International marketing variables would vary from region to region or say from country to country, although the concept of marketing globally could be the same for achieving the company’s goals and objectives. There would be a very thin line of varying concerns and reported differences in between the costs of all inputs and resources, prices, advertising cost and mediums used and last but not the least the distribution factor to deliver the products in all corners of its country of operation.
But through proper consultancy for businesses and its operation in different countries can enable companies to adapt, properly manage, and intelligent coordination plan in newly tapped marked where all the operations and functions are unfamiliar to the new ones. Companies choose to discover international markets for a variety of reasons. In some case in point, companies start exploring international markets in reaction to spontaneous information and instructions or say demands from end-consumers in those respective markets.
While, many businesses also start their operations in other countries in order to ascertain a the market share in those countries thus to overcome the overhead costs at home, diversify their corporate holdings, take advantage of domestic or international political or economic changes, or tap into new or growing markets. (Eight Tech, 2009) Businesses strategically planning to expand their portfolio operations used to adopt certain various ways depending upon certain form of strategies.
These strategies include exporting certain goods or raw materials from the host country and making retailing outlets in different countries worldwide. These forms of strategies are numerous starting from formal joint venture agreements to establishing their own branded subsidiaries in the prospective country (ies). These two extreme forms of strategies could also include provision of licensing and patenting agreements with formal rights holding, etc. to companies / businesses already in operation in countries abroad, franchising; contract manufacturing; and establishing subsidiaries in foreign countries are also considered on a large scale.
Each method has its own distinct advantages and disadvantages. (Eight Tech, 2009) The two countries that I have chosen to consider for operations of my company are Pakistan and India. Bothe the countries are located in the south of Asia and both have needs of similar kinds. Thus it will be easy to compare the two with similar environment and similar consumer needs and patterns. There are numerous factors that affect directly and indirectly on the planning, designing, implementation and execution of marketing campaigns.
At first these campaigns before execution need to be properly executed via going through the processes of market research on both primary and secondary basis with defined level of monitory evaluation in order to prepare an international marketing strategy. Analyzing any international market we need to properly judge the variables of the respective market such as political environment; economic environment; social and cultural environment; demographic and physical environment; technological environment and legal environment.
Below in the paper we will be discussing these factors in detail and how they affect the international market of India, which is our chosen country for exploring new markets. (Eight Tech, 2009) India: India has transformed itself from a third world country to a major powerhouse which has now become a major attraction for foreign investment. This statement can be backed by the fact that India is the second most popular country for the foreign direct investment after China. It is currently the fourth largest economy of the world.
Despite of the terrorism threat India is striving hard and has become one of the most important innovators of the technology that will be required in the next part of the global economy. (Kamdar, 2007) India is a huge market with its population of more than 1. 2 billion as at 2008. The growth rate of the country has been immense as it has seen growth of around 7. 2% while the inflation rate has been pretty high for the year. Having said all this, one thing which is the irony of India is its poverty. In India 26% of the people in the urban areas are living below the poverty line while 28% is living below the poverty line in the rural areas.
These statistics together forms up into a huge number which may be a little important fact for a chain of retail outlet coming into India for operating business. Where at one side high population growth of India makes India an attractive economy for any foreign business, at the other hand this has also been termed as the major cause of people living below the poverty line. (Indian Freedom Fighters, n. d. ) India also has issues relating to terrorism within it as various serious incidents have taken place in India that have harmed the economy very badly.
A good example could be either a riot in Gujarat or the Mumbai attacks in India. To analyze the environmental conditions of India in a better way, I would do a PEST analysis of India with context to the business operations of Tesco to give a very clear idea that whether India would be a good place or not. PEST analysis refers to the Political, Technological, Environmental and Social factors of the country. This is a way in which the environment could be analyzed in a better way as it incorporates the four major elements in an environment. Political Situation:
Similar to many other countries, political factors in India also play a major role in the economy of India. India currently is supporting its local entrepreneurs in order to make sure that they don’t suffer due to huge multinationals. They are providing them with every sort of assistance to make sure that the small businessmen of India survive in front of the multinationals. (Luo, 2004) This can become a difficult situation for the international retailer as he would have to compete with huge powers like Ambani group who have recently opened up a huge superstore called Star Bazaar, the local markets that are supported by the government.
Other than that major concern is India is the political instability that is in India due to the terrorism activities in India. A lot of local religion based riots takes place in India and at times even major terrorism activities like bomb blast occurs over there. These might affect Tesco very badly as at times huge superstores are set to fire by the mob as it has already been done in the past. Other than that poor political conditions in India would mean closure of the superstore due to the bad conditions which would affect the revenue badly.
Even if the superstore is not closed, low foot fall may also reduce the revenue and increase the average cost which would affect the net profit. Economic Situation: Economic situation in India would be of very much importance to Tesco as it would directly influence its revenues. As even mentioned earlier, India is a very fast growing economy which has now became the second most popular place to invest after China.
The GDP in 2009-2010 was around 7. 8%. The two factors that might serve as a drawback for Tesco are the inflation rates which were 16. 2 in January 2010 and the other is high poverty level in the Urban India. The increasing inflation rate might increase the number of people falling within the poverty level in the urban areas where Tesco might want to locate itself. This would then reduce the number of customers for Tesco. India though is the second largest when it comes to population but the huge number of people living below the poverty line makes it difficult for such retailers to take advantage of the high population rate in India.
Social / Cultural Environment: The biggest advantage of India is its youth population whose interest for leisure activities as shopping and others is increasing at a rate of 14% per annum. This would help Tesco a lot as there is a huge market in India that is open towards this trend of supermarkets. (Indian Retail Report, 2009) But a portion of the economy still consists of those individuals who prefer going to local bazaars due to low prices and their buying habits like negotiations etc. To get that market shifted towards the supermarket trend would be a difficult task.
This would also require a shift in the overall culture of the economy where people have been buying things from local bazaars or the local grocery shops. (Hiscock, 2008) Demographic and Physical Environment: Fundamentals that best fits under this category of factor assessment include income and consumption level with the measured percentage of spending, population size, development, and distribution; atmospheric conditions would affect the viability and sales of business; shipping distances; time zones; and natural resources, etcetera.
Technological Compatibility: India is becoming a hub for innovation. It is famous for its fast paced innovation in all categories. Thus, it would add up to Tesco as it would get new and innovative technologies for managing supply chain and other related important processes. Urban India is technological savvy and thus it is not difficult to integrate new technologies as people know how to operate it. Online shopping is not a new phenomenon for Indians as they have been doing it for past several years now. (Iyengar, 2007)
New technologies can give them advantage in their logistics and they can even replicate the technologies that they have been using abroad as the people in India are very handy with new and different technology. The expectations of the Indian consumers are rising very fast thus the companies have to keep at pace with it and constantly get in new technologies in order to come up to the expectations of the consumer and in order to delight him the companies might even have to go a mile ahead for that. (The Financial Express, 2009)