1.3 The Motivation for Global Marketing

Reasons for Entering Global Markets

Many marketers have found the international marketplace to be extremely hostile. A study by Barker and Kaynak (1992) for example, found that less than 20 percent of firms in Texas with export potential actually carried out business in international markets. But although many firms view in markets with trepidation, others still make the decision to go international. Why?

In the Barker and Kaynak study, the following motivating factors were given for initiating overseas marketing involvement (in order of importance):

• large market size
• stability through diversification
• profit potential
• unsolicited orders
• proximity of market
• excess capacity
• offer by foreign distributor
• increasing growth rate
• smoothing out business cycles

Other empirical studies over a number of years have pointed to a wide variety of reasons why companies initiate international involvement. These include the saturation of the domestic market, which leads firms either to seek other less competitive markets or to take on the competitor in their home markets; the emergence of new markets, particularly in the developing world; government incentives to export; tax incentives offered by foreign governments to establish manufacturing plants in their countries in order to create jobs; the availability of cheaper or more skilled labour; and an attempt to minimize the risks of a recession in the home country and spread risk (Chen & Hicks, 2000).

Reasons to Avoid International Markets

Despite attractive opportunities, most businesses do not enter foreign markets. The reasons given for not going international are numerous. The biggest barrier to entering foreign markets is seen to be a fear by these companies that their products are not marketable overseas and a consequent preoccupation with the domestic market. The following points were highlighted by the findings in the previously mentioned study by Barker and Kaynak (1992), who listed the most important barriers:

• too much red tape
• trade barriers
• transportation difficulties
• lack of trained personnel
• lack of incentives
• lack of coordinated assistance
• unfavourable conditions overseas
• slow payments by buyers
• lack of competitive products
• payment defaults
• language barriers

It is the combination of these factors that determines not only whether companies become involved in international markets, but also the degree of any involvement.

Case: Global Marketing Strategy

A major theme of Chapter One is the importance of having a global marketing strategy (GMS). A GMS improves international performance by creating a competitive advantage with a marketing mix tailored to the company’s global needs. A Canadian example would be Canada Goose, which has successfully reached many countries and continents. From operations to marketing and outbound logistics, many of their marketing activities have traditionally been handled in Canada. Recently, they have opened international physical stores. This demonstrates a move towards more multinational marketing efforts. Since success in cities such as New York, London, and Tokyo has proven that they have a large market, they have been motivated to continue growing.

A successful strategy they’ve implemented includes cold rooms in some of their stores. This is so that customers can experience products in colder temperatures (Reiss, n.d.). By going global with their cold rooms, they have anticipated the need of international consumers to be able to experience for themselves what it’s like to wear this coat in cold temperatures. They have understood that their value proposition is the brand’s image as being high quality (Reiss, n.d.). Additionally, they offer clothing for three seasons, demonstrating they understand and employ a localized strategy and understand the geography aspect of marketing. This enables them to extend their product lines to countries that are not as cold as Canada. Rather than focusing on pure luxury, they emphasize quality and craftsmanship. Moreover, they recognize that it is important to avoid having products that appear standardized and instead turn towards making their products unique as “Made in Canada” (Danziger, 2018).

Vicky Anborgh, March 2023

 

Core Principles of International Marketing – Chapter 1.3 by Babu John Mariadoss is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.