INTERNATIONAL MARKETING

International business has been practiced for thousands of
years. In modern times, advances in technology have
improved transportation and communication methods; as
a result, more and more firms have set up shop at various
locations around the globe. A natural component of international
business is international marketing. International
marketing occurs when firms plan and conduct transactions
across international borders in order to satisfy the
objectives of both consumers and the firm.
International marketing is simply a strategy used by
firms to improve both market share and profits. While
firm managers may try to employ the same basic marketing
strategies used in the domestic market when promoting
products in international locations, those strategies
may not be appropriate or effective. Firm managers must
adapt their strategies to fit the unique characteristics of
each international market. Unique environmental factors
that need to be explored by firm managers before going
global include trade systems, economic conditions,
political-legal systems, and cultural conditions.
The first factor to consider in the international marketplace
is each country’s trading system. All countries
have their own trade system regulations and restrictions.
Common trade system regulations and restrictions
include tariffs, quotas, embargoes, exchange controls, and
nontariff trade barriers. The second factor to review is the
economic environment. Two economic factors reflect how
attractive a particular market is in a selected country:
industrial structure and income distribution. Industrial
structure refers to how well developed a country’s infrastructure
is, while income distribution refers to how
income is distributed among its citizens.
Political-legal environment is the third factor to
investigate. For example, the individual and cultural attitudes
regarding purchasing products from foreign countries,
political stability, monetary regulations, and
government bureaucracy all influence marketing practices
and opportunities. Finally, the last factor to be considered
before entering a global market is the cultural environment.
Since cultural values regarding particular products
will vary considerably from one country to another
around the world, managers must take into account these
differences in the planning process.
Just as with domestic markets, managers must establish
their international marketing objectives and policies
before going overseas. For example, target countries will
need to be identified and evaluated in terms of their
potential sales and profits. After selecting a market and
establishing marketing objectives, the mode of entry into
the market must be determined. There are three major
modes of entry into international markets: exporting,
joint venture, and direct investment.
Exporting. Exporting is the simplest way to enter an
international market. With exporting, firms enter international
markets by selling products internationally through
the use of middlemen. This use of these middlemen is
sometimes called indirect exporting.
Joint Venture. The second way to enter an international
market is by using the joint-venture approach. A joint
venture takes place when firms join forces with companies
from the international market to produce or market a
product. Joint ventures differ from direct investment in
that an association is formed between firms and businesses
in the international market.
The four types of joint venture are licensing, contract
manufacturing, management contracting, and joint ownership.
Under licensing, firms allow other businesses in
the international market to produce products under an
agreement called a license. The licensee has the right to
use the manufacturing process, trademark, patent, trade
secret, or other items of value for a fee or royalty. Firms
also use contract manufacturing, which arranges for the
manufacture of products to enter international markets.
In the third type of joint venture, management contracting,
the firms supply the capital to the local international
firm in exchange for the management know-how.
The last category of joint venture is joint ownership.
Firms join with local international investors to establish a
local business. Both groups share joint ownership and
control of the newly established business.
Direct Investment. Direct investment is the last mode
used by firms to enter international markets. With direct
investment, a firm enters the market by establishing its
own base in international locations. Direct investment is
advantageous because labor and raw materials may be
cheaper in some countries. Firms can also improve their
images in international markets because of the employment
opportunities they create.