International marketing in flour industry

07 November 201314 min reading
Strong export spurt realized by Turkey in wheat-based food products (wheat flour, pasta and biscuits) recently, is an indicator of the competitive power of Turkey and above-mentioned sectors in the international market. However; Turkey’s or other countries that have a voice in the international trade maintaining their position and increasing the market share in the world trade  depend on the continuation of meeting the requirements of global trade.   As today’s main concept, globalization causes the norms settled in economic, social and cultural fields to go beyond the political boundaries of countries. Today, most of the norms gain value in the lives of the societies as much value as they get international quality. Globalization concept, in which its economic dimension becomes prominent, is based on the principle that world economies enter into a wide integration and world trade is liberalized.   In today’s era; countries enter into a cutthroat competition in order to have much voice in the world economy and together with this competition, world has met a new concept called as “Global Markets”. The most important condition in order to make trade in this global market is to compete with the foreign companies already in that market in terms of both price and service. The competitive power of the countries also becomes an important concept, as well as the competitive power of the companies.   What we understand from the foreign competitive power of the countries is that the goods of a country is at a level that can compete with the goods of other countries in terms of price and quality, in other words those goods are accepted in the international market. Increasing the competitive power has a different dimension for Turkey who is at European Union accession process as Turkey’s taking its place in the globalized world by taking further steps in the foreign expansion process started in 1980s depends on that it can compete with foreign marketers in the first place.   Strong export spurt realized by Turkey in wheat-based food products (wheat flour, pasta and biscuits) recently, is an indicator of the competitive power of Turkey and above-mentioned sectors in the international market. However; Turkey’s or other countries that have a voice in the international trade maintaining their position and increasing the market share in the world trade  depend on the continuation of meeting the requirements of global trade.   FROM SALES TO INTERNATIONAL MARKETING In a study prepared under the title of “International Marketing” in 2009; marketing concept is defined as solving, planning, organizing, using and controlling specific sources for the satisfaction of needs and desires of selected customer groups with the aim of providing a gain. International marketing is defined as the conduction of these efforts in the international arena.   Actually, the root of the marketing is sales. But today, these two transactions are separated from each other completely in terms of concept and content. Sales transaction can be defined as “exchange of goods or services” in a very simplified manner. The potential customer should be convinced to buy a good or a service in order to realize the sales. Sales-related activities such as seeking for potential customers, displaying the good, bargaining have been realized since the beginning of the civilization.   As a result of the development of national markets and communication facilities; producers started to benefit from s the ads and used them as a helper in their sales activities at the end of 19th century. Ad provided awareness and persuasion of the wide consumer groups about the sold product; it increased the commitment of the users to the product. Thus, companies established advertisement departments or benefited from advertisement agencies.   National markets’ reaching to huge dimensions especially in the industrialized countries in the 20th century, made ​​it necessary to make market research for directing the sales activities. Companies started to search the needs and desires, their reactions to the company's products in order to decrease the risk of delusion in the sales. For that, many companies established market research departments.   Sales, advertisement and market research departments worked independent from each other or under the management of sales department for a while. In this case; importance was mainly given to the sales department that was the oldest and largest department, other departments ignored. As a result of these; marketing departments were established in most of the companies. This new department started to manage customer services, pricing, product research and development activities in addition to advertisement and market research.   Together with the development of marketing concept; companies admitted that the aim is not selling a specific product; it is to meet the needs of the potential customer group. This aim is defined as the highest and continuous profit way. Specific products or services can become useless, now demanded, unwanted, and disliked but the needs of the persons are permanent and increase with the increase in the income of the society. Thus; marketing concept defines the objective of the marketing as finding solutions to the problems of the selected potential customers, not as selling goods. According to the marketing; a good or a service is a means that solves the problem of a customer.   COMPETITION IN THE INTERNATIONAL MARKETING The concept of competition’s definition in the international arena and the variables it is affected from vary on country, sector and company basis. In her study titled as “International Competitive Power of Specific Food Industries”, Prof. Dr. Bedriye SARAÇOĞLU states that the determinants of the efficiency and structural factors like production increase affect the competitive power on country basis and besides these the economy policies of the country have also a role on it. In addition to this structural situation, relative industrial efficiency and the relative cost advantage have an important role on competitive power on sector basis. On company basis; the competition would depend on factors like quality, cost, production scale, marketing power, company strategies, management-organization and human capital.   Factors that affect the competitive power of a country in the international markets are discussed as non-economic social factors like religion, culture and habits besides economic factors such as gross domestic product, exchange rates, import, export. However; the most important fact that affects the competitive power in the international arena is the foreign trade policies of the countries. Even, it is stated that these factors can be more effective than economic and social factors mostly.   There are some studies in the literature asserting that the most important indicator of international competitiveness is relative efficiency activity. In these studies; concept of competitive power on returns to scale (economies of scale) is discussed with technological developments, capital and effort efficiency. Thus; in order to ensure continuity of exports, in other words to gain competitive power, cost per unit should be decreased and for that, quality and technical performance should be increased together with production increase.   HIGHLIGHTS OF INTERNATIONAL MARKETING The objectives and basic functions of marketer who targets the domestic market and international marketer are the same. The different thing is the environment in which they work. The customers of the international marketer are the ones in a country or countries other than his/her own country. Thus, the marketed product or service has to cross at least one interstate border. Crossing the border means encountering different currencies, customs regulations, laws, banking systems, languages ​​and cultures, economic and political systems. The amount of the variables that an international marketer encounters and are out of his/her control is a lot and they are complicated. This represents the difficulty of international marketing. If sales is a part of product marketing chain, then export is a part of international marketing activities. Export is formed when foreign currency that is internationally recognized is brought to the country in exchange of a product or a delivery of a product is produced within the country. However; marketing experts think that approaching to the subject only as the export of the products limits the success. In such an approach; export is limited with the requests of the traditional recipients of basic products. If the goal is defined as determining and meeting the needs of the markets in abroad; new markets can be formed, new export products can be developed, these products can be placed in the foreign markets permanently with ad and promoting activities.   CONDITIONS THAT PREVENT INTERNATIONAL TRADE   The basis of international trade is defined as the principle of comparative advantage. Any country can produce specific products and services more efficiently than other product and services. Technological power of the country, its population’s education and cultural level, its natural resources can outclass in some situations. For instance; Turkey produces both wheat and automobile. But convenient climate conditions and the vast and fertile agricultural lands induce that Turkey produces wheat more efficiently than automobile. A country’s directing its resources to the fields on which it has advantages to use them most efficiently and importing the goods and services on which it has disadvantages with the export income are the obligations for its own interests. As a result; international trade emerges, the resources of the countries entering to this trade are used more efficiently and the consumers can get the products and services cheaper. However; various effects in practice prevent international free trade. With the aim of national security; governments invest in the unproductive areas without economic advantages and protect these sectors with precautions that make it difficult for import. Expired industrial sectors with which the country has no superiority are supported via help from government budget (subvention) in order to prevent unemployment and they are protected from the competition of the import with customs barriers. Developing countries try to strengthen various industrial sectors that are newly established and do not have the chance to survive in the free international trade environment by preventing import. We can sum up the most important means used by the governments that want to prevent free international trade due to the reasons above as follows:  
  1. 1.       Customs
The taxes and duties taken from the goods coming from foreign countries at the borders, stations and airports prevent foreign trade through increasing the prices of import. Customs taxes are taken on ad valorem, weight of the goods cleared through customs or a similar basis (specific).  Compound tariff is taken from the products on which these two taxes are applied. The products internationally traded are numerated in details in the catalogue titled as “Brussels Nomenclature”. Countries form scales of their tariffs according to the differentials in this list and declare them.  
  1. 2.       Quotas
The limitations imposed on the import as unit or total value, in other words quotas, are used as a method preventing foreign competition by various countries. Managing the quotas is usually achieved by import licenses.  
  1. 3.       Foreign Exchange Restrictions
Foreign exchange control is the restrictions applied by the governments in foreign currency transactions. Everyone in a country, where foreign exchange control is applied, is obliged to sell the foreign currency they earn to an institution determined by the government (usually the central bank or an experted government agency) at a determined rate. In some foreign exchange control systems; persons supplying foreign currency from specific resources are allowed to sell a portion of the foreign currency they get in the free market. As the institution undertaking the control forms the foreign exchange market alone, it can determine that for what purpose the currency is used and the amounts to be spent.   In the countries where foreign exchange control is applied; the value of the national currency in foreign currency is usually higher than the one in the free market. This situation creates an encouraging effect for import by limiting the foreign currency amounts to be bought by the individuals. However; the import can be prevented from exceeding a certain level by limiting the foreign currency to be bought by the individuals. Thus; the decrease in the gold reserves and the deficit in the balance of payments can be prevented.  
  1. 4.       Boycotts
Boycotts are the factors preventing international trade. Boycotts can be official like that Arabian countries forbid the trade with Israel and companies trading with Israel or unofficial like that US port worker unions  do not load the ships carrying goods to Russia from time to time.  
  1. 5.       Other Obstacles
The standards difficult to follow, packaging and labeling requirements, health checks, long and complicated formalities and similar administrative practices and market conditions making it difficult for import can be counted as other obstacles.  For instance; Japan remained its import at a low level for long years with hard market conditions difficult to apply rather than official obstacles.   INTERNATIONAL TRADE BLOCKS Some countries who want to eliminate the conditions preventing the trade between them and increase the trade volume thus the dimensions and efficiency of their economies, form regional trade blocks. Usually these blocks emerge within the frame of historical and geographical connections of the countries. Close political friendship or colony relations in the history have still importance in the foreign trade of some countries. For instance; 10 % of the foreign trade of France is still with the African countries that are the old colonies of the country. Due to the transportation costs, some countries make a great part of their foreign trade with neighboring countries (like that Turkey mainly makes trade with Middle Eastern countries). These geographical bonds give regional quality to the trade blocks, as well as historical relations. It is possible to count European Community, COMECON (Council for Mutual Economic Assistance), ASEAN (Association of South East Asian Nations), and North-South dialogue as examples.   MARKET RESEARCH The first step taken by the company that decides to make export is to search whether there are requests for the products it is interested in the foreign markets. In other words; it inspects the products for which there are requests in the foreign markets. Deciding to develop a product for the export, a company should learn what kind of a product is liked and accepted in the foreign markets. Besides the climate conditions to which the product is imposed, important cultural features needed to be learned in that specific market and standards to be complied with would be the subject of research. Decisions of starting export, entering to a new export market or presenting a new product to the existing market usually enforce the development and change of the product. This requires market research. Before starting a market research; firstly the inspection whether the desired information is searched by others should be done; then if it is searched, it is possible to get the results from an existing secondary resources with a desk research. If the results obtained from this way are satisfying, a great time saving can be achieved. Market analysis as a part of marketing research covers the information about markets and communication channels. Information like market shares, stock levels and distribution rates of different brands belong to this category. If a product is marketed direct for the consumer, consumer research should be a part of the market research. Consumers’ any ideas, attitudes and habits related with especially the product, advertisement and promotions are within the scope of consumer research.   TOPICS TO BE RESEARCHED WHILE ENTERING INTO THE NEW MARKETS   INFORMATION ABOUT MARKETS
  1. 1.       Export regulations of your home country
-          Restrictions -          Tax, tax return and exchange regulations -          Registration, license and other documentation requirements.  
  1. 2.       Entering into the market
-          Customs and quotas -          Inland duty, -          Foreign exchange restrictions, -          legislation related with health and standards, -          Political factors.  
  1. 3.       Size and development of the market
-          Import (quantity, value, source, growth curve) -          Consumption (quantity, growth curve, geographical features).  
  1. 4.       Non-division of the market
-          Possible sections (age, income, cultural, geographical, etc.) -          Profile of the typical consumer.  
  1. 5.       Effects on the demand
-          Climate and geography, -          Social and cultural factors, -          Political factors.  
  1. 6.       Competitors
-          Domestic production and production developments in that country, -          Competition in the form (ID, market shares, factory places capacities, plans) -          Competitors' power (size, private benefits) -          Reasons for success in competition, -          Gaps in the production range in the competition, -          Trademark and patent cases.  
  1. 7.       Price
-          Retail prices -          Wholesaler and retailers' profit rate -          Transportation costs, -          Factory sales prices.   INFORMATION ABOUT THE PRODUCT
  1. 1.       Product Qualifications
-          Color, -          Taste, -          Dimensions, -          Design and style, -          Raw materials, -          Use, -          Technical conditions.  
  1. 2.       Product Package
-          Protection, -          Information, -          Exhibition and sale, -          Legal obligations, -          Shopping methods -          Consumer.  
  1. 3.       External packing
-          Transportation, -          Loading, unloading, -          Storage.   INFORMATION ABOUT MARKETING METHODS
  1. 1.       Transport
-          Availability, speed and frequency, -          Safety and risk, -          Cost.  
  1. 2.       Sales and distribution channels
-          Channels and their uses, -          Inventory levels and delivery times, -          Profitability ratios -          Conditions of sale, -          Important distributors.  
  1. 3.       Prices
-          Upper and lower limits, -          Prices and pricing strategies of competitors, -          Product advantages.  
  1. 4.       Technical services
-          Consultancy, -          Obtaining complaints, -          Maintenance, repair and spare parts, -          Training, -          Warranty.  
  1. 5.       Advertising and promotions
-          Competitors' techniques and expenditure, -          Media costs and activities -          Competitors' messages, -          Promotion efforts via distribution channels.
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