International Trade & Marketing

Unit 1: Overview of International Marketing

• Random distribution of natural resources requires interdependence among countries.
• Countries engage in international marketing/trade to obtain goods they cannot produce at home or goods that are cheaper abroad.
• Nations buy goods and services they can produce themselves, specializing in commodities and services where they have a comparative advantage.
• Trade between nations developed where one could produce something desirable while others could not.
• International marketing/trade is rooted in the varying resources of different regions.
• Marketing involves investigation, designing, and selling.
• International marketing extends the analysis, planning, and implementation of marketing resources and programs to foreign markets.
• The American Marketing Association (AMA) defines international marketing as the multinational process of conception, pricing, promotion, and distribution of ideas, goods, and services satisfying individual/organizational objectives.
• The inclusion of multinational implies marketing activities are undertaken and coordinated across several countries.
• The international marketing process isn't a mere repetition of identical foreign strategies.
• The four Ps of marketing (product, place, promotion, and price) must be integrated and coordinated across countries for an effective marketing mix, sometimes adjusted for a particular market.
• Cateora and Graham (1999) define international marketing as business activities designed to plan, price, promote, and direct the flow of a company's goods/services to consumers/users in over one nation for profit.
• International marketing deserves special attention due to its growing importance as an era of marketing opportunity and its greater level of risk and uncertainty stemming from unfamiliarity with other cultures.

Reasons for International Marketing

• Global firms offering better products or lower prices might attack the company’s domestic market, prompting a counterattack.
• Foreign markets may present higher profit opportunities.
• Companies achieve economies of scale through a large customer base.
• International diversification reduces dependence on any one market.
• Customers might expand abroad and require international servicing.
• Factor endowment differences in different regions cause international trade.

Challenges in International Marketing

• Unstable governments, high indebtedness, inflation, and unemployment expose foreign firms to risks.
• Some companies sponsor the government in power during campaigns, adding marketing costs.
• High foreign indebtedness makes it difficult to pay back debts.
• Foreign exchange problems with high indebtedness and economic-political instability decrease a currency's value.
• Foreign firms want to be paid in hard currencies with profit repatriation rights, but these options are unavailable in total in markets.
• Foreign governments place regulations on foreign firms operations. Governments impose high tariffs to protect domestic markets and use invisible trade barriers.
• Officials require bribes before signing necessary documents and often award contracts/business to highest bidders.
• Technological Pirating raises worries about foreign managers learning how tom make products and breakaway to compete openly.
• High costs of production and communication adaptation require studying each foreign market critically and carefully.
• Changing international boundaries shape economic behavior.

International Marketing Concepts

• Domestic market extension concept is when a domestic company seeks sales extension of its domestic product into foreign markets.
• Multi-domestic market concept recognizes overseas market differences and the importance of offshore business.
• Global marketing strategy strives for efficiencies of scale by developing a standardized product to be sold at reasonable prices to a global market.

Stages of International Marketing Involvement

• No direct foreign marketing involves companies that do not actively cultivate customers outside national boundaries.
• Sales may be made to trading companies directly.
• Infrequent foreign marketing occurs when temporary surpluses are characterized by their temporary nature in production levels or demand result in marketing oversees.
• Regular foreign marketing is at the level when the firm has permanent productive capacity devoted to production to be marketed on a continuing case.
• International marketing entails goods production outside the home market.
• Global marketing changes the company orientation toward markets and planning by treating the world, including its home market, as one market.

Unit 2: Bases of International Trade

• Nations trade expecting to gain something from trading partners.
• Trade is necessary because it is virtually impossible for a country to be completely self-sufficient without incurring undue costs.
• Trade is a positive-sum game; both nations and individuals anticipate gain from it.

Production Possibility Curve

• Without trade, a nation produces all commodities to satisfy needs.
• The production possibility curve shows the number of units of computers/automobiles a country can produce, substituting one product for the other with resource limits.
• Countries elect to specialize or put their resources either into making computers or automobiles.

Principles of Absolute Advantage

• A country should export a commodity produced at a lower cost and import a commodity produced at a higher cost than other nations.
• Nigeria has an absolute advantage in computers, but absolute disadvantage in automobiles; Ghana has the opposite.

Principles of Comparative Advantage

• Trade will take place if one nation has absolute advantage for all products, and another has absolute disadvantage for all products.
• David Ricardo argued that absolute production costs are irrelevant.
• A country may be better at producing many products, it should produce what it produces best (concentration on a product with the least comparative disadvantage).

Factor Endowment Theory

• Absolute/relative advantage is determined by labor in terms of time and cost.
• Labour determines comparative production costs and product prices.
• An analysis of labour costs has to consider the quality of that labor.
• Countries have different factor endowments so they have comparative abundant different factors.
• Countries export the relatively plentiful commodity.
• Example of other theories: production life cycle.

Limitations of Trade Theories

• Trade theories are limited by underlying assumptions.
• Most trade rules are based on a traditional model assuming trade is: Bilateral, involving products Originating primarily in the exporting country, The exporting country having a comparative advantage, and Competition primarily focusing on the importing country's market.
• Today's realities are different with Trade as a multilateral process.

Unit 3: World Market Environment

• The environment prospective companies want to trade with is imperative especially the environment.
• Some businesspeople confuse the world and home market environments.
• Humankind's ability to overcome environmental harshness distinguishes humankind from the rest of animal kingdom.
• Demographics includes geographical distribution, density, mobility trends, age distribution, birth/death rates, and marriage rates.
• Natural resource endowment varies among countries.
• Marketing decisions are affected by developments in the political and legal environment.
• Culture is a set of transmitted/shared traditional beliefs and values, encompassing norms, values, customs, art, and mores.

Technological & Economic Environments

• An international marketer studies each nation’s technological development independently and the issues includes: the mode of production of goods and services, mode of delivery of services, packaging systems, mode of payments, time consideration, Cost of technology, and Accessibility of technology.
• Marketers require purchasing power and the availability of purchasing depends on current income, prices of goods/services, savings, debt, and credit availability.

Unit 4: International Marketing: Mode of Entry

• Marketing opportunities exist in all countries regardless of the level of economic development.
• International marketers can be misled if they assume that economic opportunities only exist in developed countries.
• A particular can be attractive because of the demand and size terms of the number of its consumers and their spending power.
• Underdeveloped countries may provide better returns because competitive expenditures are less than sophisticated.
• Opportunities must be screened comparing opportunities based on relevant criteria.
• There is no single ideal criterion assessing market opportunities.
• International market entry strategy can consider the environmental impact such as; the nature of production, the nature of the market, the company’s financial capacity, the companies management expertise, and the company’s established objectives.

Export

• One of these strategies is that a manufacturing production remain locates in the home country and while the company makes sales arrangement.
• Exporting enters foreign markets, the company achieves a minimum line in production, investment or company mission.
• One of the advantages is risks are minimal because the company simply exports its excess production capacity when receiving orders abroad
• Under this, marketing strategies are inflexible/ unresponsive.

Indirect & Direct Export

• Indirect export involves a the firm who doest have to develop an oversees sales force.
• Direct Export: the manufacturers concerned take responsibility of exporting their products with the services of middlemen.

Joint Venture

• Foreign investor may join local investors to create joint venture in which they their and control.
• Licensing: an export manufacture will enter an agreement with a foreign company authorizing the foreign company to use the production process.
• Contract an equipment will be for the local company in the foreign country to be in charge of licensed products.
• Turkey operation is a seller for a facility fully equipped and ready to be operated by the buyer.

Direct Investment

• Direct ownership or a foreign based assembly or manufacturing facilities is the ultimate foreign investment.
• Some of the advantages includes: company may secure cost in areas of cheaper and raw materials.

FTZ (Free Trade Zone)

• An FTZ can be used regardless of the weather and the entry is exporting or local manufacturing.

Introducing a Product into International Market

• In interpreting the research findings, the firm has to take into consideration the dynamic fashion environment in the market.

Factors to Consider to Standardize & Differentiate

• The usage of the product is in all markets.
• Corporate objectives: and financial resources requirements:
• Legal Systems: can have a major impact on marketing practices.

Module 2: Market Share Strategies

• A product that is successful in one country is not a guarantee.

New Product Development

• A Product should be useful to the society both now and in the future.

Market Segmentation

• Some marketers are prone to treat market segmentation as an unknown and unfamiliar concept.

Product Adoption

• Relative Advantage: For a product to gain acceptance, it must demonstrate is advantage 19.

International Product Life Cycle (IPLC)

• The international product life cycle (IPLC) explain trade in advantage describing.

Explore the influence of natural resources, globalization of markets, and comparative advantage on international trade. Learn about the factors driving the interest in international marketing and the differences between global and multinational companies. Understand how varying resource availability led to international trade's origin.