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Introduction
The International Marketing Strategies of Gordon Ramsay will be evaluated in this report including the recommendations for its strategies. marketing International marketing means finding a marketing gap in the global market and providing excellent and innovative solutions to the gap; it results in potential revenue and business growth. This report is on international marketing. To apply the concepts and theories of international marketing, a UK-based restaurant company named Gordon Ramsay has been selected. This is a premium-class restaurant which requires reservation three months earlier than the expected date of being served (Gordon Ramsay, 2020). This report will contextualize the theories and models of international marketing on Gordon Ramsay. In this report, the writer is hired as a marketing consultant by this restaurant company. This report will analyse the concepts of international marketing. The second and third parts will evaluate approaches and strategies while entering an international market and adaptation of the marketing plans, respectively. Finally, various international marketing approaches and their evaluation have been presented.
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Concepts of International Marketing
Gilligan and Hird (2012) referred to international marketing as the process of creating, communicating, exchanging offerings and delivering, which carry value for foreign clients, customers, partners and society. Organizations become capable of increasing their revenue by utilizing market opportunities in foreign markets. For that reason, it needs higher management skills and capabilities to accomplish growth in a foreign country. Organizations face hard competition in foreign markets because many established organizations have created their demand in the international market. Organizations face difficulties in finding out the demand of the new markets and cannot communicate with stakeholders effectively because of a new language. The political environment, various trade rules, etcetera create challenges for companies in the international market; therefore, organizations have to take decisions according to the culture, trade rules and other factors of the new market.
International Marketing Opportunities:
Increased market share:
After entering the international market, organizations become capable of possessing market share in both domestic and international markets (Fletcher and Crawford, 2013). As a result, market share increases enormously.
Increased profit level:
Companies consider the financial stability of the targeted international markets and enter there if the country is financially strong. Therefore, companies can set premium prices for their products and services, which increases the profit level of a company (Baack, Harris and Baack, 2013).
Economies of scale:
Companies have to produce products for both local and international markets when they enter the foreign market. Therefore, they produce products for both markets and become able to accomplish economies of scale by producing huge quantities. As a result, profitability also increases.
Prolonged life of products:
Through international marketing, organizations sell products or services in their own country, including foreign countries and common demand for the product is created by international marketing (Hult et al., 2018). As a result, the demand for the products increases and products get prolonged life.
Drivers for international marketing:
Reasons that encourage companies to adopt international marketing are given beneath:
Higher profitability:
One of the major reasons for adopting international marketing is higher profitability. Restaurant Nathan Outlaw has targeted India because it has a GDP growth of 4.2%, which refers to the potentiality of India to make the company highly profitable (India Brand Equity Foundation, 2020).
New customers and increased revenue:
By adopting international marketing, organizations become capable of creating more customers in the international markets which is the other key reason for adopting international marketing (Fletcher and Crawford, 2013). Restaurant Nathan Outlaw will get more customers in a new market, and it will boost the restaurant’s revenue
Business differentiation:
International marketing helps companies to differentiate their business. By entering India, Restaurant Nathan Outlaw will be introduced to suppliers and buyers, which will help them to innovate their menu and invent new dishes which will differentiate the company.
Talent pool:
The talent pool got attracted international business companies, which helps companies to ensure great outcomes (Akaka, Vargo and Lusch, 2013). When Restaurant Nathan Outlaw enters India, people will know the company as an international brand because it is a UK restaurant; therefore talented people will be attracted to the company. As a result, recruitment costs will be saved, and the company will get the best employees which will operate all operations efficiently.
The challenges of international marketing:
Find out customers’ demands:
Companies do not have a proper idea about the demand of international customers which is one of the key challenges (Hult et al., 2018). Gordon Ramsay has to face this challenge while entering India because their demand is different from British people. The restaurant has to identify the preferences of Indian people to serve services according to their expectations.
Social factors:
Shared beliefs, lifestyle, values etcetera social factors are different from one another and organizations have to adjust to these social factors (Fletcher and Crawford, 2013). For instance, most Indian people avoid beef; therefore, Gordon Ramsay should not serve beef in their restaurants to build trust among customers and drive revenue.
Political factors:
It is one of the key challenges to interact with the influence of political factors on the international market. Rules and legislations of India are different from the UK, and Gordon Ramsay should adopt significant initiatives to interact with the influences properly.
Routes of entering the international market:
Joint Venture:
It is the process of entering a foreign market by being a partner with an established company in the market (Morgan, Feng and Whitler, 2018). Gordon Ramsay can adopt this process and become a partner with an Indian company to enter India. As a result, people will trust the restaurant because of the partnered company’s reputation.
Licensing/Franchising:
A company allows a foreign company to use their knowledge, expertise, system, process and strategies in exchange for a percentage of profit. Gordon Ramsay will not need to invest, but they will get profit from the Indian company franchisee or licensee but it is not a good way because the secret of an organization is exposed through this process.
Foreign Direct Investment:
It refers to the process where a company directly invests in a foreign country by setting up its office (Akaka, Vargo and Lusch, 2013). Gordon Ramsay can adopt the FDI route for India, and they will have direct control of the business, but it requires enormous investment.
Factors a company should consider while expanding business globally
Choosing a market for international expansion is an important decision and requires rigorous evaluation of a number of factors such as economic health of the population, business environment, doing business status etc.
Daniels, Radebaugh, & Sullivan (2014) revealed that economic status, per capita income of the population, and stability of the economic status play the most important role in selecting a global market. If the target market of Gordon Ramsay is analysed, it can be found that India is a potential market for the company because this country has a growing economy and the per capita income of the population is on the rise. India has around 1.35 billion population with total GDP of $8.683 trillion, which has steadily been increasing at a rate of approximately 6.8% consistently over the past few years (Singh et al., 2019). This implies that the Indian economy is stable and the country has a growing population with higher income; these people should be the target customers of Gordon Ramsay.
Budhwar & Varma (2010) revealed that the similarity of regulations and laws of the target host market should also be clearly evaluated before entering the target market. Being a British colony till 1947, India demonstrates a lot of similarity in terms of laws, and regulations to those of the UK (Shaikh, 2010). This suggests that India is expected to be an attractive destination for a British company because Gordon Ramsay will find it convenient to expand premium restaurant services in India.
A business in a foreign market will not boost if the customers do not have the demand to consume the food even if the business has many values to provide to the customers (Dunning, 2012). Gordon Ramsay must evaluate if the target customers in the Indian market are really capable and willing to spend and have services from the restaurant. The Wire (2020) reported that the net worth of India’s reach people is on the rise. It has also been reported that the net assets of wealthy people in India increased by three times. It suggests that the overall growth of net wealth in India is very much positive. This also suggests that such wealthy people will be willing to avail of premium services offered by Ramsay.
Apart from the above, Gordon Ramsay should also consider how they can adapt to the culture in India, how to select the best location to start with etc.
Approaches to international marketing and their evaluation
Gordon Ramsay has to evaluate the range of options available while choosing a specific approach to go to the internal market. Exporting, licensing or franchising, foreign direct investment and joint ventures are some of the potential approaches to go to the international market.
Exporting is the most basic and most widely used form of moving to the international market. It refers to simply exporting goods to the international market without having much involvement in the foreign market (Chang, Van Witteloostuijn, & Eden, 2010). As the definition implies, the most potential drawback of this approach is that exporting does not allow the international business to have knowledge and expertise on the foreign market. In fact, Gordon Ramsay should not involve itself with exporting goods or services to the Indian market because it cannot export food or services to India. Moreover, Gordon Ramsay has a sustainable plan for the International market; thus, exporting is not a suitable option for the company.
Joint ventures in the Indian restaurant industry could be an important approach to moving to the international market. A joint Venture implies making contact with a local Indian restaurant company and building a new restaurant brand in India (Doz, 2011). An advantage of this approach is that Gordon will find it very convenient to expand and grow its business in India because the host company knows the market. One potential disadvantage of this approach is that the Host Company will come to know the strategies of Gordon Ramsay, and thus Gordon will be in a strategically weak position. Therefore, it is strongly suggested that Gordon should not move into a joint venture with anyone.
Licensing or franchising could really be potential approaches for a company to expand its business in the international market. This strategy means allowing some other companies the right to use the brand name of the secret recipes in the host market (Killing, 2012). The advantage of this approach is that Gordon Ramsay can easily earn a lot of revenue only by selling the brand name and recipes, and Gordon is not bound to share the strategic directions with the host companies. However, Gordon cannot have direct experience in operating the business in the host market. Thus, if Gordon Ramsay has a long-term plan to expand business in India, franchising or licensing should not be used.
Foreign Direct Investment (FDI) is the most extensive and highest form of commitment to the host market. FDI implies that a company invests in a new market as a complete company, and the investment is made directly by the mother company with full control (Kolk & Van Tulder, 2010). Gordon Ramsay will have full control of the Indian market if this approach is followed; additionally, they will have extensive experience in the Indian market. It goes with the strategic direction of Gordon. Thus, it is suggested that Gordon should move to India with FDI.
Presenting the key arguments in the global versus local debate:
Definition:
(Paliwoda and Thomas, 2013) stated that domestic marketing refers to the process of producing, distributing, branding and promoting products or services within the mother country of the company; on the other hand, international marketing refers to the process of producing, distributing, branding and promoting products or services outside of the mother country. For that reason, the international marketing process is more complex and has more opportunities than domestic marketing.
Future growth:
The local market offers the opportunity to discover the market which has limited opportunities, whilst companies get the great opportunity of discovering foreign markets become able to ensure future growth (Papadopoulos and Heslop, 2014). It seems that the international market ensures future growth if they become able to fulfil the demand of the customers, but the local market cannot ensure future growth.
Controllable or uncontrollable factors:
Companies know about the laws and regulations, social norms and other factors of their company; therefore, the factors remain under control in domestic marketing, but companies do not know the factors of the foreign market, which makes their operations complex and the factors are uncontrollable.
Investment:
Local marketing needs less investment including capital, resources and struggles for that reason the scope and growth of the company are also limited (Czinkota and Ronkainen, 2013). On the other hand, international marketing requires huge investment, has more risks and brings higher profitability.
Adaptation strategy:
Cateora et al (2020) referred that it is the process through which companies internationalize their business by customizing their products and services on the basis of the preferences of international customers. It is an outstanding way to capture customers because they get products of their own choice. Gordon Ramsay will be capable of creating a strong place in customers’ minds by serving dishes of Indian customers’ choice because the customers will see that an international brand which belongs to the UK is making Indian foods for their customers. It will make customers highly satisfied with the restaurant. Customers will visit Gordon Ramsay repeatedly when they see that the restaurant is conscious of their preferences. As a result, the restaurant will be capable to create its own place within its competitors in India. It is seen that the Adaptation marketing approach will help Gordon Ramsay to ensure growth in foreign markets.
Exemplifying adaptation marketing approach by showing the adaptation strategy of McDonald’s. McDonald’s adopts an adaptation strategy and customizes its foods while serving in different countries according to the preferences of the customers. For instance, McDonald’s serves Pork items in the USA but does not serve Pork items in Muslim countries because Muslims do not eat meat. As a result, people of Muslim countries trust McDonald’s and have their food without any hesitation.
Standardization strategy:
Standardization indicates to the process through which companies enter foreign without bringing any change in their products and services (Terpstra, V., Foley, J., & Sarathy, R. (2012). This approach reduces the costs of redesigning products and reproducing products and even helps companies to achieve economies of scale. Gordon Ramsay is a restaurant in the UK and the food habits of the UK and India are not the same; therefore the company cannot adopt a standardization approach while entering India. The strategy will not be able to create a huge customer base for the restaurant because customers will see that the company do not value their preferences. It seems that Gordon Ramsay should not use this strategy.
Exemplifying the standardization process with the example of Nike. Nike does not standardize their products according to the choice of host countries’ customers and even does not consider the price. As a result, they become able to achieve economies of scale and create demand for the same products globally. Nike targets a specific customer base; therefore, they use a standardization approach.
How to apply Marketing mix in international marketing
Ruzo et al., (2011) have found in their research that marketing mix is the way of applying marketing principles of price, place, promotion and product in companies to ensure business growth.
Product: Product is the touchable and untouchable attributes for which customers pay to meet their requirements (Skarmeas, Zeriti and Baltas, 2016). Gordon Ramsay will set their menu according to the preferences of Indian people in order to serve the foods Indians will love. As a result, customers will be highly satisfied and will maintain repeatable purchases.
Price:
Price is the value that customers agree to pay for the products or services that fulfil their demand. Gordon Ramsay has to pay heed to the financial condition of their targeted customers in India in order to set the price of their foods. As a result, new customers will have the capability to afford the foods, and they will generate higher revenue.
Place:
It indicates the process through which customers get their desired products and services (Gilligan and Hird, 2012). Gordon Ramsay will open their restaurant in Bombay because the city is crowded, and people have the financial stability to afford the food. It means that the city has the potential to make the restaurant profitable.
Promotion:
Promotion refers to the way of encouraging customers to purchase the products and services of a company. The key promotional strategy of Gordon Ramsay will be social media such as Whatsapp, Facebook, Twitter, Likee, etcetera because people of all ages use these media. Therefore, the restaurant will post good pictures of their decorated restaurants and foods, including videos and offers to attract customers. As a result, customers will come to Gordon Ramsay more and more, and the company will be highly profitable.
Explaining and analysing various international marketing approaches to help Gordon Ramsay in making the right decision:
EPRG Framework:
Ethnocentric approach:
Moses et al., (2011) refer that the concept of the Ethnocentric approach is home market marketing strategies are suitable, and these should be applied in the international market. The approach is inappropriate, and Gordon Ramsay should not adopt is because the culture of India and the UK is not the same. The restaurant will standardize its products; therefore, they have to avoid this approach. It could be suitable for Nike because the brand does not customize its products.
Polycentric approach:
It is the process of applying various types of strategies according to the culture of the foreign market (Shoham, 2015). A polycentric approach is a suitable approach for Gordon Ramsay because they will be capable of attracting Indian customers by considering Indian culture. The customized marketing strategy of the restaurant will ensure that they will be able to create a huge customer base in India. The disadvantage of this approach is Gordon Ramsay has to invest more
Re-geocentric approach:
Kiuna (2013) said that re-geocentric is the approach where different regions are targeted as different markets, and different marketing strategies will be applied to the regions. This approach is also inappropriate for Gordon Ramsay because the company has targeted only one country, which is India, to expand its business. When the restaurant is expanded to more countries located near, it will be able to apply this approach.
Geocentric approach:
Geocentric refers to the process where the whole world is taken as a market and the same marketing strategies are planned for the market appropriate strategies can be found in host countries and the strategies can be used in the local countries too (Drachal, 2014). The geocentric approach is not for Gordon Ramsay because companies can apply this approach that has business in more countries but the restaurant only has business in the UK and has planned to enter in a new market.
What Gordon Ramsay should adopt between home and international orientation
Skarmeas, Zeriti and Baltas (2016) have revealed that Home orientation is a way of applying domestic marketing strategy while internationalizing business to save costs and efforts. On the other hand, international orientation is a way of making new strategies for the international market, which needs more effort and investment (Cavusgil and Cavusgil, 2012).
Home orientation needs less investment for the reason that organizations do not need to make new marketing strategies for the host country (Czinkota, Ronkainen and Zvobgo, 2011). Whilst international orientation needs more investment in order to make new marketing strategies according to the culture of host countries (Kotler et al., 2018).
De Mooij (2015) showed in his research that Home orientation does not bring outstanding outcomes for companies because the marketing strategies fail to attract customers of a different culture. On the other hand, international orientation brings outstanding income for companies because the strategies are made for the targeted country and successfully attract customers toward a business (Felzensztein et al., 2014).
Suitable strategy for Gordon Ramsay between home orientation and international orientation:
From the above-evaluated comparison between home orientation and international orientation, it is seen that international orientation is the suitable approach for Gordon Ramsay. Home orientation will not help the company to achieve more customers in India because of the difference in customer nature and the external environment. Therefore, Gordon Ramsay should adopt an international orientation and make marketing strategies which will be compatible with the business environment of India. As a result, the company will be able to accomplish growth in India.
Application of Porter’s five forces model on Gordon Ramsay:
Mathooko and Ogutu (2015) have found in their research that Porter’s five forces are the model through which companies can evaluate their competitive position.
Threat of new entrants: Medium:
Threats of new entrants are medium for Gordon Ramsay because it is easier for Indian food companies to enter the industry but the quality provided by the restaurant cannot be maintained by new entrants because of less experience. Therefore, the company have to maintain their quality to maintain its position.
The threat of substitutes: High:
The threat of substitutes is high for Gordon Ramsay because there are so many options for Indian people to choose from and eat their favourite foods. Even people can make special food items in their homes at lower costs which is one of the key reasons why Gordon Ramsay may have fewer customers.
Bargaining power of suppliers: Low:
The bargaining power of suppliers is low because there are so many small and big suppliers who supply raw materials. As a result, suppliers will not be able to dominate Gordon Ramsay and ask for higher prices.
Bargaining power of buyers: High:
The bargaining power of buyers is high because they can switch to competitors, and Gordon Ramsay will fail to survive in India. Switching costs are lower, which makes them more powerful toward the company.
Competitive rivalry: High:
San-Qi, Wasabi by Morimoto, Golden Dragon, Trèsind etcetera are the top restaurants in Mumbai that have world-class decoration and food quality (Elite Traveler, 2020). It means that Gordon Ramsay is going to face high competition in the Indian food industry because all of the restaurants have created their demand.
Conclusion:
Companies have to face unexpected situations and complexities while internationalizing their business because of less knowledge about the country’s culture, customers’ demand and external factors. Companies face tough competition in the international market because both local and other international companies have been competing in the market for a long time and have their customer base. Gordon Ramsay has to evaluate the challenges they may face in order to find out the ways of minimizing the risks of the international market. Therefore, Gordon Ramsay will be capable of surviving in India’s food industry and ensuring future growth. The restaurant should also find out the opportunities in India’s market to do proper planning in order to capture them.
References:
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