International Marketing, Term Paper Example

Introduction

Managers in the international market content with four specific issues including developing, pricing, selling, and distribution of the firm’s products; termed the marketing mix. Unlike the domestic counterparts, these managers have to decide whether to standardize or customize the products to each market. While deciding to standardize the marketing mix, the managers either adopt the ethnocentric, polycentric or geocentric approaches. Ethnocentric approach maintains the form of the products as they are sold in the domestic market; a polycentric approach customizes the marketing mix to cater for the target market needs; and a geocentric approach adopts a universal marketing mix for all markets.

According to Jain (1989), standardization is defined as the degree to which multinational firms apply the marketing mix variables across national boundaries. Research has established that standardization is considered a significant aspect of international marketing strategy. Therefore in order for multinational companies to sustain business across national boundaries, it is imperative that the marketing mix variable should be standardized.

The decision as to the degree to which a firm can standardize or customize depends on a number of factors. The product policy can be affected by legal and cultural factors. Legally, the host country’s laws and regulations may affect the product policies, such as packaging and quality requirements. Culturally, the product policies may be altered to cater for diverse cultural needs of the target markets, such as packaging language and quality preferences (Jain, 1989).

Benefits of Standardization and Customization

Standardized products include products that are similar throughout the markets. A firm opts to standardize because of the benefits of research and development and economies of scale during production. Additionally, the firm benefits from reduced marketing costs, centralized control of the marketing program, and depicts the trend of a single global market. Furthermore, standardization lowers costs of making a product accessible to a number of people; due to fewer types of components to be produced, production and operation will be simplified. Economies of scale result from producing large quantities from a fewer types of standardized products.

On the other hand customization involves altering the marketing mix to cater for the needs of the specific target market. Unlike standardization, customization exhibits the diverse conditions for using the product; acknowledges the legal, regulatory, and buyer behaviour variations; encourages local drive and desire in exercising the marketing program; and allows the firm to adequately attend to the needs of the specific markets (Bennett, 1995).

Starbucks

Starbucks is a global corporation I the authentic coffee industry, has extended its presence in 30 countries and recorded revenue of $5.1 billion in 2006. Starbucks’ success in the global economies is associated to the firm’s focus on the experience and quality more than the price. From the minor differences that Starbucks’ specialty drinks over those of the competitors, it points to the fact that a standardization approach is in place. The focus on quality is linked to the image the company has build, through providing plenty of comfortable sitting that make the customer hospitable, hence spending more time than they had intended. Similarly, Starbuck has adopted environmentally friendly marketing campaigns for its products. In an attempt to appeal to its potential customer, Starbucks purchased the Ethos-Water firm to help provide clean water to the under developed countries. The mall and larger competitors have watched Starbucks leading through a series of strategies; delivery of unique experience at each store, specifically targeting on cultural affiliations; the designer-choice of furniture and fixtures; the naming of the drinks; and the use of sups with messages, crafted to match the occasions (Bennett, 1995).

Starbucks’ strengths is based on its position as the number 1 specialty coffee retailer, both as a market leader and capitalization. Its extensive store network is made of 8500 shops owned directly, and 6500 franchises and licenses. As a specialist in all things coffee, the firm receives high volumes purchases, and capitalizes on economies of scale and multinational outsourcing. Its committed workforce also contributes to the success of the company.

However, some of its weaknesses include premium prices due to its premium brand. Competitors such as McDonalds and Costa Coffee could undercut it by offering lower than premium prices. As a specialty in coffee products, the overdependence on coffee is also one of Starbuck’s weaknesses. Considered an “American Global” other cultures perceive the presence of such firms as tampering with foreign cultures (Jain, 1989).

The threat of possible saturation of the coffee market, new entrants, consolidation, and competing price war companies would adversely affect its margins. Protects from activists negatively taint the Starbucks labor relations, fair-trade policies and social responsibility gestures. Additionally, the economic recessions impacting consumer spending forces the customers to resort to low-price alternatives; while the rising costs of raw materials will translate into increased cost of coffee.

According to Cateora (1990), opportunities of joint ventures such as outsourcing the service or co-locating in restaurants and supermarkets will lower its costs of production. They can also diversify to different food ranges, such as sandwiches and I-tunes. Continued improvement in the effectiveness and efficiency across customer service delivery, procurement and supply chain will ensure their position as the marker leaders.

Google Inc.

Google Inc. is the world’s number 1 search engine that begun 10 years ago as a simple Phd project. It holds an estimated market share of 60 percent. It was not until 2 years after its inception did it begin to internationalize, currently offering 149 services, beginning with 3 employees in 1998 and increased to 20123 by 2008. Due to the company stock options, 1200 employees are millionaires. 97% of Google turnover is generated from advertisement as the number 1 online marketing site. Globally, Google has adopted a geocentric strategy with 23 of its offices in the United States and 22 in Europe. Google despite its presence in different cultures offers relatively the same service. In most of tits office managers of different nationalities work together (Douglas & Craig, 1995).

Google boasts of its strengths as an established brand name reliable, trusted and fast meeting the needs of its users. With little end user marketing due to the word of mouth that it enjoys, Google has a low cost operation and indexing servers. Its crew of PhDs tasked with improving on the search and speedy features, more than 600 million searches are conducted within and outside the US. The option of localized search allows vendors and business people to identify locally available opportunities. Additional innovative service such as directory, images, news, and groups are differently featured on the webpage for users to choose. The use od state-of-the art search technology while indexing pages so as to return as many result to the use as possible. The technology adopted allows additional solutions such as for wireless handheld devices, catalogues and personalized toolbars which have increased the essence strength. Once a user has prompted a search, Google doe not linger for ad revenue but navigates directly to the designated webpage (Cateora, 1990).

Among its weaknesses, Google ranking technology is manipulated by spammers through dummy sites that have links to pages ranked by Google. Lack of actual traffic analysis for the link based ranking disadvantages the company. The cost per click advertising price strategy confuses the users, and the advertisers cannot predict the charges and position of their ads. Ineffectiveness of the contextual advertising was considered by marketers to be appealing more to searchers than to visitors due to the visible editorial content. Automated indexing errors would sometimes result due to the localized search algorithms. Despite is market share; on average 57% of the search engine queries are accurately answered (Douglas & Craig, 1995).

The opportunities available for Google include the option of increasing switching costs through mass-marketing, alerting users of updates and adding “sticky” like email and chatting systems. Localization can also extend to advertisements in addition to new features like multimedia and print media. Merging with established mass-market portal will allow Google to lock in large number of users and advertisers. For the handheld devices, the firm could start offering full fledged services to win over a portion of the market.

Despite the opportunities, threats such as over-reliance on some portals like AOL would adversely affect their revenue it contracts with the portals would be cancelled. Cateora (1990) believes that as an open market, the internet industry has no long time barrier for new entrants. Competitors entering in future with similar but improved services and interfaces can snatch the market from Google; hence unregulated rivalry and competition is the norm for this industry. Especially from rivals like Yahoo and MSN’s Longhorn search feature which has been predicted to finally overtake Google. Due to the company’s indexing and server infrastructure, might be affected by their inability to change the algorithm and database design. In an attempt to compete with upcoming search engines, Google’s adoption of advanced searches accessing user personal information would be taken negatively by the users. Attempts by Google to enter into mergers with already established mass-market portal would negatively impact on its longstanding brand name.

Therefore in order for continuous operations a market leader, Google can increase switching costs by tracking user search fields and regularly alerting them of new updates for the designated fields. Just like, MSN and Yahoo, Google can add “sticky” like features for chatting and emails, hence raising the switching costs for users. In order to provide additional features such as multimedia, print media and private database, Google can merge with established mass-market portal to acquire number in form of users and advertisers.

References

Bennett, R. (1995). International Marketing: Strategy, Planning, Market Entry and Implementation. London, UK: Kogan Page.

Cateora, P. (1990). International Marketing (7^th ed,). Boston, Massachusetts: Richard D. Irwin, Inc.

Douglas, S. & Craig, C. (1995). Global Marketing Strategy. New York, London: McGraw-Hill.

Jain, S. (1989). Standardization of International Marketing Strategy: Some Research Hypotheses. Journal of Marketing, 57(4), 70-79.