Principles of Marketing: Global Marketing - Deciding to Go, International Push Pull Factors

What It Is

Deciding to go international is a crucial marketing decision that involves evaluating the pros and cons of expanding a business into new markets. This decision is driven by both push and pull factors. Push factors are internal drivers that force a company to expand, such as overcapacity or high production costs. Pull factors, on the other hand, are external drivers that attract a company to a new market, such as a growing demand or a favorable business environment. For example, Coca-Cola's expansion into China was driven by both push factors (high production costs in the US) and pull factors (growing demand for soft drinks in China).

Key Concepts & Frameworks

• PESTEL Analysis: A framework for analyzing the external environment of a business, including Political, Economic, Social, Technological, Environmental, and Legal factors. Example: When analyzing the Chinese market, a company might consider the government's policies on foreign investment (Political) and the growing middle class's demand for premium products (Social).
• SWOT Analysis: A framework for identifying a company's Strengths, Weaknesses, Opportunities, and Threats. Example: A company might identify its strength in brand recognition, but also its weakness in local market knowledge when expanding into a new country.
• 4Ps/7Ps: A marketing mix framework that includes Product, Price, Promotion, Place, People, Process, and Physical Evidence. Example: When expanding into a new market, a company might need to adapt its product offerings to meet local tastes and preferences (Product) and adjust its pricing strategy to compete with local competitors (Price).
• AIDA Model: A framework for understanding consumer behavior, including Attention, Interest, Desire, and Action. Example: A company might use the AIDA model to develop a marketing campaign that grabs the attention of potential customers, generates interest in the product, creates desire for the product, and ultimately drives action (e.g., purchasing the product).
• CLV (Customer Lifetime Value): A formula for calculating the total value of a customer over their lifetime. Example: A company might use CLV to determine whether it's worth investing in a new market, by calculating the potential revenue from a customer over their lifetime.
• ROI (Return on Investment): A formula for calculating the return on investment of a marketing campaign. Example: A company might use ROI to evaluate the effectiveness of a marketing campaign in a new market, by calculating the revenue generated by the campaign divided by the cost of the campaign.

How to Apply It

• To evaluate the feasibility of expanding into a new market, conduct a PESTEL analysis to identify potential risks and opportunities.
• To develop a marketing strategy for a new market, use the 4Ps/7Ps framework to adapt your product, pricing, promotion, and distribution strategies to meet local needs.
• To measure the effectiveness of a marketing campaign in a new market, use ROI to calculate the return on investment.

Common Mistakes

• Mistake: Assuming that a successful product in one market will automatically be successful in another market.
• Correction: Conduct a thorough market analysis to understand local tastes, preferences, and market conditions.
• Mistake: Failing to adapt marketing strategies to local market conditions.
• Correction: Use the 4Ps/7Ps framework to adapt your marketing mix to meet local needs.
• Mistake: Ignoring cultural and language differences when expanding into a new market.
• Correction: Conduct cultural and language research to understand local customs and preferences.

Exam / Interview Tips

• Be prepared to explain the difference between push and pull factors and provide examples of each.
• Be able to apply the PESTEL and SWOT frameworks to a real-world scenario.
• Be prepared to discuss the importance of adapting marketing strategies to local market conditions.

Quick Practice

Scenario: A company is considering expanding into the Chinese market. What is the first step in evaluating the feasibility of this expansion?

A) Conduct a PESTEL analysis B) Develop a marketing strategy for the Chinese market C) Calculate the ROI of the expansion D) Conduct market research to understand local tastes and preferences

Answer: A) Conduct a PESTEL analysis. Explanation: A PESTEL analysis is the first step in evaluating the feasibility of expanding into a new market, as it helps identify potential risks and opportunities.

Scenario: A company is developing a marketing campaign for a new product in the US market. What is the next step in the AIDA model?

A) Create desire for the product B) Generate interest in the product C) Grab the attention of potential customers D) Drive action (e.g., purchasing the product)

Answer: B) Generate interest in the product. Explanation: The AIDA model is a framework for understanding consumer behavior, and the next step after grabbing attention is to generate interest in the product.

Last-Minute Cram Sheet

• PESTEL Analysis: A framework for analyzing the external environment of a business.
• SWOT Analysis: A framework for identifying a company's Strengths, Weaknesses, Opportunities, and Threats.
• 4Ps/7Ps: A marketing mix framework that includes Product, Price, Promotion, Place, People, Process, and Physical Evidence.
• AIDA Model: A framework for understanding consumer behavior, including Attention, Interest, Desire, and Action.
• CLV (Customer Lifetime Value): A formula for calculating the total value of a customer over their lifetime.
• ROI (Return on Investment): A formula for calculating the return on investment of a marketing campaign.
• Push Factors: Internal drivers that force a company to expand into a new market.
• Pull Factors: External drivers that attract a company to a new market.
• Marketing Mix: A framework for developing a marketing strategy that includes Product, Price, Promotion, Place, People, Process, and Physical Evidence.
• Market Research: The process of gathering and analyzing data about a target market.
• Cultural Research: The process of gathering and analyzing data about local customs and preferences.
• Language Research: The process of gathering and analyzing data about local language and communication styles.