Copyright Atomic Dog Publishing, 2002 The International Marketing Plan and Entry Mode Selection Dana-Nicoleta Lascu Chapter 8

Copyright Atomic Dog Publishing, 2002 Chapter Objectives Develop a general understanding of international marketing strategies at the different levels of the international organization and provide insights into the international marketing planning process of selected companies Offer an understanding of company entry mode selection and the risks involved at each level Describe different types of strategic alliances involving international companies

Copyright Atomic Dog Publishing, 2002 Developing an International Marketing Strategy Developing and maintaining a strategic fit between international company objectives, competencies and resources, and the challenges presented by its international markets.

Copyright Atomic Dog Publishing, 2002 Levels of Strategic Planning CorporateDivisionBusiness UnitProduct Level

Copyright Atomic Dog Publishing, 2002 Levels of Strategic Planning, continued Strategic plan allocates resources and establishes objectives for the whole enterprise worldwide Has long-term focus Involves the highest levels of management Involves international target market selection Corporate

Copyright Atomic Dog Publishing, 2002 Levels of Strategic Planning, continued Strategic plan allocates resources to each business unit based on division goals and objectives Portfolio analysis is used to decide which brands to harvest, invest in, or divest Has longer-term focus Division

Copyright Atomic Dog Publishing, 2002 Levels of Strategic Planning, continued Planning involves decisions on which consumer segments to target in each country and how to target them Business Unit

Copyright Atomic Dog Publishing, 2002 Levels of Strategic Planning, continued A marketing plan is developed at product level, product line level, or at brand level Has shorter-term focus Involves the marketing department Product Level

Copyright Atomic Dog Publishing, 2002 Developing the International Marketing Plan Develop strategies for the target market  Product mix  Distribution  Promotion mix  Pricing Plan international marketing programs Manage the international marketing effort:  Organize  Implement  Control

Copyright Atomic Dog Publishing, 2002 Deciding on the International Entry Mode Indirect Exporting  Company uses home country intermediaries, who in turn sell product overseas  Lowest risk, lowest control  Companies can use cooperative exporting, also known as piggybacking and mother-henning -Involves using the distribution system of exporters with established systems for selling abroad who agree to handle the export function of a non-competing company on a contractual basis Direct Exporting  Own in-house exporting department handles the exporting function

Copyright Atomic Dog Publishing, 2002 Selecting the International Entry Mode, continued Licensing  Licensor offers know-how, shares technology, and shares brand name with licensee  Licensee pays royalties  Lower-risk entry mode; limits exposure to economic, financial, and political instability  Permits the company access to markets that may be closed or that may have high entry barriers DOWNSIDE: Can produce competitor in the licensee

Copyright Atomic Dog Publishing, 2002 Selecting the International Entry Mode, continued Franchising  Franchisor gives franchisee right to use brand name, trademarks and business know-how Less risk, higher level of control Very rapid market penetration DOWNSIDE: Can create future competitors who understand the operations of the franchise

Copyright Atomic Dog Publishing, 2002 Selecting the International Entry Mode, continued Joint Venture  Preferred entry mode of governments of developing countries -Help develop local expertise -If production is exported, helps with country’s balance of trade  Foreign company and local company establish a jointly- owned new company  Parties share capital, equity, labor  70% of all joint ventures break up within 3.5 years DOWNSIDE: Joint-venture partners can turn into viable competitors; and 70% of all joint ventures break up within 3.5 years.

Copyright Atomic Dog Publishing, 2002 Selecting the International Entry Mode, continued Consortia  Involve three or more companies  Monopoly effect  Allowed -where expensive R&D is involved -in underserved markets -in markets where the government and/or the marketplace can control its activity

Copyright Atomic Dog Publishing, 2002 Selecting the International Entry Mode, continued Wholly Owned Subsidiaries  Can be developed by the company – greenfielding – or can be purchased (acquisition or merger)  Involve long-term market commitment  High cost  High control of operations  Greatest level of risk

Copyright Atomic Dog Publishing, 2002 Selecting the International Entry Mode, continued Branch Offices  Entities are part of the international company, rather than a new company (as in the case of the subsidiary)  Involves substantial investment sales office showroom  Engages in a full spectrum of marketing activity  High level of control

Copyright Atomic Dog Publishing, 2002 International Strategic Alliances Typically, the term refers to nonequity alliances; for example: Manufacturing  Contract manufacturing, engineering, technological, and research and development alliances Marketing  One firm handles marketing for another, or some aspect of the marketing process Distribution  One firm handles the distribution for another, or some aspect of the distribution process

Copyright Atomic Dog Publishing, 2002 Chapter Summary Addressed marketing strategies involved at different levels of the international organization Provided insights into the international marketing planning process Offered an understanding of company entry mode selection decision and the risks and control level associated with each level Described different types of entry modes and the risks and control level associated with each