SCOPING THE INTERNATIONAL MARKET PLACE

AND ROLLING OUT THE MARKETING PLAN

IEISHA SHAIKH

1
 TABLE OF CONTENTS

Introduction 3

How is International Marketing Defined? 3

Differences Between Local and International Marketing 3

Scope of International Marketing 4

Key Concepts of International Marketing 5

Reasons to Expand Internationally 5

Marketing Channels 5

The Market Evaluation Process 6

Market Entry 7

Conclusions and Recommendations 8

Bibliography 9

2
INTRODUCTION

Huda Beauty is a cosmetics line that was founded in 2013. Its first product launch was a series of
false lashes that are distributed by Sephora. Since then, the UAE-based company has come out with
other products like highlighter palettes, false nails and liquid lipsticks. Its current market includes
women in their early teens to late thirties.

HOW IS INTERNATIONAL MARKETING DEFINED?

International marketing is marketing done at an international level. It is defined in the following

ways:

"At its simplest level, international marketing involves the firm in making one or more marketing mix
decisions across national boundaries. At its most complex level, it involves the firm in establishing
manufacturing facilities overseas and coordinating marketing strategies across the globe.” (Doole &
Lowe, 2001).

"International Marketing is the performance of business activities that direct the flow of a company’s
goods and services to consumers or users in more than one nation for a profit.” (Cateora & Ghauri,
1999)

"International marketing is the application of marketing orientation and marketing capabilities to

international business.” (Muhlbacher & Helmuth & Dahringer, 2006)

"The international market goes beyond the export marketer and becomes more involved in the
marketing environment in the countries in which it is doing business.” (Keegan, 2002)

DIFFERENCES BETWEEN LOCAL AND INTERNATIONAL MARKETING

1. Local marketing refers to a mix of business activities like promotion, production and
distribution occurring on a local scale. International marketing refers to a mix of business
activities like promotion, production and distribution occurring on an international scale.

2. Local marketing involves catering to one market whereas International marketing caters to
various countries and markets.

3. The risks involved with international marketing are higher than local marketing.

4. Less capital and resources are required with local marketing when compared to
international marketing.

5. Local marketing deals with restrictions and laws in one country whereas international
marketing deals with restrictions and laws in multiple countries.

3
SCOPE OF INTERNATIONAL MARKETING

There are various ways a company can bring its goods and services to a group of consumers. The
following nine ways have been evaluated below:

Imports: Importing involves bringing goods in from another country for sale. Brands buy and import
goods meant to be resold to a potential customer base inland. Most often, companies import to
improve their own production line, when they’re certain that using the goods will help them with
achieving their objectives.

Exports: Exporting involves sending goods to another country for sale. Brands export their finished
goods to international markets or on to their other franchises in far off markets where they can
make sales that generate huge revenues.

Contractual Agreements: International marketing involves patent licensing, turn-key operations, co-
production, and licensing agreements. Licensing includes a number of contractual agreements
whereby intellectual property such as patents, trade secrets, trademarks and brand names are made
available to foreign businesses for a price.

Joint Ventures: “Strategic alliance between two independent companies, often established as a
jointly owned company.” (Coyle, 2000) It is generally characterized by shared ownership, returns,
risks and governance. When a foreign investor invests in a local company or when overseas and local
firms jointly form a new firm, a joint venture is formed. In those countries where fully owned firms
are not allowed to operate, joint venturing is the alternative.

Fully Owned Manufacturing: Companies with a long-term interest in a foreign market may find that
it is in their best interests to set up fully owned production facilities. Trade barriers, cost differences
and government policies encourage the establishment of manufacturing facilities. This also provides
the firm total control over quality, prices and production.

Contract Manufacturing: When a firm enters a contract with a third-party and outsources certain
production activities like manufacture or assembly, while retaining product marketing with itself, it is
referred to as contract manufacturing. While being low-risk, it is also low-cost and easy to exit.

Management Contracting: Under a management contract, an enterprise performs necessary

managerial functions for a client without incurring the high risks and potential benefits of
ownership.

Third Country Location: A business can choose to operate from a third country base when, for
multiple reasons, no commercial transactions can happen between two countries and it wants to
enter the market of another region. An example is entry into China through third country bases in
Hong Kong by Taiwan.

Mergers and Acquisitions: Mergers are formed when two enterprises consolidate into one, and
Acquisitions are formed when an enterprise takes ownership of another’s stock, interests, equity or
assets. This can provide access to new markets, more distribution networks, advanced technology
and patent rights. It also decreases the level of competition for both firms.

4
KEY CONCEPTS OF INTERNATIONAL MARKETING

Some key concepts to consider when expanding internationally are:

Culture: When expanding internationally, cultural differences are important to consider. A product
should add value and meet the wants of your consumers.
Having a proper understanding of your target market and what it values is imperative.

Government Laws and Regulations: When the operations of a business are conducted in more than
one country, it has to be flexible and comply with the restrictions imposed from multiple
governments and bodies. These restrictions include labor laws, trade barriers, import and export
laws, investment procedures, customs laws, trademark requirements, and tax laws.

Foreign Government Stability: Aspects like currency exchange rates, proximity to raw materials and
resources, transport options and government incentives are all important to consider.

REASONS TO EXPAND INTERNATIONALLY

Higher Profit Potential: A company can increase its profit potential and diversify its revenue sources
by making its goods available to consumers in multiple countries.

Access to Skill: international labor offers a company considerable advantages like increased
productivity, advanced language skills, diverse educational backgrounds and more.

Competitive Advantage: Expanding internationally can also help a company acquire access to new
technologies and industry ecosystems, which may significantly improve their operations and
increase brand recognition.

Foreign Investment Opportunities: Expansion also gives a company the opportunity to develop their
resources further form prominent connections in the global market.
Multinational companies can also profit from lucrative investment opportunities, like tax incentives,
that may not exist in their home countries.

MARKETING CHANNELS

What are the various routes a business can adopt to market its goods and services? These are
described below.

Direct sales: When goods and services are brought to the consumer without an intermediary –
through direct marketing and advertising, or through a company’s website or store, it is direct

5
selling. Ideal for goods and services with complex workings, it allows a business to use its
marketing skills, build a close, personal relationship with its clients and get quick feedback.
This form of marketing demands more physical resources and has higher travel costs.
Indirect Sales: A retailer, wholesaler or reseller purchases products in bulk from a company, at a
lower rate, and distributes it further to consumers. This is a cost-effective way to displace a large
amount of goods quickly and doesn't employ the resources a company needs to make direct
sales. It is also quicker and easier to sell especially lower value items, since you have only one
client to handle business with. Even so, profit margins are often decreased, and setting the right
price can be complicated.

Distance sales: This is where products, services or digital content is sold to consumers without
face-to-face contact; usually through a website, the phone, the TV or direct mail (catalogues and
brochures). This employs fewer resources since no retail space is needed and physical travel isn’t
necessary either. However, products and services can’t be demonstrated and customer trust can
be much harder to establish over the internet. This method is best for repeat orders, reaching
online markets and selling to customers who are further away or abroad, or for products and
services that don't need to be touched and tried to be trusted.

Online Sales: Selling online can be done through a business’ own website, through affiliate
marketing, through an auction site, through a retailer's website, through online ads, or using
direct emailing to a customer database. Using this platform eliminates the costs associated with
a physical store and staff. Orders are placed automatically.
A well-designed website is essential to use this method.

Combining Channels: This is when a business uses more than one route to market. It gives
businesses a chance to expand their audience, evaluate which marketing channels are most
effective and adjust their sales strategies accordingly. Here, information and prices must be
consistent across the board to avoid customer dissatisfaction.

THE MARKET EVALUATION PROCESS

If a business decides to expand internationally, there is an elimination process that takes when
evaluating which country or countries are most profitable. This process is examined below.

1) Country Identification: At this first stage, a business generally evaluates potential

new markets, keeping in mind its modus operandi and current market. Often,
expanding to country with a similar heritage, spoken language, religion, political
belief or culture is most rational. Expanding to a nearby country is also a straight-
forward option in most cases. Countries are added and excluded from this list for
any number of reasons.

2) Preliminary Screening: At this second stage, a business further evaluates the

countries present on the list. Macro-Economic factors such as currency stability and
exchange rates are examined and countries are now ranked. This creates the basis
for calculating market entry costs and initial capital needed. Here, the marketing
manager narrows the list of countries that he could to enter further. At this point,
in-depth screening can begin.

6
 3) In-Depth Screening: The countries that remain at stage three are all considered
feasible for market entry. It is imperative that detailed information on the target
market be collected so the marketing strategy can be made accurate. Here, micro-
economic factors and local conditions such as marketing research are considered.
For example, what prices can the firm charge in a country?
How can the firm effectively distribute its products and services in a country?
How should the firm engage and communicate with the target market in a country?
How do the products or services offered need to be modified for a country?
These elements will make the basis of segmentation, targeting and positioning.
The value of the nation’s market, tariffs or quotas in operation, similar opportunities
and threats to new entrants should all be taken into account by the business here.

4) Final Selection: With the final short-list of potential countries, managers should
reflect upon strategic goals and look for a match in the countries at hand. The list
gets even shorter based on more focused criteria.

5) Direct Experience: Experience creates a better marketing strategy. Marketing

managers or their representatives should travel to the chosen country to experience
firsthand the nation’s culture and business practices. Similarity and dissimilarity to
the businesses current markets should be assessed here. The market entry strategy
comes together. The business’ management should be experimental and open to
new ideas.

MARKET ENTRY
A market entry strategy includes any activities associated with the delivering and distributing goods
or services to a new target market. Factors to be considered when planning this strategy are trade
barriers, capital and resources needed, and sales and delivery.
Various market entry strategies are defined and explained below.

 Exporting: This strategy involves transporting goods from one country for sale in another.
There are two sub-strategies.

-Direct: A direct export is made when a business handles all aspects of transporting its goods to the
customer, without a middle man. This means that a business enjoys a greater profit, more control
over its services, familiarity with their customers, direct feedback, and flexibility to revise or change
market strategy as it develops in the foreign market.
The downsides to this are that it might involve more time, energy and money than a business can
afford. Additionally, since there is more control, there is also more responsibility. If there is an error
in service, the business is completely liable. Responding to customer communications can be a
daunting task without a customer service team.

Indirect: Indirect exports are done through an intermediary. This a low-risk, low-liability strategy. It
allows a business to focus on domestic operations and requires little experience in the international
market, since shipment and logistics don’t have to be dealt with. Products can be tested for export

7
potential. While these are important advantages, a business enjoys lower profits and loses control
over foreign sales. Additionally, the company doesn’t know its customers and they don’t know it,
and the intermediary doesn’t represent the business exclusively.

 Licensing: Giving distribution or manufacture rights to a separate entity is licensing. This

gives a business direct access to new markets that are otherwise inaccessible, eliminates
trade barriers, requires a low capital to start off with, and is low-risk since the licensee is
already established.
However, the business has a low level of control. Poor quality management on the licensee’s
part can damage the brand’s name. Since the contract is valid for a limited time there is low
stability. Last, the business is prone to theft of intellectual property.

 Greenfield Investments: When a parent company in one country builds its operations in a
foreign country from the ground up, they’ve made a greenfield investment. This gives the
company full control over products, services, quality, and rate of production, while
eliminating intermediary costs.
Depending on the government in the new country, the business might even business tax
incentives.
This strategy however, requires more capital, opens a business up to more established
competition, makes the business subject to entry barriers and more government
regulations, and it also can take years for a business to successfully integrate itself into the
market.

CONCLUSIONS AND RECOMMENDATIONS

Entering the international markets increases profit potential and grows a business.
There are various routes Huda Beauty can take to enter the international market.
The most profitable route is for the cosmetics line to license more enterprises overseas with
distribution rights. This is ideal because the brand’s products are already established and in high
demand worldwide.

8
BIBLIOGRAPHY
Doole, I. and Lowe, R. (2001), International Marketing Strategy – Analysis, Development and
Implementation, Thomson Learning, 3rd Ed.

Cateora, P.R., and Ghauri, P.N. (1999), International Marketing, McGraw-Hill Publishing Company,
European Edition.

Muhlbacher, H., Helmuth, L. and Dahringer, L. (2006), International Marketing – A Global

Perspective, Thomson, 3rd Ed.

Keegan, W.J., (2002), Global Marketing Management, Prentice Hall, 7th Ed.

Coyle, B., (2000), Mergers and Acquisitions, Chicago, Fitzroy Dearborn Publishers, p. 119