International marketing - Essay Example

?INTERNATIONAL MARKETING STRATEGY International Market Selection & Entry With every firm planning to go global given the competitiveness in the global markets, it is critical for firms to plan foreign market entry strategies which will make such firms explore foreign based customers and remain competitive over time. At the heart of international strategy lies selection of foreign market and the entry models which are appropriate for the desired market (Ellis, 2010, p.450). A comprehensive and exhaustive analysis of the market plus the entry mechanisms are essential for any firms planning to venture into foreign market if the corporation would want to remain in operation and break-even. Similarly, the increase in the competitiveness nature of international markets calls for improved quality and advancement in the production techniques (Ronkainen, 2005, p.97-8). The entry strategies in an international category involves making decisions on the goals and objectives of the firm, choice of the products/services, market penetration modes, and performance monitoring and control systems which are deemed appropriate for the market. After evaluating its potential, strengths, capacities, and limitations, a corporation then figures going multinational. Exploring an international market with more promising potential involves market screening of all the potential markets. The screening exercise is conducted based on economic, cultural, and political factors which have the potential of affecting operations of the firm in the foreign market (Keegan, & Schlegelmilch, 2011, p.37). Besides, geographical factors and demographic variables must be given close attention. These include location, composition of the potential target consumers (based on gender, age, income, culture, and family structures), political and economic environment (covering from legal regulations, duties and taxes, to consumer protection standards), and market characteristics. Being the fundamental factors under investigation, size, level of competition, and distribution agents with the marketing environment must be valued (Root, 2009, p.56). Otherwise, if these factors are not considered, then the firm will not succeed in the foreign market as it will fail to command the much needed market share. The selection of an overseas market is conducted in five stages. The first stage entails conducting an investigation on the domestic market regulations and management preferences. The second stage involves conducting an initial entry assessment programs. The third and the fourth steps are conducting a survey on the competitiveness and market responses respectively. The final step in exploring foreign market entails a detailed analysis of international trade-off possibilities (Wolfgang, 2008, p.67). After the completion of market selection, a firm then plans her entry strategy. A number of entry strategy options are made available for firms to choose from. Firms may either choose for enter the foreign market through distributors or agents or through direct methods such as partnerships, alliances, direct sales promotion, or agreements (Johansson, 2007, p.75). The method of market entry adopted by the foreign firm venturing in a new market significantly affects the outcome and success of the firm. These entry strategies may be undertaken in form of licensing, joint venture, exporting, and direct investments. However, independent of the entry strategy chosen by a firm, their access to the market is limited. Though using intermediaries and agents results into a fasters and greater command of the market, it is relatively costly and very bureaucratic (Pan, & Tse, 2007, p.87). This implies that the venturing/investing firm has no direct control of the market and neither has any direct link with the customers/consumers. On the other hand, direct entry methods are better in building personalized market understanding, it is limited with the fact that the foreign firm will not have any control of the market and hence, low sales volume over the first few years of operation. International product policy Products being the heart of international marketing endeavour, manufacturers or firms compete for quality and preference in the global markets. It is products which establish the link between buyers and seller. However, like in the domestic market, the role of products in the international markets remains the same. The underlying question for the firm is which products to sell/produce. Designing the right commodities for the global needs is the main challenge facing international corporations. The firm will determine the products to sell, international production strategies, brand portfolio management, product standardization versus customization, branding, packing and labelling techniques, and timing of the product entries (Westhead et al., 2012, p.45). In identifying the products to deal in, international marketers determine what the foreign market offers by defining the production available in the international market and defining the rights/services behind these products. While determining the terms and conditions for product warranty, the firm if faced with two critical decisions; that is, to apply the same product warranty policy for all the firms or to advance different warranty policies for each country (Wood, & Robertson, 2010, p.18). Either way, the firm will have to incur additional costs. In addition, the international marketer is faced with the challenge of using warranty as one of its competitive tool. Some firms consider undertaking investments in product services through training, staffing, and distribution as a way of increasing their competitiveness (Wolfgang, 2008, p.68). International firms may also prefer selling their services and rights as opposed to physical products. For example companies like Coca-Cola licences bottlers globally in their name. Three alternatives to international product strategies are available. These include, straight product extension (where the same domestic policies are exported in the international market), product adaptation (where the demands and preferences of the foreign consumers are catered for), and product innovation (in which international marketers designs from new products from scratch to match the unique needs of the foreign market) (Hollensen, 2008, p.88-9). Firms may also adopt product standardization and customization. Under this approach, both the domestic and foreign products are harmonized or standardized to bear common expertise standards under the principle “all business being local” (Wolfgang, 2008, p.68). Economically and businesswise, standardization is conducted to enhance economies of scale in production, and to conserve the domestic image of the product given that consumers are mobile. On the other hand, product adaption is prompted by differences in climate, variations in user skills, national consumer habits, difference in product regulation policies practiced by different states, and historical foundation of the company (Cateora, & Graham, 2009, p.106). Finally, product branding and labelling are other international marketing tools used by global marketers. Multinational firms brand and pack their product (popularly referred to as private packing/branding) as a way of conveying their image internationally. However, some companies are forced to abide by the legal constraints enacted by the state authorities and the law making body to protect consumers against any falsified information since consumer’s right to quality and standards must be adhered to. Packing may also be necessary as a method of protecting the products from climate and damage during transportation (Taylor Zou, & Osland, 2010, p.154). List of references Cateora, P. R. & Graham, J. L. 2009. International Marketing. 11th ed. New York, McGraw Hill Companies, p.106. Czinkota, M.,Ronkainen,I. 2005. International Marketing, The Dryden Press, Sydney, p.96-9. Ellis, Paul. 2010. "Social Ties and Foreign Market Entry." Journal of International Business Studies, 31: 443-469. Hollensen, S. 2008. Global Marketing - Market-Respective Approach. Hertfordshire, Prentice Hall, p.86-9. Johansson, J. K. 2007. Global Marketing: Foreign Entry, Local Marketing and Global Management. New York, Times Mirror Books, p.75. Keegan, W. J. & Schlegelmilch, B. B. 2011. Global Marketing Management - A European Perspective. Harlow, Pearson Education Limited, p.36-7. Pan Y. & Tse, D.K. 2007. The Hierarchical Model of market Entry Modes. Journal of International Business Studies, p.87. Root, R.F. 2009. Entry Strategies for International Markets. Jossey-Bass, Inc., Publishers, San Francisco, California, p.56-7. Taylor C. R., Zou, S., Osland, G. E. 2010. Foreign market Entry Strategies of Japanese MNCs. International Marketing Review, Vol. 17, No. 2, 146-163. Westhead, P., Wright, M. and Ucbasaran, D. 2012. ‘International market selection strategies selected by “micro” and “small” firms’, Omega The International Journal of Management Science, p.45. Wolfgang Ulaga, 2008. International Product Policy. New York: McGraw, p.67-8. Wood, V. R. & Robertson, K. J. 2010. Evaluating international markets. International Marketing Review, p.18. Read More