Designing an international marketing program

An international marketer goes through the same steps in designing a marketing program as domestic marketer. However, the international marketer must decide whether to use a global or customized approach. Careful marketing research must be done to help the international marketer decide whether to modify or maintain domestic product, price, place, and promotion strategies.

We start with the product. The following options can be considered here.

- Extension: Selling the same product in other countries is an extension strategy. It works well for products like Coca-Cola, Wrigley's gum, General Motors cars, and Levi's jeans.

- Adaptation: Changing a product in some way to make it more appropriate for a country's climate or preferences is an adaptation strategy. For example Exxon sells different gasoline blends based on each country’s climate.

- Invention: Designing a product to serve the unmet needs of a foreign nation is an invention strategy. This is probably the strategy with the most potential, since there are so many unmet needs, yet it is actually the least used.

Price. Most foreign countries use a cost-plus pricing strategy. For international firms this can mean their products are priced higher than the local goods. Why? International products must include not only the cost of production and selling, but also tariffs, transportation and storage costs, and higher payments to intermediaries.

Dumping is when a firm sells a product in a foreign country below its domestic price. This is most often done to build a share of the market by pricing at a competitive level. Another reason is that the products being sold may be surplus or cannot be sold domestically, and are therefore already a burden to the company. The firm may be glad to sell them at almost any price.

Some U.S. pharmaceutical firms have sold penicillin, for example, at a lower price in foreign countries than at home. They justify this by saying that R&D costs are not included in foreign prices. Japan has been accused of following a dumping strategy for some of its products in the United States. Its response is that the volume sold here allows economies of scale, the savings of which are passed on to U.S. consumers.

An unusual pricing dimension of international marketing is countertrade, using barter rather than money in making international sales. Although countertrade accounts for only about 10 percent of the world trade, it is growing in importance. An unpleasant aspect of pricing is bribery, the practice of giving or promising something of value in return for a corrupt act. This is a common practice in many countries to reduce red tape and make sales. Although in many countries bribery is an accepted business practice in some international sales, it is officially illegal in all countries.

Place. An international marketer must establish a channel of distribution to meet the goals it has set. The first step involves the seller; its headquarters is the starting point and is responsible for the successful distribution to the ultimate consumer.

The next step is the channel between the two nations, moving the product from the domestic market to the foreign market. Intermediaries that can handle this responsibility include resident buyers in the foreign country, independent merchant wholesalers who buy and sell the product or agents who bring buyers and sellers together. Once the product is in the foreign nation, that country's distribution channels take over. Foreign channels can be very long or surprisingly short, depending on the product line.

Questions:

1. Give your own examples of product extension, adaptation, and invention.

2. Describe some international marketing price policies.

3. What steps does product placement involve?

4. Three Ps have been mentioned in the text. Using your knowledge from previous texts describe the way the fourth P works in International Marketing.

Exercises:

Ex.1. Translate the sentences given below. Pay attention to the words in italics.

1. Chesterham is a small market town with a population of 2000.

2. Access to new foreign markets was assured.

3. This device was first marketed by a Japanese firm.

4. They have never had to operate in a market economy.

5.It’s a seller’s market at the moment.

6. A talking watch will shortly be on the market.

7. Many labour-saving devices have come onto the market.

8. You’ll never get a picture as good as this one on the open market.

9. Exxon might well be in the market to buy up a competitor too.

10. They took the mineral water off the market while tests were being made.

Ex. 2. Marketing can be defined as an art of buying and selling. Let’s have a look at the following group of words. Do you know each of them? Into what two groups can they be subdivided?

Purchase, sell, splash out on, buy up, pick up, sell off, buy in bulk, flog, snap up, stock up, be a sell out, buy in, buy wholesale, sell up, be selling like hot cakes, outsell, bestseller.

And now use them in the sentences below.

1.It’s best to … when house prices are high.

2. The bakery usually … its cakes … at half price just before closing time.

3.Why don’t we … … and move to Canada? Property is really cheap there.

4. Don’t let him try and … you his car – he’s had endless trouble with it.

5. By the end of the 1980s portable computer systems were …larger systems by 30%.

6. The new book, which reveals intimate details about Princess Diana’s private life is … … … … in New York.

7. Jane Fonda’s new diet book is sure to be a … in America.

8. Madonna’s European tour … a total … ….

9. Foreign investors are not permitted to … land.

10. If I were you, I’d … … that dress before someone sees it.

11. That picture? Oh, I … it … on the market last week.

12. We … … … a bottle of champagne to celebrate her promotion.

13. The supermarkets are full of people … … for the New Year’s holiday.

14. We always … … …. It is so much more economical.

15. Mark … the earrings … and then … them in the market.

16. People had to … … candles during the electricity strike.

17. In the last five years development agencies have … … almost all the land in the area.

Ex. 3. This exercise is a kind of an addition to the previous one. What is common in them?

Match the words given below with their definitions.