INTERNATIONAL MARKETING92% of the worlds consumers live outside the U.S.
Thus, international marketing is very important. When selling to foreign markets, one must realize that there are major differences between other countries & the U.S. Aside from political and legal differences, there are economic, technological, social (family, religion, education, health …
) & cultural differences.Each 1 billion in trade deficit yields a loss of 25,000 jobs. See text for how international trade is measured and protectionism vs. free trade.Gray Goods – Goods imported from unauthorized dealer; problem = no manufacturers warranty.Dumping = Sale of export goods at less than normal value (less than cost or less than home-country price).Strategic Adaptations Of The Marketing Mix1Keep The Product & Promotion The Same Worldwide (Global Marketing)- e.
g., world brands such as Coca Cola and Marlboro.- Theodore Levitt is the guru of the globalization or global marketing approach.- Promotion mix elements such as advertising present the biggest problem to standardizing a marketing strategy across all borders because promotion is based on a communication process, which can differ from country to country – even if the languages are the same (e.
g., the U.S. & the U.
K.).2Adapt Only The Promotion – e.g., in most of the world, bicycles are promoted as transportation; in U.S. as leisure.3Adapt Only The Product – e.
g., Canadians prefer a more bitter beer; Barbie looks Asian in Japan.4Adapt Promotion & Product – e.g., American cereals in Asia = snack food; therefore, need different flavors (e.
g., tofu).5Backward Invention – Simplify product & use less technology. This makes the product more affordable & usable in certain foreign markets.Some Ways To Operate In Foreign Markets 1Exporting – A company sells what it produces to foreign markets via export merchants (e.g., export trading companies) or export agents (e.
g., export management companies) or a firms own sales branches.Risk of tariff & devaluation.2Direct Investment & Ownership – Investment in production and or distribution facilities can occur either through a wholly-owned foreign subsidiary or a joint venture with a foreign company. Risk of nationalization.Joint Ventures – domestic & foreign firms become partners.
Strategic Alliance – a formal long-term agreement between firms in order to accomplish global objectives without formal ownership by either company.3Contracting (Licensing, Franchising, Contract Manufacturing & Management Contracting)Licensing = selling rights to name, process or patent for a fee or royalty; e.g., magazines such as Cosmopolitan & Playboy; Ampex licensed VCR technology to Japan.
Contract Manufacturing – Domestic firm contracts with a foreign firm to do production; marketing is done by domestic firm.Management Contracting – Seller provides management skills only; e.g.
, Hilton Hotels.3 Major Risks In Intl Mktg:1Radical Change In Government – a companys factories may be nationalized.2Change In Export Rates – foreign currency may be devalued; a firm may want to hedge with options.
E.g., many tech firms hurt by Asian economic crisis.3Foreign Markets May Impose Tariffs, Taxes, Quotas On Your Product – They do so to make imports more expensive relative to domestic goods.
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