Page 219 - DMGT545_INTERNATIONAL_BUSINESS

International Business

notes are engaged in international marketing and are subject to the same concepts and principles as are
U.S. firms marketing in Brazil.

Did u know? International Trade Theory also explain why products are exchanged between
countries.

11.5 Determining international marketing strategies: factors

limiting standardisation

From an international marketing manager’s point of view, the most cost-effective method to
market products or services worldwide is to use the same program in every country, provided
environmental conditions favour such an approach. However invariably, as we have seen in
the previous section, local market characteristics exist that require some form of adaptation to
local realities. One of the challenges of international marketing is to determine the extent of
standardisation for any given local market. To do this, the international marketing manager must
become aware of any factors that would limit standardisation. Factors limiting standardisation
can be categorised into four major groups: market characteristics, industry conditions, marketing
institutions, and legal restrictions.
!

Caution Product standardisation becomes difficult with regard to distinguished market
variables and sustaining policies.

11.5.1 market characteristics

Market characteristics can have a profound effect on international marketing strategy. The physical
environment of any country-determined by its climate, product use conditions, and population
size often forces marketers to adjust products to local conditions. Many cars in Canada come
equipped with a built-in heating system that is connected to an electrical outlet to keep the engine
from freezing while turned off. In warmer climates, cars are not equipped with such a heating
unit but are more likely to require air conditioning. The product use conditions for washing
machines in Europe differ from country to country. In Germany, manufacturers have been forced
to add built-in heaters because home makers prefer to boil the water during the regular washing
cycle and use a coldwater fill. British home makers prefer to fill washing machines with hot water
directly from a house boiler, making a built-in heating unit unnecessary. A country’s population
will affect the market size in terms of volume, allowing for lower prices in larger markets. Market
size or expected sales volume greatly affect channel strategy. Company-owned manufacturing
and distribution are often possible in larger markets, whereas independent distributors are often
used in smaller countries.

Macroeconomic factors also greatly affect international marketing strategy. The income level,
or gross national product (GNP) per capita, varies widely among nations-from below $100 for
some of the world’s poorest nations to above $10,000 for rich countries such as Kuwait, Sweden,
and the United States. Depending on income level, countries have been categorised according to
stages of economic development, ranging from a pre-industrial stage to full economic maturity.”
As can be expected, marketing environments will differ considerably according to income
level. If the population’s level of technical skill is low, a marketer might be forced to simplify
product design to suit the local market. Pricing may be affected to the extent that countries with
lower income levels show higher price elasticities for many products compared to developed
countries. Furthermore, convenient access to credit is often restricted to buyers in developing

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