Transcript INTERNATIONAL MARKETING

INTERNATIONAL MARKETING
DR. SHIRLEY C. EJE
Professor
THE ATTRACTION OF INTERNATIONAL
MARKETING
 International Marketing – an organization whose products
are marketed in two or more countries. The fundamentals of
marketing applied to international marketing is the same as
domestic marketing.
 Reasons of why domestic markets turns international:
1. The existence of foreign markets
2. Saturation in domestic markets
3. Comparative advantage due to the uniqueness of resources
ORGANIZATION STRUCTURES FOR
OPERATING IN INTERNATIONAL MARKETS
 Exporting – the simplest way of operating in foreign markets. The
following are important:
 Export merchant - middleman
 Export agent – negotiates the sale of product
 Contracting – involves a legal relationship that allows a firm to
enter a foreign market indirectly, quickly establish a market
presence, and experience a limited amount of risk.
 Licensing – means granting to another producer – for a fee or royalty
payment – the right to use one’s production process, patents,
trademarks, or other assets.
 Franchising – combines a proven operating formula with local
knowledge and entrepreneurial initiatives.
 Contract manufacturing – contract with local manufacturers to
supply products.
ORGANIZATION…
 Direct Investment – a company can build or acquire its own
production facilities in a foreign country.
 Joint venture – a partnership agreement in which the foreign
operation is owned in part by the domestic company and in part
by a foreign company.
 Strategic alliance – a formal, long-term agreement between
firms to combine their capabilities and resources to accomplish
global objectives.
 Wholly owned subsidiaries – commonly used by companies that
have evolved to an advanced stage of international business.
With this, a company has maximum control over its marketing
program and production operation.
ORGANIZATION…
 Multinational Corporation – a truly worldwide enterprise
that leads to the highest level of investment. Both the foreign
and domestic operations are integrated and are not separately
identified.
STRATEGIC PLANNING FOR
INTERNATIONAL MARKETING
Satisfactory performance of international marketing overlies in:
1. Understanding the environment of a foreign market; and
2. Gauging which domestic management practices and
marketing mix elements should be transferred directly to
foreign market, which one modified, and which one is not
used at all.
ANALYSIS OF THE ENVIRONMENT
 Social and cultural forces
 Family
 Social customs and behavior
 Education
 Languages differences
 Economic development
 Infrastructure
 Level of economic development
 Less developed countries
 Newly industrialized countries
 Highly industrialized countries
ANALYSIS…
 Political and Legal Forces – The principal political concerns
of international marketers are the stability of government
and their attitudes toward free trade.
 Trade barriers
 Tariff – tax imposed on a product entering a country.
 Import quota – limit of the amount of product to enter a country.
 Local-content law – a regulation specifying a proportion of a finished
product’s components and labor that must be provided by the importing
country.
 Boycott – refusal to buy products from a particular company or country.
ANALYSIS…
 Political…
 Trade Agreements
 The General Agreement on Tariff and Trades (GATT) – this organization
was created in 1948 to develop fair-trade practices among its member.
 The European Community (EC) – the objective of this organization that
was created in 1957 is liberalizing trade among its member from Europe.
 The European Free Trade Association (EFTA) – this association, which
was formed in 1960, has been successful in eliminating most of the trade
barriers among its countries.
 The North American Free Trade Agreement (NAFTA) – the organization
started since 1989 to eliminate tariffs between countries in North
America.
FACTORS IN DESIGNING THE
MARKETING MIX
 Marketing Research – Some of the problems that may arise
in research are the following:
 Scarcity of reliable statistical data
 Quality of gathered data
 Lack of uniformity among host countries
 Methods of collecting data from respondents
 Willingness of respondents to respond accurately in the
research
FACTORS…
 Product Planning – a critical question in product planning
concerns the extent to which a company can market the
same product in several different countries. Some strategies
of product planning are:
 Product extension – describes the situation in which a standard
product is sold in two or more countries.
 Product adaptation – modifying a product that sells successfully
in one market to suit the unique needs or requirements of other
markets.
 Product invention – the development of an entirely new
product for a foreign market.
FACTORS…
 Pricing
 An exporter faces variables such as currency conversion,
differences in what is included in price quotations, and often a
lack of control over middlemen pricing.
 Sometimes companies engaged in dumpling – selling products
in foreign markets at prices below the price charged for these
goods in their home market.
 An alternative for currency-based pricing is barter or
countertrade. Two reasons are:
 Lack of hard currency – Hard currencies are the money of counties
viewed in world markets as reasonably stable.
 Inadequate marketing structure
FACTORS…
 Distribution System – Studying the environment in a foreign
market helps in understanding the distribution system.
 Middlemen and channels of distribution
 Physical distribution
 Bribery in international distribution
 Advertising
 Standardizing Advertising - factors involve are the following:
 It spurred by the increase in international communications and
entertainment.
 It contributes to production costs.
INTERNATIONAL TRADE BALANCES
 Balance payment – is an accounting record of all its
transactions with all the other nations.
 Trade balance – the difference between what it exports and
what it imports.
 Trade surplus – when exports exceeds imports and the
balance is positive.
 Trade deficit – when imports exceeds exports and the
balance is negative.
FACTORS THAT AFFECT A
COUNTRY’S BALANCE OF TRADE
 Consumer preferences
 Technology
 Barriers to entry
 Other government policies
 Tax structures
 Relative marketing capabilities
 The price and quantity of oil