29/05/2013

International Marketing Strategy

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Developments achieved today as a result faster communication, transportation and technology has turned the world into a global village. Hence it is not uncommon to find a product produced in one country being consumed in other countries. International marketing has led the acceptance of a product in countries other than where it was produced.
International marketing is, therefore, defined as the frontiers of a marketing organization to carry its activities beyond the frontiers of its country. When marketing activities are performed to compete beyond the domestic market, then it is international marketing.
Although marketing principles are universal, the performance of marketing activities beyond national boundaries, can be significantly different from what marketing in the domestic market entails. There is, therefore need to make adjustment in a firm’s marketing strategies to be able to cope with international standards.


Why international marketing


Before you can go into international market, the first decision is to decide whether to go international or not. In making this decision, you must therefore understand why people go to market abroad in order to assess yourself whether you can go or not. Some of the factors usually adduced for going to market abroad include:
  • Saturation of the domestic market: when the domestic market is saturated in terms of profit and sales potentials, you may decide to go abroad before decline sets in.
  •  Opportunities in foreign markets: when you identifies higher sales and profit opportunities in some foreign markets than domestic market you might decide to go international.
  •  Need to expand customer base: sometimes you may require expanding your customer base in order to enjoy the benefits of economies of scale and to fully utilize its large production capacity.
  • Risk reduction: Decision to market abroad may be an effort to spread and reduce risk by concentrating or depending on a single (home) market.
  •  Law of comparative advantage: a person may have a comparative advantage of producing in one country than other. Such person would therefore decide to stay in that country where raw materials, availability of labour, production facilities give them advantage and market their products to other countries.
  •  Customers servicing: when your customers are going abroad, then you follow them to provide them with international servicing.


HOW TO ENTER INTERNATIONAL MARKET

 

Once a decision has been made on marketing abroad, the next line of action is on the mode of entry. Five entry strategies are available for use by the international marketer, and they are: indirect exporting, direct exporting, licensing, joint ventures and direct investment.
Indirect Export
This occurs when you work through independent intermediaries to export your product. This strategy involves less risk to you as more people are now involved in the process. At the same time it involves less investment, as there may be lesser need for developing an export department, engaging overseas sales force, and so on.
Direct Export
This requires that you handle your export yourself. Although the risk and investment are higher than indirect exportin, the potent returns are also high, as you do not have to pay intermediaries.
Licensing
This involves you, giving license to a foreign company to use a manufacturing process, trademark, patent trade society or other items of value for a fee or royalty. Its advantages lies in the fact that the licensor gains entry into the foreign market through lesser risk while the licensee gains production expertise or a well known product or name without having to start from the scratch.


 

How to Obtain an Export License in Nigeria

The NigerianExport Promotion Council (NEPC) is the agency saddled with the responsibility of promoting the non-oil export and the issuance of the licenses in Nigeria.
The license can be obtained within one week in any of the NEPC offices across the country. This license costs NGN10,000 per 2year.
To obtain an export license from NEPC as co-operative society or as a limited liability company. The following documents are required from a limited liability:
  • A duly completed export license application form obtained from the Nigerian Export Promotion council. 
  • Memorandum and articles of association 
  • Copy of certificate of incorporation
  •  Certified true copy of form C.O.7 and C.O.2
The original copy of the filled, signed and sealed form and copies of all the other documents will be submitted to the NEPC office.

Joint ventures

This is a partnership between a domestic trader and a foreign trader or government. As a result, the two investors share ownership and control of the joint venture. Joint venture has both economic and political justifications. For example, it is preferable in industries where large investments (financial, physical and managerial) are required.

Direct Investment

This offers the greatest potential rewards for marketers although with higher risks. Direct investment involves ownership of foreign-based assembly plants or manufacturing facilities in whole or in part. Direct investment offere the investors certain advantages such as, economies of scale, greater control over production and marketing, better image in the host country and deeper relationship with the local public.

 

ENVIRONMENTAL FORCES IN INTERNATIONAL MARKETS

Marketing in the global market is not as easy as domestic marketing. As you are considering international marketing, you faces problems that result from influence of external environment. It is therefore important that an international marketer conducts a detailed analysis of the environment in order to be able to appreciate better, the problems involved in international marketing. Environmental forces in international marketing are the same with those of domestic marketing except that they are more complex in the former since differences exist from country to country in cultural, social, economic, political, legal and technological forces.

Culture:







The culture defines a set of values shared by citizens of a country. It also dictates what is socially acceptable to a people and what is not. Culture is passed on from one generation to the other and covers issues such as language, greetings, colours, numbers, shapes, sizes, symbols, educational system and religion.
Culture differs from country to country and it is necessary for an international marketer to understand the customs of a country before he can effectively penetrate its market. Cultural differences have implications on the marketer’s marketing mix (product, price, promotion and distribution).
Colours for instance, can communicate different in international market. Mourners in china wear white while brides wear red. An illustration of feet is regarded as despicable in Thailand while it is unacceptable for a salesman to call on someone’s wife (in Italy) if the husband is not at home.
An international marketer must also take acre in translating product names, slogans and promotional messages into foreign languages sa as not to convey the wrong meaning.
What is important however is for international marketers to understand the fact that each country has its own set of customs and tradition, which determine business practices and influence negotiation with foreign customers.

Economic Forces:

The international marketer takes very serious the economic factors that affect his activities abroad. He must, therefore, consider the level of economic and technological development in order to appreciate marketing opportunities (or lack of them) in his international market. For instance, complex and sophisticated industries are found in lesser-developed countries. In addition, other economic issues to be considered in international marketing include: standard of living, availability of credit, discretionary buying power, income distribution, national resources and other conditions that affect transportation.
However International marketing opportunities may exist in both rich and poor countries.

Political and Legal Factors:

Entry into international market is greatly affected by each county’s political system, regulatory bodies, national pressure groups and courts. Government policies on business ownership vary from country to country, while some discourage private ownership, others may allow minimal private ownership and others emphasis little government participation to citizens of the host country.
Legal considerations are made up of legal structures that are designed to encourage or limit trade. They include:
  • Tariffs – taxes levied on goods entering a country 
  • Quotas – limits on the amount of a specific product that can enter a country 
  • Boycotts – exclusions of all products from certain countries or companies 
  •  Exchange Controls – laws compelling companies earning foreign exchange from their exports to sell it to a control agency usually a Central Bank 
  • Trade Agreements – Agreements to stimulate international trade e.g General Agreement on Trade and Tariffs (GATT)
  •  Market Groupings or Common Trade Alliances occur when several countries agree to work together to form a common trade area that enhances trade opportunities.
Technology Forces:

As a result of inequality in technological development among countries, marketing internationally may pose some problems than domestic marketing. While the advance countries advertise on television or through direct mail campaigns, these may be difficult in countries that lack up to date broadcast and postal services. Nonetheless many partnerships with businesses from developed countries in order to gain valuable industrial and agricultural technology.

Demography:

The population of a country may affect an international marketer in his bid to determine the market potential of a country. He must determine the population figure of the country, whether the population is urban or rural, and their accessibility. He must also find out the distribution of income in the country into upper class, middle class and lower class. For example, the demand for luxury items is a function of the number of affluent buyers existing within the country.

Country Resources:





The availability or non-availability of natural resources may also affect international marketing to a great extent. The availability of petroleum for instance has influenced to a great extent the political and economical lives of some countries like Nigeria, while petroleum shortages have created huge amounts of wealth for some countries, thereby stimulating both consumer and industrial consumption. The drop in oil prices of the 1980’s made many oil producers who had borrowed against their oil reserves, unable to pay. Shortage of water may also affect the production of agricultural produce especially in those countries where the economy is basically agrarian.

2 comments :

  1. Excellent information, thanks for sharing this helpful information with us.

    ReplyDelete

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