International Marketing: Meaning, Scope and Importance
International marketing is the application of marketing principles by industries in one or more than one country. It is possible for companies to conduct business in almost any country around the world, thanks to the advances in international marketing.
In simple words, international marketing is trading of goods and services among different countries. The procedure of planning and executing the rates, promotion and distribution of products and services is the same worldwide.
In recent times, companies are not restricted to their national borders, but are open for international marketing. With the increasing change in customers’ demands, choices, preferences and tastes, the economies are expanding and giving way to more competitive marketing. Thus, organizations need to respond rapidly to the demands of the customers with well-defined marketing strategies.
The major participants in international marketing are as follows −
- Multinational Corporations(MNCs) − A multinational corporation (MNC) is an organization that ensures the production of goods and services in one or more countries other than its home country. Such organizations have their offices, help desks or industrial set-up across nations and usually have a centralized head office where they co-ordinate global management.
- Exporters− They are the overseas sellers who sell products, and provide services across their home country by following the necessary jurisdiction.
- Importers− They are the overseas buyers who buy products and services from exporters by complying with the jurisdiction. An import by one nation is an export from the other nation.
- Service companies− A service company generates revenue by trading on services and not on physical commodities. A public accounting company is the best example of a service company. Revenue here is generated by preparing returns of income tax, performing audit services, and by maintaining financial records.
The use of internet, social media, advertisements has propelled the growth of global marketing. Globalization is witnessing a tremendous change and giving way to the scope of international marketing. International marketing has broadened its capacity due to some major factors.
Factors that have influenced the growth of international marketing are as follows
- Export− Trading of goods and services from one country to another by promoting the same on social media, and abiding by the rules and regulation of both the home country and the foreign country with respect to the rules and regulations is known as export. In short, exporting means shipping the products and services from one nation to another.
- Import− Buying of products and services from an external source across national borders is known as import.
- Re-export− Re-export refers to the export of foreign goods in the same state as previously imported, from the free circulation area, premises for inward processing or industrial free zones, directly to the rest of the world and from premises for customs warehousing or commercial free zones, to the rest of the world.
- Regulation on marketing activities− Re-export refers to the export of foreign goods in the same state as previously imported, from the free circulation area, premises for inward processing or industrial free zones, directly to the rest of the world and from premises for customs warehousing or commercial free zones, to the rest of the world.
- Formalities and procedures of marketing− There are a number of laws and policies framed by different countries and these make international marketing more complex, and a time consuming process. The exporters & importers are compelled to abide by all the formalities & procedure related to licensing, foreign exchange, customs duties & goods clearance. These policies, rules and regulations are not static for all participating countries. So, it is important to be well aware of the procedure and formalities and plunge into the vast expanse of international marketing.
- Trade block and their impact− Active participation of several nations in marketing activities builds trade block. These blocks involve EU, LAFTA, ASEAN, EFTA & CACM. Measures should be taken to reduce trade blocks as they are harmful to the growth of free world trade.
- Commercial policies and their impact− The countries participating in the international marketing design their own commercial policies that suit their requirements. Different policies of different nations invoke the commercial environment of international market.
- International marketing research− International market is important, as it deals with marketing on a larger scale and also paves way for productive research. Research requires complete knowledge of the in and out of target market, customers’ needs and requirement, buying behavior, prevailing market competition and many more. Market research at international level provides base for product planning & development, introduction of sales promotion techniques.
Provides higher standard of living
International marketing ensures high standard life style & wealth to citizens of nations participating in international marketing. Goods that cannot be produced in home country due to certain geographical restrictions prevailing in the country are produced by countries which have abundance of raw material required for the production and also have no restrictions imposed towards production.
Ensures rational & optimum utilization of resources
Logical allocation of resource & ensuring their best use at the international level is one of the major advantages of international marketing. It invites all the nations to export whatever is available as surplus. For example, raw material, crude oil, consumer goods & even machinery & services.
Rapid industrial growth
Demand for new goods is created through international market. This leads to growth in industrial economy. Industrial development of a nation is guided by international marketing. For example, new job opportunities, complete utilization of natural resources, etc.
Benefits of comparative cost
International marketing ensures comparative cost benefits to all the participating countries. These countries avail the benefits of division of labor & specialization at the international level through international marketing.
International cooperation and world peace
Trade relations established through international marketing brings all the nations closer to one another and gives them the chance to sort out their differences through mutual understanding. This also encourages countries to work collaboratively with one another. This thereby designs a cycle wherein developed countries help developing countries in their developmental activities and this removes economic disparities and technological gap between the countries.
Facilitates cultural exchange
International marketing makes social & cultural exchange possible between different countries of the world. Along with the goods, the current trends and fashion followed in one nation pass to another, thereby developing cultural relation among nations. Thus, cultural integration is achieved at global level.
Better utilization of surplus production
Goods produced in surplus in one country are shipped to other countries that have the need for the goods in international marketing. Thus, foreign exchange of products between exporting country & importing countries meets the needs of each other. This is only possible if all the participating countries effectively use surplus goods, service, raw material, etc. In short, the major advantages of international marketing include effective utilization of surplus domestic production, introduction of new varieties of goods, improvement in the quality of production & promotion of mutual co-operation among countries.
Availability of foreign exchange
International marketing eases the availability of foreign exchange required for importing capital goods, modern technology & many more. Essential imports of items can be sponsored by the foreign exchange earned due to exports.
Expansion of tertiary sector
International marketing promotes exports of goods from one country to another encouraging industrial development. Infrastructure facilities are expanded through international marketing. It indirectly facilitates the use of transport, banking, and insurance in a country ensuring additional benefits to the national economy.
Special benefits at times of emergency
Whenever a country faces natural calamities like floods & famines, it is supported by other countries in the international market. The international market provides emergency supply of goods and services to meet urgent requirements of the country facing the calamity. This distribution can only be facilitated by a country which has surplus imports.
A company exporting goods to other foreign countries earns substantial profit through export operation as domestic marketing is less profitable than international marketing. The loss a company suffers in domestic marketing can be compensated from the profit earned through exports in international marketing. Foreign exchange can be earned by exporting goods to foreign countries. Thus, the profit earned can be used for the import of essential goods, new machinery, technology, etc.