Question

Why cultural differences/Economics factors/Global locations/Political organizations that a company needs to consider when identifying a target segment in an international market? Use an example to illustrate.

Answer 1

It is vital for a company to establish its presence in the global market. However, various factors need to be considered before establishing a target segment in an international market.

Social and Cultural Factors: Countries differ from each other in terms of their language, religion, food, clothes, etc. The difference is of utmost significance and a company should consider how these differences can benefit or hinder its marketing efforts. Products need to be altered or customized significantly if the company wishes to gain acceptance in the foreign market.

Economic Factors: Before launching a product in a foreign market segment it is important to know if the market can afford the products that they sell. Companies should understand the fact that terms like middle class or upper-middle class, which is associated with social status, have different meanings in different countries. Moreover, the company also needs to assess the economic conditions and stability of the country where it plans to run its operations. The GDP, currency stability, and buying patterns will paint a better picture of the country’s economic prosperity and well-being.

Political and Legal Factors: It is important to understand how a country’s government responds to foreign investments. Smooth procedures, absence of any political hurdles, subsidies, and incentives are usually a good sign indicating the acceptance of the government. It is also important to study the tax structures and legal system of a country as they can have a huge impact on business operations.

For Example, McDonald’s is a well-known fast-food chain that has succeeded globally due to its impeccable assessment of different markets. The extensive cultural research carried out by McDonald’s is evident in its operational activities. For example, in Germany, beer is served along with burgers suiting the preference of Germans. In Indonesia, since the majority of the population comprises of Muslims, pork burgers are replaced with fish burgers. In India, beef is replaced with chicken to respect Hindu sentiments. Another key factor in the success of McDonald’s is the awareness of its biggest audience. The U.S.A. is the largest market for McDonald’s and it leaves no stone unturned in pleasing its best consumers.

If McDonald’s continues to display such adaptability, uniformity, cultural awareness, and segmentation it will continue to reign supreme and maintain its status as a global brand leader.