DR. SHIRLEY C. EJEProfessor

INTERNATIONAL MARKETING

THE ATTRACTION OF INTERNATIONAL MARKETINGInternational 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 markets2. Saturation in domestic markets3. Comparative advantage due to the uniqueness of resources

ORGANIZATION STRUCTURES FOR OPERATING IN INTERNATIONAL MARKETSExporting – the simplest way of operating in

foreign markets. The following are important:Export merchant - middlemanExport 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 MARKETINGSatisfactory performance of international

marketing overlies in:1.Understanding the environment of a foreign

market; and2.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 ENVIRONMENTSocial and cultural forces

FamilySocial customs and behaviorEducationLanguages differencesEconomic developmentInfrastructureLevel of economic development

Less developed countriesNewly industrialized countriesHighly 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 AgreementsThe 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 MIXMarketing Research – Some of the

problems that may arise in research are the following:Scarcity of reliable statistical dataQuality of gathered dataLack of uniformity among host countriesMethods of collecting data from respondentsWillingness 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 distributionPhysical distributionBribery in international distribution

AdvertisingStandardizing Advertising - factors involve are

the following:It spurred by the increase in international

communications and entertainment.It contributes to production costs.

INTERNATIONAL TRADE BALANCESBalance 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 TRADEConsumer preferencesTechnologyBarriers to entryOther government policiesTax structuresRelative marketing capabilitiesThe price and quantity of oil