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What is International Marketing?
Introduction to International Marketing
International marketing is simply the application of marketing principles to more than one
country. However, there is a crossover between what is commonly expressed as international
marketing and global marketing, which is a similar term. For the purposes of this lesson on
international marketing and those that follow it, international marketing and global marketing are
interchangeable.
The intersection is the result of the process of internationalisation. Many American and European
authors see international marketing as a simple extension of exporting, whereby the marketing
mix is simply adapted in some way to take into account differences in consumers and segments.
It then follows that global marketing takes a more standardised approach to world markets and
focuses upon sameness, in other words the similarities in consumers and segments. So let's take a
look at some generally accepted definitions.
Domestic marketing vs International marketing
Domestic marketing and International marketing are same when it comes to the fundamental
principle of marketing. Marketing is an integral part of any business that refers to plans and
policies adopted by any individual or organization to reach out to its potential customers. A web
definition defines marketing as a process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods and services to create exchanges that satisfy
individual and organizational goals. With the world shrinking at a fast pace, the boundaries
between nations are melting and companies are now progressing from catering to local markets
to reach out to customers in different parts of the world. Marketing is a ploy that is used to
attract, satisfy and retain customers. Whether done at a local level or at the global level, the
fundamental concepts of marketing remain the same.
Domestic Marketing
The marketing strategies that are employed to attract and influence customers within the political
boundaries of a country are known as Domestic marketing. When a company caters only to local
markets, even though it may be competing against foreign companies operating within the
country, it is said to be involved in domestic marketing. The focus of companies is on the local
customer and market only and no thought is given to overseas markets. All the product and
services are produced keeping in mind local customers only.
International Marketing
When there are no boundaries for a company and it targets customers overseas or in another
country, it is said to be engaged in international marketing. If we go by the definition of
marketing given above, the process becomes multinational in this case. As such, and in a
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simplified way, it is nothing but application of marketing principles across countries. Here it is
interesting to note that the techniques used in international marketing are primarily those of the
home country or the country which has the headquarters of the company. In America and
Europe, many experts believe international marketing to be similar to exporting. According to
another definition, international marketing refers to business activities that direct the flow of
goods and services of a company to consumers in more than one country for profit purposes
only.
Difference between domestic marketing and international marketing
As explained earlier, both domestic as well as international marketing refer to the same
marketing principles. However, there are glaring dissimilarities between the two.
Scope – The scope of domestic marketing is limited and will eventually dry up. On the other end,
international marketing has endless opportunities and scope.
Benefits – As is obvious, the benefits in domestic marketing are less than in international
marketing. Furthermore, there is an added incentive of foreign currency that is important from
the point of view of the home country as well.
Sharing of technology – Domestic marketing is limited in the use of technology whereas
international marketing allows use and sharing of latest technologies.
Political relations – Domestic marketing has nothing to do with political relations whereas
international marketing leads to improvement in political relations between countries and also
increased level of cooperation as a result.
Barriers – In domestic marketing there are no barriers but in international marketing there are
many barriers such as cross cultural differences, language, currency, traditions and customs.
International trade
As its name implies, international trade is the exchange of products, services, and money across
national borders; essentially trade between countries. When consumers in the U.S. purchase
Swiss-made watches, Guatemalan-grown fruits, Chinese-made toys and electronics, and
Japanese-manufactured automobiles, they experience the end result of international trade.
Also known as foreign trade, international trade has been maintained since the dawn of time.
Trading goods were transported on the backs of tradesmen across tribal boundaries, and bartered
and sold among neighboring, and, hopefully, accommodating tribesmen. The Silk Road between
Europe and Asia is one example of the sometimes beneficial, sometimes troubling essentials of
international trade. Asian silks and spices were traded for European technology and weapons,
with varying benefits and consequences.
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Domestic trade is the purchase and sale of products and services within a particular nation’s
borders, and is inherently limiting to a modern national economy. International trade, conversely,
raises national gross domestic product (GDP) by providing vastly expanded economic
opportunity. It is, therefore, incumbent upon the global economic community to promote fair
trade between nations. In addition, the ability of nations to trade freely with all others is also vital
for profits. Free trade, fair trade, and profits are the cornerstones of global economic well-being.
There is a somewhat cyclical nature to international trade. Poorer nations, able to provide cheap
labor and lower production costs, are subservient to richer and more consumer-oriented nations.
As the productive nations gain wealth through their productivity, the consumer nations are forced
to become productive themselves through the transfer of their capital to the productive nation.
Thus, the process is reversed. The burgeoning imbalance of trade between the United States and
China is one example of the cycle where the consumer nation is becoming economically
beholden to the producing nation.
International trade is most commonly recognized in the exchange of goods or products.
However, trading services, such as expertise in a particular field, or the ability to facilitate the
trade of goods, is another common form of foreign trade.
Trading capital on the foreign exchange market (FOREX) represents a third facet of international
trade. Capital, or currency, held for foreign trade fluctuates in value hourly due to political,
business, weather and other conditions and factors from nation to nation. Trading currency in the
international market attempts to profit from the rising value of one nation’s currency through
selling the lower value of another nation’s capital. Trading capital is also the amount of money
designated by a trader to pay the costs of foreign trade, such as tariffs, subsidies, transportation,
etc.
What Are the Different Types of International Trade Services?
Businesses engaging in international trade can benefit from a range of services, including those
that offer advice on export planning so the business can exploit its expertise and unique selling
points in overseas markets. Advice also may be available on product standards and regulations in
the overseas markets and on any required export licenses. Product pricing, methods of payment
and the terms of freight contracts must be considered, and expert services are available to help
with this. International trade services providers may find freight forwarders for a business and
help with the terms and wording of international contracts. Assistance with participating in trade
exhibitions, planning trade delegations and finding partners or agents in foreign markets also are
among the available international trade services.
Enterprises intending to penetrate a new foreign market are likely to need the services of a
market research company, which may produce an analysis of the foreign market, the competitors
participating in that market, the best ways of penetrating the market and the correct marketing
strategy. The market research company may perform social research to identify trends in public
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tastes in the overseas market and provide an analysis of business opportunities. An enterprise
may benefit from research about the impact of its brand in the international market, its strengths
and weaknesses, and the influence of competing brands.
Some organizations offer services in connection with trade promotions and exhibitions that may
be used by enterprises looking to demonstrate their products and services in a foreign country.
Intermediaries may help with booking spaces and setting up the exhibition, as well as with
advertising the business in the other country. Other organizations specialize in organizing group
tours of business executives who want to investigate conditions in their industry overseas, and
the intermediary organization may arrange for them to meet representatives from industry and
government. These organizations also may provide translation services and interpreters.
Other international trade services involve looking for potential local partners in a foreign
country. A company may be looking for a partner in the other country because this is a
requirement of local regulations or because the company needs to work with an enterprise that
has local knowledge or a local distribution network. The company may need help in finding a
suitable local business to participate in a contractual or equity joint venture or partnership. Other
types of intermediary may offer international trade services that bring together buyers and sellers
in a particular international market, or find agents to act for an enterprise in the foreign country.
What Are the Different Types of International Trade Contracts?
A basic trade contract involves an agreement whereby one party promises to pay for goods or
services that another party provides. International trade contracts are agreements between parties
located in two different states. In many instances, international trade contracts involve import
and export agreements. Trade contracts are subject to international law, and are impacted by
trade agreements between particular nations.
Multi-national companies create trade contracts with manufacturers that produce low-cost goods
in other nations. Such deals enable firms to reduce costs by cutting domestic labor costs.
Companies also enter into trade agreements to import food and produce from overseas. Some
trade agreements are designed to transport minerals including oil, gas and precious stones to
nations where such natural resources do not exist.
International trade contracts often involve government entities or businesses in a particular
nation paying for services that are provided by contractors from another nation. Such agreements
often involve skilled professionals such as engineers or scientists who bring their expertise to
nations where few professionals have the requisite skills to perform certain functions. The supply
of goods is often negotiated into service contracts as a condition of the deal.
Governments often enter into international trade contracts on behalf of companies designed to
facilitate trade between nations. Agreements to eliminate tariffs are common features of
international trade contracts. In other instances, governments enter into aid-for-trade deals
whereby one nation provides aid to a poor nation and that nation agrees to buy goods or services
from contractors based in the donor nation. Such contracts often become null and void if the
nations involved become involved in political or economic disputes. In extreme cases, nations
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place trade embargoes on one another which means that companies located in the two nations
can no longer trade.
Entities involved in international trade contracts have to reach an agreement on how the goods
should be transported from the supplier to the buyer. Ships and airplanes often have to pass
through the territory of several other nations before reaching the final destination. Consequently,
an international trade contract should detail which party should cover the cost of transportation
and which party should cover the applicable taxes and tariffs.
Trade contracts are often complicated, because nations around the world use different forms of
currency. Since currency prices fluctuate on a daily basis, many international trade contracts are
based upon payments being made in types of currencies that typically have low levels of
volatility such as the United States dollar, the Euro or the Swiss franc. Trades of certain types of
goods such as crude oil, are always priced in United States dollars.
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