LO2 Deciding how to enter the markets Once a company has decided to sell in a foreign country, it must determine the best mode of entry. Its choices are exporting, joint venturing , and direct investment . The simplest way to enter a foreign market is through exporting- entering foreign markets by selling goods produced in the company’s home country, often with little modification. Exporting involves the least change in the company’s product lines, organization, investments, or mission 50
A second method of entering a foreign market is by joint venturing —joining with foreign companies to produce or market products or services. Joint venturing differs from exporting in that the company joins with a host country partner to sell or market abroad. There are four types: licensing (company enters into an agreement with a licensee in the foreign market) contract manufacturing (joint venture in which the company makes agreements with manufacturers in the foreign market to produce its product or provide its service ) management contracting (joint venture in which the domestic firm supplies the management a know-how to a foreign company that supplies the capital) and joint ownership (one company joining forces with foreign investors to create a local business in which they share possession and control). The biggest involvement in a foreign market comes through direct investment —the development of foreign-based assembly or manufacturing facilities. Example Ford in Asia. LO3 Deciding on the global marketing program Companies that operate in one or more foreign markets must decide how much, if at all, to adapt their marketing strategies and programs to local conditions. At one extreme are global companies that use standardized global marketing- essentially using the same marketing strategy approaches and marketing mix worldwide. At the other extreme is adapted global marketing . In this case, the producer adjusts the marketing strategy and mix elements to each target market, resulting in more costs but hopefully producing a larger market share and return. The question of whether to adapt or standardize the marketing strategy and program has been much debated over the years. On the one hand, some global marketers believe that technology is making the world a smaller place, and consumer needs around the world are becoming more similar. This paves the way for global brands and standardized global marketing. Global branding and standardization, in turn, result in greater brand power and reduced costs from economies of scale. On the other hand, the marketing concept holds that marketing programs will be more effective if tailored to the unique needs of each targeted customer group. If this concept applies within a country, it should apply even more across international markets. Despite global convergence, consumers in different countries still have widely varied cultural backgrounds. They still differ significantly in their needs and wants, spending power, product preferences, and shopping patterns. Because these differences are hard to change, most marketers today adapt their products, prices, channels, and promotions to fit consumer desires in each country.
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- Marketing, partner, SBUs