Global marketing

The Oxford University Press defines global marketing as “marketing on a worldwide scale
reconciling or taking commercial advantage of global operational differences, similarities and
opportunities in order to meet global objectives.” Oxford University Press’ Glossary of
Marketing Terms.

Here are three reasons for the shift from domestic to global marketing as given by the authors of
the textbook, Global Marketing Management—3rd Edition by Masaaki Kotabe and Kristiaan
Helsen, 2004.

Contents
[hide]

 1 Worldwide competition
 2 Evolution to global marketing
o 2.1 Domestic marketing
o 2.2 International marketing
 3 Elements of the global marketing mix
o 3.1 Product
o 3.2 Price
o 3.3 Placement
o 3.4 Promotion
 4 Global marketing Advantages and Disadvantages
o 4.1 Disadvantages
 5 See also
 6 References
 7 Further reading
 8 External links

[edit] Worldwide competition

One of the product categories in which global competition has been easy to track in U.S.is
automotive sales. The increasing intensity of competition in global markets is a challenge facing
companies at all stages of involvement in international markets. As markets open up, and
become more integrated, the pace of change accelerates, technology shrinks distances between
markets and reduces the scale advantages of large firms, new sources of competition emerge, and
competitive pressures mount at all levels of the organization. Also, the threat of competition
from companies in countries such as India, China, Malaysia, and Brazil is on the rise, as their
own domestic markets are opening up to foreign competition, stimulating greater awareness of
international market opportunities and of the need to be internationally competitive. Companies
which previously focused on protected domestic markets are entering into markets in other
countries, creating new sources of competition, often targeted to price-sensitive market
segments. Not only is competition intensifying for all firms regardless of their degree of global
market involvement, but the basis for competition is changing. Competition continues to be
market-based and ultimately relies on delivering superior value to consumers. However, success
in global markets depends on knowledge accumulation and deployment.[1] tiwana.

[edit] Evolution to global marketing

Global marketing is not a revolutionary shift, it is an evolutionary process. While the following
does not apply to all companies, it does apply to most companies that begin as domestic-only
companies.

[edit] Domestic marketing

A marketing restricted to the political boundaries of a country, is called "Domestic Marketing".

A company marketing only within its national boundaries only has to consider domestic
competition. Even if that competition includes companies from foreign markets, it still only has
to focus on the competition that exists in its home market. Products and services are developed
for customers in the home market without thought of how the product or service could be used in
other markets. All marketing decisions are made at headquarters.

The biggest obstacle these marketers face is being blindsided by emerging global marketers.
Because domestic marketers do not generally focus on the changes in the global marketplace,
they may not be aware of a potential competitor who is a market leader on three continents until
they simultaneously open 20 stores in the Northeastern U.S. These marketers can be considered
ethnocentric as they are most concerned with how they are perceived in their home country.
exporting goods to other countries. loosener Rhett

[edit] International marketing

If the exporting departments are becoming successful but the costs of doing business from
headquarters plus time differences, language barriers, and cultural ignorance are hindering the
company’s competitiveness in the foreign market, then offices could be built in the foreign
countries. Sometimes companies buy firms in the foreign countries to take advantage of
relationships, storefronts, factories, and personnel already in place. These offices still report to
headquarters in the home market but most of the marketing mix decisions are made in the
individual countries since that staff is the most knowledgeable about the target markets. Local
product development is based on the needs of local customers. These marketers are considered
polycentric because they acknowledge that each market/country has different needs.

[edit] Elements of the global marketing mix

The “Four P’s” of marketing: product, price, placement, and promotion are all affected as a
company moves through the five evolutionary phases to become a global company. Ultimately,
at the global marketing level, a company trying to speak with one voice is faced with many
challenges when creating a worldwide marketing plan. Unless a company holds the same
position against its competition in all markets (market leader, low cost, etc.) it is impossible to
launch identical marketing plans worldwide.

[edit] Product

A global company is one that can create a single product and only have to tweak elements for
different markets. For example, Coca-Cola uses two formulas (one with sugar, one with corn
syrup) for all markets. The product packaging in every country incorporates the contour bottle
design and the dynamic ribbon in some way, shape, or form. However, the bottle or can also
includes the country’s native language and is the same size as other beverage bottles or cans in
that same country.

[edit] Price

Price will always vary from market to market. Price is affected by many variables: cost of
product development (produced locally or imported), cost of ingredients, cost of delivery
(transportation, tariffs, etc.), and much more. Additionally, the product’s position in relation to
the competition influences the ultimate profit margin. Whether this product is considered the
high-end, expensive choice, the economical, low-cost choice, or something in-between helps
determine the price point. East or west , India is the best.

[edit] Placement

How the product is distributed is also a country-by-country decision influenced by how the
competition is being offered to the target market. Using Coca-Cola as an example again, not all
cultures use vending machines. In the United States, beverages are sold by the pallet via
warehouse stores. In India, this is not an option. Placement decisions must also consider the
product’s position in the market place. For example, a high-end product would not want to be
distributed via a “dollar store” in the United States. Conversely, a product promoted as the low-
cost option in France would find limited success in a pricey boutique.

[edit] Promotion

After product research, development and creation, promotion (specifically advertising) is

generally the largest line item in a global company’s marketing budget. At this stage of a
company’s development, integrated marketing is the goal. The global corporation seeks to reduce
costs, minimize redundancies in personnel and work, maximize speed of implementation, and to
speak with one voice. If the goal of a global company is to send the same message worldwide,
then delivering that message in a relevant, engaging, and cost-effective way is the challenge.

Effective global advertising techniques do exist. The key is testing advertising ideas using a
marketing research system proven to provide results that can be compared across countries. The
ability to identify which elements or moments of an ad are contributing to that success is how
economies of scale are maximized. Market research measures such as Flow of Attention, Flow of
Emotion and branding moments provide insights into what is working in an ad in any country
because the measures are based on visual, not verbal, elements of the ad.
[edit] Global marketing Advantages and Disadvantages

Assignment 5: Evaluation the usefulness of international market.

 Economies of scale in production and distribution

 Lower marketing costs
 Power and scope
 Consistency in brand image
 Ability to leverage good ideas quickly and efficiently
 Uniformity of marketing practices
 Helps to establish relationships outside of the "political arena"
 Helps to encourage ancillary industries to be set up to cater for

the needs of the global player

The benefits of eMarketing over traditional marketing

Reach

The nature of the internet means businesses now have a truly global reach. While traditional
media costs limit this kind of reach to huge multinationals, eMarketing opens up new avenues for
smaller businesses, on a much smaller budget, to access potential consumers from all over the
world.

Scope

Internet marketing allows the marketer to reach consumers in a wide range of ways and enables
them to offer a wide range of products and services. eMarketing includes, among other things,
information management, public relations, customer service and sales. With the range of new
technologies becoming available all the time, this scope can only grow.

Interactivity

Whereas traditional marketing is largely about getting a brand’s message out there, eMarketing
facilitates conversations between companies and consumers. With a two way communication
channel, companies can feed off of the responses of their consumers, making them more
dynamic and adaptive.

Immediacy

Internet marketing is able to, in ways never before imagined, provide an immediate impact.
Imagine you’re reading your favorite magazine. You see a double-page advert for some new
product or service, maybe BMW’s latest luxury sedan or Apple’s latest iPod offering. With this
kind of traditional media, it’s not that easy for you, the consumer, to take the step from hearing
about a product to actual acquisition. With eMarketing, it’s easy to make that step as simple as
possible, meaning that within a few short clicks you could have booked a test drive or ordered
the iPod. And all of this can happen regardless of normal office hours. Effectively, Internet
marketing makes business hours 24 hours per day, 7 days per week for every week of the year.
By closing the gap between providing information and eliciting a consumer reaction, the
consumer’s buying cycle is speeded up and advertising spend can go much further in creating
immediate leads.

Demographics and targeting

Generally speaking, the demographics of the Internet are a marketer’s dream. Internet users,
considered as a group, have greater buying power and could perhaps be considered as a
population group skewed towards the middle-classes. Buying power is not all though. The nature
of the Internet is such that its users will tend to organize themselves into far more focused
groupings. Savvy marketers who know where to look can quite easily find access to the niche
markets they wish to target. Marketing messages are most effective when they are presented
directly to the audience most likely to be interested. The Internet creates the perfect environment
for niche marketing to targeted groups.

Adaptivity and closed loop marketing

Closed Loop Marketing requires the constant measurement and analysis of the results of
marketing initiatives. By continuously tracking the response and effectiveness of a campaign, the
marketer can be far more dynamic in adapting to consumers’ wants and needs. With eMarketing,
responses can be analyzed in real-time and campaigns can be tweaked continuously. Combined
with the immediacy of the Internet as a medium, this means that there’s minimal advertising
spend wasted on less than effective campaigns. Maximum marketing efficiency from eMarketing
creates new opportunities to seize strategic competitive advantages. The combination of all these
factors results in an improved ROI and ultimately, more customers, happier customers and an
improved bottom line.

[edit] Disadvantages

 Differences in consumer needs, wants, and usage patterns for products

 Differences in consumer response to marketing mix elements
 Differences in brand and product development and the competitive environment
 Differences in the legal environment, some of which may conflict with those of the home market
 Differences in the institutions available, some of which may call for the creation of entirely new
ones (e.g. infrastructure)
 Differences in administrative procedures
 Differences in product placement.
Global
Marketing

What is Global Marketing?

Global Marketing is the process of marketing a product or service on a wider scope with the
hopes of reaching the international marketing community. The Oxford University Press defines
global marketing as “marketing on a worldwide scale reconciling or taking commercial advantage
of global operational differences, similarities and opportunities in order to meet global
objectives”.

However, marketing globally is a completely different ball game compared to domestic

marketing. Most companies make the mistake of using the same marketing tactics and strategies
for global marketing. They don’t realise that, what appeals a domestic market may not appeal an
international market, due to differences in culture and tastes.

Global marketing if well executed could launch a company into the international marketing
community successfully. However following a uniform marketing technique for both domestic
and international market can have the required effect only if sufficient market research has been
undergone. Multinational companies use global marketing to launch a product or service
internationally. For this they need to first verify whether the strategies used in global marketing
can have the desired effect in the larger market or not. Apart from using the marketing mix for
different countries, global marketing also needs the marketing policies of the different countries
to have a concordance between them.

4 P’s of Global Marketing

As a company rises from each marketing level to become a global company, they need to keep in
mind four P’s – product, price, placement and promotion. A global organization needs to
maintain a strong position against its competitors to be able to stay alive and running in the
market.

Product

A global business can easily market its products in the global market with small adjustments to
the product to suit the particular country. They can continue to use the same logo and brand but
make small adjustments to their marketing campaigns to suit the local markets wherever it is
launched.

Price

Pricing depends on many factors such as cost of product development, transportation costs, taxes,
cost of raw materials used, etc.  Thus, pricing may vary across different markets based on these
costs. The brand image of the company also matters. A popular brand can demand a higher cost
as compared to its competitor products.

Place

The place of distribution of the product varies according to the country it is being marketed in. It
also depends on the product’s position in the global market. Based on whether it is a high-end
product, economical or low-choice product, the place of product distribution must be chosen
accordingly.

Promotion

The promotion of the product must also be done by keeping its market in mind. This activity can
be quite expensive, and if not done well can burn a big hole in the company’s marketing budget.
Thus, a cost-effective marketing of the product is extremely crucial.  To be able to effectively
market a product in different countries, it is essential to understand their culture and lifestyles.
For example, using bikini-clad models in advertisements may be effective in the west, but
unacceptable in Islamic countries.

Advantages of Global Marketing

 Consistency in Brand Image: Global marketing enables the company to have a consistent image
in all the regions chosen for marketing.
 Power and Scope: Global marketing has a lot of scope, which provides a very intriguing
experience.
 Lower Marketing Costs: When considered as a whole, marketing costs are quite high. However,
costs further exceed if the product is to be marketed separately in the different countries.
 Quick and Efficient Use of Good Ideas: A global organization can make use of a good marketing
idea and introduce it on a global scale.
Global Marketing Disadvantages
Although global marketing can do a lot for your business, they still have certain disadvantages
that need to be considered.

 Inconsistency in Consumer Needs:  Consumers belonging to one country may have different
expectations and react differently than those from another country. Therefore, global marketing
should be capable of dealing with this issue.
 Inconsistency in Consumer Response: The consumers of one country may react differently than
the consumers of another.
 Legal Differences: Overseas laws may be in conflict with those applied in home countries.
 Brand and Product Preferences: For instance, the consumers of “A” country may prefer a product
that has an ethnic feel to it, whereas the consumers of “B” country may opt for a product that
has a more modern approach.
How to Expand Your Business Globally
Overview

Today's global market demands global action, yet, according to the U.S. Department of Commerce
(DOC), fewer than 10 percent of American manufacturing and service companies are involved in
international trade. However, like it or not, you're probably already competing globally — foreign-owned
companies are competing with you in your "domestic" markets. You can turn global competition to your
advantage by tapping markets and labor supplies across international borders yourself — a process that
is simpler than you may believe. This Interactive Business Tool will help you understand how to stretch
your company's global reach. In addition to this discussion, you will also find valuable information in a
related module, How to Enter an Emerging Foreign Market.

Outline:

I. What You Should Know Before Getting Started

A. Why Compete Globally?
B. Watch Out For ...
II. Methods of Doing Global Business
A. Direct Exporting
B. Indirect Exporting
III. Your International Business Plan
IV. Getting Ready to Go Global
A. Analyzing Your Industry
B. Analyzing Your Business's Capabilities
C. Selecting the Best Markets to Enter
D. Market Factors to Assess
1. Demographic and Geographic Factors
2. Political Factors
3. Economic Factors
4. Social/Cultural Factors
5. Market Access Factors
6. Distribution and Production Factors
V. Forming Connections in Your Market
VI. Pricing Your Product
A. Quoting a Price
B. Setting Terms of Sale
VII. Getting Paid
VIII. Transporting Goods Internationally
IX. Resources

I. What You Should Know Before Getting Started

A. Why Compete Globally?

Becoming involved in international trade can help your business:

  Enhance domestic competitiveness by finding less-expensive suppliers
 Increase sales and profits
 Gain global market share
 Reduce dependence on existing markets and suppliers
 Extend the sales potential of existing products with relatively low development costs
 Stabilize seasonal or cyclical market fluctuations
 Enhance potential for corporate expansion

B. Watch Out For ...

In order to participate in global trade, your business will need to incur additional costs, such as developing
new promotional material, traveling to foreign locations, modifying your product to meet the needs of a
new market, and shipping overseas. For these reasons, the decision to embark on international trade
should be done with eyes open.

Back to Outline

II. Methods of Doing Global Business

There are several methods you can use to enter a foreign market, including exporting, importing,
licensing, joint ventures and off-shore production. If you have an existing business that creates a tangible
product, exporting is the most common method. Start-up costs and risks are limited, and profits can be
realized early on. If you are beginning a new venture, the other choices are options that may reduce some
of the start-up risks.

There are two basic ways to export: directly or indirectly.

A. Direct Exporting

In direct exporting, your company finds a foreign buyer and then makes all arrangements for shipping
your products overseas. This method requires a lot of footwork and infrastructure, and entails more risk,
but the potential profit rewards are often higher. If you choose to export directly, you have several options:

Sales Representatives/Agents -- Essentially, you hire foreign-based representatives or "agents" who work
on a commission basis to locate buyers for your product, just as you would domestically.

Distributors -- You strike a deal with a foreign distributor, who purchases merchandise from you and
resells it with a markup. The distributor maintains inventory and provides after-sales service to the buyer.

B. Indirect Exporting

Your company uses an export intermediary to perform most of the details of the export arrangement.
Many small businesses choose this option, at least at the outset. There are several types of export
intermediaries:

Commissioned agents - These are brokers who link your product or service with specific foreign buyers,
allowing the primary company to fulfill the order and handle packing, shipping and export documentation.

Export Management Companies (EMCs) and Export Trading Companies (ETCs) -- These companies
operate in the country where the goods are to be exported. EMCs generally represent your product to
promote it to other prospective overseas purchasers, while ETCs usually work according to demand,
finding a need and sourcing your product for foreign buyers. Both types of companies usually take care of
all aspects of the export transaction (including conducting market research, promoting your product
overseas, accessing proper distribution channels, and locating foreign distributors), making them a viable
option for smaller companies that lack the time and expertise to break into international markets on their
own. EMCs and ETCs usually operate on a commission basis, although some work on a retainer basis
and some take title to the goods they sell, making a profit on the markup. Importing and exporting can be
done on any scale — from a tiny home office or from the World Trade Center. You don't need a license
from the United States government in order to do international trade, but the country with which you do
business may require a license. What you do need is an international business plan.

Back to Outline

III. Your International Business Plan

If you're already in business, you probably already have a business plan. If so, you'll need to amend it to
include the specifics of international business. If not, you'll need to begin from scratch in order to define
your company's present status, internal goals and commitment, and to seek financial help if you expect to
pursue a bank loan or other types of investment. An international business plan should define:

 Why you're interested in global trade

 What your import/export pricing strategy will be
 Who your potential export markets (or import sources) and customers are
 How you plan to enter the foreign market
 What additional costs (travel, shipping, marketing, sourcing) you expect to incur
 What revenues your venture is expected to bring in
 How you plan to finance your global expansion
 What the legal requirements are to enter the markets that interest you
 How you plan to transport the goods
 Whether you plan to pursue overseas partnership or investments

Back to Outline

IV. Getting Ready to Go Global

For your business to succeed globally, the principles are the same as succeeding domestically: You need
to find a product that will fill a targeted need for the purchaser in export markets according to price, value
to customer/country and market demand. Do you have a product for which there is a market overseas? Is
there a product manufactured overseas that has a market domestically? If so, you need to identify why
your product will have a market overseas or why an imported product will sell domestically. What gives
your product a competitive advantage for an overseas market? Who are the buyers for your product?
Why would they buy from you? Take the following steps to determine the feasibility of your international
business plan.

A. Analyzing Your Industry

You need to identify where your industry is today and predict the trends and directions that it will take over
the next three years. How competitive is your industry in the global market? To find out, consult the
following resources:

 Talk to people in the same business or industry, research industry-specific magazines, attend
trade fairs and seminars.
  Consult the National Trade Data Bank (NTDB), obtain import/export statistics from the Bureau of
the Census, and contact the U.S. Small Business Administration (SBA) or the U.S. Department of
Commerce (DOC) district office in your area.
 Contact the SBA or the U.S.& Foreign Commercial Service (US & FCS) district office and contact
a DOC country or industry desk in Washington, D.C.
 Contact SBA, your state international trade office, a DOC country or industry desk in Washington,
D.C., for federal or state government market studies that have been conducted on your industry's
potential international markets.
 Find export data on your industry through your SBA or DOC district office. Contact the SBA at
(202) 205-6720 or DOC at (202) 482-2867 for a district office near you.

B. Analyzing Your Business's Capabilities

If you have an existing business that you are planning to expand globally, you probably are already doing
a few things right to have reached this point in your business. However, you'll need to assess your
business's strengths and weaknesses to determine what approach to take in the international market. Ask
yourself the following questions:

 Why is your business successful in the domestic market? What's your growth rate? What are your
strengths?
 What products do you feel have export potential?
 What are the competitive advantages of your products or business over other domestic and
international businesses?
 What are the needs that will be filled by your product in a foreign market?
 What competitive products are sold abroad and to whom?
 Is there an after-market for your product? Who will provide it?
 What complementary goods and technologies does your product require?

If your product is an industrial good:

 What firms are likely to use it?

 What is the useful life of your product?
 Is use or life affected by climate?
 Will geography affect product purchase (e.g., transportation problems)?
 Will the product be restricted abroad (e.g., tariffs, quotas or non-tariff barriers)?

If the product is a consumer good:

 Who will consume it? How frequently will the product be bought?
 Is consumption affected by climate or geography?
 Will the product be restricted abroad (e.g., tariffs, quotas or non-tariff barriers)?
 Does your product conflict with traditions, habits or beliefs of customers abroad?

C. Selecting the Best Markets to Enter

Although the three largest markets for U.S. products are Canada, Japan and Mexico, these countries may
not be the largest markets for your product. If you're not sure where to do business, one good indicator is
to find out where your domestic competitors have expanded internationally. Another useful resource are
three key United States government databases that can identify those countries that represent significant
export potential for your product: The Small Business Administration's Automated Trade Locator
Assistance System (SBAtlas), Foreign Trade Report FT925 and the U.S. Department of Commerce's
National Trade Data Bank (NTDB).

Once you've identified several countries that you think have market potential for your product, you're
ready to do serious market research. Research and review data and information for the following factors
for each country.

D. Market Factors to Assess

Answer yes or no to the following questions to assess the potential of specific countries.

1. Demographic and Geographic Factors

    ___ Is there sufficient population size, growth and density in the correct demographic region?
    ___ Is the climate compatible with your product?
    ___ Is the shipping distance economically feasible?
    ___ Is there a sufficient physical distribution and communication network?
    ___ Are the natural resources you may need available?

2. Political Factors

    ___ Is the government amenable to trade with the United States?
    ___ Is the country politically stable?
    ___ Does the government have heavy involvement in business?
    ___ Are there existing trade restrictions, tariffs, non-tariff barriers or bilateral trade agreements?

3. Economic Factors

    ___ Is the economy sufficiently developed to support your product?

    ___ Is foreign trade a significant part of the economy?
    ___ Is the country's currency stable? What is the inflation rate, availability, controls and stability of
exchange rate?
    ___ Is the per capita income and distribution of income sufficient to support your product?

4. Social/Cultural Factors

    ___ What is the literacy rate and average educational level in the country?
    ___ Is there a middle class that would support your product?
    ___ Do the people have sufficient disposable income and a propensity to spend money on products
similar to yours?
    ___ How is the market similar to and different from your domestic market?
    ___ Are there language and cultural barriers to doing business?

5. Market Access Factors

    ___ Are there limitations on trade, such as high tariff levels or quotas?
    ___ What documentation will you need?
    ___ Are there local standards, practices and other non-tariff barriers?
    ___ What is the country's policy on honoring patents and trademark protection?
6. Distribution and Production Factors
    ___ Are there intermediaries available if you need them?
    ___ Are there sufficient regional and local transportation and storage facilities?
    ___ Is there labor available with the skills you may need?
    ___ What are local manufacturing conditions?
    ___ What are local labor laws?

When you're determining which foreign market to enter, one of the key factors may be the existence or
absence of tariffs and non-tariff trade barriers. Tariffs are taxes imposed on imported goods in order to
raise the price of imported goods to the level of domestic goods. Often tariffs become barriers to imported
products because the amount of tax imposed makes it impossible for exporters to profitably sell their
products in foreign markets.

Non-tariff barriers are laws or regulations that a country enacts to protect domestic industries against
foreign competition. Such non-tariff barriers may include subsidies for domestic goods, import quotas or
regulations on import quality. Countries with low trade barriers in place are usually not good choices for
global trade.

Back to Outline

V. Forming Connections in Your Market

Once you've identified the product or service you want to import or export and the country that interests
you, you need to make business connections in the chosen market. That is, you're looking for companies,
agents or distributors who are looking for the products you will offer and that may be interested in doing
business. You also need to determine whether you will handle your global business directly or choose an
agent, distributor or intermediary to act on your behalf, and if so, you need to find someone qualified to do
so.

The U.S. federal government, state governments, trade associations, exporters' associations and foreign
governments offer low-cost and easily accessible resources to simplify and speed your entry into foreign
markets. In addition, almost every industry and product has a corresponding organization and publication,
even in developing countries. Consult these organizations and publications for ads, articles and listings
for companies that manufacture, buy or sell the product for which you're looking. The Internet is a great
boon for locating sources, since many companies that do international business will have English-
language Web sites. Keep in mind, however, that Internet usage in most foreign countries lags behind
United States usage, so if you limit your sourcing options to what is on the Web, you may not find the
prices or selection you need.

The U.S. Department of Commerce (DOC) has a number of contact programs in place that can help you
make the connections you need. Here's a run-down:

Export Mailing Lists - These are custom searches of the DOCs databases of prospective overseers
customers. You select market criteria, then receive a list of relevant manufacturers, agents, retailers,
service firms, government agencies with names, addresses, contacts, products and other information.
Output is available as mailing labels or on disk.

Trade Lists - These are directories that the DOC publishes for each country based on the information
above.

Trade Opportunities Programs - This service collects sales leads from overseas firms looking for U.S.
products. Lead details include specifications, quantities, delivery dates and bid deadlines.
Agent/Distributor Service - This is a matching service that performs a custom search of foreign import
agents and distributors, contacts them with your company's literature and products, then prepares a
report identifying six prospects that are interested in doing business with you.

Here are a few other options for making contacts (more information about accessing these will follow in
the "Resources" section):

Importing
International chambers of commerce
Consulates
Embassies
Foreign trade ministries
World Trade Centers Association (WTCA)
Foreign industry associations
Foreign industry publications
Trade associations

Exporting
Thomas Register
Dun & Bradstreet
U.S. Department of Commerce
WTCA
Domestic industry associations
Domestic industry publications
National Association of Export Companies (NEXCO)
National Federation of Export Associations (NFEA)

Once you've identified potential sources, contact them to seek specific product information, such as
specifications, product samples and prices. Contact them by letter, fax, email, telex or cable. At this point,
it's best to translate your business's own literature into the language of the country where you plan to do
business. Although contacts at most foreign companies that do international business will speak English,
it's best to communicate in your potential source's language.

Back to Outline

VI. Pricing Your Product

Pricing a product is always one of the most important parts both of marketing a product and making a
business profitable, and, unsurprisingly, pricing a product for the overseas market is one of the most
critical factors for entering foreign markets. Prices must be high enough to generate a reasonable profit,
yet low enough to be competitive in overseas markets. Naturally, your cost of goods sold must include all
the expenses to move product to the port of destination, which hike up the bottom line considerably, but
don't forget that doing business internationally affects your overhead as well.

Cost of Goods Sold

In addition to the material and labor used in the manufacture of your product, you must consider:

Export packing
Forwarding
Container loading
Documentation
Inland freight
Consular legalization
Truck/rail unloading
Bank documentation
Wharfage
Dispatch
Handling
Bank collection fees
Terminal charges
Cargo insurance
Ocean freight
Other misc.
Bunker surcharge
Telex
Courier mail

International Overhead Costs

Changes in product packaging

Promotional literature
Marketing and advertising
Sales salaries, bonuses and commissions
Foreign market research
Translation, consulting and legal fees
Foreign agent/distributor product information and training

Once you've determined your break-even price based on the additional costs above, you're ready to set
your prices. The selected pricing structure should be part of your market penetration objectives. Your
goals will vary depending on the target overseas market. Ask yourself the following questions regarding
pricing:

Are you entering the market with a new or unique product?

Are you selling excess or obsolete products?
Can your product demand a higher price because of brand recognition or superior quality?
Are you willing to reduce profits to gain market share for long-term growth?

Obtain as much information as possible on local market prices as part of your market research. Overseas
distributors and agents of similar products of equivalent quality can give you some insight.

A. Quoting a Price

The pro-forma (projected) invoice is the most commonly used document to give price quotations to
potential customers. The quotation in a pro-forma invoice is usually considered binding, although prices
may change prior to final sale. To prepare the invoice, you should give a detailed description of the
product, an itemized list of charges and sale terms. Prices should be quoted in United States dollars to
reduce foreign exchange fluctuation risks. The invoice should also indicate the period during which the
price quotation is valid.

B. Setting Terms of Sale

You should be familiar with the common terms of sale used in international trade before preparing your
pro-forma invoice. Terms of the sale that you should spell out include:

Risk of Loss - This clause excuses the exporter from responsibility where a default in performance is
caused by events beyond the exporter's control, such as war, acts of God or labor problems.
Payment and Finance Terms - This describes when payment will be made, in addition to providing
provisions for late payments, partial payments and remedies for nonpayment.

Warranties - In some cases, the importer will require the exporter to warrant that the goods meet certain
standards of construction and performance.

Acceptance of Goods - Frequently, the importer will insist upon the right to inspect the goods upon
delivery. If the goods do not meet the standards set in the invoice, the importer can reject them.

Intellectual Property Rights - Protection of the exporter's patents, trademarks or copyrights should be
assured in the agreement, in particular since these protections are frequently eroded when goods cross
international lines. Get this in writing.

Dispute Settlement - This is always a good clause in any agreement of sale, but in an international
agreement, it's especially useful. Spell out how and where any disputes will be resolved and which
nation's law should be applied.

Back to Outline

VII. Getting Paid

One of your primary concerns in entering the overseas market is to be paid in full and on time. While the
credit of a buyer is always a concern, you may have less recourse when it comes to collecting unpaid
international debts, so you should exercise extra caution. Be sure that you and your buyer agree upon the
terms of the sale in advance.

The primary methods of payment for international transactions, ranked in order of most secure to the
exporter to least secure, include:

Payment in advance - This is the most desirable, but it's usually just an option when the manufacturing
process is specialized, lengthy or capital intensive and requires partial or progress payments.

Letters of Credit (LC) - A letter of credit is an internationally recognized instrument issued by a bank on
behalf of its client, the purchaser. The LC actually represents the bank's guarantee to pay the seller,
provided the conditions specified on it are fulfilled.

Documentary Collection (Drafts) - Documentary collections involve the use of a draft, drawn by the
seller on the buyer, requiring the buyer to pay the face amount either on sight (sight draft) or on a
specified date in the future (time draft). The draft is an unconditional order to make such payment in
accordance with its terms, which specify the documents needed before title to the goods will be passed.

Consignment - In this arrangement, the importer only pays the exporter after the goods have been resold
to another purchaser. Title to the goods remains with the exporter until the purchase conditions are
satisfied. Consignment is very risky for the seller since there are no guarantees when or if the goods will
be sold, and in the meantime, the exporter's capital remains tied up in inventory over which he or she has
no control.

Open account - This means that payment is due after the goods are manufactured and delivered (usually
within 15, 30 or 60 days). In other words, this is the typical way that business is conducted in the United
States. However, this method is considered risky internationally because your recourse to collect unpaid
debts is limited.

Back to Outline
VIII. Transporting Goods Internationally

Once you've set terms of sale, the next variation between selling a product domestically and
internationally occurs: how to transport the goods. One of the main differences between selling
domestically and exporting is the documentation required. Providing proper documentation with your
shipments is essential, if the goods are to arrive safely and on time.

Luckily, the role of the international freight forwarder (your shipper) is to act as an agent for the exporter in
moving cargo to the overseas destination. These agents are familiar with the import/export rules and
regulations of foreign countries, methods of shipping, United States government regulations and the
documents connected with foreign trade.

Freight forwarders can help you with your order from the start by advising you on freight costs, port
charges, consular fees, costs of special documentation and insurance costs as well as handling fees.
Freight forwarders may also recommend the best type of packing for protecting the merchandise in transit
and arrange to have the merchandise packed at the port or sealed in shipping containers. If you plan to
take advantage of these services, be sure you figure these additional export costs into the price you
charge your customer.

When the order is ready to ship, freight forwarders should be able to review the letter of credit,
commercial invoices, packing list and other documentation to ensure that everything is in order. Following
are the paperwork documents that you may need to fill out to ship an order internationally.

International Shipping Documentation

Commercial Invoice - This proves the exporter's ownership of the goods and promises payment. The
description of the goods on the commercial invoice must correspond exactly to the description in the letter
of credit or other method of payment. It's usually best to prepare a commercial invoice in English and in
the language of the destination country.

Export License - You don't need a license to export goods, unless it's possible that export could threaten
United States national security, affect certain foreign policies of the United States, or create short supply
in domestic markets. To determine whether you need a license, check with the U.S. Department of
Commerce's Bureau of Export Administration (BEA).

Shipper's Export Declaration (SED) - This is used for mail shipments valued at more than $500 and
required for other shipments valued at more than $2,500 so that the Bureau of the Census can monitor
exports. The SED must be presented to the carrier before the shipment departs.

Certificate of Origin - Although the commercial invoice may contain a statement of origin, some
countries require Certificates of Origin. Certificates of Origin allow for preferential duty rates if the
exporter's country has an agreement with the importer's country to allow entry of certain products at lower
tariffs.

Export Packing List - This itemizes the material in each individual package and indicates the type of
package and individual net, legal, tare and gross weights and measurements for each package (in both
U.S. and metric systems). A copy of the packing list should be attached to the outside of a package in a
waterproof envelope marked "packing list enclosed." The list is used by the shipper or forwarding agent to
determine the total shipment weight and volume and whether the correct cargo is being shipped. In
addition, customs officials may use the list to check the cargo. The original packing list should be
forwarded along with your other original documents in line with the conditions of sale.

Insurance Certificate - Most exporters insure goods for 110 percent of their value.
Inspection Certificate - Many foreign purchasers request that the seller certify that the goods being
shipped meet certain specifications. This certification is usually performed by an independent inspection
firm.

Dock Receipts - This document transfers shipping obligations from the domestic to the international
carrier as the shipment reaches the terminal.

Bill of Lading/Air Waybill - Bills of lading and air waybills provide evidence to title of the goods and set
forth the international carrier's responsibility to transport the goods to their named destination.

Training Module Checklist

___ Have you identified the product you wish to export?

___ Have you decided whether to try direct exporting or indirect exporting?
___ Have you articulated why you're interested in global trade?
___ Have you identified the best market to enter?
___ Have you identified who your potential export markets (or import sources) and customers are?
___ Have you determined how you plan to enter the foreign market
___ Have you calculated additional costs (travel, shipping, marketing, sourcing) you will need to incur to
enter the global market?
___ Do you understand the legal requirements to enter the markets that interest you?
___ Have you determined how you plan to transport the goods?
Global Marketing Strategies
1. Introduction

Globalization has had a significant impact on business corporations and economics across the world. In
the 1960s, various United States companies crossed the country’s boundaries, the 1970s witnessed the
growth of Japanese companies in the United States and other markets, the 1980s saw the emergence of
third world multinationals and the 1990s saw companies going global. The boundary that distinguished
between foreign and domestic markets has disappeared as companies compete with each other in one
global market. It is very important that companies equip themselves with a global marketing strategy to
sustain successfully in the global market place.

In this unit, we will try to understand the significance of global marketing, analyze the process of
selecting a potential market, and understand the importance of environmental factors on global
marketing strategies. We will also discuss the various methods of entering new markets, and the process
of developing a global marketing strategy.

2. Significance of Global Marketing

Global marketing has become vital for the growth of various organizations as a result of –

• Saturation of domestic markets.

• Liberalization of various developing economies like India.
• Rapid technological developments that have enabled manufacturers to produce good quality products
at low prices. This in turn, enabled these companies to enter new markets in developing economies,
where they could leverage the advantage of their superior quality products.

Global marketing will help multinational companies leverage the following advantages –

• Marketers can source good quality materials from places where they are available at economical rates.
• Multinational companies can reduce their development time and recover the investments in research
and development rapidly by marketing their products in the global market.
• By entering new markets, the companies can meet the expectations of the shareholders and capital
market regarding earnings, growth objectives, and future prospects of the company.

3. Selecting a Potential Market

Selecting a potential market is a crucial as well as a difficult process in globalization. This is so because
marketers must analyze and choose the country that has a feasible market for the company’s products.
Therefore, prior to entering a new market, companies should consider the following issues-
• Who buys its products?
• Why do they buy them?
• What do they do with the product after buying it?
• What are the factors that influence their purchase decisions?

Global marketing decisions of multinational companies are affected by multiple factors. For instance,
factors like economic and political environment, socio cultural environment, existing markets, growth
prospects, etc, of the host country also influence the selection of potential market to a large extent.

Regional free trade zone: Regional free trade zones are formed to help nations in a region to engage in
free trade within the region. The countries failing within a free trade region are known as member
countries. The members formulate preferential trade policies that regulate the trade between the
member countries. The agreement also formulates uniform trade policies for the rest of the world. The
objectives of free trade zone can be to –

• Ensure economic growth of members.

• Increase trade relations.
• Increase foreign capital inflows.
• Create economic and diplomatic trade blocs.
• Integrate the economic policies of member countries.

Evaluation of potential markets: The market potential of all the individual markets in the world cannot
be easily evaluated by prospective entrants. Therefore, the potential new entrants begin the evaluation
process by screening out less lucrative markets and identify those countries that provide potential
marketing opportunities. This is generally done with the help of published secondary data. The process
of identifying potential markets includes four phases.

• First phase involves analyzing the international environmental factors of different markets such as the
economic, geographic, legal as well as political environment.
• Second phase includes customer perceptions, product satisfactoriness and Analyzing market.
• Third phase involves analyzing factors such as skilled labor, competitors, cost of exit, and barriers to
entry.
• Fourth phase involves ranking the potential markets depending upon expected sales, level of
investments, and profit potential.

4. The Impact of Environmental Forces on Global Marketing

Global marketing efforts are influenced by technological, regulatory, legal, cultural, social, political and
economic factors.

Economic environment
The economic environment has a wonderful impact on worldwide as well as global marketing, as the
most crucial factor determining a market’s potential is income. The major factors which influence
economic environments are the Gross Domestic Product as well as Gross National Product, capability in
infrastructure, availability and cost of energy, rate of inflation, and disposable income.

These criteria are essential as they decide the feasibility of a potential market. For instance, owing to its
high Gross Domestic Product growth, India is favored destination for many multinational companies.
Political environment

In the analysis of the political environment of a potential market, marketers should take into
consideration the possible impact of the following factors on their business –

• National sovereignty and security policies.

• Implications of foreign direct investments.
• Corporate policies.
• Trade barriers.
• Political prestige of the country.

Social and cultural environment

The socio-cultural environment of every nation is unique. Therefore, it is very essential for marketers to
consider the differences existing between the cultures in the home country and the host country.

The experience faced by The Coca Cola Company during the launch of its soft drink product in China is
often cited as an example for emphasizing the impact of cultural differences on global marketing. The
company, during the product’s launch in China, spelled Coca Cola as ‘Ke-Kou-ke-la’ in Chinese. Later, the
company searched from around 40,000 Chinese characters and came up with the word ‘ko-kou-ko-le,’
which when translated in Chinese meant ‘happiness in the mouth.’

Legal and regulatory environment

The following factors constitute the legal and regulatory environment of a country –

• Sovereignty of the nation.

• Arbitration policies.
• Laws governing contractual agreements.
• Licensing policies.
• Dispute settlements procedures.
• Tax structure.
• Rules regarding patients and trade marks.
• Exit routes and other related issues.

Since these factors have a direct bearing on the business, marketers are required to analyze these issues
carefully before venturing into a potential market.

Technological environment

Innovation is the new mantra of success for modern day marketers. With rapid technological
advancements in the market, no player can afford to remain stagnant for a long period. Many
multinational modern corporations like Phillips, Hewlett Packard, Samsung, Sony and many others are
constantly attempting to beat their competitors by producing technologically advanced products.
Technological edge is fast becoming a competitive advantage for many companies. This boom in
technology is also supported by customers, as they are increasingly becoming techno savvy and
demanding innovative and technologically advanced products.
5. Methods of Entering a New Market

The following are some of the popular ways of entering international markets –

• Internationalization process.
• Direct and indirect exports.
• Joint ventures.
• Licensing.

6. Types of Marketing Organization

The type of an organizational structure also has a tremendous impact on the functioning of companies
in the international arena. Companies generally prefer to transform into global organizations with a view
to adapt to the needs and requirements of the international marketing environment. The following are
the different types of organizational structures that companies adopt in order to operate in the
international marketing environment –

• Export division.
• International division.
• Global organization.

7. Developing Global Strategies

A global marketing strategy involves the understanding of the importance of the following three major
perspectives; standardization, configuration-coordination and integration. Standardization in production
and marketing programs can have the following benefits –

• Ability to exploit good ideas on a global scale.

• Consistency in dealing with customers.
• Economies of scale in production as well as marketing.

8. Summary

Global marketing has become very significant for the growth of a variety of organizations due to
saturation of rapid technological, liberalization of developing countries, domestic markets. Selecting a
potential market is a crucial task for global marketers. Gaining knowledge about free trade zones and
tactful evaluation of potential markets plays an essential role in this process. Environmental factors that
impact global marketing are technological, regulatory, legal, cultural, social, political and economic
factors. Companies enter a new market through direct exports, indirect exports, licensing, joint
ventures, and internationalization process. There are different types of marketing organizational
structures. They are export division, international division and global organization. Developing an
effective global marketing strategy involves product strategies, promotion strategies, pricing strategies
and place strategies. There is a concept of rendering social service out of the revenues earned in
marketing which should be never be ignored – societal concept.