4.7 International marketing

Introduction

• International marketing: selling products in markets other than the original domestic market.

• Globalization: growing trend towards worldwide markets in products, capital and labor, unrestricted by national barriers.

Methods of entry into international markets

• How should the business enter the international markets?

  • Exporting can be undertaken either by selling the product directly to a foreign customer (perhaps the order has been placed via the company website) or indirectly through an export intermediary, such as an agent or trading company based in the country.
  • International franchising means that foreign franchisees are used to operate a firm’s activities abroad. This can take the form of either one foreign company being used as franchisee for all the branches in their own country or individual franchisees being appointed to operate each outlet.
  • Joint ventures: agreements between at least two companies to own and operate a new business venture.
  • Licensing involves the business allowing another firm in the country being entered to produce its branded goods or patented products under license, which will involve strictly controlled terms over quality. This means that goods do not have to be physically exported, saving on time and transport costs and making food products fresher too.
  • Direct investment in subsidiaries
  • Studies have shown that setting up company-owned subsidiaries in foreign countries can achieve higher success rates than taking over or merging with locally based companies.

• Approaches to selling goods/services internationally:

  • Pan-global marketing: adopting a standardized product across the globe as if the whole world were a single market selling the same goods in the same way everywhere.
  • Global localization: adapting the marketing mix, including differentiated products, to meet national and regional tastes and cultures.

Role of cultural differences in international marketing

• Cultural differences exist because of many reasons. People from different cultures have:
  • Different perceptions
  • Different values and ideologies
  • Different tastes, attitudes, lifestyles, religious beliefs, customs and rituals.

Implications of globalization in international marketing

• Multinational companies: businesses that have operations in more than one country.

• Globalization is not a new process but it has accelerated in recent years with the rapid growth of multinational companies and the expansion of free international trade with fewer tariffs and quotas on imports.

• Key features of globalization that have an impact on business strategy

  • Increased international trade as barriers to trade are reduced
  • Growth of multinational businesses in all countries as there is greater freedom for capital to be invested from one country to another
  • Freer movement of workers between countries.