History Of Defining International Marketing

Published Date: 02 Nov 2017

INTRODUCTION

Globalization, where creates multiple opportunities for businesses to flourish and expand, it also exposes them to serious challenges. Big domestic players may not retain the same position in international markets after embracing globalization. Marketing products and services across borders require the organizations to make strategic decisions based upon thorough research to avoid a situation of being at a strategic disadvantage. In the international markets, competition is intense and multinational companies realize the need of exploring new markets and developing a different niche in order to gain a global competitive advantage. International companies begin with preparing themselves for recognizing particular needs, wants and perceptions in the potential countries under a patented brand name.

Defining International Marketing

International Marketing may be defined as, "The process of focusing firms resources on international marketing opportunities whether while competing within the domestic market against other international companies or even when the firm goes beyond national frontiers to market goods and services" (Paul & Kapoor, 2008).

The American Marketing Association (AMA) defines international marketing differently, "The multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives." Therefore, international marketing is not only restricted to satisfying the needs and wants of foreign market segment but also accomplishing the objectives established by the organization to determine the end results of international marketing activities. The international marketers come across several hurdles while marketing the goods and services to foreign market which includes scrutinizing the political and legal environment, the cultural disparities between the tried and potential markets and the level of competition.

Multinational companies are increasingly committing their operations and functions to Information Technology to gain competitive advantage in the international markets. Over the past few years, IT has developed miraculously such tools and systems that help the managers in foreign subsidiaries to coordinate their activities with the parent company and to tailor the marketing operations in the international segment to the customer preferences and attitudes. However, it is essential to align the information technology with the international marketing strategies to seek prominence within the foreign segment.

SCOPE OF THE PAPER

The aim of this paper is to examine the importance of information technology in the marketing field and how it helps the organizations in achieving the corporate objectives along with gaining customer satisfaction. IT based systems continually help the organizations in making marketing related decisions by generating alternatives for the management to review. It is also important in regard to the cost reductions and effort savings in the collection of necessary customer and market related data required to make marketing decisions in the untried market. It will further discuss the overtime development of the information technology in the multinational corporate world. Internet and the management information systems are considered phenomenal development of information technology which the businesses are utilizing for purpose of building prominence and enhancing sales in the international markets. Moreover, the paper will examine in depth the ways in which information technology is impacting the work of international marketers. Investments in information technology come off with huge expenditures; therefore it is important for the management to study the probable impacts of such an investment on the marketing practice. Where information technology brings about facilitations in the field of international marketing, it also poses challenges which are discussed in the later section. The paper will be concluded with key recommendations of effective usage of information technology to market goods internationally by quoting examples of the successful international firms which are incorporating IT driven marketing and selling processes and IT enabled channels through which customers can access them.

IMPORTANCE OF INFORMATION TECHNOLOGY IN MARKETING FIELD

International marketing management when integrated with the information technology (IT) department can help in bringing about more efficiency and effectiveness in the related functions. Marketing information is the key of taking fruitful marketing decisions, since a firm taking its operations beyond national boundaries cannot settle upon the marketing mix unless it collects sufficient information about the buying patterns, consumer behaviors, price sensitivity and consumer preferences towards the product/service offered. The success of marketing functions of an organization greatly relies on the collection of accurate information relating to the marketing variables including both the controllable and uncontrollable variables, which are discussed in detail later in this section.

When organizations start their operations on an international scale, they first come across with certain factors like political environment of the host country, its economic position, the technological influence, legal environment, demographics, culture and society. These variables are known as uncontrollable marketing variables and studying them in depth is vital to the marketing decision making. It is difficult, if not impossible to discover business opportunities on a foreign land before analyzing the broad environment made up of these uncontrollable marketing variables. In case, a firm seeking opportunities across its national borders launches its products/services without analyzing the uncontrollable variables, then it cannot predict the success of the business in host country regardless of its popularity in the home country. This is where the marketing information systems intervene to facilitate the newly internationalized organizations in seeking business opportunities which they can exploit with the help of available resources and competencies.

The marketing information systems are defined as "A system that analyzes and assesses marketing information, gathered continuously from sources inside and outside an organization. Timely marketing information provides basis for decisions such as product development or improvement, pricing, packaging, distribution, media selection, and promotion" (Amoako, 2012).

The marketing information systems are not only helpful in collecting quick information about the uncontrollable marketing variables but it also allows the firm in obtaining and analyzing the information regarding controllable marketing variables. Marketing mix is referred as the controllable variables which include product features, target market, placement, price, packaging and promotion. Companies entering the foreign market cannot design, price and promote the products without segmenting the market and tailoring all the subsequent marketing variables to cater that specific audience. Marketing information systems helps in creating linkages between departments and transmits information in the most effective manner to support marketing decision making. Firms come across complex situations where decision support systems (DSS) help in instances of complicated decision making problems. These systems help by performing procedures like collecting, classifying, analyzing and evaluating the essential information. It also helps in monitoring the flow of information, transmitting the correct and timely information to the marketing managers for the sake of decision making and storing the information for future correspondence (Freihat, 2012).

In the contemporary era of fierce competition in the corporate world, IT helps the organizations operating in international market ability to compete and to discover untapped business opportunities to satisfy potential customers and thus gain competitive advantage. IT has facilitated the conduct of marketing research, which allows the firms to come up with unique features in existing products or services or to launch innovative products and services before competitors. IT has also caters the secrecy concern of the research data collected since it helps in maintaining the data in password protected files that have limited access. IT resources hinder the erosion of competitive advantage since specialized customer profiles and related data gathered through computer systems is least likely to imitable (Mithas & Tafti, 2012).

The consumer preferences and expectations are changing at a faster pace which makes it difficult for the companies operating in host country to keep up with the pace. IT driven research tools like online surveys, questionnaires and feedback forms helps the companies in remaining updates as regards to the changing trends in the needs and wants of existing target audience and potential audience. These methods allow the customers to respond to you in a friendly and relaxed environment which helps in extracting the unbiased information which is useful for building an effective marketing plan.

Marketing information and data is the key to making marketing decisions; however it is difficult for the organizations to manage information coming from multiple sources. Operating data equipment in this regard helps the hassle free organization of all the information so that it can be utilized by marketing management in doing important marketing planning quickly. Moreover IT helps the companies to promote their products and services while reducing costs through Internet and social media. Traditional methods of advertising and promotion (TV and direct selling) in a host country could be costly with uncertain results but promotion through web is a cost effective and far reaching method from which the international marketing departments can now benefit.

IT systems are important for company’s revenue growth in the host country since it develop connections between the organization and the customers. The relationships with customers resulting from the use of IT are more enhanced, for instance Customer Relationship Management (CRM) helps in developing direct relationship with the customers which is unattainable through traditional marketing channels. Moreover it helps in enhancing the sales of the business through better customer knowledge, historical customer databases and cross selling. Such IT tools and systems also help the international firms in mass customization, whereby marketers recognize the preferences of individuals and make personalized offerings (Mithas & Tafti, 2012).

ADVANCEMENTS IN INFORMATION TECHNOLOGY

Advancements in information technology and the manner in which IT has transformed the communication systems, is considered more or less a reason for the world turning into a global village. The main sector benefitting from this transformation is the business sector which has started to exploit their domestic core competencies in the foreign lands as well. Once a business goes beyond its national boundaries, there is a need to coordinate the operations and information with the parent and sister concerned companies operating in different countries. For this purpose, the technology itself is on the go.

Computer networks for internal communication

Many years back, the development of computer networks revolutionized the manner in which organizations communicated within the organization. There was no more any need to leave the desk in order to talk to the supervisor. The internal communication networks did not only result in cost savings but it saved time as well thus bringing about efficiency in the organization. It allowed the employees to connect with each other by sending memorandums. Information technology enabled the organizations to use readymade templates of memos so they could save time in structuring the format and save time by simply inputting the message. Internal computer networks helped in coordinating the activities of all departments and facilitated the transmission of timely and accurate information among the workforce. It further assisted the progress of both horizontal and vertical communications, since earlier it was difficult to approach the senior management immediately.

External Communications and Digital Media Marketing

The information technology responded with the development of broadband Internet to facilitate the external communications as well. Use of Internet does not lead to time and cost savings but also adds extra revenues to the business with increased awareness of the business among the market segments through digital and social media. The international business marketers must keep a tab on the most active social media in the host countries in order to promote their product/service on the right platform. IT works in a smart manner and this is how it is helping the businesses become more prominent through social media. IT allows the social media marketers to concentrate and direct their advertisements to the target market and the potential market rather than making it available to all the groups of people where it would least impact.

Through online directories, international marketers can obtain the contact numbers and email addresses and can reach the potential customers in most cost effective way through emails, Internet generated short messages (SMS) and targeted databases (Mithas & Tafti, 2012). IT has developed global application systems where the data and information from subsidiaries operating in host countries can be collected, consolidated and stored. This world wide database can be accessed from all foreign locations (Ives, 1991).

Management Information Systems

With the growing complexities in the business as it undergoes expansion, IT works its way out to develop new systems and tools to ease those complicated situations. Management information systems are miraculous innovations of information technology. The systems have variants to be used in different departments, for instance marketing information systems, described above are used by the marketing managers to create effective marketing plans. Marketing information systems cornered around back in 1964 and were quite popular in business computing arena. Brien and Stafford were among the first ones who gave the narrative and graphic model of marketing information systems, using the marketing mix as the basic structure (McLeod & Rogers, Spring 1985).

These systems were widespread and all big companies jumped in the bandwagon of marketing information systems which were highly sophisticated in performing the tasks of gathering, classifying, analyzing and updating information which was used by the managers to make decisions relating to marketing. The marketing information system consists of four component parts including the internal reporting systems, marketing research system, marketing intelligence system and marketing models. The first component consolidates information and helps the marketers understand the customer service by comparing orders with sales. It can further give knowledge to the marketing department regarding the levels of consumer demand of the product or service by comparing inventory records with sales. The second component is the marketing research system which revolves around finding information to solve marketing problems and to bridge the market gaps. Research studies are also conducted to scan the marketing environment. Marketing intelligence systems makes the third component which is one of the most essential in terms of its function since it enables the managers to sift through information which is needed for decision making. Marketing intelligence is defined as, "a system of ongoing information collection through procedures and data sources, about events and trends in the technological, economic, political and legal, demographic, cultural, social, and competitive arenas" (Hill, McGraw, 2006). The marketing intelligence systems help the companies in international arena to keep a tab on competitor’s moves and on customer’s expectations simultaneously. Investments into marketing intelligence system components can reduce the costs for the international company since in house research proves to be less expensive than hiring aid from external market researchers. Marketing intelligence system is an integrated system which combines group decision support systems, Employee information system and online databases (Surinta, n.d.). The final component is known as marketing model, whereupon the managers make the decision according to a particular frame of reference. There are two broad types of marketing models including probabilistic and deterministic and they perform the analytical function (Kotler, 1988).

CRM

IT has also developed browser based Customer Relationship Management system (CRM), which maintains all the pertinent data of the existing and potential customers. Just through one click of mouse, marketers can carry out one to one communication with the customers. It also allows segregating the customers with similar demographics for mass communication with the group sharing commonalities.

GIS

Advancements in information technology are helping the international marketers in choosing the right locations for retail outlets with the help of Geographic Information System (GIS). It collects processes and analyses data about geographical locations.

Development of brands

The customer and market databases help in the development of global brands by learning about customer preferences the companies can attribute personality traits to their product/service.

EFFECTS OF IT ON INTERNATIONAL MARKETING

IT has affected the economy, businesses and on the whole the lifestyles of individuals. Where, IT has facilitated several business tasks by automating them, it poses some new challenges as well. This paper is going to discuss the beneficial effects and the challenges one by one. Let’s look at how IT is helping the international firms in marketing their products and services. The key target of the firm’s marketing practice is the customer. Several years ago when there were no customer centric systems, business depended on traditional methods of advertising to reach to the customers. However, as the environment becomes more competitive, the international companies do not only want to reach out to their potential customers but on the same hand want to retain their existing customers as well so as not to lose them to their competitors. The traditional methods of advertising and a good customer service when a customer shows up on the premises are not enough to retain the customers. Keep responding to their changing choices is also important which is only possible by continual market research which includes maintaining direct customer records and maintaining subtle communications with them to learn about their changing demands. In order to gain competitive advantage in the foreign country, a huge responsibility lies on the marketing department’s shoulder. IT is beneficial in scanning and analyzing the customer environment through customer relationship management software and the recommender systems which are defined as, "Recommender systems are software applications that aim to support users in their decision making while interacting with large information spaces, recommending the items of interest to users based on preferences they have expressed either explicitly or implicitly" (MOCEAN & POP, 2012). Evaluating the domestic market is not quite challenging as related to scanning foreign environment since there is a better understanding of the people in former case. Marketing recommender systems are a splendid innovation of IT in this respect since it can easily consolidate and process the information to answer important questions for marketing managers including what the customers’ want, who will purchase the product/service offered by firm, how much will the customers buy and the what are the factors to be considered in customer environment. On the basis of the gathered information, recommender system generates alternate decisions for the managers to choose the best from.

The development in the information technology and communications have also radically changed infrastructure savings, the manner in which users access information and the way they make marketing decisions. IT has helped the marketers to move in the real-time information; the qualitative and quantitative leaps in regard of data storage capacity are unlimited in the digital library of information which could be accessible either online or offline as whole or in selective form. Further advances in the field of IT made the marketing practice in international scenario even more valuable. The marketing databases help the businesses in understanding their position in the foreign market as compared to be the existing and potential competitors and provide deeper insights on the market trends like buying patterns, buying power, consumer desires and demands. Consumer’s response to a marketing campaign is more pronounced when businesses try to forward the message in a personalized manner. In this regard Just-in time marketing technique serves the purpose where businesses try to provide value to the existing and potential customers by wishing them on birthday, anniversary or on other occasions by sending an e-card or a brief email. The customer databases provide such pertinent information. Most of such greeting messages are system-generated however they do not go without making an impact on the customer. Investment in information technology is one time, however there are other costs of keeping the systems updated however, they affect the business positively in two ways i.e. by reducing costs and by increasing profitability because the databases and recommender systems allow the marketers to plan cost effective and impactful marketing plans and campaigns with increased knowledge of the customers and the market in the host country (SOAVĂ & RĂDUŢEANU, 2012).

There are certain challenges that IT pose on the firms operating in international arena. The biggest challenge is to hire the workforce that can completely understand the technological changes and keep the systems updated to avoid any situation of lagging behind than competitors. Another consequence of using marketing information systems is that managers are exposed to overload of market information which often results in the loss of promised advantages during the implementation. Both these challenges are interrelated to some extent because a successful marketing information system requires the understandability between the user and the system (HULBERT, et al., 1972).

Global Marketing

IT immensely helps the organizations in developing standardized brands to be marketed around the world by maintaining coordination in the activities through computer network systems to ensure whether the products manufactured in one part of the world are suitable for customers throughout the world. IT has compressed the communication time and allows the sharing of scarce expertise in other parts of the world through cyberspace. The integrated systems It is difficult to harness IT on a global scale than it is to implement in the national divisions. Implementing worldwide system poses challenges since different versions of hardware tailored to specific language and functions is required (Ives, 1991).

RECOMMENDATIONS

Recommendations for effective use of IT are given in the light of international companies who are using these integrated information technology and information systems to their benefit.

Bryant Home is using information technology to differentiate them in the market place. There are 13 regional offices and each is connected to share the information in order to respond to the customer’s queries and changing demands as quickly as possible. Through the Intranet facility, customers can view the home designs using virtual reality technology which allows the customers to experience and visualize the development. The company communicates enough information to the potential customers beforehand so that they take a buying decision without any ambiguity (Studies, 2013).

According to a study of Fortune 500, there is an increased use of decision support systems for sake of pricing and physical distribution decisions. According to a survey, 68% of Fortune 500 firms gather customer data, while 55% firms collect data on competitive marketing activities and 48% collect government data with the help of their marketing information systems (McLeod & Rogers, Spring 1985).

Morgan Stanley is a financial service global company with trading centers in London, New York, Hong Kong and Tokyo. It makes the best efforts in responding to change and in studying the trends through effective use of information technology. It utilizes global information system to capture the trading information through all the trading centers which process the data in real time, thus helping the company to determine what kinds of financial assets need to be provided to the customers to meet their demands (Business case studies, 2013).