International marketing – the issues 615
whom to offload production also means that
the company does not have to resort to
discounting for established customers, thereby
protecting its price structure and avoiding the
setting of precedents for future price
negotiations.
4 Geographical diversification arises where
companies find it preferable to remain with the
product line which they know and are
successful with rather than diversifying into
new product lines or product technologies.
This is a strategy of finding new markets for
existing products.
5 Market potential as assessed by the population
and their purchasing power. There are few
untapped markets left. Cuba is certainly one,
but various economic and political US
sanctions are in place to discourage foreign
companies considering moving there, although
some countries are now doing so, most
notably Canada. China is the most populous of
the developing countries, but it is not
untapped. Your competition is aware of what
China has to offer. The capacity to consume or
to absorb the product has to be matched with
the capacity to pay for it. High levels of
indebtedness in the Third World have created
financial innovations in the variants of
countertrade now available, much to the
displeasure of the World Bank and IMF (Paun
and Shoham, 1996).
6 Market ‘spoiling’. The purpose here is less
actively to pursue a market than to register a
presence with a competitor, particularly where
this also concerns market entry into a rival’s
domestic market. Timing is on the side of the
existing market player who draws revenue
from sales while his competitors plan their
response. In world markets, it is the case that
multinationals scan market segments for the
presence of their multinational rivals. Narrowly
defined segments in which there is little
competition add to their total corporate
power structure. A small but significant base in
one part of the world may enable a
multinational to access other markets in the
same region and, at the same time, discourage
competitors. Market entry can also be viewed
as an offensive strategy, showing that by
entering a rival’s home market the company is
capable of taking occasionally retaliatory
action. Entry can then be seen as a warning
against a multinational rival of its presence in
the rival’s home market, and its ability
therefore to undercut the rival’s home base
and therefore the market for its main product.Marketing arguments: the
California-ization of consumers
The world is changing. Developed markets
have affluent, knowledgeable consumers who
share similar tastes and needs; hence, this
growing phenomenon of an international mar-
ketplace for goods and services, which knows
no frontiers. The term was first coined by
Kenichi Ohmae, and refers to the increasing
product standardization found across markets
and the consequent supposed homogenization
of consumers. Ohmae drew two important
conclusions from this phenomenon:1 That this therefore reaches beyond taste to
worldview, mindset and thought processes in a
mental programming as first described by
Hofstede.
2 Teenagers around the world have in common
that they have been subjected to a
multimedia-rich instant response electronic
environment.Risk can be classified
International marketing differs from domestic
marketing in that when the company is dealing
with its own domestic market, key variables
can be taken as known, such as: Political risk.
Economic/financial risk.
Commercial risk.
Taxes and legislation relating to company
incorporation.