INTERNATIONAL MARKETING

( MS-213 ) By

DR. LOKESH JINDAL

Overview
Decision Criteria for IB Entry & Expansion Decision Model Exporting Additional Expansion Alternatives Market Strategy Summary

Learning Objectives
To identify criteria for selection of foreign markets. To appreciate which market entry alternatives are available to companies. To recognise export activities as a process developing over time. To understand different entry startegies: sourcing, licensing,investment & ownership

Decision Criteria for IB

Political risk Market access Factor cost & conditions Shipping consideration Country infrastructure Foreign Exchange

Selecting Foreign Markets

... should be based on a number of criteria:
market-related characteristics cost-related aspects the regulatory framework tariffs, duties & non-tariff trade barriers

the importance of these selection criteria depends upon the industry & the markets taken into account

Market Selection Criteria

1. Market Potential 2. Market Access 3. Shipping Cost & Time 4. Appraising Level & Quality of Competition 5. Service 6. Product Fit

Critical Questions for a Product-Market Profile: The 9 Ws

1.Who buys our product? 2.Who does not buy our product? 3.What need or function does our product serve? 4.What problem does our product solve? 5.What are customers currently buying to satisfy the need and/or solve the problem for which our product is targeted? 6.What price are they paying for the products they are currently buying? 7.When is our product purchased? 8.Where is our product purchased? 9.Why is our product purchased?

A Multi-Stage Selection Process

Approx. 150 countries

Markets which drop out due to restrictions (must criteria)

Source: adapted from D.J.G. Schneider, and R.U. Mller, Datenbankgesttzte Marktselektion: Eine methodische Basis fr Internationalisierungs-strategien, Stuttgart, 1989

Markets which are filtered out based on a first set of selection criteria Markets which are filtered out based on a second set of selection criteria Potential foreign target markets

Visiting the Potential Market

... is essential after assessment & selection of potential market(s) goals:
to confirm (or contradict) assumptions regarding market potential to gather additional (primary) data to develop a marketing plan in co-operation with the local agent or distributor

Production Abroad
Ownership and Control
100 % Ownership & Strategic Alliances

Ownership

Equity Joint Ventures

Licensing 0 0

Franchising Control

Management Contracts 100 %

Direct Exporting
Direct market representation
via wholesalers or retailers or directly to the consumers

Independent representation
independent distributor

Piggyback marketing
distribution through another distributors channel

Export-Related Problems
Logistics Legal procedure Servicing exports Sales promotion Foreign market intelligence

Licensing
contractual arrangement whereby one company (licensor) makes an asset available to another company (licensee) in exchange for royalties, license fees or other form of compensation

Franchising
A form of licensing a company permits its name, logo, cultural design and operations to be used in establishing a new firm or store.

Joint Ventures
Company run by two or more partner firms Risk is shared and different value chain strengths are combined Influence depends on degree of ownership Good opportunity to build on local know-how JV finds greater acceptance by local authorities

Wholly-owned Subsidiaries/Acquisition
Represents the most extensive engagement abroad Subsidiary is either established through the creation of a new facility or the acquisition of an existing firm Company has complete decision power & control Investor achieves greater flexibility In many countries majority or 100% ownership by foreign companies is forbidden

Summary
The choice of potential foreign markets must be based on a thorough evaluation of criteria which influence the potential success abroad; eg market potential, market access, or product fit. Once the potential foreign target market(s) is selected, a company has to decide how to enter this market.

THANK YOU