Figure 9.A below shows the general marketing decision process for moving into global markets which can also be found on page 554 of Principles of Marketing by Phillip Kotler and Gary Armstrong (2012).
Figure 9.A
Image Source: (Kotler & Armstrong, 2012)
- Looking at the Global Marketing Environment – As with any marketing strategy, the implementation cannot begin until sufficient research is conducted on the current state of the market. As more and more companies are realizing the enormous benefits of moving into global operations, there has become a subsequent increase in the number of rules, regulations, and government-sanctioned organizations that dictate the pace and the state of the global environment. In addition to being aware of these international trade systems, companies that are hoping to go global need to pay attention to several key factors that differ immensely depending upon which country business is being done in. These environmental factors, economic, legal, political, and cultural, are all entirely variable all over the world and therefore a company must be aware of each factor in each country that it hopes to expand its business to. An excellent example of a successful company in understanding the global market is McDonald’s, which was covered in detail during one team’s practicum this semester. McDonald’s menu varies greatly depending upon the country the store is located in. The McDonald’s menus in India, Japan, and Russia both look nothing alike and look nothing similar to the menu found here in America.
- Deciding Whether to Go International – Though doing businesses globally has provided very promising expansion opportunities to large-scale organizations, not all companies have the resources or the knowledge necessary to compete in a global market. Though going global has been incredibly beneficial to McDonald’s, WalMart, and IKEA, many companies could do themselves more harm than benefit by attempting to take their operations to a global scale. Because globalization requires a significant commitment of time and resources before any form of return can be seen, most small company’s with lesser brand popularity cannot afford to compete globally. Additionally, some organizations may offer products or services that would have no demand in foreign markets, and thereby would be wasting their resources in attempting to capture new markets abroad.
- Deciding Which Markets to Enter – Before a company can begin to sell its products abroad, it must determine which markets, and how many markets it intends to target. My team’s marketing plan for the iBrick, a new smartphone by Apple found that the iBrick should most heavily target burgeoning smartphone markets such as Russia, India, and China (Holliday, 2013). However, because we chose to work with Apple, the iBrick would be sold in international markets everywhere as the company has the large distribution network necessary to achieve such a wide volume.
- Deciding How to Enter the Market – Once a company has committed itself to competing globally, and it has identified the key areas that it will be targeting, it must decide the general strategy it will take in spreading its product. There are three primary methods for selling a product in a foreign country, each increasing in both risk and potential for returns. These methods are exporting, joint venturing, and direct investing. Exporting occurs when a company sends its products from its domestic facilities to the new markets in which it intends to sell. This is seen as the most indirect method for entering a market, however it is very low risk and has the lowest cost. Joint venturing occurs when a company joins forces with foreign investors to create a local business abroad. This can be extremely effective as it combines the resources of a global brand with the know-how of a investors who have lived in that area for some time. The final method for entering a market is direct investment, which is defined by Kotler & Armstrong as, “entering a foreign market by developing foreign-based assembly or manufacturing facilities.” (Kotler, p.565). Direct investment requires a lot of invested capital and comes at a high-risk, however if successful this can yield long term sales potential and perpetually declining operating costs.
- Deciding on the Global Marketing Program & Organization – After a company has completely prepared itself for selling its product to selected international markets, it must choose how it wants to market its products in the future in those nations. A company may choose to standardize their global marketing program, and develop a single unifying marketing plan for all of its markets, or a company can attempt to adapt its marketing strategies depending on the market location. As noted in the text Principles of Marketing, “most international marketers suggest that companies should…seek a balance between standardization and adaptation.” (Kotler, p.566). Because the iBrick would be sold by the Apple Corporation, it would adhere to Apple’s heavily adapted marketing policies. Because Apple is a successful and powerful brand, it has the resources necessary to create a new marketing strategy in each new international market.
References
Holliday, K. (2013, November 27). How to play emerging market smartphone growth in 2014. CNBC.com. Retrieved March 13, 2014, from http://www.cnbc.com/id/101233221
Kotler, P. & Armstrong, G. (2012). Principles of Marketing. Upper Saddle River, NJ: Pearson Education, Inc.
Chad Sorensen - Marketing Portfolio 