6.8: Summary

Most American firms have discovered that many opportunities exist in international marketing, as evidenced by the vast amount of goods exported by US-based firms. There are many reasons why US firms choose to engage in international marketing. Perhaps the most attractive reasons are the market expansion and profit opportunities afforded by foreign markets.

Basic principles of domestic marketing apply to international marketing. However, there are some differences, many of which are centered on environmental factors which affect international marketing: (a) the economic environment, (b) the competitive environment, (c) the cultural environment, (d) the political/legal environment, and (e) technological environment and the ethical environment.

Once a firm has decided to enter a particular foreign market, it must decide upon the best way to enter that market. A firm has five basic foreign market entry options, the selection of which depends largely on the degree of control that the firms wishes to maintain over its marketing program.

When a firm chooses to market its products internationally, it must decide whether to adjust its domestic marketing program. Some firms choose to customize their market programs, adjusting their marketing mix to meet the needs of each target market. Others use a standardized marketing mix. In making the decision to customize or standardize, there is a wide range of possibilities for adapting a firm's product, price, promotion, and distribution strategies.

Key terms

International marketing The marketing of a company's products and/or services outside of that company's home nation.

Multinational marketing Firms that are involved in marketing as well as production, research, human resource management and the employment of a foreign work force.

Dumping A practice in which a firm attempts to sell discontinued products, seconds, or repaired products in overseas markets at below domestic prices.

Exchange rate The value of one nation's currency in relation to that of another country.

Tariff A tax placed on imported goods.

Expropriation The act of a government taking ownership of a firm's plants.

Indirect exporting Occurs when all of a firm's foreign sales are made through the firm's domestic sales department.

Semi-direct exporting Occurs when a firm sells products in foreign markets through agents, merchant middlemen, or other manufacturers.

Combination export manager A domestic agent intermediary that acts as an exporting department for several noncompeting firms.

Manufacturers export agent Similar to manufacturer's agents in domestic product setting.

Webb-Pomerene Export Association Two or more firms that compete domestically, but work together in exporting their products.

Piggyback exporting A situation in which one manufacturer that has export facilities and overseas channels of distribution will handle the exporting of another firm's noncompeting but complementary products.

Direct exporting Occurs when a firm establishes an export department to sell directly to a foreign firm.

Licensing An agreement in which a firm (licensor) provides some technology to a foreign firm (licensee) by granting the firm the right to use the licensor's manufacturing process, brand name, or sales knowledge in return for some payment.

Joint venture A partnership between a domestic firm and a foreign firm.

Straight extension The introduction of the same product and the same message in every foreign market.

Communication adaptation A strategy used in foreign markets when the same product can be used to satisfy different needs, or if a product is used in a different way in foreign market.

Product adaptation A product is changed to meet individual foreign target market needs.

Questions

➢ What are the reasons a firm might engage in exporting?

➢ How does the economic environment affect international marketing activities?

➢ How does the cultural environment affect international marketing activities?

➢ How does the technological environment affect international marketing activities?

➢ Briefly describe the major strategies a firm might use to enter a foreign market.

➢ Why are prices often lower in foreign markets than in domestic markets?

➢ What are the differences between straight extension, communication adaptation, product adaptation, dual adaptation, and product invention strategies?

➢ What are the reasons why a firm might enter a foreign market by means of a joint venture strategy?

➢ Briefly describe the methods of distribution used by direct exporters.

➢ Why does direct investment in foreign markets afford marketers the greatest degree of control over international marketing activities?

➢ How can an organization determine its best option for entering an international market?

➢ What impact do international trade agreements such as NAFTA and international governing organizations such as the World Trade Organization have on decisions to expand internationally?

➢ Other than the Interactive Journal, what other sources provide relevant information to organizations facing international marketing decisions?

➢ What changes do you anticipate in international marketing? What countries will influence international trade?

➢ What will be some of the problems Persona faces as it enters markets outside of Europe?

➢ The initial monitoring machine costs USD 78, plus USD 16 a month for the sticks. Will these costs present problems?

Project

Identify a US-made product that is currently sold in the US. Develop a marketing plan for this product, assuming they plan to export to Canada.

Case application

Unilever's global brand

Unilever division Unipath is to begin the global rollout of a contraceptive product that has been 15 years in secret development and that the company is hailing as a major brand launch.

"The biggest thing to happen to contraception since the 60s," as the UK print and poster ads through Ogilvy & Mather Worldwide, London, describes it. Persona is the fruit of tens of millions of dollars investment.

"This is going to be a big Unilever brand," said Senior Brand Development Manager, Susannah Day, at its UK launch, backed by a USD 7.8 million marketing campaign that also includes an Internet site, a free phone "careline”, retailer training, point of purchase displays, and direct mailings to the medical profession. Ogilvy and Mather (O&M), a Unilever roster agency, was appointed in 1995 to create ads that would work internationally.

First evidence that all this was not mere launch puffery came at Unilever's results meeting, when co-chairman Niall FitzGerald revealed sparkling sales and awareness statistics and details of the product's march just into Italy and Ireland and then into the Netherlands, Scandinavia, and Germany.

In the first few weeks of the UK launch, Persona was the biggest selling item by value in the 1,247 stores nationwide of Boots–the retailer through which the brand was exclusively launched–and it achieved 55 per cent consumer awareness within a month. In pre-launch research among hundreds of women in the UK and Germany, 30 per cent said they were likely to buy the product.

"We expect Persona to be a mainstream form of contraception in most markets in Europe and the US," notes Ms Day. Plans are to take the brand into 20 countries by 2000, including Australia and ultimately, it is expected to go on sale worldwide. This occurred in July of 2000.

Persona works by measuring a woman's hormone levels via home urine tests and revealing the days in a month when she is least at risk of becoming pregnant. An electronic monitor records the days in a woman's cycle. On the mornings when a test is required, a yellow light flashes, asking for a stick carrying a urine sample to be inserted into the monitor. After the hormone level is measured, either a red light denoting high risk or a green light denoting low appears. Reliability is claimed to be 95 per cent-the same as condoms.[1]

References

¹Isobel Doole, Robin Lowe, and Chris Phillips, International Marketing Strategy, International Thompson Business Press: London, 1999, pp. 14-15.

²Theodore Levitt. "The Globalization of Markets." Harvard Business Review. May-June 1983, pp. 92-102.

³Philip Kotler, "Global Standardization-Courting Danger," Journal of Consumer Marketing, Vol. 3, No.2, Spring, 1986, pp. 13-20.

⁴S. Barker and E. Kaynak, "An Empirical Investigation of the Differences Between Initiating and Continuing Exporters," European Journal of Marketers, Vol. 26, No.3, 1992.

⁵Ibid.

⁶Anne Chen and Malt Hicks, "Going Glob Avoid Culture Clashes," PC Week, April 3, 2000, pp. 68-69.

⁷Barker and Kaynak, op. cit.

⁸Eileen Cassidy Imbach, "US Commercial Centers: The Future of Doing Business Abroad," Business America, November, 1994, pp.25-26.

⁹Michael Selz, "More Small Firms Are Turning to Trade Intermediaries," The Wall Street Journal, February 2, 1995, p. B2.

¹⁰Julia Flunn and R A. Melcher, "Heineken's Battle to Stay Top Bottle," Business Week, August 1, 1998, pp. 60-62.

¹¹Warren J. Keegan, "Conceptual Framework for Multinational Marketing," Columbia Journal of World Business, Vol. 7, November 1973, p.67.

¹²TT Nagle, The Strategies and Tactics of Pricing, Prentice-Han, Inc. Englewood Cliffs, N.J., 1999.

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1. [1]Source: Suzanne Bedlake, "Birth of a Global Brand," Ad Age International, March 1997, p. 126; Rainer Hengst, "Plotting Your Global Strategy." Direct Marketing, August 2000, pp. 52-55; Eileen P. Moran, "Include Overseas Markets the Right Way." Marketing News. April 24, 2000, pp. 47-48.