Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 6

MARKETING IN GLOBAL MARKETS

SUMMARY

Most American firms have discovered that many oppOitunities exist in international marketing, as evidenced by the vast amount of goods exported by U.S.-based firms.

are many reasons why

U.S. firms choose to engage in international marketing. Perhaps the most attractive reasons are the market expansion and profit opportunities afforded by foreign markets.

Basic principles of domestic marketing apply to intel11ational marketing. However, there are

some differences, many of which are centered on environmental factors which affect international marketing: (1) the economic environment, (2) the competitive environment, (3) the cultural environment, (4) the political/legal environment, and (5) technological environment and the ethical environment.

Once a firm has decided to enter a

foreign market, it must decide upon the best way

to enter that market. A firm has five basic foreign market entry options, the selection of which depends largely on the degree of control that the firms wishes to maintain over its marketing program.

When a firm chooses to market its products internationally, it must decide whether to adjust

its domestic marketing program. Some firms choose to customize their market programs, adjusting

their marketing

to meet the needs of each target market. Others use a standat'dized marKeting

mix.

making the decision to customize or standardize, there is a wide range of possibilities for

adapting a finn 's product, price, promotion, and distribution strategies.

MARKETER' S VOCAB ULARY

International marketing

The marketing of a

products and/or services outside of that

company's home nation.

Multinational marketing

Firms

are involved in marketing as well as production, research ,

human resource management and the employment of a foreign work force.

Dumping

A practice in which a firm attempts to sell discontinued products, seconds, or repaired

products in overseas markets at below domestic prices.

Exchange rate

The value of one nation's cUlTency in relation to that of another country.

Tariff

A tax placed on imported goods .

Expropriation

The act of a government taking ownership of a firm 's plants.

Indirect exporting

Occurs when all of a finn 's foreign sales are made through the firm 's domes-

tic sales department.

Semidirect exporting

Occurs when a firm sells products in foreign markets through agents, mer-

chant middlemen, or other manufacturers.

Combination export manager

A domestic agent intermediary that acts as an exporting depart-

ment for several noncompeting firms.

Manufacturers expor t agent

to manufacturer's agents in domestic product setting.

Webb-Pomerene Export Association

Two or more finTIs that compete domestically, but work

together in exporting their products.

Piggyback exporting

A situation in which one manufacturer that has export facilities and over-

seas channels of distribution will handle the exporting of another firm's noncompeting

comple-

products.

Direct exporting

Occurs when a

establishes an export department to sell directly to a for-

eign flnn .

CASE APPLICATION

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Licensing

An agreement in which a firm (licensor) provides some technology to a foreign firm

(licensee) by granting the firm the right to use the licensor's manufacturing

brand name,

or sales knowledge in return for some payment.

Joint venture

A partnership between a domestic firm and a foreign firm .

Straight extension

The introduction of the same product and the same message in every foreign

market.

Communication adaptation

A strategy used in foreign markets when the same product can be

used to satisfy different needs, or if a product is used in a different way in foreign market

Product adaptation

A product is changed to meet individual foreign target market

DISCUSSION QUESTIONS

1. What are the reasons a firm might engage

exporting?

2. How does the economic environment affect international marketing activities?

3. How does the cultural environment affect international marketing activities?

4. How does the technological environment affect international marketing activities?

5. Briefly describe the major strategies a firm might use to enter a foreign market.

6. Why are pri ces often lower in foreign markets than in domestic markets?

7. What are the differences between straight extension, communication adaptation, product adaptation, dual adaptation, and product invention strategies?

8. What are the reasons why a firm might enter a foreign market by means of a joint venture strategy?

9. Briefly desclibe the methods of distribution used by direct exporters.

10. Why does direct investment in foreign markets afford marketers the greatest degree of control over international marketing activities?

PROJECT

Identify a U.S.-made product that is currently sold in the U.S. Develop a marketing plan for thi s product, assuming they plan to export to Canada.

CASE APPLICATION

UNILEVER'S GLOBAL BRAND

Unilever division Unipath is to begin the global rollout of a contraceptive product that has been 15

years in secret development and that the company is hailing as a major brand launch.

"The biggest thing to happen to contraception since the

as the U.K. print and poster ads

through Ogilvy & Mather Worldwide, London, describes it. Persona is the fruit of tens of millions of dollars investment.

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