Page 220 - DMGT545_INTERNATIONAL_BUSINESS

Unit 11: Basics of International Marketing

countries, impacting negatively on the sale of capital goods and consumer durables. Exchange notes
rate fluctuations distort prices among countries for many products that otherwise might sell at
similar prices. This leads to the problem of cross shipping products to take advantage of price
gaps. With specialisation among channel members differing widely among various countries,
depending on macroeconomic factors, companies often find themselves forced to adjust channel
policies to compensate for the absence of the middleman they normally rely on in their home
country. Wage levels and the availability of manpower may influence a company to choose a
different approach for its sales force. Since the motivation to purchase some products depends
on a country’s income level, advertising and promotion strategy may have to be adjusted for
such changes.
Cultural and social factors are less predictable influences on the marketing environment, and they
have often frustrated many international marketers. Customs and traditions have the greatest
effect on product categories when a country’s population has had prior experience with a given
product category. INCAP, an agency supported by several central American governments and
located in Guatemala, developed a low cost, high protein beverage in the form of atole (thin
gruel), a popular drink customarily consumed hot by Guatemalans. This same product was
rejected by consumers in neighbouring El Salvador because the product would thicken when it
was cool, which was the way El Salvadorians usually consumed Another hurdle in international
marketing is language, which has become a major focus for international marketers. There are
many examples of poor translations of promotional material. Pepsi Cola once used a literal
translation of its popular U.S. campaign theme “Come Alive with Pepsi” in Germany without
realising that come alive in German meant “come alive out of the grave.

11.5.2 industry conditions

Industry conditions often vary by country since products frequently are in varying stages of
the product life cycle. New product introduction in a country without prior experience might
affect the extent of product differentiation since only one or two versions of the product
might be introduced initially. Also, a company might find itself in a situation where limited
awareness or prior experience of a country will require a considerable missionary sales effort
and primary demand stimulation, whereas in more mature markets the promotional strategy is
likely to concentrate on brand differentiation. The level of local competition can be expected to
vary substantially by country. The higher the technological level of the competition, the more
an international company must improve the quality level of its products. The varying prices
of local substitutes or low local production costs can be expected to influence pricing policy. In
countries where competitors control channels and maintain a strong sales force, the strategy of
a multinational company might differ significantly from that in a country where the company
holds a competitive advantage.

11.5.3 marketing institutions

For historic and economic reasons, marketing institutions have assumed different forms in
different countries. Practices in distribution systems often entail different margins for the same
product, requiring a change in company pricing strategy. Availability of outlets is also likely to
vary by country. Mass merchandisers such as supermarkets, discount stores and department
stores are widely available in the United States and other industrialised countries but are largely
absent in less developed nations in Southern Europe, Latin America and other parts of the world.
Such variations may lead to considerably different distribution strategies. Likewise, advertising
agencies and media are not equally accessible in all countries; and the absence of mass media
channels in some countries makes a “pull” strategy less effective.

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