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Week 3new
Week 3new
BUS 4012
Leah Ogesa
1. International Marketing
Today, the marketing organizations are not restricted to their national borders. The entire world
is open for them. New markets are springing forth in emerging economies like – China,
Indonesia, India, Korea, Mexico, Chile, Brazil, Argentina, and many other economies all over
the world. In today’s global market opportunities are on a par with the expansion of economies,
with the increasing purchasing power, and with the changing consumer taste and preferences.
The economic, social, and political changes affect the practice of business worldwide, the
business organizations have to remain flexible enough to react rapidly to changing global trends
to be competitive.
1.International marketing decision i.e. initial and fundamental decision on whether or not to
3. The market entry decision i.e. determination of the most appropriate methods of entry into
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4. The Marketing Mix decision i.e. planning and implementing a marketing mix appropriate to
direct the flow of goods and services to consumers and users in more than one nation.”
business activitiesdesigned to plan, price, promote, and direct the flow of a company’s goods and
According to Terpstra and Sorathy, “international marketing consists of finding and satisfying
global customer needs better than the competition, both domestic and international and of
1. Broader market is available– Unlike domestic marketing the market is not restricted to
national population. Population of other countries can also be targeted in international marketing.
2. Involves at least two set of uncontrollable variables – In domestic marketing the marketers
have to interact with only one set of uncontrollable variables. In international marketing at least
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two set of uncontrollable variables are involved or more if the marketing organization deals in
more countries.
3. Requires broader competence– Special management skills and broader competence is required
in international marketing/business.
4. Competition is intense – An international marketing organization has to compete with both the
domestic competitors and the international competitors. Hence, the competition is intense in
international marketing.
5. Involve high risk and challenges – International marketing is prove to various kinds of risk
and challenge like – political risk, cultural differences, changes in fashion and style of foreign
customers, sudden war, changes in government rules and regulations, communication challenges
developing international markets for domestically produced goods and services a company can
reduce the risk of operating internationally, gain adequate experience and then go on to set up
2. Contractual Agreements
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Patent licensing, turn key operations, co – production, technical and managerial know – how and
licensing agreements are all a part of international marketing. Licensing includes a number of
contractual agreements whereby intangible assets such as patents, trade secrets, know – how,
trade marks and brand names are made available to foreign firms in return for a fee.
3. Joint Ventures
A form of collaborative association for a considerable period is known as joint venture. A joint
venture comes into existence when a foreign investor acquires interest in a local company and
vice versa or when overseas and local firms jointly form a new firm. In countries where fully
owned firms are not allowed to operate, joint venture is the alternative.
A company with long term interest in a foreign market may establish fully owned manufacturing
facilities. Factors like trade barriers, cost differences, government policies etc. encourage the
setting up of production facilities in foreign markets. Manufacturing abroad provides the firm
5. Contract manufacturing
When a firm enters into a contract with other firm in foreign country to manufacture assembles
the products and retains product marketing with itself, it is known as contract manufacturing.
Contract manufacturing has important advantages such as low risk, low cost and easy exit.
6. Management contracting
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Under a management contract the supplier brings a package of skills that will provide an
integrated service to the client without incurring the risk and benefit of ownership.
When there is no commercial transactions between two countries due to various reasons, firm
which wants to enter into the market of another nation, will have to operate from a third country
base. For instance, Taiwan’s entry into china through bases in Hong Kong.
Mergers and Acquisitions provide access to markets, distribution network, new technology and
patent rights. It also reduces the level of competition for firms which either merge or acquires.
9. Strategic alliances
A firm is able to improve the long term competitive advantage by forming a strategic alliance
with its competitors. The objective of a strategic alliance is to leverage critical capabilities,
increase the flow of innovation and increase flexibility in responding to market and technological
changes. Strategic alliance differs according to purpose and structure. On the basis of purpose,
2. Marketing, sales and services alliances in which a company makes use of the marketing
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3. Multiple activity alliance involves the combining of two or more types of alliances. For
instance technology development and operations alliances are generally multi- country
alliances.
On the basis of structure, strategic alliance can be equity based or non equity based. Technology
transfer agreements, licensing agreements, marketing agreements are non equity based strategic
alliances.
Counter trade is a form of international trade in which export and import transactions are directly
interlinked i.e. import of goods are paid by export of goods. It is therefore a form of barter
between countries. Counter trade strategy is generally used by UDCs to increase their exports.
However, it is also used by MNCs to enter foreign markets. For instance, PepsiCo’s entry in the
former USSR. There are different forms of counter trade such as barter, buy back, compensation
deal and counter purchase. In case of barter, goods of equal value are directly exchanged without
the involvement of monetary exchange. Under a buy back agreement, the supplier of a plant,
equipment or technology. Payments may be partly made in kind and partly in cash. In a
compensation deal the seller receives a part of the payment in cash and the rest in kind. In case of
a counter purchase agreement the seller receives the full payment in cash but agrees to spend an
To bring countries closer for trading purpose and to encourage large scale free trade
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To bring integration of economies of different countries and there by to facilitate the
To establish trade relations among the nations and thereby to maintain cordial relations
To facilitates and encourage social and cultural exchange among different countries of
the world.
To provide better life and welfare to people from different countries of the world. In
emergencies situations.
and thereby to remove gap between the developed and developing countries.
international marketing.
To keep international trade free and fair to all countries by avoiding trade barriers.
consumers will be satisfied. In international business, when we discuss target market selection, we
are looking at countries for possible target market within which the companies are willing to operate.
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expand selectively over time, across areas that are deemed attractive.
specific market analysis. Data for screening are got from secondary and primary sources.
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The four processes of screening countries that will serve as target market include the followings.
1. Preliminary Screening
It relies solely on secondary data to know the general country factors either favourable or
unfavourable to you and the generic product specific factor. If both are positive on your side it means
you have gotten prospective target countries and if unfavourable, you reject the countries and look
Market potential is the sales in physical or monetary units that might be available to all firms in an
industry during a given period under a given level of industry, marketing effort and given
environmental condition.
There is the feeling of whether it is favourable or unfavourable after using the income, elasticity of
demand, market audit, analogy and longitudinal analysis to measure the market. You either reject the
market if unfavourable and if favourable, you proceed to what we call high market potential
countries.
After studying the market and believing that the market has prospect, there is need for estimating the
sales potential of the target market. You need data to help you look at competition, market, consumer,
product and channel structure. If they are favourable, you go to the next stage of referring to the target
as highest sales potential control and if not, you either reject the country or look at other target
markets.
4. Identifying Segment
There is need to identify the most profitable target relying mostly on primary data, if it is favourable,
you proceed to optimal segment mix in target market and if not favourable, you reject segment and look
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1.5.2 Concentration versus Diversification
Czinkota (2002) stated that concentration is a small number of markets while diversification is
characterised by growth in a relatively large number of markets in the early stages of international
market expansion. Expansion alternatives have two options. You may concentrate in a small area i.e.
Spillover effects
Extents of constraints
of marketing efforts at appropriate levels. A key question in international marketing concerned itself
with the extent to which the elements of the marketing mix-product, price, place and distribution
should be standardized. The market also faces the specific challenge of adjusting each of the mix
a. Make no special provision for international market place rather, identify potential target
markets and then choose products that can easily be marketed with little or no modification.
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b. Adapt to local condition in every target market (multi domestic approach).
c. Incorporate differences into a regional or global strategy that will allow for local difference in
(expectations and preferences) purchase patterns, economic status of potential users, stages of
2. Product Characteristics
They include, product consistency brands, function, attributes, features, method of operation or
usage, durability, quality, ease of installation, maintenance, after sales services, country of origin, etc.
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Product Line Mangement
International market product line must be local, regional and global brand.
Product Counterfeiting
Is a general problem worldwide which involves producing inferior products to look like the original
ones? The four ways of fighting it, is through legislative action, bilateral and multinational negotiations,
3. Company Consideration
These factors include profitability, market opportunities, (e.g. market potential, product-make fit) cost of
Export pricing
Are dual pricing that differentiate products that are domestic or international. In dual pricing, cost plus
marginal cost methods are mostly used; while market differentiated pricing is used based on demand
escalation or dumping.
International product pricing is when the manufacturer operation is defined by corporate objectives,
costs, customer behaviour and market conditions, market structure and environmental constraints.
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Price Coordination
Calls for price coordination of products have increased because of the introduction of the Euro.
Transfer Pricing
Transfer or inter-company pricing is the pricing of sales to members of corporate family. It means
charging almost the same price for all products in the same industry.
This is what connects the manufacturers with the buyers; it takes time for a decision to be arrived at.
Channel design - The length and width of the channel employed is affected by so many
Selection and screening of intermediaries - You have to look for appropriate channel
members.
Managing the Channel Relationship - Conflict arises among members because it is like a
marriage; you continue to manage these members so as to reduce conflict, if conflicts are not
Economic - There has been an increase in sales on the net, companies will continue to
embrace it.
An international businessman must think of the most appropriate promotional mix for his products.
Basically, advertising, personal selling, sales promotion and public relations are used for
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Advertising- Majorly, advertising decision focuses its attention on which strategy to use. The
promotional messages and the organisation of the promotional programme must conform to the
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Personal Selling- Is one on one selling in international business. Industrial goods,
Sales Promotion - Any method of attracting customers for more purchases apart
coupons, samplings, premiums, point of purchase and direct mail which are good
examples of sales promotions. Any of these could be used for international marketing
communication.
CONCLUSION
International business cannot succeed except marketing activities are employed. Marketing activities
involve selecting the target market and marketing management. Marketing management involves
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