Distribution
and Communication Decisions for International Market
International Marketing
Decision
International
marketing decisions are same as domestic marketing; only difference is that all
marketing decisions are taken with reference to foreign or international
markets (or customers). More clearly, product, price, promotion, and
distribution decisions are made for international buyers.
Those
firms planning to enter the global markets have to decide on following key
decisions:
1.
International Markets Decision:
Whether
to go for international market?
2.
Market Selection Decision:
To
whom of which country to sell?
3.
Market Entry Decision:
How
to enter the international market?
4.
Marketing Mix Decision:
Which
type of marketing mix should a firm prepare?
5.
Organization Decision:
What
type of organization should a firm adopt to manage international business?
Let’s
describe in brief these key decisions.
1.
International Markets Decision:
The
first few important questions a firm has to answer are (1) should a company go
for international market? (2) Why should a company prefer to enter global
market? (3) Does company capable to transact in international markets?
Obviously, answers come from company’s current domestic market position and
types of opportunities available in the foreign markets. When international
markets seem to more attractive and the company is capable to exploit these
markets, the company decides to enter the international markets.
In
short, a company prefers to enter the international market in following
situations:
1.
When company’s has excess production capacity and there exists attractive
opportunities outside, and/or
2.
When, compared to domestic markets, foreign markets seem more attractive or
profitable, and/or
3.
When company has enough capabilities to deal with international markets, and/or
4.
When domestic governments insist, force, and/or encourage businessmen for
international markets.
2.
Market Selection Decision:
Once
a firm has decided to enter the international market, the next important
marketing decision is market selection. As per company’s present product mix,
production capacity, and proposed expansion strategy, it selects one or more
countries to operate in. In the same way, it has to decide on type of foreign
buyers to be served.
Market
segmentation and target market selection are two basic issues in the decision.
Initially, a firm targets the most attractive and comparatively easy
international markets. Global marketing research can help a company to study
international consumer behaviour, segment international market, and select a
few most profitable markets.
To
assess international markets, following criteria may be used:
1.
Present market opportunities
2.
Future market opportunities
3.
Market share
4.
Uncertainties and challenges
5.
Cost-profit estimates
6.
Return on investment
3.
Market Entry Decision:
A
firm has selected international markets to operate in. Now, the next imperative
marketing decision is market entry, i.e., how to enter the market; which of the
options to be used for foreign market entry. There are several options to
choose an appropriate entry strategy.
(1).
Exporting:
Exporting
involves selling domestic products in foreign markets. It is easier and common
entry option. Exporting consists of producing the products in home country and
selling or exporting the same in the international market. There are two
options in exporting, the first, company itself exports products in foreign
markets, and, the second, company exports through intermediate agency or agent.
Some
entry options in exporting, as suggested by Philip Kotler, include:
i.
Export Department:
A
company maintains a full-fledged export department to sell its products in
foreign markets. The department is responsible for searching export
opportunities, promotion and selling products, and performing all activities
related to export business.
ii.
Opening Branch in Foreign Market:
Some
companies open their branches or shops in foreign markets to serve consumers.
The head of the branch is responsible for all activities related to promotion
and distribution of the company’s products.
iii.
Appointing Traveling Salesmen:
Some
companies appoint salesmen to search customers in foreign market and serve
them. They collect orders and manage necessary procedures. They can help
develop relations with foreign agencies, retailer, and customers.
iv.
Appointing Distributors:
In
this entry option, a firm appoints agents, representatives, or middlemen in
foreign markets. They are responsible to carry out all activities to promote
and sell the company’s products.
(2).
Direct Foreign Investment:
A
company sets up its own factory in other countries. Its carries out all
production and marketing activities in foreign land. But, the option depends on
a lot of factors such as market stability, costs of production and marketing,
competition, government policies, and other factors determining favorableness
of situation. Company should select this strategy carefully as there are
considerable risk and uncertainties in some countries.
(3).
Joint Venture:
The
joint venture is jointly owned and managed by host and foreign companies, by
two companies of two nations. A foreign company holds necessary equity to get
voice in management but not enough to completely dominate the venture.
Structure of joint venture depends on government policies and approach of host country.
In
underdeveloped and developing countries, many multinational corporations are
operating as joint ventures. For example, HMT represent joint venture with
Swiss Machines and Tools, Proctor and Gamble has joint venture with Godrej,
Suzuki of Japan has with Maruti Udyog, etc.
At
present Indian governments and companies operate with more than 50 countries as
joint ventures. When a giant company invests directly in many countries, it is
called multinational companies (MNCc). There are several forms of joint
venture, such as mixed companies, joint ownership companies, licensed
companies, contract manufacturing, management contract, etc.
4. Marketing Mix Decision:
Marketing
mix decision involves preparing marketing mix (strategies) for international
market. Marketing mix consists of 4P’s – product decisions, pricing decisions,
promotion decisions, and place or distribution decisions.
Marketing
mix decisions remain same as domestic market except the target market. Here,
all marketing mix decisions are taken with reference to foreign customers and
global marketing environment.
5.
Organization Decision:
Organization
for global marketing is an important decision. In order to implement, direct,
and control international marketing efforts, a company must adopt an
appropriate organization structure. The organization is responsible to regulate
foreign trade.
It
is same as domestic marketing organization; the only difference is that it is
prepared to administer international marketing operations and activities.
Structure depends on a lot of factors such as type of products, number of
countries, type of buyers, etc. Sometimes, it is treated as the department or
part of main organization, for example, foreign trade department.
There
are different types of organization structures suit with international
marketing such as:
i.
Product-wise Organization
ii.
Country-wise Organization,
iii.
Customer-wise Organization
iv.
Place-wise Organization
v.
Matrix or Mix Organization, etc.
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