This abstract is from the 15th chapter of the Handbook of Cross-Cultural Marketing, which is coauthored by Camille Schuster. It covers the importance of international market research and the extent to which markets should be studied prior to international expansion.
Managers and researchers often fail to comprehend cultural disparities, that customers differ between and within countries, or investigate whether or not a market exists prior to market entry. Insufficient preparation makes cross-cultural business a high-risk activity (Ricks, 2000). However challenging, cross-cultural market understanding is instrumental to success since it permits the firm to benefit from different environments, attitudes, and market conditions. Many firms do little research before entering a foreign market or pay little attention to the diversity of consumers in their home market. Managers often assume that the current methods used in their domestic market are both best and appropriate for all other markets and consumers. Major reasons why managers are reluctant to engage in cross-cultural research are the time, effort, and money required to understand market demand, differences in culture, and consumer tastes (Craig and Douglas, 1999). Despite such reservations, research is as important when doing business internationally as it is in the domestic market. Firms need to learn what consumers want, why they want it, and how they satisfy their wants and needs. Knowing who to ask, what to ask, and selecting the appropriate methodology to the task at hand are critical steps. Developing an understanding of international markets, consumers, competitors, and governments paves the way to success.
Here you are, visiting the ever beautiful London, when you come across a shop with the most beautiful pair of shoes in the window. You notice they’re designer, vintage even, and in the perfect condition, and look, the price says £150. That’s reasonable you say, until you get to the counter to pay for the shoes, only for your mom to point out that £150, is actually $200 in U.S. dollars. This is called an “exchange rate”.
In business, trade is a big word. Not in the sense of how you spell it, but rather how we use it, as there are many compartments to trading with different countries. From exports, to labor, to production and prices, trade isn’t just the exchanging of goods. Lets break it down and use the example of clothing.
President Trump signed an executive order that will withdraw the United States from the Trans-Pacific Partnership (TPP). The TPP is the largest planned regional trade accord in history, and was designed for the United States and 11 other nations in Asia and the Pacific to build a free trade zone. Its purpose was to lower tariffs, resolve trade disputes, and make patents safe, all while enhancing U.S. power in Asia.
The new administration has fulfilled Trump’s campaign promise, by changing America’s trade ties with other countries, and abandoning the TPP brokered by his predecessor. The withdrawal from multinational trade agreements stems from his belief that they “erode American jobs and opportunities”, and has had large geopolitical implications in Asia, and throughout the world.
This is one of the published series on the linkages between freedom and international marketing.
International marketing contains the freedom of almost unlimited growth potential. Activities confined to domestic borders may well run into limits of expansion. International market opportunities relax these limits quickly. Instead of restrictions, the international marketing paradigm encourages the stripping away of restraints; instead of limitations, there is the encounter of opportunity.
Freedom also means not being forced to do something one does not want to do. There are economic migration pressures that force people to move from their rural homes into urban areas or from their developing countries into industrialized ones. Industrialized nations, in turn, speak about immigration pressure. For both sides, little if any freedom is involved here. Most individuals who do the moving would much rather stay home but cannot afford to do so due to economic exigencies. The recipient countries might not want to welcome the migrants but do so in response to political and humanitarian pressures. International marketing may have been part of what triggered some of these migrations, but it also can be instrumental in stemming the tide. It can provide the economic opportunity for individuals at home so that they need not migrate. Thus, it lets individuals become productive contributors to the global economy free from pressures to shift locations.
When the long-standing rivalry between socialism and market orientation was resolved, market forces and the recognition of demand and supply directly affected human rights and the extent of freedom. With all humility and gratefulness we can conclude: Markets were right! In country after country, market forces have demonstrated typically greater efficiency and effectiveness in their ability to satisfy the needs of people.
International marketing has been instrumental in stimulating these newly emerging market forces. In spite of complaints about the slowness of change, the insufficiency of wealth redistribution, and the inequities inherent in societal upheavals, a large majority of participants in market-oriented changes are now better off than they were before. Without the transition provided by international marketing, these changes would not have come about that swiftly.