The Global Marketplace

marketing fundamentals -- part 15 -- summary

Companies today can no longer afford to pay attention only to their domestic market, regardless of its size. Many industries are global industries, and firms to operate globally achieve lower costs and higher brand awareness. At the same time, global marketing is risky because of variable exchange rates, unstable governments, protectionist terrorists and trade barriers, and several other factors. Given the potential gains and risks of international marketing, companies need a systematic way to make their global marketing decisions.

A company must understand the global marketing environment, especially the international trade system. It must assess each foreign markets economic, political/legal, and cultural characteristics. The company must then decide whether it wants to go abroad and consider the potential risks and benefits. It must decide on the volume of international sales it wants, how many countries it wants to market in, and which specific markets it wants to enter. This decision calls for weighing the problem rate of return on investment against the level of risk.

Entering International Markets

The company must decide how to enter each chosen market -- whether through exporting, joint venturing, or direct investment. Many companies start as exporters, move to joint ventures, and finally make a direct investment in foreign markets. In exporting, the company enters a foreign market by sending and selling products through international marketing intermediaries (indirect exporting) or the company's own department, branch, or sales representative or agents (direct exporting). When establishing a joint venture, a company enters foreign markets by joining with foreign companies to produce or market a product or service. In licensing, the company enters a foreign market by contracting with the licensee in the foreign market, offering the right to use a manufacturing process, trademark, patent, trade secret, or other item of value or a fee or royalty.

Companies must also decide how much their products, promotion, price, and channels should be adapted for each foreign market. At one extreme, global companies use a standardized marketing mix worldwide. Others use an adaptive marketing mix, in which they adjust the marketing mix to each target market, bearing more costs but hoping for a larger market share in return.

The company must develop an effective organization for international marketing. Most firms start with an export department and graduate to an international division. A few become global organizations, with worldwide marketing play and in managed by the top officers of the company. Global organizations view the entire world as a single, borderless market.