International market
international marketing plan is a marketing plan aimed at global
expansion of product sales and brand recognition. If you don’t
already know the difference between international marketing and
global marketing, make sure to read our article on that first.
In essence, international marketing is aimed at customizing or
tailoring products, marketing, and sales tactics at the international
market they are expanding into. Rather than broadcasting the same
media advertisements to multiple countries, each country/market
segment receives different marketing messages to appeal to that
particular community.
Each country represents a unique challenge for marketers because
of culture, language, laws, and other factors. These challenges can
also be present on regional and local levels which require even more
targeted techniques.
The decisions to do business internationally and launch an
international marketing campaign could be any of the examples
noted below (not an exhaustive list):
-Expanding brand awareness
-Economic growth in a country
-New commerce laws
-Untapped or underserved markets
-International partnerships/joint ventures
International Marketing is Important
International marketing, as opposed to global marketing, is
incredibly important to boost your company’s international image
for a few reasons.
1) Increases Focus
International marketing increases a brand’s focus on a marketing
message. Since every marketing message, media advertisement, and
media channel is selected based on careful market research, brands
are able to demonstrate more intentionality in their marketing
decisions.
2) More Marketing Expertise and Personnel
Unlike global marketing where all decisions are made from
personnel at the company’s headquarters, international marketing
generally calls for more marketing employees and research teams.
The obvious drawback to this is the added salary expense, but for
the most part, the added employees frees up HQ marketing
personnel from execution of the marketing plan and keeps them
more focused on managing and strategizing.
3) Brand Authority
One of the major importances of international marketing is creating
brand authority in a variety of different markets. The key to note
here is the difference between brand awareness and brand
authority. Suppose a well-established American company begins
broadcasting their messages to multiple coun19tries.
Multinational marketing
Multinational marketing: The focus on multinational marketing
came as a result of the development of the multinational
corporation. These companies are characterized by extensive
development of assets abroad and operate in a number of foreign
countries or markets as if they were local companies. Such
development led to the creation of many domestic strategies, thus
the name multidomestic strategy whereby a multinational firm
competes with many strategies, each one tailored to a particular
local market. The major challenge of the multinational marketer is
to find the best possible adaptation of a complete marketing
strategy to an individual country. This approach to international
marketing leads to a maximum amount of localization and to a large
variety of marketing strategies. The attempt of multinational
corporations to appear local wherever they compete, often results
in the duplication of some key resources. The major benefits are the
ability to completely tailor a marketing strategy to the local
requirements.
Exporting
Exporting is defined as the sale of products and services in foreign
countries that are sourced or made in the home country. Importing
is the flipside of exporting. Importing refers to buying goods and
services from foreign sources and bringing them back into the home
country. Importing is also known as global sourcing.
Why Do Companies Export?
Companies export because it’s the easiest way to participate in
global trade, it’s a less costly investment than the other entry
strategies, and it’s much easier to simply stop exporting than it is to
extricate oneself from the other entry modes. An export partner in
the form of either a distributor or an export management company
can facilitate this process. An export management company (EMC) is
an independent company that performs the duties that a firm’s own
export department would execute. The EMC handles the necessary
documentation, finds buyers for the export, and takes title of the
goods for direct export. In return, the EMC charges a fee or
commission for its services. Because an EMC performs all the
functions that a firm’s export department would, the firm doesn’t
have to develop these internal capabilities. Most of all, exporting
gives a company quick access to new markets.
Benefits of Exporting: Vitrac
Egyptian company Vitrac was founded by Mounir Fakhry Abdel Nour
to take advantage of Egypt’s surplus fruit products. At its inception,
Vitrac sourced local fruit, made it into jam, and exported it
worldwide. Vitrac has acquired money, market, and manufacturing
advantages from exporting.
1Market.The company has access to a new market, which has
brought added revenues.
2.Money.Not only has Vitrac earned more revenue, but it has also
gained access to foreign currency, which benefits companies located
in certain regions of the world, such as in Vitrac’s home country of
Egypt.
3.Manufacturing.The cost to manufacture a given unit decreased
because Vitrac has been able to manufacture at higher volumes and
buy source materials in higher volumes, thus benefitting from
volume discounts.
Risks of Exporting
There are risks in relying on the export option. If you merely export
to a country, the distributor or buyer might switch to or at least
threaten to switch to a cheaper supplier in order to get a better
price.
Characteristics of a Multinational Corporation
The following are the common characteristics of multinational
corporations:
1. Very high assets and turnover
To become a multinational corporation, the business must be large
and must own a huge amount of assets, both physical and financial.
The company’s targets are high, and they are able to generate
substantial profits.
2. Network of branches
Multinational companies maintain production and marketing
operations in different countries. In each country, the business may
oversee multiple offices that function through several branches and
subsidiaries.
3. Control
In relation to the previous point, the management of offices in other
countries is controlled by one head office located in the home
country. Therefore, the source of command is found in the home
country.
4. Continued growth
Multinational corporations keep growing. Even as they operate in
other countries, they strive to grow their economic size by
constantly upgrading and by conducting mergers and acquisitions.
5. Sophisticated technology
When a company goes global, they need to make sure that their
investment will grow substantially. In order to achieve substantial
growth, they need to make use of capital-intensive technology,
especially in their production and marketing activities.
6. Right skills
Multinational companies aim to employ only the best managers,
those who are capable of handling large amounts of funds, using
advanced technology, managing workers, and running a huge
business entity.
7. Forceful marketing and advertising
One of the most effective survival strategies of multinational
corporations is spending a great deal of money on marketing and
advertising. This is how they are able to sell every product or brand
they make.
8. Good quality products
Because they use capital-intensive technology, they are able to
produce top-of-the-line products.
Licensing
Licensing is a business arrangement in which one company gives
another company permission to manufacture its product for a
specified payment. Licensing is defined as the granting of permission
by the licenser to the licensee to use intellectual property rights,
such as trademarks, patents, brand names, or technology, under
defined conditions. The possibility of licensing makes for a flatter
world, because it creates a legal vehicle for taking a product or
service delivered in one country and providing a nearly identical
version of that product or service in another country. Under a
licensing agreement, the multinational firm grants rights on its
intangible property to a foreign company for a specified period of
time. The licenser is normally paid a royalty on each unit produced
and sold. Although the multinational firm usually has no ownership
interests, it often provides ongoing support and advice. Most
companies consider this market-entry option of licensing to be a
low-risk option because there’s typically no up-front investment.
For a multinational firm, the advantage of licensing is that the
company’s products will be manufactured and made available for
sale in the foreign country (or countries) where the product or
service is licensed. The multinational firm doesn’t have to expend its
own resources to manufacture, market, or distribute the goods. This
low cost, of course, is coupled with lower potential returns, because
the revenues are shared between the parties.
Licensing generally involves allowing another company to use
patents, trademarks, copyrights, designs, and other intellectual in
exchange for a percentage of revenue or a fee. It’s a fast way to
generate income and grow a business, as there is no manufacturing
or sales involved. Instead, licensing usually means taking advantage
of an existing company’s pipeline and infrastructure in exchange for
a small percentage of revenue.
An international licensing agreement allows foreign firms, either
exclusively or non-exclusively, to manufacture a proprietor’s
product for a fixed term in a specific market.
Joint venture
An international joint venture (IJV) occurs when two businesses
based in two or more countries form a partnership. A company that
wants to explore international trade without taking on the full
responsibilities of cross-border business transactions has the option
of forming a joint venture with a foreign partner. International
investors entering into a joint venture minimize the risk that comes
with an outright acquisition of a business. In international business
development, performing due diligence on the foreign country and
the partner limits the risks involved in such a business transaction.
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IJVs aid companies to form strategic alliances,[1] which allow them
to gain competitive advantage through access to a partner's
resources, including markets, technologies, capital and people.
International joint ventures are viewed as a practical vehicle for
knowledge transfer, such as technology transfer, from multinational
expertise to local companies, and such knowledge transfer can
contribute to the performance improvement of local companies.[1]
Within IJVs one or more of the parties is located where the
operations of the IJV take place and also involve a local and foreign
company.[2]
Advantages
Many of the benefits associated with international joint ventures
are that they provide companies with the opportunity to obtain new
capacity and expertise and they allow companies to enter into
related business or new geographic markets or obtain new
technological knowledge.[1] Furthermore, international joint
ventures are in most cases have a short life span, allowing
companies to make short-term commitments rather than long-term
commitments.[1] Through international joint ventures, companies
are given opportunities to increase profit margins, accelerate their
revenue growth, produce new products, expand to new domestic
markets, gain financial support, and share scientists or other
professionals that have unique skills that will benefit the companies.