THE IMPORTANCE OF INTERNATIONAL MARKETS

One of the major developments in the business world over the past several decades has been the
globalization of markets. The emergence of a largely borderless world has created a new reality for all
types of companies. Today, world trade is driven by global competition among global companies for
global consumers.

With the development of faster communication, transportation, and financial transactions, time and
distance are no longer barriers to global marketing. Products and services developed in one country
quickly make their way to other countries, where they are finding enthusiastic acceptance. Consumers
around the world wear Nike shoes and apparel and Levi’s jeans, eat at McDonald’s, shave with Gillette
razors, use Dell and Lenovo computers as well as Apple and Samsung smartphones, drink Coca-Cola and
Pepsi Cola soft drinks and Starbucks coffee, communicate on phones made by Samsung, Apple, and
Xiaomi, and drive cars made by global automakers such as Ford, Honda, General Motors, Toyota, BMW,
and Volkswagen.

Companies are focusing on international markets for a number of reasons. Many companies in the
United States and Western Europe recognize that their domestic markets offer them limited
opportunities for expansion because of slow population growth, saturated markets, intense competition,
and/or an unfavorable marketing environment. For example, soft-drink consumption in the United States
has been declining over the past decade as consumers turn to healthier beverages such as juices, teas,
and fortified waters. The industry has also been under pressure from public health groups and regulatory
agencies in both the United States and the European Union because of concerns over the consumption
of sugared soft drinks and childhood obesity. Thus companies like PepsiCo and Coca-Cola are looking to
international markets in Asia, Africa, and Latin America for growth opportunities.

Many companies must focus on foreign markets to survive. Most European nations are relatively small in
size and without foreign markets would not have the economies of scale to compete against larger U.S.
and Japanese companies. For example, Swiss-based Nestlé and Netherlands-based Unilever are two of
the world’s largest consumer-product companies because they have learned how to market their brands
to consumers in countries around the world. Australia’s tourist industry is a major part of its economy
and relies heavily on visitors from other countries. Tourism Australia, the federal government agency
responsible for the country’s international and domestic tourism marketing, has been running a global
campaign called “There’s Nothing Like Australia,” which is designed to attract visitors by showcasing the
diversity of places to visit and experiences available across the country.

In 2016, Tourism Australia launched a variation of its global IMC campaign that highlights the country’s
world-class aquatic and coastal experiences which are its key competitive advantages as a tourist
destination. The campaign is based on research showing that 70 percent of Australia’s international
visitors enjoy these experiences as part of their trip to the country, but many tourists do not have a full
apprecia-tion of the breadth, depth, and quality of experiences such as visiting the Sydney Harbor and its
famous opera house, snorkeling on the Great Barrier Reef, or taking a helicopter ride over the 12
Apostles (Exhibit 19–1). In addition to digital, print, and television advertising, Tourism Australia is using
virtual reality (VR) at travel expos and events to give prospective travelers an immersive experience and
capture what it feels like to visit many of its aquatic and coastal attractions.

Companies are also pursuing international markets because of the opportunities they offer for growth
and profits. The dramatic economic, social, and political changes around the world in recent years have
opened markets in China and Eastern Europe. China’s joining of the World Trade Organization in 2001
has provided foreign competitors with access to 1.3 billion potential Chinese consumers, and Western
marketers are eager to sell them a variety of products and services.The growing markets of the Far East,
Latin America, Africa, and other parts of the world present tremendous opportunities to marketers of
consumer products and services as well as business-to-business marketers.

Many companies in the United States, as well as in other countries, are also pursuing international
markets out of economic necessity as they recognize that globalization is revolutionizing the world far
more radically and rapidly than indus-trial development and technological changes of previous eras. In
his influential book The World Is Flat: A Brief History of the Twenty-First Century, Thomas L. Friedman
discusses how the economic flattening of the earth is being stimulated by technology that is breaking
down barriers that historically inhibited and restricted international trade. He notes that companies in
the United States can prosper only if they are able to compete in the global marketplace that
encompasses the 95 percent of the world’s population that lives beyond our borders.

Most major multinational companies have made the world their market and generate much of their
sales and profits from abroad. However, international markets are important to small and midsize
companies as well as the large multinational corporations. Many of these firms can compete more
effectively in foreign markets, where they may face less competition or appeal to specific market
segments or where products have not yet reached the maturity stage of their life cycle. For example, the
WD-40 Co. has saturated the U.S. market with its lubricant product and now gets much of its sales
growth from markets in Europe, Asia, Latin America, China, and Australia (Exhibit 19–2).

Another reason it is increasingly important for U.S. companies to adopt an international marketing
orientation is that imports are taking a larger and larger share of the domestic market for many products.
The United States has been running a continuing balance-of-trade deficit; the monetary value of our
imports exceeds that of our exports. American companies are realizing that we are shifting from being an
isolated, self-sufficient, national economy to being part of an interdependent global economy. This
means U.S. corporations must defend against foreign inroads into the domestic market as well as learn
how to market their products and services to other countries.

While many U.S. companies are becoming more aggressive in their pursuit of international markets, they
face stiff competition from large multinational corpora-tions from other countries. Some of the world’s
most formidable marketers are Euro-pean companies such as Unilever, Nestlé, Siemens, Philips, and
Reckitt Benckiser as well as the various Japanese and South Korean automotive and consumer electronic
manufacturers such as Honda, Toyota, Sony, Samsung, Hyundai, and LG.