INTERNATIONAL MARKETING

Objectives:

To evaluate different international Marketing decisions made by international business executives.

Introduction

International marketing decision is a multi-step process. There are at least five major decision areas of international marketing. These i.e. deciding

1. Whether to go abroad

2. Which markets to enter,

3. How to enter the market (s)

4. On an appropriate marketing mix, and

5. On a suitable marketing organisation

Let us briefly discuss the major issues pertaining to each of these decision areas

1. DECIDING WHETHER TO GO ABROAD

The marketer must first of all decide whether to go abroad or not. Many arguments are advanced in favour of marketing internationally. Some of these include;

the possibility of obtaining higher profits in foreign markets;
the possibility of getting a higher sales volume with the consequent reduction in cost per unit;
the possibility of lengthening the product life cycle when the product is introduced into foreign markets;
the possibility of “evening out” seasonal fluctuations in demand since some markets may buy the product during one period of the year while others buy the same during another period of the year;
the possibility of selling obsolete products in foreign markets without detriment to the domestic market.

However, the above merits only provide the base- line information. The marketer contemplating going abroad must further decide whether international opportunities are sufficiently attractive to justify a more detailed investigation and if his/her organization has or can acquire the resources and capabilities to market internationally. If decisions on these two areas are affirmative, then the decision maker moves to the next stage of international marketing decision process, that is, market selection.

2. DECIDING WHICH MARKETS TO ENTER

The decision maker must have a rational mechanism or procedure for ranking the various markets into which the international marketer can enter. In most cases, these are ranked on several criteria, including size, growth, cost of doing business in each of them, competitive advantage and risk level. Needless to say, these criteria are likely to give different rankings. To avoid this problem, “enlightened” decision makers use an index, such as the rate of return on investment framework, which has the following stages

Estimation of current market potential: here the decision maker estimates the current market potential (that is, a measure of the relative strength or ability of a market to absorb a given product or group of products for an entire industry) using existing published data, such as population census and the per capita incomes of different markets supplemented by primary data. Some sources of existing data upon which the current market potential can be estimated are United Nations publications, foreign government reports, bank reports and so forth
Forecast of future market potential; besides estimating the current market potential, the international marketer is also interested in the state of future demand. As it is to be expected, this exercise is more complicated since the market analyst may not be sufficiently versed in foreign microenvironments (economic, political-legal and social- cultural environments). However, he/she can still use surveys of buyer intentions, expert opinions, test-marketing and other research tools to this end
Forecast market share: the international marketer will find himself operating in the same market as other foreign marketers and host country companies. Thus the potential entrant into the market must estimate the proportion of the market potential that he is capable of securing. Crudely, the market share will be determined by his marketing effort (expenditure), relative to the total industry marketing effort. The larger is his effort relative to industry effort the larger the market share.

Of course the estimator should not ignore the fact that the home government may favour the domestic firms at the expense of foreign companies. Furthermore, several foreign nations do not show the stability of government, currency or system of laws that permit an accurate forecasting of market shares.

Forecast of costs and profits: once the market share has been determined the market analyst goes ahead and estimates revenue on the basis of estimated sales. The next step is cost estimation. The nature and magnitude of costs are largely dependent on the marketer’s contemplated entry strategy as discussed below. After estimating costs, he calculates the differences between sales and costs to find company profits for each year of planning period. It should be noted that the accuracy of these estimates depend on the expertise of the estimator, the availability and reliability of demand.
Calculation of rate of return on investment: the forecasted stream of earning is related to the investment stream to determine a rate return. Once the rates for different markets are computed, the countries are then ranked on this basis. It is assumed, that the country with the highest rate of return is the best market. However, in selecting markets, the analyst has to go beyond the quantitative estimates, since qualitative factors such as political stability are also important

3. DECIDING HOW TO ENTER THE FOREIGN MARKET.

Once a company decides to target a particular country, it has to determine the best mode of entry. Its broad choices are indirect exporting, direct exporting, licensing, joint ventures, and direct investment.

2. DECIDING HOW TO ENTER THE FOREIGN MARKET.

Indirect Export

The normal way to get involved in a foreign market is through export. Companies typically start with indirect exporting- that is, they work through independent intermediaries to export their product. There are four types of intermediaries:-

i) Domestic – based export merchant:-

Buys the manufacturer’s products and then sells them abroad.

ii) Domestic – based export agent:-

Seeks and negotiates foreign purchases and is paid a commission. Included in this group are trading companies.

iii) Cooperative Organization:-

Carries on exporting activities on behave of several producers and is partly under their administrative control. Often used by producers of primary products – fruits, nuts, coffee, tea and so on.

iv) Export Management Company:-

Agrees to manage a company’s export activities for a fee.

NB; Indirect export has two advantages, first, it involves less investment. The firm does not have to develop an export department, an overseas sales force, or a set of foreign contacts. Second, it involves less risk. Because international marketing intermediaries bring know-how and services to the seller and seller will make fewer mistakes.

Direct Export

Companies eventually may decide to handle their own exports. The investment and risk are somewhat greater, but so is the potential return as a result of not paying an intermediary. The company can carry on direct exporting in several ways.

1. Domestic – based export department or divisions:-

An export sales manager carries on the actual selling and draws on market assistance as needed. The department might evolve into a self-contained export department performing all the activities involved in export and operating as a profit centre.

2. Overseas sales branch or subsidiary:-

An overseas sales branch allows the manufacturer to achieve greater presence and programme control in the foreign market. The sales branch handles sales and distribution and might handle warehousing and promotion as well. It often serves as a display centre and customer-service centre as well.

3. Travelling export sales representatives:-

The company can send home based sales representatives abroad to find business.

4. Foreign – based distributors or agents:-

The company can hire foreign-based distributors or agents to sell the company’s goods. These distributors and agents might be given exclusive rights to represent the manufacturer in that country or only limited rights.

NB: Whether companies decide to enter foreign markets through direct or indirect exports, one of the best ways to initiate or extend export activities is by exhibiting at an overseas show.

Joint Ventures

Foreign investors may join with local investors to create a joint venture in which they share ownership and control. Many companies have announced joint ventures in recent years. For instance,

Ø Coca-cola and the Swiss company Nestle are joining forces to develop the international market for “ready to drink” tea and coffee, which currently sell in significant amounts only in Japan.

Ø Forming a joint venture might be necessary or desirable for economic or political reasons. The foreign firm might lack the financial, physical, or managerial resources to undertake the venture alone. Or the foreign government might require joint ownership as a condition for entry. Even corporate giants need joint ventures to crack the toughest markets.

Ø Joint ownership has certain drawbacks. The partners might disagree over investment, marketing or other policies. One partner might want to reinvest earnings for growth, and the other partner might want to withdraw these earnings. The failure of the joint venture between AT & T and the Italian computer maker Olivetti collapsed due to the company’s inability to formulate a clear mutually agreeable strategy.

Furthermore joint ownership can hamper a multinational company, for carrying out specific manufacturing policies on a worldwide basis.

NB: More recently JVAs have been seen as valid long-term entry strategy in their own right. As a short-term strategy, JVA helps to reduce their risks of complete FDI.

Foreign Investment in the global Economy

There are two forms of investment namely:-

1. Portfolio investment and

2. Direct investment.

Portfolio Investment

Portfolio investment involves the acquisition of stocks and shares, financial deposits, and other financial assets in order to earn a return on surplus funds.

In international arena, a huge amounts of portfolio investment flow between the world’s stock markets and other financial centres.

Investors purchase shares on foreign stock market or hold currency deposits at foreign banks, transferring large sums of “hot money” across frontiers as investors’ confidence or interest rates rise and fall. Derivatives markets are now responsible for a vast increase in these capital flows.

Derivatives are contracts which are “derived” from underlying assets such as currencies, commodities or equities. A derivatives contract may be for the purchase of currency at an agreed price on a future date.

(A forward exchange contract), for the purchase of a commodity at an agreed price on future date (a future contract), of if may grant an option, to sell an amount of shares at a fixed price within a specified time (a share option).

These contracts, and numerous similar variants, provide one of the parties with insurance or a “hedge” against fluctuations in the price of the asset, the other party bears the risk in return for a “premium” on the asset price.

In each case portfolio investors are searching for a profitable use for their surplus funds, either in the form of interest and dividends or when their financial assets are sold at a higher price. Portfolio investors may be financial institutions and brokers, institutional investors like insurance companies or pension funds, industrial and commercial companies or individuals.

Their investments are often sensitive to economic fluctuations or perceived weakness in an economy and when there is turmoil in the world markets. These investment flows tend to respond quickly when confidence is damaged, but their movements often reflect underlying strengths and weakness in economies and their institutions.

NB: Whilst the activities of portfolio investors are sometimes criticized as wasteful speculation, their funds also help to provide capital and a variety of financial services and their activities send important market signals.

Direct Investment:

Meaning: Foreign direct investment (FDI) means, the establishment or acquisition of income generating assets in a foreign country over which the investing firm has control.

A company which builds a major new plant abroad may not be able to sell the plant at an acceptable price if the investment is a failure. Nor can the company easily recover its investment in the training of its foreign workforce. FDI is therefore the most complete form of market entry strategy and the one which involves the highest risks, but it enables the investor to retain control over its foreign operations.

NB: The ultimate form of foreign involvement is direct ownership of foreign-based assembly of manufacturing facilities. The foreign company can buy part of full interest in a local company or build its own facilities. As a company gains experience in export, and if the foreign market appears large enough, foreign production facilities offer distinct (advantage). Namely:

Ø First, the firm could secure cost economies in the form of cheaper labour or raw materials, foreign – government investment incentives, freight savings, and so on.

Ø Second, the firm will gain a better image in the host country because it creates jobs.

Ø Third, the firm develops a deeper relationship with government, customers, local suppliers, and distributors, enabling it to adopt its products better to the local marketing environment.

Ø Fourth, the firm retains full control over its investment and therefore can develop manufacturing and marketing policies that serve its long-term international objectives.

Ø Fifth, the firm assures itself access to the market in case the host country starts insisting that purchased goods have domestic content.

NB: The main disadvantage of direct investment is that the firm exposes its large investment to risks such as blocked or devalued currencies, worsening markets or expropriation. The firm will find it expensive to reduce or close down its operations. Since the host country might require substantial severance pay to the employees. The firm has no choice but to accept these risks if it wants to operate on its own in the host country.

Foreign investment in the global economy:-

There are two forms of investment. Namely:-

1. Portfolio Investment

2. Direct investment.

Portfolio Investment

Portfolio investment involves the acquisition of stocks and shares, financial deposits, and other financial assets in order to earn a return on surplus funds.

In the international arena, huge amounts of portfolio investment flow between the world’s stock markets and other financial countries.

Derivatives are contracts which are “derived” from underlying assets such as currencies, commodities or equities. A derivative contract may be for the purchase of currency at an agreed price on a future date.

(a forward exchange contract), for the purchase of a commodity at an agreed price on future date (a future contract), of if may grant an option, to sell an amount of shares at a fixed price within a specified time (a share option).

Foreign Direct Investment

Meaning:-Foreign direct investment (FDI) means the establishment or acquisition of income generating assets in a foreign country over which the investing firm has control.

The impact of FDI for global and international economies

- It has contributed greatly towards the globalization of business and the interdependence of the world’s economies.

- FDI had helped some countries where these major investing firms come from to consolidate their dominant influence over the world economy and international trade and financial institutions.

- It has enabled the emerging economies to develop more rapidly than would otherwise have been possible. Some of the emerging economies are now, also producing major foreign investors in their own.

- The investor’s home country gains certain advantages from having home-based MNEs. These companies repatriate profits and some of their international reputation rubs off on the country or origin.

Smaller domestic firms may be their suppliers and this helps to give these firms a measure of international experience.

- Companies become unpatriotic when they close down plants at home and take their operations abroad.

- Host countries are sometimes fearful of the effects of FDI. They may see inward FDI as evidence of a loss of control of their economy. Smaller and weaker countries in particular, often try to retain control over their domestic industry. Even larger ones do this to protect what they regard as strategic industries.

- Inward FDI of course brings:-

· Capital

· Skill

· Technology

· It provide employment

· Helps in developing some of the emerging economies.

Other Reasons for Foreign Direct Investment

· Market factors:-

Marketing considerations and the corporate desire for growth are major causes of the increase in foreign direct investment. Even a sizable domestic market may present limitations to growth. Firms therefore need to seek wider market access in order to maintain and increase their sales.

· Barriers to trade:-

Circumvent barriers to trade and operate abroad as domestic firms, unaffected by duties, tariffs, or other import restrictions.

· In addition to government erected barriers may also be imposed by customers through their insistence on domestic goods and services, either as a result of nationalistic tendencies or a function of cultural differences.

· Furthermore, local buyers may wish to buy from sources that they perceive to be reliable in their supply, which means buying from local producers. For some products, country-of-origin effects may force a firm to establish a plant in a country that has built-in positive stereotype for product quality.

· Cost factors:-

Servicing markets at sizable, geographic distances and with sizable tariff barriers has made many exporters offerings in foreign markets prohibitively expensive. Due to that many manufacturing multinationals have established plants overseas to gain cost advantage.

· Investment climate:-

Foreign direct investment by definition implies a degree of control over the enterprise, yet this may be unavailable because of environmental constraints, even if the firm owns 100% of the subsidiary.

Major determinants of foreign direct investment

Marketing factors Cost factors Investment climate

1. Size of market 1. Desire to be near source 1. General attitude

of supply toward foreign investment

2. Market growth 2. Availability of labour 2. Stable political and

economical environment

3. Desire to maintain 3. Availability of raw 3. Limitation of

share market materials ownership

4. Desire to advance 4. Availability of capital 4. Currency exchange

exports of parent technology regulations

company

5. Need to maintain 5. Lower labour cost 5. Stability of foreign

close customer exchange

contact

6. Dissatisfaction with 6. Lower other production 6. Tax structure

existing market costs

arrangement

7. Export base 7. Lower transport cost 7. Familiarity with country

8. Desire to follow 8. Financial (and other) 8. Absence of “nuisance

customers inducements costs”(bureaucracy &

by government corruption)

9. Desire to follow 9. More favourable cost 9. Quality of life

competition levels 10. Business culture

11. Procedures

12. Relationships

Barriers of trade: - General

1. Government – erected barriers 1. Expected higher profits

to trade-tariffs, quotas and 2. Expansion

non tariff barriers 3. Competitive

2. Preference of local 4. Market power

customers for local 5. World reputation

products 6. Global presence

NB: Barriers can be circumvented or overcome by FDI.

Access to resources

- Where large quantities of resources are needed

- Where specialized resources are immobile

- Where resources are core business e.g. mining & petroleum.

Supportive government policies

- Microeconomic stability

- Market liberalization

- Low corporate taxation

- Currency convertibility

- Ownership & profit regulations

- Good education 7 training

- Efficient infrastructure

- Financial incentives.

A country’s stock of “Created Assets”

- Tangible assets:- infrastructure, distribution networks

- Intangible assets – skills, technology, innovation , intellectual property

- Organizational relationships.

LICENSING

Under a licensing agreement, one firm permits another to use its intellectual property for the compensation designed as royalty. The recipient firm is the licensee. The property licensed might include patents, trademarks, copyrights, technology, technical know-how or specific business skills – licensing therefore amounts to exporting intangibles.

Assessment of Licensing Advantages:-

As an entry strategy, it requires neither capital investment nor detailed involvement with foreign customers.

- By generating royalty income, licensing provides an opportunity to export research and development already conducted.

- After initial costs, the licensor can reap benefits until the end of the license contract period.

- Licensing reduces the risk of expropriation because the licensee is a local company that can provide leverage against government action.

- Licensing also helps to avoid host-country regulations that are more prevalent in equity ventures.

- Licensing provides a means by which foreign markets can be tested without major involvement of capital or management time.

Special form of licensing:-

Is trademark licensing which, has become a substantial source of worldwide revenue for companies that can trade on well-known names and characters.

- Trademark licensing permits the names or logos of designers, literary characters, sports teams, movie stars to appear on clothing, games, foods and beverages gifts and novelties, toys and home furnishings.

- Trademark licensing is possible, however, only if the trademark name indeed conveys instant recognition.

Licensing:

Licensing is a simple way for a manufacturer to become involved in international business marketing. The licensor licenses a foreign company to use a manufacturing process trademark, patent trade secret or specific business skills, copyrights, technology technical know-how or other item of value for a fee or royalty. The licensor thus gains entry into foreign market at little risk, the licensee gains production expertise or a well-know product or name without having to start from scratch.

Ø Coca-cola carries out its international marketing by licensing bottlers around the world or more technically, franchising bottlers- and supplying them with the syrup and the training needed to produce, distribute and sell the product.

Disadvantages:-

Licensing has several potential disadvantages. The firm has less control over the licensee than if it had set up its own production and facilities. Furthermore if the licensee is very successful, the firm has given up profits, and if and when the contract ends, the company might find that it has created a competitor. To avoid creating future competitor, the licensor usually supplies some proprietary ingredients or components needed in the product. (As coca-cola does). But the best strategy is for the licensor to lead in innovation so that the licensee will continue to depend on the licensor.

There are several variations of a licensing arrangement.

Ø A company can sell a management contract to the owners of a foreign hotel, airport, hospital or other organization to management services instead of a product. Management contracting is a low-risk method of getting into foreign market, and it yields income from the beginning. The arrangement is especially attractive if the firm is given a option to purchase some share in the managed company within a stated period.

Ø Another entry method is Contract Manufacturing, in which the firm engages local manufacturers to produce the product.

Example: When Sears opened department stores in Mexico and Spain, Sears found qualified local manufacturers to produce its products.

NB: Contract manufacturing has the drawback of giving the company less control over the manufacturing process and the loss of potential profits on manufacturing.

However, it offers the company a chance to start faster, with less risk and with the opportunity to form a partnership or to buy out the local manufacturer later.

Ø Finally a company can enter a foreign market through franchising which is more complete form of licensing. Here the franchisor offers a franchisee a complete brand concept and operating system. In return, the franchisee invests in and pays certain fees to the franchisor.

Companies such as McDonald’s entered scores of foreign markets by franchising its retail concepts.

Franchising

It is another international business entry strategy. Franchising is the granting of the right by a parent company (the franchisor) to another, independent entity (the franchisee) to do business in a prescribed manner. This right can take the form of selling the franchisor’s products, using its name, production and marketing techniques or using its general business approach. Usually, franchising involves combination of many of these elements.

- The major forms of franchising are manufacturer-retailer systems (such as a car dealership). Manufacturer – wholesaler systems (such as soft drink companies) and service firm-retailer systems (such as soft drink companies), and service firm-retailer systems (such as lodging services and fast-food outlets).

- Typically to be successful in international franchising, the firm must be able to offer unique products or unique selling propositions. If such uniqueness can be offered growth can be rapid and sustained.

The reasons for global expansion of franchise systems are market potential financial gain and saturated domestic markets.

Advantages:

- From a franchisee’s perspective, the franchise is beneficial because it reduces risk by implementing a proven concept.

- Form a governmental perspective, there are also major benefits. The source country does not see a replacement of exports or export jobs. The recipient country see franchising as requiring little outflow of foreign exchange, since the bulk of the profits generated remains within the country.

Franchising, by its very nature, calls for a greater degree of standardization. In most cases, this does not mean 100 percent uniformity but rather, global recognisability.

Fast-food franchisors will vary the products and product lines offered depending on local market conditions and tastes.

- Even though franchising has been growing rapidly, problems are often encountered in global markets:-

Problems encountered in international markets by franchising system.

1. Host government regulations and red tape.

2. High import duties and taxes in foreign environment

3. Monetary uncertainties and royalty remission to franchisor.

4. Logistical problems in operation of international franchise system.

5. Control of franchisees.

6. Location problems and real estate costs.

7. Patent, trademark, and copyright protection.

8. Recruitment of franchisee personnel.

9. Language and cultural barriers.

10. Training of foreign franchisee personnel.

11. Availability of raw materials for company product

12. Foreign ownership limitations

13. Competition in foreign market areas.

14. Adaptation of franchise package to local market.

STRATEGIC ALLICANCES

A strategic allicance is non-equity cooperation agreement between two or more firms which is intended to promote their joint competitive advantage. Strategic alliances generally involve cooperation in one or more of three areas. Namely: - Production, research and development and marketing.

Firms may lack the necessary resources for a project or may want to share the risks with a firm engaged in similar or complementary activities.

- Alliances in the motor manufacturing industry are commonly of this type.

- Alliances may also enable firms to gain market access, sometimes denied by government restrictions or to share the benefits of each other’s markets.

- It allows the partners to speed up the processes of innovation and marketing expansion. The time saved can often provide significant strategic advantages over rivals.

NB: Competition between individual firms, allicance for worthwhile innovation, improvement in product.

- Collaborative strategies are less permanent but can produce quicker returns.

Management Contracts

Some firms have as their basic competitive advantage proven management techniques and expertise which they may wish to share with other firms or authorities in other countries.

- A management contract is a type of licensing agreement between the firm and another firm(privately or state owned) whereby the contracting firm make available its managerial expertise and a part of its management personnel in training local managers for the efficient operation of projects in return for an agreed fee. The contract is for a specified period of up to three or five years, depending on the size and volume of the project.

Example:- The British Airports Authority (BAA) signed an agreement contract with the Atlanta, Georgia, Airport Authority to:-

a) Modernize the existing airport and all its facilities to current modern standards – and

b) Train local managers and technical staff to assume full responsibility for the running of the airport.

Advantages:-

- For the firm receiving the management expertise is that it obtains readily available managerial expertise for the efficient operation of the business and training for its key personnel.

- The firm may find it easier to obtain the necessary financing for the project from financial institutions as the reputation of the contracting firm may provide the confidence required.

Disadvantages:-

- The main disadvantage is that the firm may develop over dependency on the contracting firm’s technology and lose control over essential aspects of its business.

Advantages to the contracting firm

- Is that a management contract provides an opportunity for the firm to exploit its valuable managerial skills and resources worldwide.

- It considerably lowers the risks involved because the firm can exercise greater control over the project.

- The firm gains valuable experience and reputation which it can use to further its competitive advantage.

Disadvantage:-

The main disadvantage is that in transferring its skills and resources the firm may end up creating a potential competitor and thus limit its opportunities for future contracts.

TURNKEY PROJECTS:-

A turnkey project is a term used to describe an arrangement under which a firm, either on its own or in a consortium with other firms, undertakes to design, build, equip, and train personnel to operate an entire production or service facility before turning it over (that is, handing over “the key”) to its owner, which may be a private company or the government of the host country. (One of the most successful forms of this type of arrangement is the “build, operate, and transfer (BOT) model, particularly appropriate for development projects in developing countries.

The projects may include airports, dams, railways which may be financed by foreign governments as part of their development aid programmes and international institutions such as the World Bank.

- Turnkey projects often involve highly specialized exports of industry – specific services and the transfer of technology, the sort of specific input which the host country may lack. Payment for these projects is either in cash or in a special form of arrangement known as “countertrade” which involves the exchange of goods and services.

Advantages of turnkey projects for the firm include:-

- The opportunity for the firm to exploit its technical know-how.

- Projects involving firms in a consortium enable the firms to benefit from the collective pooling of financial resources and experience.

- The main advantage for host countries is that turnkey projects provide a more suitable and speedily alternative way of building their infrastructure and enable them to take advantage of financial and low-cost, project finance provided by foreign governments and international agencies.

Disadvantages of turnkey projects for the firm are:-

- The relatively short-term nature of most of the turnkey projects and the fact that they involve governments mean the firm(s) will not be able to form long-term relationships with the host country but success in one country may lead to contracts being awarded by other countries.

- The technology the firm transfers may actually benefit the local firms which may later turn out to be the firm’s chief rivals in similar projects.

- When a firm transfers its technology and other resources, it is in fact transferring a part of its competitive advantage from which no long-term benefit may be forthcoming.

Deciding On an Appropriate Marketing Mix

Organisations that contemplate operating in foreign market(s), have to decide the extent to which they will adapt the product and marketing mix to local environments. The available strategies are numerous, since each one of the 4ps (product, price, promotion and place) may or may not be adapted.Using only product and marketing communication (promotion) for illustration purposes, we can distinguish five strategies:

i. Straight extension: this involves introducing a product in foreign countries “ in the same form and with the same communication that the company uses at home.” For instance, Pepsi Cola Company sells the same product in every country, using the same advertising theme as it does in the United States of America.

ii. Communication adaption: some marketers leave the product unchanged, but use different communication messages (themes) in different countries. For example, in the industrialised world, bicycles are mainly for recreational purposes or by children, while in developing countries such as Kenya the same bicycles are primarily used as a basic means of adult transportation. Hence, the communications in the two regions are normally different although the product is the same.

iii. Product adaptation: where a product serves the same purpose in different regions but with varying conditions of use, then the strategy of product adaptation should be followed. Extra engineering and product adaptation but may be worthwhile. For instance, making electrical appliances of 240 volts for Kenya and other former British colonies and tropicalised products is worthwhile investment.

iv. Dual adaptation: this strategy entails altering both the product and the communication to increase product acceptability. This is an expensive strategy, but if the target market is large, it is worth the expenses

v. Product invention; involves creating a new product to meet a need in another market. As it is to be expected, this is the most expensive strategy but if potential sales justify the expenditure, it should be seriously considered

Besides considering the product and its promotion (communication), the potential international marketer must also consider the place (distribution), and price strategies. In terms of distribution, the international marketer is advised to take a whole channel view of the problem of getting his product to the final consumers in the foreign market. With respect to pricing, the producer may have to price his product lower in foreign market than for the home market to take care of lower income abroad and/ or more intensive competition. Nevertheless, most of the concepts on distribution and pricing decisions which were discussed earlier are relevant in this area

Deciding On the Marketing Organisation

The final decision-phase in this regard involves the type of marketing organisation that the international marketer will use. The organisational structure that he adopts tends to reflect his degree of involvement, experience, if any, in international marketing and the company’s international marketing objectives. The three major options open to the marketer are:

i. The export department

ii. The international division and

iii. Multinational organization

The export department strategy involves establishing a department with a sales manager and a few clerks. When the volume of business increases, the staff of the export department is increased to provide various marketing services

The international division strategy entails the establishment of an organisation unit which is charged with all the responsibility of the firm’s international activities. This division is headed by a “president” or “, managing “director, depending on its domicile. Finally, the strategy of establishing a multinational organisation means that “the top corporate management and staff are involved in the worldwide planning of manufacturing facilities, marketing policies, financial flows and logistic systems.” Very few African owned corporations have reached this level of development.

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Friday, 21 June 2019