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Mohd Zahid Laton, FPP UiTM Pahang CHAPTER 8 INTERNATIONAL MARKETING1. International marketing. International marketing is the performance ofbusiness activities designed to plan, price, promote, and direct the flow of acompany’s goods and services to consumers or users in more than one nation for aprofit. The only difference in the definitions of domestic marketing and internationalmarketing is that marketing activities take place in more than one country.2. Factors to be considered when involves in international marketing; 2.1 Demographic. Demography is the statistical study of human population and its distribution characteristics. Demography is especially important to marketing executives because people who have money to spend and the willingness to spend it are what constitute a market. Example of demographic factors are birth rate, age, sex, occupation, religion, family, education and other statistics. 2.2 Economic. Economy determines the size and strength of demand for the product. People alone do not make the market. They must have the money to spend and be willing to spend it. The condition of economy is a significant force that affects the marketing system of just about any organization whether business or non-business. i. Rising income. Incomes are rising, primarily due to dual- income families. Disposable income rises or drop. Purchasing power rises or drop. ii. Inflation. A general rise in process, often accompanied by lack of increase in wages results in decreased of purchasing power. During periods of inflation, marketers should be aware that brand loyalty decreases and consumers stock up on bargain products. iii. Recession. A period of economic activity characterized by negative growth, which reduces demand for goods and services. This period of economic activity is when income, production, and employment fall, which reduce demand. 2.3 Natural. It consists of natural resources required by business as inputs to produce goods demanded by customers. The forces of nature have several impacts on the overall decision of the marketer. Example of natural environments are; 1) shortages of certain raw materials (oil, coal, rubber, timber, etc), 2) increased cost of energy (marketers may resort to use solar, wind and water as sources of energy as the oil/fuel price increase 1
Mohd Zahid Laton, FPP UiTM Pahang dramatically), 3) increased levels of pollution, thus more money need to be spent to clean the environment. 2.4 Technological. Technology is the knowledge of how to accomplish tasks and goals and often this knowledge comes from scientific research. Marketers must be aware of new developments in technology and their possible effects, because technology can and does affect marketing activities in many different way. 2.5 Political and Legal. Laws, government agencies and pressure groups made up the political and legal environment. The political/legal influences on marketing can be grouped into 4 categories such general monetary and fiscal policies, broad social legislation and policies set by regulatory agencies, subsidies and tariffs and import quotas, and laws affecting marketing itself (including competitors and consumers). 2.6 Social-cultural. The socio-cultural consists of the demographic characteristics, customs and values of the population within which the marketing firms are operating.3. Market penetration. Market penetration is a strategy for company growthby increasing sales of current products to current market segments withoutchanging the product.4. Method of international market entry. International market entry is usefulin order to determine how to penetrate the abroad market; 4.1 Export [indirect export, direct export, intra-corporate-transfer]. Exporting is defined as the process of sending goods or services from one country to other countries for use or sale there. It is relatively easy to undertake and are often the first international step for a company. 4.2 International licensing. Licensing is another means foreign market. It is where a licensor, sells the right to use its intellectual property. 4.3 International Franchising. Franchising is more common in the United States than elsewhere in the world. It represents the major international franchisor. Example; Burger King, Dunkin Donuts, KFC, Mc Donald, etc. 4.4 Specialized entry mode [management contracts, turnkey project]. Firm may used specialized strategies to enter foreign market without making long-term investments. 4.5 Foreign direct investment [Greenfield strategy, acquisition strategy, joint venture]. Foreign direct investment (FDI) is entering international market through ownership of assets in host countries. A firm 2
Mohd Zahid Laton, FPP UiTM Pahang may first enter the foreign market through exporting, licensing or franchising.5. Deciding whether to go abroad market. Before going abroad, the companymust weigh several risks and answer many questions about its ability to operateinternationally such; 5.1 Can the company learn to understand the preferences and buyer behavior of consumers in other countries? 5.2 Can company offer competitively attractive products? 5.3 Will company be able to adapt to other countries business cultures and deal effectively with foreign nationals? 5.4 Do the company’s managers have the necessary international experience? 5.5 Has management considered the impact of regulations and the political environments of other countries?6. Deciding which market to penetrate. Before going abroad, the companyshould; 6.1 Define its international marketing objectives and policies. 6.2 Decide what volume of foreign sales it wants. 6.3 Choose in how many countries it wants to market. 6.4 Decides on the types of countries to enter.7. Deciding the international marketing program. Companies that operatein one or more foreign markets must decide how much to adapt their marketingstrategies and programs to local conditions depends to the marketing mix elementssuch; 7.1 Product. Several strategies can be considers such; i. Straight product extension. Marketing a product in a foreign market without any change. ii. Product adaption. Adapting a product to meet local conditions or wants in foreign markets. iii. Product invention. Creating new products or services for foreign markets. 3
Mohd Zahid Laton, FPP UiTM Pahang7.2 Promotion. Companies can either adopt the same communicationstrategy they used in the home market or change it for each local market.Consider advertising messages. Some global companies use a standardizedadvertising theme around the world. Colors also are changed sometimes toavoid taboos in other countries. Even names must be changed.7.3 Price. Companies also face many problems in setting theirinternational prices. It could set a uniform price all around the world, but thisamount would be too high a price in poor countries and not high enough inrich ones. Example, a Gucci handbag may sell for $60 in Italy and $240 inU.S.A. Why? Gucci faces a price escalation problem. It must add the cost oftransportation, tariffs, importer margin, wholesaler margin, and retailermargin to its factory price.7.4 Distribution channels / place. Companies must design internationalchannels that take into account all the necessary links in distributing theseller’s products to final buyers, including the seller’s headquartersorganization, channels among nations, and channels within nations. 4