DR. SHIRLEY C. EJE Professor INTERNATIONAL MARKETING

THE ATTRACTION OF INTERNATIONAL MARKETING International 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 markets 2. Saturation in domestic markets 3. Comparative advantage due to the uniqueness of resources

ORGANIZATION STRUCTURES FOR OPERATING IN INTERNATIONAL MARKETS Exporting – the simplest way of operating in foreign markets. The following are important: Export merchant - middleman Export 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 MARKETING Satisfactory performance of international marketing overlies in: 1. Understanding the environment of a foreign market; and 2. 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 ENVIRONMENT Social and cultural forces Family Social customs and behavior Education Languages differences Economic development Infrastructure Level of economic development Less developed countries Newly industrialized countries Highly 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 Agreements The 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 MIX Marketing Research – Some of the problems that may arise in research are the following: Scarcity of reliable statistical data Quality of gathered data Lack of uniformity among host countries Methods of collecting data from respondents Willingness 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 distribution Physical distribution Bribery in international distribution Advertising Standardizing Advertising - factors involve are the following: It spurred by the increase in international communications and entertainment. It contributes to production costs.

INTERNATIONAL TRADE BALANCES Balance 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 TRADE Consumer preferences Technology Barriers to entry Other government policies Tax structures Relative marketing capabilities The price and quantity of oil