Page 322 - DMGT408DMGT203_Marketing Management

Unit 14: The Global Marketplace

Introduction Notes

The world has become a global marketplace. Countries use trade to speed up their economic
growth. The increasing importance of international marketing is the outcome of current changing
structure of competition, and changing demand patterns in markets across the world. Whether
businesses like it or not, protectionism of markets is disappearing from large number of countries.
Domestic market, large or small, now has to be shared with a variety of offerings and their
marketers. Companies are unavoidably involved with foreign customers, competitors, and
suppliers within their own domestic markets. For almost all players, large or small, it has
become necessary to seek foreign markets for their products and services to survive and grow.
With the opening up of economies, increasing levels of incomes, barrier-less communications
and travel, and technological advances, people in a large number of countries throughout the
world want the same things. They want modern appliances, fast-food restaurants, latest in
fashions, ever increasing convenience in life, high-quality services and so on. As a result of these
powerful shifts in trends, organisations must be prepared to be competitive in an increasingly
interdependent global environment. Whether a firm chooses to compete directly or not it gets
affected by other foreign competitors who do.

Example: For a company producing refrigerators or traditional Rajasthani namkeen, there
seems to be no way out but to compete in the global market. Businesses are able to communicate
throughout the world at the speed of sound using data, text, voice, or image.
14.1 Levels of Global Marketing Involvement

Some companies decide to keep their degree of involvement in global marketing low-key and
some other may become totally involved. According to Cateora, a business firm may choose
one of the five distinct levels of commitment to international marketing. Companies generally
move gradually through different phases of involvement in international marketing. The reasons
are obvious. Risks can be minimised by gradually committing more financial resources to a
particular foreign market based on accumulated experience. Temporary, low level of involvement
means low financial risks. However, it is not necessary for every company to follow the sequence
of phases and some companies may bypass one or more stages:
No Involvement: The firm has no active commitment to seeking customers in international
markets, but the products may reach foreign markets via other means. The firm may sell only to
foreign traders or companies that come directly to the firm, or domestic wholesalers sell the
firm’s products in other countries on their own initiative. These types of unsolicited buyers
approaching the firm often trigger the firm’s interest in seeking more sales in foreign markets.

Infrequent International Marketing: At this level, the firms may sell any temporary surplus
production to foreign buyers, but international marketing activities are reduced as soon as
domestic demand increases. There is negligible or no intention of continuing international
market presence. Company makes no adjustments in organisational structure or in the products
it sells.
Regular International Marketing: Companies in this phase develop regular international
marketing strategies to achieve set goals. The firm undertakes operations in foreign markets by
either seeking foreign middlemen, may have its own sales force, or have sales subsidiaries in
selected countries. At this stage, generally company makes investment in management,
production capacity, and marketing goods continuously in foreign markets. The company begins
to depend on profits from foreign operations.

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