INTERNATIONAL MARKET ENTRY STRATEGIES

Session 6
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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MARKET ENTRY METHODS & THE LEVELS OF INVOLVEMENT IN INTERNATIONAL MARKETS

Wholly-owned subsidiary Company acquisition Assembly operations Joint venture Strategic alliance Licensing Contract manufacture Direct marketing Franchising Distributors and agents Sales force Trading companies Export management companies Piggyback operations Domestic purchasing
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Levels of involvement

Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

SUCCESSFUL MARKET ENTRY #1

Criteria for Selecting Appropriate Market Entry Method
The company objectives and expectations relating to the size and value of anticipated business The size and financial resources of the company Existing foreign market involvement The skills, abilities and attitudes of the company management towards international marketing The nature and power of the competition with the market

Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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SUCCESSFUL MARKET ENTRY #2 Criteria for Selecting Appropriate Market Entry Method
The nature of existing and anticipated tariff and non-tariff barriers The nature of the product itself, particularly any areas of competitive advantage, such as trademark or patent protection The timing of the move in relation to the market and competitive situation

Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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RISK & CONTROL IN MARKET ENTRY

Control
Co-operation Strategies
Joint ventures Strategic alliances

Manufacturing
Own subsidiary Acquisition Assembly

Direct Exporting
Distributors Agents Direct marketing Franchising Management contracts

Indirect Exporting
Piggybacking Trading companies Export management companies Domestic purchasing

Risk
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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INDIRECT EXPORTING #1
Domestic Purchasing
Foreign organisation purchases the product for export to another country Gives access to and limited knowledge of the international market Little control over choice of markets entered For longer term, need a more proactive approach

Export Management Companies (EMCs)

Specialist companies act as the export department for a range of companies Help SMEs to initiate/develop/maintain international sales Deal with documentation, government regulation
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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INDIRECT EXPORTING #2
Trading Houses
Their extensive operations and controls enable operation in more difficult trading areas Manage countertrade activities

Piggy Backing
An established international distribution network of one manufacturer used to carry products of a second Particularly good for firms from developing countries Often poorly considered terms and conditions

Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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THE COMPONENTS OF THE EXPORT MARKETING MIX

Pricing:
Policy, strategies, discount structures & trading terms

Promotion:
Corporate promotions & local selling, trade shows & literature

Product:
Selection, development & sourcing

EXPORT MARKETING MIX

Technical:
Specifications, testing & product quality

Distribution:
Sales force management, agents, distributors & logistics

Services:
Market research, training & sales servicing

Finance & Administration: Budgets, order processing, insurance & credit control
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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IMPORTANT FACTORS FOR SUCCESSFUL EXPORTING Commitment of the firms management Exporting approach reliant on strong skills base Good marketing and information communication system production capacity & capability, product superiority, competitive pricing Effective market research Effective national export policy
Source: Katsikeas et al (1996)
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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INITIATION AND DEVELOPMENT OF EXPORT PRODUCT POTFOLIOS

Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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SELECTION CRITERIA FOR FINDING A SUITABLE AGENT Financial strength of the agent Their contacts with potential customers The nature and extent of their responsibilities to other organisations Their premises, equipment and resources (including sales representatives)
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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ACHIEVING SATISFACTORY MANUFACTURER-AGENT RELATIONSHIP

Achieving Satisfactory Manufacturer-agent Relationship
Allocate time and resources to find a suitable agent Ensure that both understand what each expects of the other Ensure that the agent is motivated to improve performance Provide adequate support on a continuing basis Ensure that there is sufficient advice and information transfer in both directions
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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REASONS FOR SETTING UP OVERSEAS MANUFACTURE

Product avoiding problems, e.g. perishability Costs of transporting and warehousing Tariff barriers and quotas Government regulations e.g. local investment Local manufacture viewed favourably by market Government contacts Market information feedback International culture in firm Local manufacture - faster response and just-in-time delivery Lower labour cost
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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MINIMISING THE POTENTIAL PROBLEMS OF LICENSING #1 Develop a clear policy and plan Allocate licensing responsibility to a senior manager Select licensees carefully Draft the agreement carefully to include duration, royalties, trade secrets, quality control and performance measures

Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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MINIMISING THE POTENTIAL PROBLEMS OF LICENSING #2 Supply the critical ingredients Obtain equity in the licensee Limit the product and territorial coverage Retain patents, trademarks, copyrights Be an important part of the licensees business

Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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FOREIGN MANUFACTURING STRATEGIES WITH DIRECT INVESTMENT Reasons for investment in local operations
To gain new business: local production demonstrates strong commitment To defend existing business To move with an established customer To save costs: e.g. labour, raw materials and transport To avoid government restrictions
Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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DRIVING FORCES FOR THE FORMATION & OPERATION OF STRATEGIC ALLIANCES

Insufficient resources Pace of innovation and market diffusion High research and development costs Concentration of firms in mature industries Government co-operation Self protection Market access

Use with INTERNATIONAL MARKETING STRATEGY: Analysis, development and implementation 4TH edition ISBN 1-84480-8025-3 Published by Thomson Learning DOOLE AND LOWE

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