ENTERING FOREIGN MARKETS
There are many factors to consider before entering to a foreign market. Practically, a new Marketing plan is needed, because factors such as geography, customer behavior, culture, and political environment can affect, financially, a company.
There are six steps to follow before entering globally. The following graphic shows them:
There are six steps to follow before entering globally. The following graphic shows them:
LOOKING AT THE GLOBAL MARKETING ENVIRONMENT
According to Kotler, P. "Before deciding whether to operate internationally, a company must understand the international marketing environment. That environment has changed a great deal in recent decades, creating both new opportunities and new problems" (p.554).
An international trade system exists, which establishes restrictions, such as tariffs, taxes, fees for importing products, quotas. Countries establish those restrictions to increase income and also to protect local companies. It is really important to look at the general environment of the new market that a company wants to penetrate because as Kotler stated, it can generate problems for a company that is trying to go globally. Also, some organizations exist to facilitate the globalization, such as the World Trade Organization, which is responsible for reducing tariffs and barriers to ease the establishment of a foreign company.
Every country has its own culture, believes, ideology. For these reason, it is necessary to analyze, deeply, social classes, political environment, and culture.
A company must establish its target market, so analyzing the different social classes or generations, as well as its culture, will be useful before deciding whether entering the new market.
Also, many economies are unstable. So, it is important to investigate about it before taking the decision of entering the market.
During our practicum # 7, my Marketing team and I presented a video to show the importance of culture (see the video below).
According to Kotler, P. "Before deciding whether to operate internationally, a company must understand the international marketing environment. That environment has changed a great deal in recent decades, creating both new opportunities and new problems" (p.554).
An international trade system exists, which establishes restrictions, such as tariffs, taxes, fees for importing products, quotas. Countries establish those restrictions to increase income and also to protect local companies. It is really important to look at the general environment of the new market that a company wants to penetrate because as Kotler stated, it can generate problems for a company that is trying to go globally. Also, some organizations exist to facilitate the globalization, such as the World Trade Organization, which is responsible for reducing tariffs and barriers to ease the establishment of a foreign company.
Every country has its own culture, believes, ideology. For these reason, it is necessary to analyze, deeply, social classes, political environment, and culture.
A company must establish its target market, so analyzing the different social classes or generations, as well as its culture, will be useful before deciding whether entering the new market.
Also, many economies are unstable. So, it is important to investigate about it before taking the decision of entering the market.
During our practicum # 7, my Marketing team and I presented a video to show the importance of culture (see the video below).
![Picture](/uploads/4/2/0/0/42002341/498332338.png?540)
DECIDING WHETHER TO GO INTERNATIONALLY
Kotler, P. advises " Operating domestically is easier and safer. Managers do not need to learn another country's language and laws. They don't have to deal with unstable currencies, face political and legal uncertainties, or redesign their products to suit different customer expectations" (p.561). It means that being local could be the most easy way to do business without extra complicate marketing analysis. But if a company decides to go global, that company must take many precautions to maintain its business stable.
In the personal assignment # 3, we talk about multinational companies, such as Pampers, entering to poor economies. These big companies spend a lot of money in advertising, and it brings additional problems.
In a big scale, using excessive advertising involves the use of limited natural resources. The irresponsible use of limited resources falls into marketing failures, such as pollution and depletion.
It is totally acceptable that marketers want to arrive with its products until to the last small place on Earth. All people around the world deserve it, but it seems irresponsible to use limited natural resources in a target market where demand does not exist, at least not voluntarily.
According to Kotler, P. “These new developing markets will require more than just shipping out cheaper versions of existing products” (327). It reinforces the idea of using unnecessarily limited natural resources during the production process, not only for offering a product but for acquiring control or power in a determined marketing target, which is considered an unethical practice from a corporation (Assignment # 3 file attached below).
DECIDING WHICH MARKET TO ENTER
According to Kotler, P. "Before going abroad, the company should try to define its international marketing objectives and policies" (p.562). It relies to the company's capabilities and goals. The company must be very objective in its goal, deciding how big the company is expecting to grow, or if the company decides to go globally into a specific country or a group of countries. A financial analysis is required in order to establish the successful of the decision being international. The company must establish the income expected to break the even-point. For these reasons, an exhaustive analysis about demographic, geographic, economic, political, and cultural is needed.
DECIDING HOW TO ENTER THE MARKET
According to Kotler, P. "Once a company has decided to sell in a foreign country, it must determine the best mode of entry. Its choices are exporting, joint venturing, and direct investment" (p.563). Basically, it means the different strategies that can be used to enter a new market. The following graph talks itself about each strategy. However, I will explain those in a separate form:
Exporting
This strategy relies on the decision of selling products or services internationally. There are two forms of exporting: directly and indirectly.
Exporting indirectly relies on the intervention of another firm or firms, which will sell the products or services in the elected country. My team # 7 and I learned from our practicum researches that Nestlé is an example of companies that decide to go globally with the help of additional corporations. It was a surprise to me, for instance, knowing that 'Chocolate Abuelita' is a Nestlé company. My surprise lies in the knowledge that Nestlé is a company from London, while I thought my whole life that Chocolate Abuelita was an authentic Mexican brand. Nestlé says "For generations, Nestlé® Chocolate Abuelita® has been an essential part of the Hispanic kitchen" (Nestlé, 2014).
Exporting indirectly entails less risks and complications than exporting directly.
If a company decides to export its products or services directly, these company must establish an exhaustive investigation to ensure its product positioning. As well as making all connections with the corporations and government agencies necessary to introduce a product in a new market.
Joint venturing
It includes licensing, contract manufacturing, management contracting, and joint ownership (Kotler&Armstrong, 2014, p.564). Joint venturing exists in different countries when some of them join together a same commercialization of their products. Licensing, contract manufacturing, management contracting, and joint ownership are legal strategies that let those companies to export its products with an ease implementation so that the products can positioning quickly.
Direct investment
According to Kotler, P. "Direct investment consists in entering a foreign market by developing foreign-based assembly or manufacturing facilities" (p.565). It means that a company invests in another country establishing manufacturing buildings.
DECIDING ON THE GLOBAL MARKETING PROGRAM
According to Kotler, P. "Companies that operate in one or more foreign markets must decide how much, if at all, to adapt their marketing strategies and programs to local conditions" (p.566). One good example that helps me to understand this concept is Kit Kat, introduced in our practicum # 7. Kit Kat is a brand positioned globally. In The United States, for instance, the traditional chocolate version is demanded, while in Japan there are more than 200 versions that where adapted to Japanese preferences (refers to the video called 'Americans try exotic Japanese Kit Kats' in the page Brands and Branding for a better illustration).
DECIDING ON THE GLOBAL MARKETING ORGANIZATION
According to Kotler, P. "Companies manage their international marketing activities in at least three different ways: most companies first organize an export department, then create an international division, and finally become a global organization" (p.572). These steps can be illustrated through Nestlé company (from practicum # 7 researches). Nestlé has an international division in The United States called NestléUSA. It reflects Nestlé such as a strong multinational company.
References:
BuzzFeedYellow (2014, October 8). One Thing Americans Shouldn’t Say To British People. Retrieved from
https://www.youtube.com/watch?v=XOWZS6qcCyA
Kotler, P., & Armstrong, G. (2014). Principles of Marketing. Upper Saddle River, NJ; Pearson.
NestleUSA. (2014). Abuelita®. Retrieved on November 06, 2014, from http://www.nestleusa.com/brands/baking/abuelita
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