Competing concepts in the international marketing activities of companies
There are five basic competing concepts that a company can take as a basis in international marketing activities: the production concept, the product concept, the marketing concept, the marketing concept and the concept of holistic marketing.
The production concept is one of the oldest in the business. According to it, consumers prefer affordable and inexpensive products. The attention of management in the companies focused on production is concentrated on achieving its high efficiency, reducing production costs and mass distribution of products. Such an orientation makes sense in developing countries, for example, China, where Lenovo, the largest personal computer manufacturer, using its huge market of cheap labor, provides a dominant position in the market. The production concept is also applied in cases where the company wants to expand its sales market.
The commodity concept assumes that consumers prefer high-quality goods with the best performance or innovative characteristics. Managers of companies with this orientation concentrate their efforts on the quality of products and its continuous improvement. However, such managers often "fall in love" in their goods, not realizing that the market does not share their feelings. It should be borne in mind that the creation of new or improved products does not necessarily end with success, it is still necessary to correctly pricing, distributing, advertising and selling new products.
According to the marketing concept (concepts of sales orientation), consumers and businesses will not voluntarily buy all the products produced by the company. Therefore, the company must conduct an aggressive sales policy and intensively promote its products on the market. Sergio Zaiman, former vice-president of marketing for Coca-Cola: the marketing goal, put the idea of the sales concept well: the marketing goal is to sell more goods to more people more often and at higher prices to earn more money.>
In practice, this concept is often followed by producers of goods (services), the need for which the potential buyer usually does not even think (for example, insurance services). This concept is addressed by most firms facing the problem of overproduction. The purpose of such companies is the sale of manufactured goods, and not the production of products the market needs.
The main provisions of the marketing concept were formulated in the mid-1950s. Instead of a commodity-oriented philosophy ("produce and sell"), the buyer is at the forefront: "understand and react" or hear and respond & quot ;. The task of marketing philosophy is not to find suitable buyers for your product, but to produce suitable products for your customers. The marketing concept claims that the key to a company's success is the ability to outperform its competitors in the efficiency of creating, delivering and advertising the best values to customers in the selected target market.
According to scientists, companies that adhere to the marketing concept, achieve the highest results. This was first demonstrated by the example of companies with reactionary market orientation who study and satisfy the expressed needs of buyers. However, some critics accuse similarly oriented companies in creating low-level innovations, suggesting that high-level innovations are possible when concentrating on hidden buying needs. These companies practice both reactionary and proactive marketing, i.e. adhere to total market orientation.
Many factors that have arisen over the past decade, require a different marketing practice and business in general. Companies have new opportunities that can change their approach to marketing activities. Marketers of the XXI century. more and more realize the need for a comprehensive, cohesive approach, not limited to the traditional principles of the marketing concept.
The concept of holistic (holistic) marketing is based on the planning, development and implementation of marketing programs, processes and activities, taking into account their breadth and interdependence. Holistic marketing recognizes that everything in marketing is important and that an extended, integrated approach is often needed. Holistic marketing includes four components: relationship marketing, integrated marketing, internal marketing and socially responsible marketing. Thus, holistic marketing is an approach by which to try to recognize and balance the various competencies and complexities of marketing activities.
In a foreign market, transnational companies face specific problems in setting prices for products: escalation of prices, transfer prices, dumping and "gray" market. Depending on the value added and changes in foreign exchange rates on the foreign market, the goods should be sold at a price that is 2-5 times higher than the manufacturer's price, so that the latter receives the same profit as in the domestic market. The company can establish unified prices in all markets, the market price for each country or the price based on costs for each country.
A real disaster for many multinational companies is the "gray" market, when the same branded goods are sold at different prices in different countries. Resellers from a country with low prices find ways to sell goods in a country with high prices, and earn on it. Transnational corporations are trying to deal with the gray market, controlling distributors, raising selling prices or depending on market conditions changing product characteristics or service guarantees.
National differences in distribution channels can be huge. Therefore, companies must learn how the goods move within each country, and draw up a general idea of distribution channels and ways of getting the goods to the final consumer. Procter & amp; Gamble supplies soap to the general wholesaler in Japan, which resells it to the distributor of this type of goods. He sells the goods to a specialized wholesaler, which supplies his regional wholesale companies. The latter sell products to local wholesale traders, which sells it to stores. As a result, the final price of the goods for consumers exceeds the producer's selling price by 2-3 times. If the company supplies soap to tropical Africa, it will sell it to a wholesale importer who sells it to several wholesalers who will resell the goods to small traders working in local markets.
Another difference is the volume and nature of retail trade in different countries.
For example, in the USA large retail retail chains dominate, in most other countries retail trade is in the hands of small independent traders. Their margins are very high, but local customs provide for the possibility of bargaining, and the real price is much lower than originally requested. The incomes of the population are limited, and consumers make daily purchases in small quantities - such that they can be brought home or taken away by bicycle.
The separation of large lots into small ones remains an important function of intermediaries, prolonging the life of a multitude of chains of distribution, which are the main obstacle to the growth of large-scale retail trade in developing countries.
A transnational company, coming to a new country for itself, must choose reliable distributors, invest in them money and coordinate their goals.
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