Market Decision and Reasons Wider Market Escape from Competition SS3 Marketing Lesson Note

FACTORS THAT AFFECT INTERNATIONAL MARKETING

• Social Factors:

The social factors of a nation determine the value system of the society, which in turn affects the International Marketing mix. Social factors are culture, caste, customs, languages, lifestyle, standard of living, climate marketing infrastructure etc. The demand for goods and services is affected by all these factors.

There is a lot of change in the quality of lifestyle of the people. They are willing to purchase many consumer durables like T.V., Fridge, Computer etc., even when they cannot afford to buy them. It became possible because of the availability of a hire purchase system or instalment basis.

• Cultural factors

Cultural factors also influence every aspect of International Marketing. International marketing decisions are based on the recognition of the needs and wants of the customers. Cultural factors help to understand the behaviour patterns and lifestyle of the society’s culture, in which an individual has grown up. Thus an individual’s perception is groomed and influenced by cultural factors.

• Economic Factors:

The economic factors are the most significant determinants of International Marketing. They also affect the survival of a business organization and its success.

The economic factors can be studied under the following categories:

• Exim Policy of the Country
• Commercial Policy
• Financial system
• Monetary system
• Currency restrictions
• Inflation/ Deflation.

The decision regarding the international marketing mix is taken by keeping in mind the above-stated economic factors which determine the economic environment of a country. Therefore, before going for an export business or before making any decision regarding the international marketing mix, it is necessary to examine the economic factors that determine the economic environment of a country.

• Competition:

Competition is an important determinant of the international marketing mix. The business firm has to face competition in its home market as well as in the international market. The international marketing mix is decided by keeping in mind the strategies of the competitors for the product, price, place and promotion.

• Political Factors:

The International Marketing mix is strongly affected by the political environment of the country. A marketer has to operate its business activities in a given political factor. The business operations are greatly affected by the political constraints at different levels. The change in the political scenario leads to changes in government policies.

The following impact is associated with the political factors- 

• If the government is stable, it leads to stable policies relating to the business 
• If frequent changes are there in the government, then it leads to frequent changes in the policies of the government relating to business operations.

Political factors play a major role in deciding the operation of a business organization in international business. Thus a business organization has to study and analyse the political environment of a particular country if it has decided to carry out its business operations.

• Legal Environment:

International Marketing decisions are influenced by the legal environment about competition, price setting, taxation, law etc. The legal system of a particular country should be studied well before doing business with that country.

• Logistics:

International Marketing mix is influenced by Logistics. It includes mode of transportation, cost of transportation, inventory management, material handling and warehousing etc. It is necessary to study all these factors before go in for any decision regarding the international marketing mix.

• Risks:

The analysis of the risk factor is an important task to be performed before making the decisions relating to the international marketing mix.

EVALUATION:    

• List and explain the factors that affect international marketing