MKT 825 Module 1: International Marketing Overview - PDF

Okay, here's the conversion of the provided text into a structured Markdown format, broken down by page and section, with LaTeX formatting for mathematical formulas:: # MKT 825 ## MODULE 1 ### MODULE 1 AN OVERVIEW **Unit 1** An overview **Unit 2** Basis of international trade **Unit 3** World ma...

Okay, here's the conversion of the provided text into a structured Markdown format, broken down by page and section, with LaTeX formatting for mathematical formulas:: # MKT 825 ## MODULE 1 ### MODULE 1 AN OVERVIEW **Unit 1** An overview **Unit 2** Basis of international trade **Unit 3** World market environment. **Unit 4** International marketing: Mode of entry and **Unit 5** Branding and Packaging ### UNIT 1 AN OVERVIEW OF INTERNATIONAL MARKETING ### CONTENTS **1.0** Introduction **2.0** Objectives **3.0** Main Contents * **3.1** An Overview of Marketing and International Marketing * **3.2** Reasons for International Marketing * **3.3** Challenges in International Marketing * **3.4** International Marketing Concepts * **3.5** Stages of International marketing Involvement. **4.0** Conclusion **5.0** Summary **6.0** Tutor-Marked Assignment **7.0** References/Further Reading ### 1.0 INTRODUCTION Random distribution of natural resources necessitates inter-dependence among countries of the world. Since no country is self sufficient, no country can produce all the goods and services needed for its economy. Hence, different countries around the globe engaged in the production and exchange of different commodities. Countries engage in international marketing/trade to obtain goods they could not produce at home or those goods which can be bought at cheaper prices than home products. Today, individuals and nations, buys goods and services which they can produce themselves because, they tend to specialize on the production of those commodities and services they had greatest comparative advantage. Trade between nations developed first, where one country can produce something desirable while others could not. International marketing/trade owes it origin to the varying resources of different regions. ### 2.0 OBJECTIVES At the end of this unit, you should be able to: * define an international marketing * give reasons for international marketing * explain challenges in international marketing * explain stages of international marketing involvement and * differentiate between global company and multinational company. ### 3.0 Main Text #### 3.1 An Overview of Marketing and International Marketing Current interest in international marketing can be explained by changing competitive structures coupled with shift in demand characteristics in markets throughout the world. With the increasing globalization of markets, companies find themselves unavoidably enmeshed with foreign customers, competitors and suppliers, even within their borders. Marketing principles are universally applicable, whether a firm sells in the domestic market or foreign market, its marketing programmes should be built around a good product or service properly priced, promoted, and distributed to a market that has to be carefully analysed. If the statement is nothing to go by, we shall start our study of international marketing by refreshing our memory with the meaning of marketing in general. Although, there are many definitions attached to marketing, notwithstanding, we shall adopt the following: Kotler and Armstrong (1996) defined marketing as the business function that identifies customers needs and wants, determines which target markets the organization can serve best, and designs appropriate products, services and programmes to serve these markets. Stanton (1981) defines marketing as a total system of business activities designed to plan, price, promote, and distribute want-satisfying goods and services to present and potential customers. Kotler (1984) defined it as a social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with other. Marketing is a profit making activity which involves the co-ordination of various functions aimed at facilitating the flow of the required goods and services from the place of production to the place of consumption. A break down of this definition shows that marketing involves: * Investigation * Designing, and * Selling #### International Marketing International marketing involves the extension of the analysis of planning and implementation of marketing resources and programmes to foreign markets. Once a firm extends its marketing resources and programmes beyond its national boundary to other countries, that firm will be said to been engaging in international marketing. American Marketing Association (AMA) defined international marketing as "the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchange that satisfy individual and organizational objectives. The inclusion of multinational implies that marketing activities are undertaken in several countries and such activities should somehow be coordinated across nations. It also means that the international marketing process is not a mere repetition of using identical strategies abroad. The four Ps of marketing (product, place, promotion and price) must be integrated and coordinated across countries in order to bring about the most effective marketing mix. In some cases, the mix may have to be adjusted for a particular market for better impact. Cateora and Graham (1999) defined international marketing as the performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. Although, international marketing does not involve principles found in the domestic marketing, it deserves special attention because of the following factors: * Its growing importance as an era of marketing opportunity and * Its greater level of risk and uncertainty steaming from the marketer's unfamiliarity with other cultures. It therefore calls for critical studying and evaluation of economic, political, socio-cultural and legal environments. In this regard, companies that seek its fortunes in the global markets, should carefully planned its marketing activities abroad, this because its risks are enormous. Likewise its rewards are unquantifiable. Thus, international marketers should critically focus on: * International marketing decisions * Market selection decision * Entry and operation decision * Marketing mix decision, and * Market organization decision. #### 3.2 Reasons for International Marketing Most companies would prefer to remain domestic, if their domestic market were large enough. This because, managers would not need to learn another country's language and laws, deal with volatile currencies, face political and legal uncertainties or redesign their products to suit different customers' needs and expectations. Besides, business would be easier and faster at home. However, Kotler (1997) gave several reasons that might draw a company into international marketing. Some of these are: 1. Global firms offering better products or lower prices might attack the company's domestic market. The company might want to counter attack these competitors in their home markets to tie up their resources. 2. The company might discover that some foreign markets present higher profit opportunities than the domestic market 3. The company might need a large customer base to achieve economies of scale. 4. The company might want to reduce its dependence on any one market so as to reduce the risk 5. The company's customers might be going abroad and might require international servicing 6. Differences in factor endowment international trade owe it origin to the varying resources of different regions. Resources are not evenly distributed around the globe, thus some countries are better in some resources than the other. #### 3.3 Challenges in international Marketing Most companies, if not all, they are compelled to go abroad, however, wish to limit their marketing activities to home markets. Some of the reasons why some of these companies do not want to abroad include: 1. Unstable Government High indebtedness, high inflation, and high unemployment (most especially African countries, Nigeria in particular) in several countries have resulted in high unstable governments that expose foreign firms to high risks. Some companies have to adopt strategy of sponsoring the government in power during campaign processes, because of their investments in such countries. These activities engaged by these companies, add to the marketing costs which they have to content with. For such reasons, most of the companies do not want to global. 2. High Foreign Indebtedness- Many companies and countries have accumulated huge foreign debts on which it is difficult to pay back, even the interest. This indebtedness could be attributed to loans taken, poor leadership, paying employees abroad, paying necessary taxes, etc, as stipulated by the governments abroad. 3. Foreign Exchange Problem-High indebtedness and economic- political instability decreases the value of a country's currency. Foreign firms want payments in hard currencies with profit repatriation rights. But these options may not be available in total in markets. 4. Foreign Government Entry Requirements and Bureaucracy- Governments of most countries places some regulations on foreign firms operations. These laws and regulations most companies most especially in developing world find it difficult to meet up. Thus, they find it difficult to go abroad. 5. Tariffs and other Trade Barriers- Governments often impose high tariffs to protect their domestic markets. They also resort to invisible trade barriers, such as slowing down import and approvals, requiring costly product adjustments and slowing down inspections or clearance of arriving goods mostly especially at the ports. 6. Corruption Officials, who charged with the responsibility of discharging one service or the other, requires bribes before necessary documents are signed. Most often they awards contract/business to highest bidders rather lowest bidders. 7. Technological Pirating- A company locating its plant abroad worries about foreign managers learning how tom make its products and breaking away to compete openly either due to some disagreements, change in foreign government and policies or inability of the firms to meet up with the economic conditions or intentional break-off. All these challenged most companies to go global. 8. High Cost of Production and Communication Adaptation- A company going abroad must study each foreign market critically and carefully, this because it must be sensitive to its economics, laws, politics, and socio-cultural and adapt appropriately its products and communications to such markets. 9. Shifting Border issues- Many international boundaries are in a state of flux. National borders are fundamentals to marketing activities, this because they dominate and shape economic behaviour within the country's borders. Changing boundaries may mean moving targets for international marketers. **Activity**: To assess your understanding of this section, do work out this activity: Give five reasons why firms go abroad. #### 3.4 International Marketing Concepts Cateora and Graham (1999) reported that the differences in the international orientation and approach to international markets that guide the international, business activities of companies can be described by one of the three orientations to international marketing management, namely: 1. Domestic market extension concept 2. Multi-domestic market concept, and 3. Global marketing concept **Domestic Market Extension Concept**: The domestic company seeking sales extension of its domestic product into foreign markets, it views its international operations as secondary to and an extension of its domestic operations. The primary motive is to make excess domestic production. Foreign sales are seen as a profitable extension of domestic operations. **Multi-Domestic Market Concept**: Once a company recognizes the importance of differences in overseas markets and the importance of offshore business to the organization, its orientation towards international business may shift to a multi-domestic market strategy. A company guided by this concept has a strong sense that country's markets are vastly different and that market success requires an almost independent program on a country by country basis, with separate marketing strategies for each country. **Global Marketing Concept**: A company employing a global marketing strategy strives for efficiencies of scale by developing a standardized product of dependable quality, to be sold at a reasonable prices to a global market. That is, marketing planning mix is approached from a global perspective and where feasible in the marketing mix, efficiencies of standardization are sought for. #### 3.5 Stages of International Marketing Involvement Regardless of the means employed to gain entry into a foreign market, a company may from marketing view-point, make no market investment. That is, its marketing involvement may be limited tom selling a product with little or no thought given to development of market control or a company may become totally involved and invest large sums of money and effort to capture and maintain a permanent, specific share of the market. Regardless of their involvement, briefly discussed below are some of the stages. 1. **No Direct Foreign Marketing**: Companies in this stage do not actively cultivate customers outside national boundaries, However, this company's products may reach foreign markets. Sales may be made to trading companies as well as other foreign customers who come directly to the firm. Or other products reach foreign markets via domestic wholesalers or distributors, who sell abroad on their own without explicit encouragement or even knowledge of the producer. 2. **Infrequent Foreign Marketing**: Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature therefore, sales to foreign markets are made as goods are available with little or no intervention of maintaining continuous market representation. 3. **Regular Foreign Marketing**: At this level, the firm has permanent productive capacity devoted to the production of goods to be marketed on a continuing basis in foreign markets. A firm may employ foreign or domestic overseas middlemen or it may have its own sales force or sales subsidiaries in important markets. The primary focus of operations and production is to service domestic market needs. 4. **International Marketing**: Companies at this stage are fully committed and involved in international marketing activities. Such companies seek markets all over the world and sell products that resulted from planned production for markets in various countries. This generally entails not only the marketing, but also the production of goods outside the home market. At this point, a company becomes an international or multinational marketing firm. 5. **Global Marketing**: At the global marketing level, the most profound changes are the orientation of the company toward markets and its planning. At this stage, companies treat the world, including their home market as one market. The entire marketing operations, and so forth, are considered as a global perspective, for example Coca-Cola Company. **Self-Assessment Exercise**: Briefly give reason for international marketing ### 4.0 CONCLUSION Certainly the homogenizing effect of tele-communications system has eliminated many of the regional differences that once existed. Thus, the world is considered as a global village/market Marketing internationally should entail looking for market segments with similar demands that can be satisfied with the same product, standardizing the components of the marketing mix that can be standardized, and where there are significant cultural differences that require parts of the marketing mix to be cultural adapted. ### 5.0 SUMMARY This unit examined marketing definitions relating to international marketing. Reasons for going international challenges and individual company's involvement were examined ### 6.0 TUTOR-MARKED ASSIGNMENT Explain the challenges in international marketing ### 7.0 REFERENCES/FURTHER READING Kotler, P: Marketing Management-Analysis, Planning. Implementation, and Control, 9th edition, New Jersey, Prentice-Hall, 19997. Onkvisit, S and Shaw, J.J: International Marketing-Analysis and Strategy, 3rd Edition, New Jersey, Prentice-hall, 1997. Stanton, W.J: Fundamentals of Marketing. 6th edition, Japan, McGraw-Hill Book Company, 1981. ## UNIT 2 BASES OF INTERNATIONAL TRADE ### CONTENT **1.0** Introduction **2.0** Objectives **3.0** Main Text * **3.1** Production possibility curve * **3.2** Principles of absolute advantage * **3.3** Principles of relative advantage * **3.4** Factor endowment theory * **3.5** Limitations **4.0** Conclusion **5.0** Summary **6.0** Tutor-Marked Assignment **7.0** References/Further Reading ### 1.0 INTRODUCTION Whenever a buyer and seller come together, each expects to gain something from one another. The same expectation applies to nations that traded with each other. It is virtually impossible for a country to be completely self-sufficient without incurring undue costs. Therefore, trade becomes a necessary activity, though, in some cases, trade does not always work to the advantage of the nations involved. Notwithstanding, too much emphasis is often placed on the negative effects of trade, even though it is questionable whether such perceived disadvantages are real or imaginary. The benefits of trade, in contrast are not often stressed, nor are they well communicated to workers and consumers? The question is- Why do nations trade? A nation trades because it expects to gain something from its trading partner(s). Then one may ask whether trade is like zero-sum game, in the sense that one must lose so that another will gain. The answer is no. because, though one does not mind gaining benefits at someone else's expense, no one wants to engage in a transaction that includes a high risk of losses. For trade to take place, both nations and individuals must anticipate gain from it. It is a positive sum game. This unit examines some theories with respect to nations and individual's trading. ### 2.0 OBJECTIVES At the end of this unit, you should be able to: * explain basis for trade among nations and individuals and * explain some theories in respect of international trading. ### 3.0 MAIN CONTENT #### 3.1 Production Possibility Curve Without trade, a nation would have to produce all commodities by itself in order to satisfy all its needs. Table 1 below, shows a hypothetical example of a country with a decision concerning the production of two products- computers and automobiles. *A description of the image of the production possibility curve: The curve depicts the trade-off between producing computers and automobiles. The vertical axis represents "Units of Computer" and the horizontal axis represents "Units of Automobile". A line slopes downward from point A on the vertical axis to point B on the horizontal axis. Point C lies within the area bounded by the axes and the line.* This diagram shows the number of units of computer or automobile a country is able to produce. The production possibility curve shows the maximum number of units made when computers and automobiles are produced in various combinations since one product can be substituted for the other within the limit of available resources. The country may elect to specialized or put all its resources into making either computers (point A) or automobiles (point B). At point C, product specialization has not been chosen, thus, a specific number of each of the two products would be produced. #### 3.2 Principles of Absolute Advantage Because each country has a unique set of resources, each country possesses its own unique production possibility curve. This curve when analyzed provides an explanation of the logic behind international trade. Regardless of whether the opportunity cost is constant or variable, a country must determine the proper mix of any of the two products and must decide whether its want to specialise in one of the two. Specialisation will likely occur if specialization allows the country to improve its propensity by trading with another nation. These principles of absolute advantage and relative advantage explained how the production possibility curve enables a country to determine what to export and import. Adam Smith in his book titled 'Wealth of Nations used the principles of absolute advantage as the justification for international trade. According to him, a country should export a commodity that can be produced at a lowest cost than can other nations. Conversely, it should import a commodity that can only be produced at a higher cost than other nations. Consider for example, a hypothetical production figures for Nigeria and Ghana as shown in table 2 below. **Table 2: Possible Physical Output** | Case | Product | Nigeria | Ghana | | :---- | :--------- | :------ | :---- | | Case I | Computer | 20 | 10 | | | Automobile | 10 | 20 | | Case 2 | Computer | 20 | 10 | | | Automobile | 30 | 20 | | Case 3 | Computer | 20 | 10 | | | Automobile | 40 | 20 | From the table above, case 2 shows that given certain resources and labour, Nigeria can produce twenty computers or ten automobiles or some combination of both. In contrast, Ghana is able to produce only half as many computers (i.e. Ghana produces ten for every twenty of Nigeria produces). The disparity might be the result better skills by Nigerian workers in making this product. Therefore, Nigeria has an absolute advantage in computers. However, Ghana has an absolute advantage in automobiles. At this point, it should be clear why trade should take place between the two countries. Nigeria has an absolute advantage for computers, but absolute disadvantage for automobiles. For Ghana, absolute advantage exists for automobiles and absolute disadvantage for computers. Therefore, if each country specializes in the product for which it has an absolute advantage, each can use it resources more efficiently while improving consumer welfare at the same time. This implies that since Nigeria would use fewer resources in making computers, it should produce these products for its own consumption as well as for export to Ghana. Base on this arrangement, Nigeria should import automobiles from Ghana rather than manufacture them itself. While for Ghana, automobiles would be exported and computers imported. Thus, for practicability each person should concentrate on and specialize in the craft that person has mastered. Similarly, it should not be practical for consumers to attempt to produce all the things they desire to consume. One should practice what one does well and leave the production of other things to people who produce them well. **Self-Assessment Exercise**: Briefly explain the term 'absolute disadvantage #### 3.3 Principles of Comparative Advantage One problem with the principle of absolute advantage is that it fails to explain whether trade will take place if one nation has absolute advantage for all products under consideration. Case 2 of table 2 above shows that situation. Note that the only difference between case I and case 2 is that Nigeria in case is capable of making thirty automobiles instead of the ten incase 1. In the second instance, Nigeria has advantage for both products, resulting in absolute disadvantage for Ghana for both. The efficiency of Nigeria enables it to produce more of both products at lower cost. At first glance, it may appear that Nigeria has nothing to gain from trading with Ghana. However, nineteenth-century British Economist, David Ricardo, perhaps the first economist to fully appreciate relative cost as a basis for trades. He argues that absolute production costs are irrelevant. More meaningful are relative production costs, which determine whether trade should take place and which items to export and import. According to his principles, a country may be better than another country in producing many products, but should only produce what it produces best. Essentially, it should concentrate on either a product with the least comparative disadvantage. Conversely, it should import for which it has the greatest comparative disadvantage or one for which it has the least comparative advantage. Case 2 shows how the relative advantage varies from product to product. The extent of relative advantage can be found by determining the ratio of computers to automobiles. The advantage can be found by determining the ratio of computers to automobiles. The advantage ratio for computers is 2:1 (i.e. 20:10) in favour of Nigeria. Also, in favour of Nigeria to a lesser extent is the ratio for automobiles, 1.5:1 (i.e. 30:20). These two ratios indicate that Nigeria possesses a 100 percentage advantage over Ghana for computers, but only a 50 percentage advantage for automobiles. Consequently, Nigeria has a greater relative advantage for the computer products. Therefore, Nigeria should specialize in producing computer products. While Ghana having the least comparative disadvantage in automobiles indicates that it should make and import automobiles. #### 3.4 Factor Endowment Theory The principles of absolute and relative advantage provide a primary basis for trade to occur, but the usefulness of these principles is limited by their assumptions. One basic assumption is that the advantage, whether absolute or relative, is solely determined by labour in terms of time and cost. Labour then determines comparative production costs and subsequently product prices for the same commodity. However, if labour is indeed the only factor of production or even a major determinant of product content, then countries with high labour cost should be in serious trouble. It is misleading to analyse labour costs without also considering the quality of that labour. A country may have high labour cost on an absolute basis, yet this cost can be relatively low if productivity is high. Furthermore, the price of a product is not necessarily determined by the amount of labour it embodies, regardless of whether the efficiency of labour is an issue or not. Since product price is not determined by labour efficiency alone, other factors of production must be taken into consideration, including land and capital In conclusion, since countries have different factor endowments, a country would have a relative advantage in a commodity that embodies in some degree that country's comparatively abundant factors. A country should thus export that commodity that is relatively plentiful within the relatively abundant factor It should be noted that there are other theories such as production life cycle. Leentief paradox and so forth that you can read on your own. #### 3.5 Limitations In sum, trade theories provide layout explanations about why nation's trade with one another, but such theories are limited by their underlying assumptions. Most of the world's trade rules are based on a traditional model that assumes that 1. Trade bilateral 2. Trade involves products originating primarily in the exporting country 3. The exporting country has a comparative advantage, and 4. Competition primarily focuses on the importing country's market. However, today's realities are quite different, namely: 1. Trade is a multilateral process 2. Trade is often based on products assembled from components that are produced in various countries 3. It is not easy to determine a country's comparative advantage as evidenced by the countries that often export and import the same product, and 4. Competition usually extends beyond the importing country to include the exporting country and the third countries. **Self-Assessment Exercise**: Briefly state the basis of relative advantage #### 4.0 CONCLUSION For countries to want to trade with one another, they must be better of with trade than without it. The principles of absolute and relative advantage explained how trade enables trading nations to increase their welfare through specialization. Trade of products with the best potential fir its own consumption as well as for export. Trade theories, in spite of their usefulness, simply explain what nations should do rather than described what nations actually do. #### 5.0 SUMMARY This unit explained basis of trade, and some theories of trade among nations. ## UNIT 3 WORLD MARKET ENVIRONMENT ### CONTENTS **1.0** Introduction **2.0** Objectives **3.0** Main Content 4. Knowledge of global Markets 5. Demographic Environment 6. Natural Environment 7. Political-Legal Environment 8. Socio-Cultural Environment 9. Technological Environment 10. Economic Environment **4.0** Conclusion **5.0** Summary **6.0** Tutor-Marked Assignment **7.0** References/Further Reading ### 1.0 INTRODUCTION Knowledge of world market environment is imperative especially the environment prospective companies want to trade with. Some companies products fail at the world market not because the products are not quality enough, or the target markets do not need them, but they fail to study such environment for their business operations. Some business persons confused the world market environment with home market environment by considering them to be one and the same. This unit examines the world market environmental variables as they affect marketing activities. ### 2.0 OBJECTIVES At the end of this unit, you should be able to * explain world market environment * explain the variables at the world market environment, and * explain its marketing implications. ### 3.0 MAIN CONTENT #### 3.1 Knowledge of Global Markets One of the characteristics that distinguish humankind from the rest of the animal kingdom is the ability to devise ways to overcome the harshness of the environment. Geography, the study of earth's surface, climate, continents, countries, people, industries, and resources, is an element of the uncontrollable that confronts every marketer but which receives scant attention The tendency is to study the aspects of geography as isolated rather than as important causal agents of the marketing environment. A significant determinant in shaping the culture of a society and its economy is the on-going struggle to supply its needs within the limits imposed by a nation's physical make-up. Thus, the study of geography is important in the evaluation of markets and their environments. Let examine this example: 'LACK OF BUSINESS ENVIRONMENT KNOWLEDGE A major example is the lack of geographical assessment in a major food processing company which had production problem after it built a pineapple cannery as the delta of a river in Menico. It built the pineapple plantation upstream and planned to barge the ripe fruit downstream for canning, load them directly on ocean liners, and ship them to the company's various markets. When the pineapples were ripe, however, the company found itself in trouble: crop maturity coincided with the flood stage of the river. The current in the river during the period was far too strong to permit the backhauling of barges upstream the plan for transporting the fruit on barges could not be implemented With no alternative means of transport, the company was forced to close the operation." This case has explained itself, no need for further explanations. #### 3.2 Demographic Environment Knowledge of the world market population is pertinent to an international marketer Markets may exist at the world market, but is the population big enough to break even, talkies of making profits? Answer must be provided for this question; otherwise going world market is nothing but visitation. Knowing the gross population is not even enough to an international marketer For the marketer to efficiently plan and implement good marketing programmes, the population has to be broken down into geographical distribution, density, mobility trends, age distribution, birth and death rates, and marriage rates The international marketer that carefully considers and understands the components of the demographic environment will likely performs a better marketing job than the one that jumps into the market with the assumption that the markets are the same with the home market. #### 3.3 Natural Environment By nature, some countries are endowed with natural resources such as oil, sand, water, minerals, mountains, rivers, streams, and so forth than the others. While some countries create these artificially to their own advantage. It therefore calls for critical study of these resources as impetus for world market opportunities and threats. #### 3.4 Political-Legal Environment Marketing decisions are strongly affected by developments in the political and legal environment. This environment is composed of laws, policies, government agencies, regulations, and pressure groups that influence and limit various organizations and individuals. Sometimes, these laws create new opportunities for business, not only served as threats. To assess a potential marketing environment, a company should identify and evaluate the relevant indicators of political difficulty Potential sources of political complication include social unrest the attitude of nations, and the policies of the host government. Much like the political environment explained above, there are multiplicities of laws that an international marketers must content with. These include: * Varying laws of nations * Bribery and corruption * Exchange rate policies * Profits repatriation issues * Issues of employment at the subsidiaries/branches * Intellectual property rights, and so forth. #### 3.5 Socio-Cultural Environment The society in which people grew up shapes their beliefs, values, and norms. Culture, an inclusive term can be conceptualized in many different ways The concept is often accomplished by numerous definitions. In any case, a good basic definition of the concept is that 'culture' is a set of traditional beliefs and values that are transmitted and shared in a given society. Culture is also the total way of life and thinking patterns that are passed from generation to generation. Culture means many things to many people, because the concept encompasses norms, values, customs, art, and mores. Therefore, a worldwide business success requires a respect for local customs. For example, consumption patterns living styles and the priority of needs are all dictated by culture In addition to consumption habits, thinking processes are also affected by culture Food preparation methods are also dictated by culture preferences For instance, Asian consumers prefer their chicken broiled or boiled rather than fried Consequently, the Chinese in Hong Kong found American-style fried chicken foreign and distasteful. Cultural universals, when they exist, should not be interpreted as meaning that the two cultures are very much alike. Too often, cultural similarities at first glance may in fact be just on illusion. Thus, an international marketer must therefore guard against taking market for granted. #### 3.6 Technological Environment One of the most dramatic forces shaping people's lives is technology. The pace of technological development among nations are not the same, thus, an international marketer must study each nation's technological development independently. Some of the issues, he/she must content with include: * Mode of production of goods and services * Mode of delivery very of services * Packaging systems * Mode of payments * Time consideration * Availability of expected technology * Cost of technology, and * Accessibility of technology. #### 3.7 Economic Environment Markets requires purchasing power as wells as people. The availability of purchasing power in an economy depends on current income, prices of goods and services, savings, debt and credit availability. Thus, an international marketer must pay close attention to major trends in income and consumers' spending patterns, in addition to economic situation of the world markets. **Self-Assessment Exercise**: Does culture influences mode of consumption? ## UNIT 4 INTERNATIONAL MARKETING MODE OF ENTRY ### CONTENTS **1.0** Introduction. **2.0** Objectives **3.0** Main Text * **3.1** International market entry decisions * **3.2** Export * **3.2:1** Indirect Export * **3.2.2** Direct Exports * **3.3** Joint Venturing * **3.3.1** Licensing * **3.3.2** Contract Manufacturing * **3.3.3** Management Contracting * **3.3.4** Turkey Operations * **3.4** Direct Investment * **3.5** Tree Trade Zones * **3.6** Introducing a product into international Markets * **3.6.1** Time scale * **3.6.2** Firms resources and Goals * **3.6.3** Specified Markets * **3.7** Factors considered whether to standardized or to differentiate * **3.7.1** Corporate objectives * **3.7.2** The market usage of the product * **3.7.3** Company resources * **3.7.4** Level of service required * **3.7.5** Base of production * **3.7.6** Legal considerations. **4.0** Conclusion **5.0** Summary **6.0** Tutor-Marked Assignment **7.0** References/Further Reading ### 1.0 INTRODUCTION Marketing opportunities exist in all countries regardless of the level of economic development to assume that only developed countries offer more market potential is a misconception that wills lead international marketers astray. A particular market may initially seem attractive because of its potential demand and size in terms of the number of consumers or their purchasing power. Yet the market may be attracting more than its share of competition. Since the market is thus crowded by many competitors, it may not be especially attractive after all. As a result, Onkvisit and Shaw (1997) observed that LDCs may provide a better return on investment because competitive expenditures can he significantly less when sophisticated and expensive marketing techniques are not necessary. A marketer usually discerns far more market opportunities that a firm's limited resources permit to be pursued. It therefore implies that a marketer must develop a priority system so that available resources will not be spread too thin for the needed impact. Countries must be screened based on certain relevant criteria for comparing opportunities. Such criteria may include market potential economic growth, political risk, available resources, etc. In assessing market opportunities, there is no single ideal criterion. A marketer must therefore employ a set of criteria that is relevant to the market opportunity under consideration. This unit examines the various alternatives of entering international markets. ### 2.0 OBJECTIVES At the end of this unit, you should be able to: * explain modes of entering international markets * select the best option for your business and * advise clients on the modality of approaching an international market. ### 3.0 MAIN CONTENT #### 3.1 International Market Entry Decision Once a company has analyzed the environment of foreign market and concludes that it represents an alternative opportunity, the next step for the company is to take strategic decisions on how to enter the market A company that has this kind of decision to make usually have three strategic options to consider and select the most appropriate. In trying to select the most appropriate strategic option, the company has to consider the impact of some the crucial factors such as the nature of the product, nature of the market, financial capacity of the company, the management expertise, and the established objectives of the company These options are thus discussed below. #### 3.2 Export This is the quickest and simplest way through which a company can enter foreign markets. With the option, the manufacturing facilities of the company will remain located in the home country while the company simply makes arrangement on how to sell some of its present products abroad. Exporting is a strategy in which a company, without any marketing or production or organization overseas, exports a product from its home base market abroad. Exporting allows a company to enter foreign markets with a minimum of change in its product line, company organization, investment, or company mission. The main advantage of exporting strategy is the case in implementing the strategy. Risks are minimal because the company simply exports its excess production capacity when it receives orders from abroad. The problem with using an exporting strategy is that it is not always an optimal strategy A desire to keep international activities simple, together with a lack of product modification, make a company's marketing strategy inflexible and unresponsive However, any company that chooses to enter into international markets by only exporting its products to the foreign markets can achieve the objective through two ways, namely indirect export and direct export ##### 3.2.1 Indirect Export Under this method or strategy the firm does not have to develop an oversea sale force. It will only hire independent international middlemen in the countries concerned. Firms that are stating export business for the first time usually adopt this method. The method involve less investment and less risks. The assumption is that the middlemen's established goodwill