7.6 - International marketing and e-commerce

With the rise of globalization, improved communications and freer international trade, international marketing (selling products in markets other than the original domestic market) allows for firms to profitably expand their sales towards new customer bases. 

Companies choose to sell products in other countries for several key reasons. One major factor is saturated home markets—when local demand slows or declines, as seen with falling personal computer sales in developed countries, firms look abroad to find new customers. Emerging markets often offer faster growth and lower operating costs, providing opportunities to increase profits. Expanding internationally also allows businesses to spread risk, as economic conditions vary across regions; for instance, car sales were more robust in China during economic downturns in the UK. Additionally, poor trading conditions at home—such as new competitors—can push companies to seek alternative markets overseas.

However, international marketing presents unique challenges. Political differences can introduce instability and risks, including terrorism or civil unrest, which may damage a company’s operations. Economic and social differences—such as variations in GDP, tax rates, consumer income, age demographics, and cultural norms like gender roles or family values—affect what products are sold and how they are marketed. For instance, luxury products may sell well in high-income countries but not in low-income ones.

Legal differences also matter. Certain products legal in one country may be banned in another (e.g., guns in the U.S. vs. many other countries), and advertising laws, especially for children, vary widely. There are also differences in product safety standards and labeling regulations.

Cultural differences are less tangible but just as important. Missteps in language translation, inappropriate advertising imagery, or misunderstanding the symbolic meanings of colors can harm a brand’s reputation. For example, using white in packaging may be viewed negatively in some Asian cultures where white is associated with mourning.

Finally, business practices vary. Setting up a company or navigating accounting standards can be easier or harder depending on the country, affecting how quickly a firm can establish itself.

To enter international markets, companies can use several strategies:

• Exporting, either directly to customers or via local intermediaries.

• International franchising, where local businesses operate under the brand’s name and model, like McDonald’s in Argentina.

• Joint ventures, where two or more firms collaborate to run a business in a new market, as McDonald’s did in India.

• Licensing, which allows local firms to produce and sell products under strict terms, saving costs and logistics but posing quality risks.

• Direct investment in subsidiaries, where companies establish or build their own operations abroad, offering greater control and long-term success, as with Toyota’s factories in the EU or Tesco’s stores in Thailand.

International Marketing – Alternative Strategies 

When businesses operate internationally, they can choose between two main strategies: pan-global marketing and global localisation.

Pan-global marketing treats the world as a single market. This strategy involves selling the same product in the same way everywhere. It relies on the idea that consumer tastes and preferences are becoming increasingly similar due to globalisation. Analysts like Levitt argue that as the world becomes more uniform, companies can take advantage of economies of scale, reducing costs by mass-producing standardised goods. This approach works well for upmarket global brands like Rolex or Rolls-Royce, which are valued for their exclusivity, and mass-market brands like Apple or Nike, which appeal to a broad global audience.

However, not all experts agree with this view. Writers like Douglas and Wind believe that substantial cultural and consumer differences still exist across regions and countries. In many cases, standardised global marketing can fail if it ignores these local variations. As a result, some companies choose global localisation instead.

Global localisation/glocalisation, often described as “thinking global – acting local,” involves adapting the marketing mix—product, price, place, and promotion—to suit local tastes, customs, and cultural preferences. This strategy is more flexible and sensitive to regional needs. For example, YUM Brands (which owns KFC and Pizza Hut) follows this approach. While benefiting from the scale and support of a large multinational corporation, it modifies its offerings in each market to better suit local consumers, such as adjusting recipes or advertising styles.

Although pan-global marketing provides cost advantages and consistent branding, global localisation is often better suited to culturally diverse markets and can help avoid accusations of cultural imperialism or resistance to foreign products. The best approach depends on the product type, target market, and how much local variation exists in consumer preferences.

E-commerce, or internet marketing, refers to the buying and selling of goods and services online. It has significantly reshaped how businesses interact with customers and other businesses. There are different ways companies use e-commerce:

• Business to Consumer (B2C): Selling directly to final consumers through a company’s website. For example, buying clothes or electronics online.

• Business to Business (B2B): Transactions between companies, such as a manufacturer ordering parts from suppliers. These deals are often higher in volume than B2C transactions.

• Online Advertising: Businesses promote their products through their own websites or by placing banners or pop-ups on related sites. For instance, an insurance company advertising on a car manufacturer's website to reach a targeted audience.

• Generating Sales Leads: Websites often encourage visitors to leave contact details, which the business can use to follow up with emails or calls.

• Market Research: Companies can collect data through online surveys and questionnaires filled out by site visitors.

Impact on Businesses and Consumers

E-commerce has transformed industries that previously relied heavily on physical stores, such as music, banking, film, insurance, and travel. For instance, Apple’s iTunes became the top music seller in the U.S. in 2010, and many UK bank customers now use only online services. Auction sites like eBay have also surged in popularity, giving consumers new tools for price comparison and product discovery.

Impact on the Marketing Mix

E-commerce has changed every element of the traditional 4Ps of marketing:

• Product: Businesses can now personalize products based on individual customer needs. Examples include custom airline tickets (seat class, luggage options) or made-to-order computers. Companies can also offer a much wider product range online than a physical store can stock – ASOS is a prime example.

• Price: The internet has made markets more competitive. Customers can compare prices instantly using comparison sites, which puts pressure on businesses to use competitive pricing strategies rather than cost-plus pricing. This shift gives more power to the consumer.

• Promotion: Digital tools such as banner ads, pop-ups, viral campaigns, SMS marketing, and dedicated webpages have revolutionized promotion. These methods are not only cheaper than traditional advertising but also more targeted and far-reaching. As a result, the relevance of traditional advertising (e.g. in newspapers and on TV) may continue to decline.

• Place: The internet has redefined how and where consumers buy. Online shopping has made it easier and often cheaper to buy goods without visiting a store.