
(c) Money supply, inflation rate, price rise
(d) Growth of transport, banking system and means of communication
(e) Rate of growth of human efficiency, and
(f) Growth of business and industry.
A business organisation is an economic system of a larger environmental system. It includes current stage of economic development, income distribution patterns, stages of business cycle, inflation, interest rates etc. Economic factors are one of the most important factors to be considered for formulation of international marketing strategy. Many variations in marketing systems originate in straight forward economic differences.
If the growth rate, speed and market condition are not favourable, then the market structure is adversely affected. The second important thing regarding marketing system is the changing element. If economic standard is now considered the marketing activities of a progressive society will be quite different from that of stagnant society.
In the context of economic environment the third factor which affects the marketing system is geography. In geography we study the conditions which affect natural resources of that country, climate and transportation. Geographical conditions also affect the living standard of people.
(ii) Social and Cultural Environment:
Social and cultural factors both affect the international market environment. Socio-cultural trends often reflect the impact of changing economic and technological conditions. An international marketing mix can only be effective as long as it is relevant to a given culture. It may call for modification of the product, introduction of a new promotional strategy or new distribution channel.
If a firm enters foreign markets without due regards to local customs and traditions, it may commit serious blunders. Culture being a major force of a country or region, it should be thoroughly understood, specially, in terms of the values and social practices of nation concerned.
Social structure, i.e., traditions, methods, customs etc., have a basic influence on economic development, industrial output and distribution factors. Social backwardness, immorality, rigidity and other social factors influence them negatively. Caste, religions, customs, conflicts etc., keep people at specified low level and they live in total darkness. The nature, behaviour, trend of human beings change very slowly.
In the context of marketing, the word ‘culture’ does not refer to classical music, art and literature, but to social institutions, values, life styles, beliefs and behaviour. Culture includes everything a person needs to know as a member of a society but does not include the basic drives with which one is born. Culture is also the total way of life and thinking pattern is passed from generation to generation.
(iii) Political Environment:
The political environment of a country plays a vital role in influencing the market. Price, size of market coverage, advertisement etc., influence the market. The market policy has to be decided on this basis. The industrial development or growth depends on free/controlled policy adopted by the country. This indicates that the political factors play a vital role.
The political situation is likely to be different in different countries. The market strategy is also likely to be different. In the regulated market, government rules over the market and the resources are diverted as per the directions of government. The welfare aspect is more important than profitability. Uplifting the rural social welfare and other development aspects are important. The political factors widely influence the market and other factors are also important with this in the strategy of marketing.
(iv) Legal Environment:
The legal aspect is very important in international marketing. Every business firm operates business within the jurisdiction of legal system. The commercial and legal laws existing within a country influence not only the marketing mix but also the environment within which a business operates.
Producers and exporters must be careful in regarding their activities in foreign markets. If they do not get the legal registration of their company in foreign then there is a provision of heavy fine also according to their laws. To avoid any trouble in future the exporter in foreign countries must study and obey the laws of that country before appointing agents, distributor and other persons etc.
Sale agreements made in foreign country are equally important for both seller and buyer. These agreements include cost of product, place of delivery of goods, credit conditions, payment conditions etc.
(v) Physical Environment:
The physical environment consists of natural resources including minerals, animal population etc. Accordingly, marketers must adapt their strategies to environmental differences in terms of availability of natural resources, varying climatic conditions and ecological considerations.
Today the world is facing many serious problems i.e., global warming, destruction of forests, air and water pollution etc. Therefore, all the countries have introduced some rules and put many restrictions in this context. It is very important to have the knowledge of these changes in regarding International Marketing.
(vi) Demographics Environment:
International market structure is influenced by the demographic structure of the country. Size, age group, size of family, birth and death rate, sex ratio, growth of population etc., affect the marketing strategy.
The size of population is different in different countries. India and China possess high population. Russia, Japan, Australia have low population. When population increases, the demand rises, market expands, demand for food, clothes and other things develops. Then the marketing strategy has to be developed in such a way as to adjust with this situation.
(vii) Technological Environment:
Science and technology are fast changing. These types of factors obviously affect the market. For example, manufacture of cotton cloth has decreased. Factories have stopped the production of cotton cloth and started producing mix fabrics which are in demand. Now, due to growth of science and technology messages are broadcast through satellites. The use of Television, Radio, Computer, Internet etc., has increased. Its adverse-affect lies on gramophone and film industry. Many industries develop due to on-going research.
(vii) Business Environment:
Environment plays a vital role in the conduct of business operations in international markets. Environment assumes- critical importance as no two countries have similar environments and different business strategies are to be adopted for different business conditions. As the environment affects firm’s strategies and tactical decisions, it becomes very important for the firm to have in-depth knowledge of the domestic, foreign and global environments.
When a firm decides to enter international markets, it faces two major decision problems- (a) Which market (b) to select, and (c) how to enter into those markets. Both these decisions are greatly influenced by the environmental forces. Firms select those countries as their target markets which have sufficient market potential. Market potential in turn depends upon geographic, economic and cultural environments of that country.
Arthur Median has identified following factors which influence business environment:
1. Social Factors:
i. National legal regime
ii. Political situation
iii. Financial system
iv. Marketing infrastructure
vi. Language, and
2. Economic Factors:
i. Commercial policy variables, e.g., tariffs, quotas, licensing, non-tariff Barriers
ii. Currency restrictions, and
iii. Internal demand management policies and instruments.
i. Competition vis-a-vis producers in the importing country,
ii. Competition vis-a-vis exporters from the competing countries, and
iii. Competition vis-a-vis other exporters from one’s own country.
i. Availability of required type of transport (sea, air, freezer space, etc.)
ii. Costs of transportation.
i. Political risks
ii. Commercial risks
iii. Acts of God, and
iv. Acts of enemies, pirates, thieves, etc.
Essay # 6. Problems and Challenges Faced in International Marketing:
International marketing is becoming very complex and challenging in the context of globalisation of markets. Many different problems and challenges have emerged due to cultural diversities, different languages, tastes, and fashions, consumption functions of the consumers and also due to incomplete knowledge about foreign markets. The companies engaged in international marketing are facing many important and interesting facts.
Some of these varied facts have forced firms to frame new strategies for their domestic markets. Here the words of Kotler are appropriate – “Marketing in domestic market gets first priority in comparison to foreign market if size of the market is really large one, as per the opinion of big companies.”
The officers of these companies need not learn laws and languages of foreign countries, need not learn about complexities of exchanges in foreign currencies, need not engage themselves in political and legal uncertainties and at the same time need not direct their products according to wishes of international customers. In short, domestic marketing is more safe and simple.
Many problems are involved in international marketing.
Some important ones are explained below:
1. Cultural Diversity:
Customs and traditions as well as racial and religious diversities affect the markets, but their effects cannot be measured appropriately. How these problems will affect the demand for the products, is hard to visualise. Therefore this constitutes the main problem in international marketing.
2. Failure of Markets in Accepting the Products:
A large number of countries in the world are not prepared to accept one-sided growth of trade in international marketing (i.e., exporting raw materials and importing manufactured items). Most of the countries prefer the products manufactured in their own enterprises in the country.
3. Failure to Enter Potential Advantageous Market:
There is a growing trend to form small trade groups in the context of international marketing due to adverse individual and political interests in the world such as European Economic Community, American Free Trade Association and Association of South East Asian Nations (ASEAN) etc. These trade associations create many important obstacles on the way of free trade and International Marketing. These trade associations have free trade among member states, but object on doing free trade with non- member countries.
4. Difficulty in Understanding the Principle of Competitive Economy, in Right Spirit:
Many countries have framed certain rules and adopt certain processes in commercial matters so as to regulate and control their imports and exports. This brings complexity element in international marketing.
5. Self-Sustained Economy:
Developing countries are adopting development process rapidly and are ready to prove their capability and ability at international level. The willingness on their part to create self-sustained economy can create problems in international trade and marketing.
6. Differences in Languages:
The failure to understand differences in languages in correct manner, brings complexity in International Marketing. The message of producer reaches the consumer in best way through the language of consumer. But differences in languages create problems in the process of communication.
7. Diversity in the Nature of Advertisement:
The nature of advertisement also changes due to differences in cultural matters like customs and traditions. The diversity in the nature of advertisement makes international marketing complex one, because different advertisement policies are to be framed for marketing of product in different countries.
Thus it can be concluded that International Marketing has to face many problems such as lack of proper identity of language and culture in foreign markets, political and legal constraints, lack of proper information regarding marketing research, undesirable competition, and failure to understand the importance of retail sellers for distributing the products in foreign markets etc.
According to Philip Kotler, under-mentioned challenges are being faced in international marketing:
1. Changing Environment:
Marketing is affected by the environment around it because changes in social, political and other factors have bearing on the economic behaviour of persons living within the boundaries of that country. Changing environment brings dynamism in the objectives of marketers and they have to act accordingly.
2. Proper Cost of Production and Communication:
A firm entering foreign markets should study different aspects minutely regarding that market. These aspects may relate to economic, social, political and cultural environment and see to it how that market will be adopting its products. Acquaintance with the tastes of every market is also necessary to frame proper marketing policies.
3. Burden of Foreign Loans:
Most of the developing and small countries are under the grip of foreign debts, due to which it is becoming difficult for these countries to make payment of their interests too. Examples of such countries are Indonesia, Mexico and Russia. Foreign indebtedness proves a big obstacle in international marketing because such countries do not permit import of goods so very easily.
4. Technological Piracy:
A firm, whose plants are established abroad is always worried regarding stealing of its techniques of production and have to face competition openly or tacitly. Such a trend is usually found widely in the fields of machinery, medicines, electronics and chemical industries.
5. Political Instability:
Many countries are under the grip of high indebtedness, hyper-inflation and mass unemployment. Political instability arises due to these factors. This tendency is risky for foreign firms as these firms face the risk of nationalisation, limited profits and self-liquidation, which create obstacles in international marketing.
Corruption is spreading like cancer in all countries. It is specifically seen in international trade. For example, under Foreign Corruption Act 1977, there is a ban on American managers on giving or taking of bribes. But the same ban is not levied on the competitors of other countries. This is a great challenge in international marketing.
7. Tariffs and Other Commercial Obstacles:
Nowadays most of the governments charge high tariffs on imported goods to protect their own industries. They resort to invisible trade obstacles too, for example, reducing slowly important inspection trends and permits regulations as well as desiring expensive product adjustments. Due to such practices, international marketing is becoming challenging for the marketers.
8. Red-Tapism and Bureaucracy:
Many firms put different rules and regulations on foreign firms in the matters of trade- for instance, they can lay emphasis on joint ventures in which domestic partner will have more share in profits or can ask foreign firms to serve national interests in better ways. Domestic firm can also put a ban on the transfer of technology or profit which will become a big challenge in international marketing.
9. Problem of Foreign Exchange:
More indebtedness and economic as well as political instability bring a fall in the value of domestic currency. Foreign firms dealing in a country want payments in hard currency in their rights regarding repatriation of profits. But this alternative is not available in many markets of the world. This creates adverse effect on international marketing.
The marketing manager should be well-acquainted with foreign markets in international marketing and should have full knowledge concerning its limitations and underlying assumptions. If any marketing is affected by social, economic and cultural characters of foreign markets, then these factors should also be kept in mind by the manager as these have a tendency to influence foreign environment.
The firm can think about reducing its dependence on any one market. The customers of a company may go for foreign products and they may need international services to meet their requirements. Global firms can attack the market of a company by presenting better quality products at low prices.
That is why a company has to think how to face the challenge of these foreign companies. Firm may also search the potential foreign markets, where it can earn more profits in comparison to profits earned in domestic markets. A firm needs a large number of consumers in order to take advantage of large scale production.
Therefore, it can be concluded that a company should frame its international marketing policies in such a way that these satisfy the consumers in the best possible way. As far as it is possible, marketing activities must be done with more than one country because if there is any risk in one market, that can be covered by selling goods in other markets.