Environmental Influences on Export and Import Marketing Mix Strategies in Australia - Example

International Marketing Name: University: Course Title: Instructor: Date: Executive Summary The objective of this report is to provide an international marketing environment analysis for Australia. In order to achieve this objective, this report has comprehensively focused on analyzing the environmental factors influencing international marketing; as well as current challenges and opportunities for international marketers in Australia. This report shall analyze environmental factors with significant implications on international marketing include economic factors, socio-cultural factors, political factors, technological factors, as well as legal factors. The challenges for international marketers include cultural diversity, stiff competition and legal restrictions among others. Opportunities for international marketers on the other include cultural diversity and diversification opportunities, opportunity for additional volume, and defensive purposes among others. Table of Contents Executive Summary 2 1.0 Introduction 4 2.0 International Marketing Environment in Australia 5 2.1 Economic Factors 5 2.2 Socio-Cultural Factors 6 2.3 Political Factors 7 2.4 Legal Factors 8 2.5 Technological Factors 8 3.0 Current Challenges for International Marketers 9 3.1 The Challenge of Cultural Diversity 9 3.2 Stiff Competition 10 3.3 Legal Restrictions 10 4.0 Opportunities for International Marketers 11 4.1 Cultural Diversity and Diversification Opportunities 11 4.2 Opportunity for Additional Volume 12 4.3 Defensive Purposes 12 5.0 Conclusion 13 6.0 References 14 1.0 Introduction The Australian economy has experienced rapid growth in the recent past presenting numerous challenges and opportunities for both domestic and international business companies. Wu (2008, p.169) postulate that due to globalization, many multinational corporations seek to expand their operations in the international marketplace in order to reap from the unprecedented international business opportunities. Business companies in Australia just like in other countries around the world continue to feel the implications of increasing globalization of the world economy. As such both at home and abroad business companies must contend with increased international competition, reduced tariffs, deregulated markets, as well as changing needs and expectations of consumers. According to Chan & Ahmed (2006, p.10), the Australian society is multi-cultural in nature and thus presents significant opportunities and challenges for international marketers. The political, economic, socio-cultural, financial, technological and legal implications of this multi-cultural nature of the Australian society in addition to a dynamic Australian economy cannot be ignored. Therefore, marketers must acknowledge and recognize the potential as well as the challenges of diverse ethnic markets such as the ones exhibited by the Australian society and economy in order to effectively achieve their marketing objectives. The purpose of this report is to provide an international marketing environment analysis report for Australia. In order to achieve the foregoing, this report shall focus on analyzing the environmental factors influencing international marketing; as well as current challenges and opportunities for international marketers in Australia. 2.0 International Marketing Environment in Australia 2.1 Economic Factors Governments use economic factors to determine how they allocate resources in both industrial and commercial sectors with the objective of realizing structural changes with regard to capital, labor as well as product markets. The economic policies adopted by a country also are aimed at enabling domestic business to respond to international challenges such as stiff competition and advancement in information and communication technologies by addressing not only political, but also economic issues (Tang, 2011, p.88). Market characteristics exhibit profound implications on strategies adopted by international marketers. While market size is influenced by population size and expected sales; macroeconomic determinants such as levels of income, purchasing power, levels of disposable income and gross national product (GNP) influence performance of various industries in the economy (Marketing Association of Australia and New Zealand, n.d, p.5). According to the Australian Bureau of Statistics (2013), the country’s Gross Domestic Product (GDP) and Real Net National Disposable Income (RNNDI) grew by 3.1% and 4.1% respectively between the period 2002-03 and 2011-12. This is indicated in figure 1 below. Additionally, Australia’s indicators of economic growth such as domestic income have shown significant growth over the past decade. As such, the economic factors in Australia are favourable to international marketers and their activities. Source: Australian Bureau of Statistics, 2013 The Australian economy is primarily regarded as the producer of agricultural goods, minerals and energy. These major industries have historically played an integral role in the country’s economic development. Other major industries include manufacturing, construction and the services industry. The services sectors include industries such as wholesale and retail trade, finance and insurance, property and business services, transport and communications, tourism and recreation, personal services, as well as government and community services among others. This indicates a diverse economy with great opportunities and potential for international marketers (Eslake, 2007, p.1&2). 2.2 Socio-Cultural Factors Socio-cultural factors have been identified to have significant influence on both behavior and export performance of international marketers. This is particularly true since international business with reference to international marketing is not only an economic, but also a cultural phenomenon. As such, socio-cultural elements in an economy such as language, attitudes towards time management, religion, risk taking, socio-cultural stratification, family units and socialization, educational/literacy levels, culture development, technology and material, general and aesthetic values, as well as wealth acquisition among others have significant implication on international marketing environment (Tang, 2011, p.88). Analysis of these socio-cultural elements is crucial because they facilitate the determination of international behavior modes for international marketing. Social and cultural factors are less predictable in the marketing environment and have elucidated frustration for most international marketers. Factors such as traditions and customs have greatest implications on product categories especially when a country’s population has had experience with a particular category of product in the past (Marketing Association of Australia and New Zealand, n.d, p.5). 2.3 Political Factors According to Tang (2011, p.88), political or rather government policies are invisible hand acting as benign observers and regulators. In addition political (government) policies supplement existing market forces. It is these two political roles of governments which influence how both domestic and international organization craft and execute their international marketing strategies. Singh (2012, p.1) reiterates that the political environment of any economy has significant implications on the working and efficiency of its industries regardless of the economy’s size and area of operation. Australia experiences a relatively peaceful political environment thereby creating a favorable business environment for international marketers. Political unrest and emergence of malicious groups ruin the image of a country, affects its international relations and ultimately jeopardizes international marketing prospects in such a country (Singh, 2012, p.1). 2.4 Legal Factors According to O'Cass & Julian (2003, p.7), governments exercise influence over not only the choice of suppliers, but also over marketing. For instance, exchange controls imposed by governments have significant implications on decision taken by marketing organizations with regard to reinvestment, financing, as well as repatriation of their marketing operations. In essence, legal factors in terms of marketing pressures, regulations and laws can significantly increase or minimize the capacity as well as the effectiveness of an international marketing organization. Other than specific legal requirements which stem from political influences, legal systems in an economy have important implication on international marketing. The operations of both domestic and international marketing organizations are influenced by shifts and developments in the legal and regulatory environment of an economy. In Australia, the ability of international marketers to envisage and handle legally-oriented challenges and problems is a great asset for their business operation (Tang, 2011, p.89). 2.5 Technological Factors Kotler & Keller (2006) note that the world is today in the midst of technology oriented revolutions and changes which have significant influences on various industries in an economy. For instance, contemporary advancements in information and communication technology have revolutionized how many marketing organizations conduct their day-today operations. As such, international marketers must find sustainable ways of coping with the implications of the current changing technological environment. Thus, it is crucial for international marketers in Australia to recognize the limits of their technology, gain knowledge of emerging technologies in marketing, and know when and how to integrate new technology in the development of their products. This will enable international marketers to analyze strategic marketing alternatives, as well as develop sustainable marketing strategies or rather marketing strategies with longer term implications. 3.0 Current Challenges for International Marketers 3.1 The Challenge of Cultural Diversity The Australian society exhibits a significant extent of cultural diversity which affects the demand for goods and services. As a result, this requires the development of new products and services, as well as the adaptation of existing products and services. In the multicultural Australian domestic market, international marketers are faced with the challenge of addressing the needs of Australian people from diverse cultural backgrounds. It is not an easy task for international marketers to explain to different and ethnic communities various products and services being offered in both the domestic and the international marketplace. In addition, diverse cultural groups in Australia also have varying tastes, values and preferences which are reflected in their needs for products and services. As a result, international marketers in Australia are faced with the challenge of ensuring that the products being offered in the marketplace confirm to these varying tastes, values and preferences (O'Cass & Julian, 2003, p.7). 3.2 Stiff Competition In marketing, competition is usually three-fold in nature and is determined in terms of the number of marketplace competitors, industry price competition and the extent of price competition. O'Cass & Julian (2003, p.7) postulate that stiff competition is one of the effects of globalization of the world economy and markets. Czinkota (2012, p.207) reiterates that globalization increases the homogeneity of global markets. It is for this reason that international organization must formulate global marketing strategies to enable them rise above competitive challenges relating to market, cost and environmental factors. It is due to stiff competition that international marketers seek to adopt a higher degree of product as well as promotion adaptation in order to achieve competitive advantage in the international marketing marketplace. By adapting product and promotion activities, international marketers broaden their market base and seek to address preference, taste and value needs of local consumers thereby improving their performance in the marketplace. International marketers in Australia are therefore, faced with the challenge of adapting their products and services to the Australian culture in order to enhance their acceptance (O'Cass & Julian, 2003, p.7). 3.3 Legal Restrictions Legal restrictions are another category of challenges faced by international marketers in Australia. This is particularly because international marketers must ensure that their products and services adhere to the laid down standards by the local governments. To a larger extent, these standards vary from one state to another. As a result, unified design for products and services by international marketers becomes impossible to achieve (Marketing Association of Australia and New Zealand, n.d, p.10). In addition, legal restrictions related to taxes and tariffs may require international marketers in Australia to adjust the prices of their products and services to extents which cannot allow certain products or services to be sold at higher volumes. Specific legal restrictions are problematic to most international marketers in Australia. For instance, advertising restrictions prohibit the mentioning of a competitors name despite the approach being an integral part of international marketing (Marketing Association of Australia and New Zealand, n.d, p.10). 4.0 Opportunities for International Marketers 4.1 Cultural Diversity and Diversification Opportunities The multi-cultural nature of the Australian society and economy provides the international marketers with a rich assortment of consumer groups to be satisfied. As a result, there is a highly diverse market opportunity in Australia (O'Cass & Julian, 2003, p.7). The Australian economy has diverse ethnic markets thereby providing international marketers with a rich business environment to operate. Czinkota (2012, p.218) argues that diversification strategy in marketing is essential for a diverse market like the one exhibited by the Australian economy. In Australia, there is a greater standardization of the marketing element mix due to increased satellite channels on advertising as product ads reach a larger share of the market. As a result, economies of scale significantly enhance the efforts of international marketers in Australia. 4.2 Opportunity for Additional Volume Business organizations internationalize with the objective of getting additional volume. Australia provides a rich and diversified market for increasing the volume sales for international marketers. Australia is home to many foreign nationals. When customers of international corporations move overseas, many business organizations follow suit. Australia provides an opportunity for international marketers to create networks for advertising agencies and open manufacturing plants for manufacturers in order to serve the interests of their multi-national clients (Marketing Association of Australia and New Zealand, n.d, p.12). 4.3 Defensive Purposes Studies have indicated that business organization also enter international markets for purely defensive reasons. Australia provides an opportunity for international marketers concerned with international competition to launch businesses in the country. This will provide such international marketers with an opportunity to check the advancement of their Australian and international competitors. In addition, Australia also provides international marketers with the opportunity to learn from one of the most advanced markets in the global arena. In essence, venturing into the Australian market by international marketers will provide an opportunity to pursue new business opportunities resulting from foreign ventures (Marketing Association of Australia and New Zealand, n.d, p.12). 5.0 Conclusion The purpose of this report was to provide an international marketing environment analysis report for Australia. This report has comprehensively focused on analyzing the environmental factors influencing international marketing; as well as current challenges and opportunities for international marketers in Australia. Environmental factors with significant implications on international marketing include economic factors, socio-cultural factors, political factors, technological factors, as well as legal factors. This findings of this report indicate that the Australian economy present significant opportunities and challenges for international markers. The challenges for international marketers include cultural diversity, stiff competition and legal restrictions. Opportunities for international marketers on the other include cultural diversity and diversification opportunities, opportunity for additional volume, and defensive purposes. This report recommends that for international marketers to enhance their efficiency and performance in the Australian marketplace it is crucial that they gain knowledge of the environmental factors in order to take advantage of the underlying opportunities while minimize the threats resulting from the challenges. 6.0 References Australian Bureau of Statistics. (2013). Feature Article: Recent Trends in Real Income Growth. Retrieved on 22 Nov, 2013 from: http://www.abs.gov.au/ausstats/abs@.nsf/39433889d406eeb9ca2570610019e9a5/78b08abe5e6f2df1ca2570d6001366dc!OpenDocument Chan, A. M. & Ahmed, F. (2006). Ethic Marketing in Australia. International Review of Business Research papers, 2(4), pp.10-21. Czinkota, M. R. (2012). International Marketing. Cengage Learning. Boulevard: Cengage Learning. Eslake, S. (2007). An Introduction to Australian Economy. Retrieved on 22 Nov, 2013 from: http://www.anz.com/resources/e/6/e6742e804e472aae9633b66672659df2/CO-Article-An-Introduction-to-the-Australian-Economy-Jan2007.pdf?MOD=AJPERES Kotler, P. & Keller, K. L. (2006). Marketing Management, 12th edn. New Jersey: Pearson Prentice Hall. Marketing Association of Australia and New Zealand. (n.d). International Marketing: An Overview. Retrieved on 22 Nov, 2013 from: http://www.marketing.org.au/images/cimages/internat.pdf O'Cass, A. & Julian, C.C. (2003). Examining firm and environmental influences on export marketing mix strategy and export performance of Australian exporters. European Journal of Marketing: Special Issue: Marketing Management in Australasia, 37(3-4), pp.366-384. Singh, G. (2012). Political Environment and Its Impact on Tourism Marketing: A Case Study of Fiji. International Journal of Marketing, Financial Services & Management Research, 1(6), pp.1-13. Tang, R. (2011). An empirical study on the factors influencing international marketing strategy development among successful exporters in Australia, DBA thesis, Southern Cross University, Lismore, NSW. Retrieved on 22 Nov, 2013 from: http://epubs.scu.edu.au/cgi/viewcontent.cgi?article=1248&context=theses Wu, J. (2008). An Analysis of Business Challenges Faced by Foreign Multinationals Operating the Chinese Market. International Journal of Business and Management, 3(12), pp. 169-174. Read More