International marketing plans have a specific marketing mix that will differ tremendously from the domestic version. Marketing managers have to take into account a country’s economic, technological, logistical, and sociocultural differences in order to successfully target an overseas market.
Assessing Global Markets Externally
Bolt Candy’s sales have grown tremendously this year. Their marketing team feels that they could sell their Bolt Candy overseas, but they’re not sure about what countries they should target. A key step in global marketing is to assess the viability of potential markets for growth. There are four key areas that Sugar Rush Corporation needs to consider for Bolt Candy’s expansion. The components for assessment are economic, infrastructure/technological, sociocultural, and government. Bolt Candy is considering the countries of Butavia, Candavia and Locavia.
In order for Bolt Candy to have a viable overseas target market, Sugar Rush needs to examine whether a country has the economic feasibility to support purchase of their product. Sugar Rush has to look at the economic environment to see if the country has a good economic environment, excellent market size, population growth and real income.
There are some key economic indicators that Sugar Rush’s team can examine to decide if a country is a worthwhile market. The first key term is GDP, or gross domestic product. This is the most known way to judge the size and market potential of an economy and the potential for global marketing. GDP is the market value of the goods and services produced by a country in a year.
Another indicator important to marketers is the HDI (Human Development Index), which represents a combination of life expectancy at birth, education attainment, and average incomes. This is an important piece of information to marketers because it determines if a country has sufficient target markets to warrant the pursuit of sales. Bolt Candy’s researchers have found that Locavia does not have a strong enough GDP or HDI to keep as a potential country for growth.
The marketing team is going to now look at Butavia and Candavia more closely to see if any other economic indicators will help with determining the best path for growth. The marketing team will also look at both country’s market size and population growth rate. Both terms show how big the potential consumer market would be for product growth. Butavia and Candavia each have over one billion people and matching growth rates (20%).
The last key economic indicator revolves around the evaluation of real income. Marketers want to know that people have enough disposable income to purchase their products. Butavia’s income is much lower than Candavia, so the marketing team will have to consider adjusting the product if they want to pursue the former country. One idea would be to offer smaller amounts of Bolt Candy, which would be priced much lower and allow the people of Butavia to afford the product.
Infrastructure and Technology
The marketing team is moving on to look at both Butavia and Candavia’s infrastructure and technological framework. Infrastructure is concerned with the basic facilities and services needed for a country to function, such as transportation systems or public institutions. Candavia has a very advanced infrastructure, but Butavia lacks established roadways. Sugar Rush would have difficulty transporting Bolt Candy throughout the country with dirt side roads and poorly kept main roads. Countries are also judged by their technological framework. This refers to whether the country has sophisticated logistic systems that will support product inventory, supply and delivery. Again, Candavia has an established network of logistics with the ability to track inventory and supplies.
A country’s laws and government actions regarding trade can dramatically affect a firm’s ability to do business. A tariff is a tax levied on a good imported into a country. Tariffs make imported goods much more expensive than domestic products. Candavia does have tariffs on a number of products, but not on candy. Candavia does not have quotas, which are set quantities of how much of a specific product is allowed into a country during a time period. Butavia has quotas established to protect domestic producers of candy. Many countries also establish trade agreements, which are intergovernmental agreements designed to promote trade. One example would be NAFTA (North American Free Trade Agreement), which encourages free trade among the United States, Canada and Mexico.
The last key element of analyzing a potential global marketing opportunity is sociocultural factors. A country’s culture will provide key elements that can help provide a marketer with information regarding regulations and cultural norms. A marketer must be aware of how a culture operates in order to develop a marketing plan. For example, Butavia citizens are against any product that contributes to childhood obesity. Their culture is focused on healthy eating and fitness. Candavia’s culture is very religious and conservative. They do not allow any businesses to be open on Sundays. Sugar Rush has to be aware of these cultural norms in order to conduct business appropriately.
Sugar Rush has analyzed the three markets for potential global marketing opportunities. The marketing team has decided that the country of Candavia will be the best choice for international business. Candavia’s key economic indicators show a growing, prosperous market. The government has established an open-door policy to encourage international business. Lastly, the infrastructure and technology will allow Sugar Rush to deliver Bolt Candy efficiently throughout the country. The cultural norm of not conducting business on Sundays can easily be accepted by the Sugar Rush team.
Marketing managers have to take into account a country’s economic, technological, logistical, and sociocultural differences in order to successfully target an overseas market.
After watching this video, you’ll be able to explain how marketing managers analyze a country’s economic, technological, logistical, and sociocultural factors when determining whether to enter an international market.