 Domestic vs International Marketing  Why International Marketing?  Nature and Benefits of International Marketing  Mode of Entry

Reported by: IVY LOUCILLE N. FERNANDEZ Investment and Portfolio Management Sat 8A – 5P

People have more opportunities to present their ideas and show their competitiveness to a wider audience. 3. developing many of us into a better person. which lead to changes in the human character. people get more exposure to various cultures. Rather. Culture  International marketing helps us to better understand our fellow human beings. International marketing rewards excellence. Homogenization of cultures does not indicate that our aptitudes. The information boom makes it easier for markets to deliver on their supervisory role. With merchandise promoted internationally. Many products would not be economically viable without a global market. It is a key factor that strengthens both nations and individuals. 5. Such a conscience results from the greater understanding that consumers develop about the consequences of their buying decisions on others. making us an amalgamation of different cultures. It predicts for more certainty in the future and enhances standards of living worldwide. There is a market conscience. Markets themselves are a form of democracy. lets us learn continuously and endows us with much more enthusiasm. Consumer support will reinforce societally desirable firm behaviour and punish acts that are deemed socially unacceptable. The aim of international marketing is to unite the world with a better era for the human race as competitive cooperation supersedes the rules of total competition.Why International Marketing? (5 core benefits on a businessman’s point of view) 1. Markets have a watchdog role to play to ensure that exploitation does not occur. Opportunity and contentment  International marketing is the best way to raise national power and status for nations with limited resources and territory. It removes boundaries between nations and grants more opportunities to gain better skills and exposure to different cultures. 2. likes and behaviours would be the same. 4.” This way. accelerating innovation and development. Nature and benefits of International Marketing         Enhances the domestic competitiveness Takes advantage of international trade technology Increase sales and profits Extend sales potential of the existing products Maintain cost competitiveness in your domestic market Enhance potential for expansion of your business Gains a global market share Reduce dependence on existing markets  Stabilize seasonal market fluctuations . reducing selective exploitation due to knowledge monopolies. Freedom  International marketing is a notion of freedom. we would accept cultural differences and adapt them to our own culture. Fairness  Nations that trade are more interdependent. International marketing enables individuals to think thoughts that are more wide ranging. Global markets force companies and their employees to learn about other cultures and to develop relationships with “foreigners. International marketing leverages the capabilities and resources that exist. Prosperity and Innovation  International marketing gives hope to countries that have been “in the dark” by offering better job prospects and improved skills. people can now easily make price comparisons. International marketing is an efficient way of doing business globally.

Promotion. brand name. products and method of operation. The foreign company. technology or process) or a trademark (which protects a product name) to another company for a fee or royalty. a company can gain market presence without an equity (capital) investment. used car dealers. .  Usually the franchise agreement is more comprehensive than a regular licensing agreement in as much as the total operation of the franchisee is prescribed. the marginal profitability of such exports tends to be high.  Licensing also is an effective mode for testing the future viability of more active involvement with a foreign partner. the video industry and professional and health improvement services. trade secret.Mode of Entry 1.  Using licensing as a method of market entry. logo. product formulations)  Under licensing. or licensee gains the right to commercially exploit the patent or trademark on either an exclusive (the exclusive right to a certain geographic region) or an unrestricted basis.  Advantages of Licensing and Franchising:  Low investment  Limited direct exposure  Lower exit costs  Rapid entry  Possible reduction in counterfeiting  Disadvantages:  Limited control (contract = enforceability)  Quality. since exports add volume to an already existing production operation located elsewhere. It differs from licensing principally in the depth and scope of quality controls placed on all phases of the franchisee`s operation.  The franchise concept is expanding rapidly beyond its traditional businesses (such as service stations. Export  This represents the least commitment on the part of the firm entering a foreign market.  Advantages:  Limited investment. licensing is a particularly attractive mode for small and medium-sized firms. license fees. Franchising  License to sell company’s products or operate a business that carries that company’s name  Franchising is a special form of licensing in which the franchiser makes a total marketing program available including the brand name. restaurants and real-estate brokers) to include less traditional formats such as travel agencies.  Due to advantages of low risk and low investment. a company assigns the right to a patent (which protects a product. Low risk  Disadvantages:  Higher unit cost to consumer  Likely lower market share  Limited learning on country market characteristics  Possible preemption by competitors Licensing  A contractual agreement whereby one company (the licensor) makes an asset available to another company (the licensee) in exchange for royalties. Exporting to a foreign market is a strategy many companies follow for at least some of their markets. or some other form of compensation (Example: patent. exporting allows a company to centrally manufacture its products for several markets and therefore to obtain economies of scale. 3. Furthermore. Image  Difficulty in terminating relationship 2. Since many countries do not offer a large enough opportunity to justify local production.

promotion and distribution. This is an entry mode in which a firm contracts with a foreign firm to manufacture parts or finished products or to assemble parts into finished products.  Lower labor costs abroad are the major incentive for using this entry mode. the partner may be an important customer who is willing to contract for a portion of the new unit`s output in return for an equity participation. the licensee does not retain rights to use the company’s trademark. Afterward.  The manufacturer`s responsibility is restricted to production.  Advantages:  Faster start  Reduced investment in manufacturing  Ability to take advantage of established manufacturer’s experience and cost structure  Disadvantages:  “Training” of competitor  Still left with marketing responsibilities (need country presence) Joint Venture (JV)  Entry strategy for a single target country in which the partners share ownership of a newlycreated business entity  Under a joint venture arrangement.  Sometimes. Franchisees typically retain rights to the parent company’s trademark and logo. o The relationship between licensees and the licensing company is looser than the relationship between franchisors and franchisees. such as for budgeting. the contracting firm supplies complete product specifications to the foreign firm. 4.  Disadvantages:  If an international firm has strictly defined operating procedures. This is important because it is a visible representation of the connection between franchisor and franchisee. the licensee is expected to establish its own identity in the marketplace. 5. sets production volume and guarantees purchase. In most cases. getting the JV company to accept the same methods of operation may be difficult.  The JV partner may have important skills or contacts of value to the international firm. one side is unable to raise the required funds.  When the JV partner wants to maximize dividend payout instead of reinvestment or when the capital of the JV has to be increased. .  Typically. Contract Manufacturing  A company arranges to have its products manufactured by an independent local company on a contractual basis. products are turned over to the international company which usually assumes the marketing responsibilities for sales.  Advantages:  Successful if the partners share the same goals with one partner accepting primary responsibility for operations matters. the foreign company invites an outside partner to share stock ownership in the new unit.*Difference of licensing from franchising: o Franchisees can expect to have a much closer relationship with their parent company than their licensee counterparts. Instead. planning and marketing.

It is very complex and requires a huge amount of financial resources. 7. Strategies  In domestic marketing. Market  Domestic marketing deals with only a single market while international marketing deals with several different countries and markets. Consumer tastes and preferences may also differ so marketing strategies must be formulated to cater to the needs of different consumers.Domestic vs International Marketing 1. Language  There are no language barriers in domestic marketing and obtaining and interpreting data on local marketing trends and consumer demands is easier and faster to do. International Marketing (IM) on the other hand is the promotion and sale of a company’s products to consumers in different countries. The risks are also lesser with domestic marketing and it needs lesser financial resources. Consumers  Domestic marketing deals only with one set of consumers while international marketing deals with different types of consumers with different tastes. 4. Selling Products  Domestic marketing is the selling of a company’s products within a local financial market. international marketing is more challenging and requires more commitment from the company because of the uncertainty and differences in laws and regulations in the global market while domestic marketing deals only with the laws and regulations of one country.  Every country has its own laws on business and a company that aims at entering into business in another country must first know about them. International marketing on the contrary must adapt to foreign country’s language Resources  Domestic marketing requires lesser financial resources while international marketing requires huge financial resources. the company can have the same policies and strategies while international marketing requires different strategies in the promotion of their products. 5. . 6. It deals with only one set of competition and economic issues which make it more convenient to do. 3. 2. Laws and Regulations  Although both use all the basic marketing principles. It helps the company make decisions and develop marketing strategies that are more effective and efficient.

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