Influence of globalization on the marketing functions of MNEs

Author: Iloka Benneth Chiemelie

Published: 8/12/2013

1.0 Influence of globalization on marketing functions of MNEs

Recep (2010) presented the argument that as a result of the advancement in modern communications and technologies, the taste and preference of consumers across the globe are fast transforming into a global thing, which is creating the right global market for product standardization. However, a number of other counter arguments have stated that positions are very important because they argue that there are still substantial differences existing between countries (Douglas and Wind, 1987).

Due to the increasing engagement of domestic companies in international trade and investment, managers now need to recognize the importance of managing international businesses and the differences that exist in terms of international markets. On a more basic route, differences can emerge by just analyzing the simple fact that countries are different. This is because differences are created in different countries because of their cultures, socio-economic and political system, legal systems and the level of economic development. Irrespective of the increased adoption and penetration of globalization, there are still huge and enduring differences between countries (Hill, ibid:. 19-37).

These differences between countries now mean that the requirements for marketing approaches are different. For instance, a product in Brazil might require a different approach for marketing from what is obtainable for marketing the same product in Malaysia or Australia. On the same hand, management of US workers requires different skills from the management of Japanese workers, and maintaining close relationship with the government might be very important in Nigeria while it is irrelevant in Germany.

As a result of these differences in countries, it is sometimes very difficult to adopt the same advertisement approach in different countries. As a result of the differences in cultural and legal system of countries, for instance, it is illegal to adopt comparative advertisement in Germany (Cateora & Graham, 2005: 483). Television advertisement is strictly controlled in countries such as Kuwait, where government controlled TV network offer allows for 32 minutes of television advertisement per day, and it must be in the evening (Recep, 2010).

The basic purpose of marketing is to enhance the sales of products by communicating the value of these products to the customers and persuading them to make purchases for such products. In that case, it becomes clear that internationalization of this marketing function will have influence on both these functions and the company. These influences include:

1.1 Transfer of skills and competence to foreign market (Recep, 2010) – in the event to tailor their marketing activities to that of their foreign markets, companies are forced to transfer their marketing management skills and competences to their staffs in these foreign markets. The outcome now becomes that the marketing functions will slowly become standardized in terms of management as a result of shared management skills and experiences.

1.2 Think global act local – this was pioneered by McDonald’s and it involves viewing the global market as one but treating them individually in terms of their demands. As a result of the differences in countries, companies internationalizing abroad are forced to adopt customize marketing strategies that meets the standards of their respective domestics markets. The influence it has on marketing function is an increase in the customization of these functions.

1.3 Focus on cost reduction from experience curve effect and location economies (Recep, 2010).- as a result of the internationalization of marketing functions, companies are forced to adopt the best cost reduction method based their experience on incurred prices. The influence as such will become some marketing functions will be ignored as such leading to an ununiformed adoption of the marketing functions and a possible elimination of functions that have been associated with higher cost.

2.0 Things to consider for MNES

In the process of internationalization, MNEs need to consider numerous marketing issues as a result of the differences in terms of marketing functions discussed above. Some of these issues include:

2.1 Legal settings for marketing – earlier discussion showed that comparative advertisement is not legal in Germany, and as such MNEs must ensure that they understand the legal settings surrounding their marketing functions in their foreign markets and also ensure that they abide by these settings in order to avoid associated legal consequences.

2.2 The style and pattern of marketing – as a result of differences in cultural view, different markets adopt different forms of marketing. For instance, marketing in the USA is normally based on individual targeting with “Celebrities” as a result of the high level of individualism in the country, while marketing in China is normally on collective targeting (Family, friends and communities) because of the high level of communism in the country.

2.3 Price – as a result of differences in currency, the cost of marketing functions are different across the globe. For instance, a Television advert cost higher in Malaysia than in Nigeria because of the price differences. As such, MNEs also need to consider the price of their marketing functions in different markets and ensure that price reduction is always the main view by adopting lower priced functions with higher return values.

3.0 Conclusion

Although the world seems to be transforming into a uniform community, it should not be mistaken with the fact that numerous differences still exist between countries as a result of differences in cultural, social, political and legal system. In that case, MNEs should also ensure that they review their marketing functions in their foreign marketing as a means of ensuring that these functions are in line with what is obtainable in these markets. The benefit of such will be reduced negative consequences and increased positive marketing outcomes. In is then concluded that the best for undertaking marketing functions abroad is “customization of these functions to meet what is obtainable in the foreign market.”

References

Cateora, P. R. And J.L. Graham (2005), International Marketing, 12th edition, New York: Mc Graw Hill/Irwin.

Douglas, S., and Y. Wind (1987), The Myth of Globalization,NY: available at: www.ingentaconnect.com/content/mcb/036/2001 , April 13, 2005.

Hill, C.W.L. (2004), “Global Business Today”, 3th edition, New York: Mc Graw Hill/Irwin.

Recep Yücel (2010). Globalization of Markets, Marketing Ethics and Social Responsibility, Globalization - Today, Tomorrow, Kent Deng (Ed.), ISBN: 978-953-307-192-3, InTech, Available from: http://www.intechopen.com/books/globalization--today-tomorrow/globalization-markets-and-business-eth-csand-social-responsibility