92% 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 Mix
1Keep 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. Words
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