Marketing Implications of Regional Economic Interaction

The marketing implications of regional economic cooperation to the multinational companies are quite much. The problems posed and the strategies to be adopted will be different from firms located in each region and firms seeking marketing opportunities from outside. The notable implications are as follows :

i. Businesses that operate within the borders of a regional group will be protected in various forms. One ; the firm enjoys the non tariff policy and other exemptions. Two ; the firm will be shielded from external competitors in an appreciable degree.

ii.  The various regional economic groups have created large market for international marketers. This provides opportunity to exploit and achieve economies of scale in production and marketing. Programmes like distribution of goods and services, promotion, logistics are carried out at reduced cost there is also increased purchasing power arising from savings gotten from cheaper prices of goods and services.
iii. The reduced or eliminated country to country tariff barriers and restrictions give rise to savings by both MNCs and consumers in regions. Such savings could be channeled into capacity building by MNCs.

iv. World competition has also been increased by regional market groups. In the past, competition was accomplished by legislation and regulation by the government; but today the major determinants of intense competition is the market forces arising from large markets created by the multinational market groups.  Competition has the capacity to enhance marketing and production efficiency among competing firms to the advantage of the consumers.

v. When multinational groups emerge, a central administration arises to take charge and control activities within the group. Consequently,  new level of government which often leads to increased regulation of business activities arises.  Apart from developing uniform customs procedures and regulations, businesses policies or regulate mergers, joint ventures and other relationships between local and foreign businesses, production activities like standard, labour relations, pricing,  promotion, marketing intermediaries' relations could be established as well. The international marketer is expected to adjust those new requirements in order to exploit emerging opportunities.

vi. National markets are gradually giving way to very large markets. Both new investments decisions and marketing programs will now be conceived for a target market area consisting of five to twelve countries rather than just one national market.

vii. Arising from  (vi) above is the ease with which to enter and exploit new marketing opportunities in regional market areas. Instead of planning for multiple markets, international marketers can embark on a single Research and Development programme for the entire region where homogeneity of tastes and preferences are obtainable. This reduces the cost of production and marketing activities.

Viii. Another marketing implication is that the urge to operate within the regional market will be more advantageous than to operate from outside the region as an exporter. The common external tariff imposed on non members could increase the cost of products and  therefore such firms will be unable to compete with region based firms. The reason is that the local producers or marketers will become stronger competitors because of the economies of scale they realise in the larger regional market.

ix. It is important to note that one of the primary economic reasons to form a regional group is to protect the business interests that operate within the borders. Naturally therefore conditions obtainable will be such that will give undue advantage to such countries within the market group. This is what gives credence to (viii) above.