4.6 - International Marketing

Question 1

Define international marketing

Answer 1

International marketing is the marketing of a firm’s products in foreign countries. It is more challenging for business since they have to deal with external factors (i.e. legislations, political systems, language, culture, etc). Therefore, International marketing normally requires an amended marketing mix that suits the local market.

Question 2

What are 5 ways of entering a international market

Answer 2

• internet
• exporting
• direct investment
• joint venture
• franchising

Question 3

How does a business enter a foreign market through the internet

Answer 3

Trading via the internet helps reduce costs

Question 4

How does a company enter a foreign market through exporting

Answer 4

the firm operating in the domestic country sell the products directly to an overseas buyer (direct export). It eliminates the need to set a business abroad. Indirect export involves hiring and export intermediary or agent in the home country to market the product. A popular form of indirect export is piggybacking; where already existing domestic distribution channels are used by another overseas business

Question 5

How does a company enter a foreign market though joint ventures

Answer 5

when two or more companies invest in a shared business project sharing their resources with each being responsible for the costs, profits and losses incurred. However, the participants keep their own independent business (i.e. Virgin Rail & Stagecoach, BMW and Toyota co-operate on research into hydrogen fuel cells

Question 6

How does a company enter a foreign market by franchising

Answer 6

when a business allows others to trade under its name in return for a fee and a royalty payment based on a predetermined share of the sales revenues (i.e. McDonalds, Subway, Burger King, etc.)

Question 7

What are 5 advantages of entering into a foreign market

Answer 7

1. A larger market – this provides the company with a larger market for their products (abroad), gaining higher sales and profitability.
2. Diversification – companies can diversify the risk by investing in other countries and not rely only in one country for revenue.
3. Enhanced brand image – creates greater brand prestige that can lead to brand loyalty. The business will be perceived to be more successful.
4. Economies of scale – with selling more products abroad the firm may reduce the average cost of production and hence make the business more competitive.
5. New business relationships – the firm can make new contacts with various stakeholders (i.e. suppliers, that might provide a better price)

Question 8

What are 5 threats of entering a foreign market

Answer 8

1. Economics challenges – distribution inequality, especially in developing countries, can create problems for the firm (i.e. the purchasing power is lower, interest rate increases or exchange rates fluctuations)
2. Political challenges – political instability may lead to constant changes in Government regulations. Global terrorism and civil unrest also have an influence in the firm’s decision to operate or leave the county (i.e. Ukraine, Russia, Israel)
3. Legal challenges – different countries have different laws and businesses must follow them. Also, the firms will have to follow customer protection laws and intellectual property rights from other countries.
4. Social challenges – demographic differences are key for businesses (i.e. elder people in Europe vs. younger people in America). Marketers need to segment the market accordingly
5. Technological challenges – Internet resources are limited in some developing countries. On top of poor infrastructure and poor communication systems. Factors which the firm need to face.

Question 9

How can you enter a foreign market though direct investment

Answer 9

this refers to a business setting up production and/or distribution facilities overseas. This companies will set their production to serve diffident regions