the importance of international marketing for a business

8.1 Marketing Analysis

8.1.1 Elasticities – meaning, formulas & short calculation examples

• Price elasticity of demand (PED)
  Formula: PED = (% ΔQd) / (% ΔP)
  Interpretation:
  • Elastic (|PED| > 1) – a 1 % fall in price gives >1 % rise in quantity. Example: PED = ‑2 → a 5 % price cut raises sales by 10 %.
  • Inelastic (|PED| < 1) – price change has little effect. Example: PED = ‑0.4 → a 10 % price increase cuts sales by only 4 %.
  • Unit‑elastic (|PED| = 1) – revenue unchanged by price moves.
• Income elasticity of demand (YED)
  Formula: YED = (% ΔQd) / (% ΔY)
  Interpretation:
  • Normal good (YED > 0) – demand rises with income. Example: YED = 0.8 → 10 % rise in income → 8 % rise in demand.
  • Luxury good (YED > 1) – demand rises faster than income.
  • Inferior good (YED < 0) – demand falls as income rises.
• Cross‑price elasticity of demand (XED)
  Formula: XED = (% ΔQd of A) / (% ΔP of B)
  Interpretation:
  • Substitutes (XED > 0) – price rise of B lifts demand for A.
  • Complements (XED < 0) – price rise of B reduces demand for A.

8.1.2 Product‑life‑cycle (PLC) & its relevance to international launch timing

• Stages: Research & Development → Introduction → Growth → Maturity → Decline.
• Key decisions at each stage (pricing, promotion intensity, distribution) differ between home and overseas markets.
• Example: A tech gadget in the growth stage may be introduced first in high‑income markets, then later in emerging economies where the maturity stage is still ahead.

8.1.3 Sales‑forecasting methods

8.1.4 Macro‑environment analysis (PESTLE)

8.1.5 Internal analysis – SWOT

• Strengths – resources, brand reputation, patents.
• Weaknesses – limited overseas experience, high cost structure.
• Opportunities – untapped market segments, favourable trade agreements.
• Threats – local competitors, exchange‑rate risk, regulatory change.

8.2 Marketing Strategy – Planning the International Marketing Plan

8.2.1 Cambridge five‑step structure (exact wording)

1. Set clear marketing objectives – specific, measurable, achievable, relevant, time‑bound (SMART). Example: “Achieve 4 % market‑share in Vietnam’s premium smartphone segment within 18 months.”
2. Analyse resources and constraints – budget, human skills, production capacity, legal & ethical limits.
3. Carry out market research – primary (online surveys, focus groups, test‑markets) and secondary (trade journals, government statistics, competitor reports). Include both quantitative and qualitative data.
4. Develop the marketing‑mix (4 Ps) for each target market – decide on product specifications, pricing strategy, distribution channels, and promotion tactics, indicating where standardisation or adaptation will be used.
5. Monitoring and control – set Key Performance Indicators (KPIs), review dates, and contingency actions.

8.2.2 Ensuring strategic coherence

• Co‑ordination – align marketing actions with production, finance and HR plans. Example: a new overseas distribution centre must be funded in the finance plan and staffed in the HR plan.
• Consistency with business objectives – the marketing plan must support the firm’s vision (e.g., “be the world’s most sustainable apparel brand”).
• Role of IT & AI
  • Big‑data analytics for segmentation and predictive demand.
  • Programmatic advertising for real‑time, cross‑border media buying.
  • AI‑driven localisation – automatic translation, sentiment analysis, chat‑bots.
  • CRM systems that integrate sales data from all subsidiaries.

8.2.3 Monitoring tools

8.3 Strategies for International Marketing

8.3.1 Global vs. Local (Standardisation vs. Adaptation)

8.3.2 Market‑entry modes – comparison

8.3.3 Pan‑global (Hybrid) strategy

• Core product and brand message remain global.
• Selective localisation of packaging, colour, advertising language or promotional offers for regional clusters.
• Example: Nike’s “Just Do It” slogan is global, but sneaker colourways and limited‑edition collaborations are released to match local street‑wear trends.

8.3.4 Factors influencing entry‑mode choice (Cambridge checklist)

• Market size, growth rate and segment attractiveness.
• Regulatory environment – foreign‑ownership limits, import licences.
• Intellectual‑property protection strength.
• Availability & reliability of potential local partners.
• Company’s financial resources, risk appetite and time horizon.
• Need for control over brand image, technology and quality.
• Logistical considerations – distance, transport costs, customs procedures.

8.3.5 International marketing‑mix considerations

8.4 Importance of International Marketing for a Business

8.4.1 Key reasons (expanded)

• Market expansion & revenue growth – Access to larger customer bases; can offset seasonal downturns in the home market.
• Economies of scale – Higher output spreads fixed costs, reducing average unit cost and enhancing price competitiveness.
• Risk diversification – Reduces reliance on a single economy’s political or economic stability.
• Competitive advantage / first‑mover benefits – Early entry builds brand loyalty and creates entry barriers for later rivals.
• Access to resources – Lower‑cost raw materials, specialised labour, or advanced technology available abroad.
• Innovation stimulation – Exposure to different consumer needs drives product adaptation and can generate breakthrough ideas that are re‑exported.
• Brand‑image enhancement – A global presence can reinforce perceptions of size, reliability and prestige.

8.4.2 Strategic benefits – summary table

8.4.3 Evaluating whether international marketing is appropriate for your business (step‑by‑step)

1. Assess domestic market saturation – Use market‑share analysis and sales‑forecasting data to determine growth ceiling at home.
2. Identify attractive foreign markets – Apply PESTLE and market‑size/‑growth calculations; rank markets using a weighted scoring matrix.
3. Quantify the financial impact – Prepare a pro‑forma income statement for each candidate market:
   • Projected sales (using elasticity & PLC data)
   • Cost of localisation, entry‑mode investment, logistics
   • Risk‑adjusted discount rate for NPV calculation
4. Check strategic alignment – Ensure the move supports the firm’s vision, core competencies and long‑term objectives (e.g., sustainability, technology leadership).
5. Select the most suitable entry mode – Match the market score from step 2 with the entry‑mode table in 8.3.2.
6. Allocate resources – Budget for market research, product adaptation, staffing, IT systems, and a contingency fund (usually 10‑15 % of the total entry‑mode cost).
7. Set monitoring mechanisms – Define KPIs (sales, market share, profit margin, brand‑awareness) and a review timetable (quarterly for the first year, then annually).

8.4.4 Suggested diagram – International Market‑Entry Process (flowchart)

8.4.5 Quick revision checklist (exam‑style)

• Define PED, YED, XED and give a short numeric example.
• List the five steps of the Cambridge marketing‑plan structure.
• Contrast Global (Standardisation) with Local (Adaptation) using one real‑world example.
• Name three factors that would push a firm towards a Joint Venture rather than Exporting.
• State two strategic benefits of international marketing and one associated risk for each.
• Explain how AI can aid localisation of promotional material.