Chapter 4: Marketing in International Markets and Globalisation

Define and elaborate: Franchising as an alternative market entry strategy

- A form of licensing granting the right to use certain intellectual property (IP) rights, such as trade names, brand names, designs etc. - The franchiser grants a license to the franchisee, who pays to be allowed to carry out business under the name owned by the franchiser - The franchisee retains ownership of their business, which remains separate from that of the franchiser - Has been relatively free of restrictions from legislation

Explain political, regulatory and legal forces in international markets

- A government's policies towards public/private enterprises Barriers to imports: - Tariffs (taxes that affect the movement of goods across economic or political bounderies, and that also affect imports, exports or goods in trnsit - Quotas (physical restrictions on the amount of goods that can be imported into a particular country/region) - Non-tariff barriers (a wide range of rules, regulations and taxes that have an impact on trade) - Differences in ethical standards: payoffs/bribes

Define and elaborate: Foreign direct investment (FDI) as an alternative market entry strategy

- A long-term commitment to marketing in a foreign nation through direct ownership of a foreign subsidiary(a company with voting stock that is more than 50% controlled by another company)/division - High costs - Greater strategy control and enhanced market capacity

Explain cultural forces in international markets

- Connotations associated with body motions, greetings, colours, numbers etc may vary greatly across cultures - When consumers are unfamiliar with products from another country, their perception of the country itself affects the attitude towards its products - May affect the marketing negotiations and decision-making behaviour of marketers

List the Environmental Forces in international markets

- Cultural forces - Social forces - Economic forces - Political, regulatory and legal forces - Technological forces

Explain economic forces in international markets

- Differences in standards of living, availability of credit, discretionary buying power, income distribution etc - Weakness of currencies of high IRs may make it difficult for companies to succeed in exporting their goods - Different GDPs (the total value of all goods and services produced by a country in one year) - High income, however, is no guarantee of an attractive market

List 8 alternative market entry strategies

- Exporting - Licensing - Franchising - Contract manufacturing - Joint ventures and strategic alliances - Trading companies - Foreign direct investment (FDI)

Explain Market Intelligence in foreign markets

- Gathering secondary data should be the first step in analysing a foreign market - Primary data should uncover significant cultural characteristics before a product is launched so that the marketing strategy is appropriate for the target market - Basic patterns of social behaviour, values - Cost may be higher than the cost of domestic research

Define and elaborate: Joint ventures and strategic alliances as alternative market entry strategies

- Joint venture: a partnership between a domestic company and a foreign company or government - Especially popular in industries that call for large investments, such as natural resources extraction - Often a political necessity because of nationalism and government restriction on foreign ownership - Local partners have first-hand knowledge or privileged access to local resources - Cost advantages - Risk that the relationship stifles flexibility - Strategic alliances: partnerships formed to create a competitive advantage on a worldwide basis - Each partner seeks to add to its competencies by combining its resources with those of its partner - Few businesses have the required individual resources, makes sense to collaborate with other companies - Global strategic partnerships: link-ups between companiies from two or more regions which jointly decide to pursue a marketing opportunity, share resources and combine ideas, retaining independence, but pooling many activities and sharing rewards

Why may it be hard to gather primary data from other markets?

- Language differences - Cultural barriers - Attitudes towards privacy - Unwillingness to be interviewed - Restrictions on free speech

Explain social forces in international markets

- Marketing activities are structured by the institutions of family, religion, health, education and recreation - For example, in the UK, where listening to music on hi-fi systems is a common form of relaxation, Japanese products have a large market -In Holland, children are banned from appearing in ads for sweets

Explain technological forces in international markets

- Much of the technology used in Europe may be inappropriate for developing countries - Promoting products via the internet will be difficult in countries where computer ownership is low or state-controlled - Non-domestic markets may be more advanced than the domestic market, providing marketers with a different set of challenges

Define and elaborate: Trading companies as an alternative market entry strategy

- Provides a link between buyers and sellers in different countries - Trading company buys in one country at the lowest price consistant with quality an sells to buyers in another country

List 3 things needed for International Marketing analysis

- Screening - Market potential - Sales potential

Define and elaborate: Licensing as an alternative market entry strategy

- System in which a licensee (owner of the foreign operation) pays commissions (provision) or fees on sales/supplies used in manufacturing - Exchanges of management techniques or technical assistance are primary reasons for licensing agreements - Löwenbräu (<3) has used licencing agreements to increase sales worldwide without committing capital to build breweries - No direct investment (reduces risk)

Define and elaborate: Exporting as an alternative market entry strategy

- The lowest and most flexible level of commitment to international marketing - A business may find an exporting intermediary that can perform marketing functions associated with selling to other countries - Limited risk in using export agents because there is no direct investment in the foreign country - Foreign buyers encourage international exchange by contacting domestic businesses about their needs and the opportunities available in exporting

Explain Global Marketing

- The most extreme case of international involvement, representing the full integration of international marketing into strategic planning - Identify products for which similarities across many markets allow a single global strategy to be pursued - Attractive to managers as one marketing strategy can be used across a number of markets - It is a mistake to assume that local differences can be ignored - While brand name, product characteristics, packaging may be straight-forward to standardise, media allocation, retail outlets, customer service and price is more difficult - Even at McDonald's there is some adaption to local tastes: beer in Switzerland and ice creams in Portugal

Define and elaborate: Contract manufacturing as an alternative market entry strategy

- The practice of hiring a foreign company to produce a designated volume of product to a set specification - Reebok uses Korean contract manufacturers to produce many of its sports shoes - The final product carries the domestic company's name

List the levels of involvement in international marketing

1. Domestic Marketing 2. Export marketing - Takes opportunities outside its home market but continues production in the home country 3. International Marketing - Reduces reliance on intermediaries and establishes direct involvement in countries in which trade takes place 4. Multinational marketing - Adaptation of some of a company's marketing activities to appeal to local culture and differences in taste - Behave in the market as they are loval companies 5. Global marketing - Total commitment to international marketing, in which a company applies its assets, experience and products to develop and maintain marketing strategies on a global scale

Define Multinational Enterprise

A company with operations or subsidiaries in many countries

Define Dumping

Selling products at unfairly low prices outside domestic markets (usually to gain market share and wipe out competitors to then increase prices again) Unethical

Define Globalisation

The development of marketing strategies that treat the entire world, or its major regions, s a single entity