This document discusses several key aspects of international marketing: 1) It defines international marketing and explains that the main difference from domestic marketing is operating in more than one country. 2) It outlines various factors to consider in international marketing, including demographic, economic, natural, technological, political/legal, and social/cultural factors. 3) It discusses market penetration strategy and various methods for entering international markets such as exporting, licensing, franchising, foreign direct investment, and specialized entry modes. 4) It lists questions a company should consider about their ability and readiness before expanding internationally.

1. Mohd Zahid Laton, FPP UiTM Pahang
CHAPTER 8
INTERNATIONAL MARKETING
1. International marketing. International marketing is the performance of
business activities designed to plan, price, promote, and direct the flow of a
company’s goods and services to consumers or users in more than one nation for a
profit. The only difference in the definitions of domestic marketing and international
marketing is that marketing activities take place in more than one country.
2. Factors to be considered when involves in international marketing;
2.1 Demographic. Demography is the statistical study of human
population and its distribution characteristics. Demography is especially
important to marketing executives because people who have money to spend
and the willingness to spend it are what constitute a market. Example of
demographic factors are birth rate, age, sex, occupation, religion, family,
education and other statistics.
2.2 Economic. Economy determines the size and strength of demand for
the product. People alone do not make the market. They must have the
money to spend and be willing to spend it. The condition of economy is a
significant force that affects the marketing system of just about any
organization whether business or non-business.
i. Rising income. Incomes are rising, primarily due to dual-
income families. Disposable income rises or drop. Purchasing power
rises or drop.
ii. Inflation. A general rise in process, often accompanied by lack
of increase in wages results in decreased of purchasing power. During
periods of inflation, marketers should be aware that brand loyalty
decreases and consumers stock up on bargain products.
iii. Recession. A period of economic activity characterized by
negative growth, which reduces demand for goods and services. This
period of economic activity is when income, production, and
employment fall, which reduce demand.
2.3 Natural. It consists of natural resources required by business as
inputs to produce goods demanded by customers. The forces of nature have
several impacts on the overall decision of the marketer. Example of natural
environments are; 1) shortages of certain raw materials (oil, coal, rubber,
timber, etc), 2) increased cost of energy (marketers may resort to use solar,
wind and water as sources of energy as the oil/fuel price increase
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2. Mohd Zahid Laton, FPP UiTM Pahang
dramatically), 3) increased levels of pollution, thus more money need to be
spent to clean the environment.
2.4 Technological. Technology is the knowledge of how to accomplish
tasks and goals and often this knowledge comes from scientific research.
Marketers must be aware of new developments in technology and their
possible effects, because technology can and does affect marketing activities
in many different way.
2.5 Political and Legal. Laws, government agencies and pressure groups
made up the political and legal environment. The political/legal influences on
marketing can be grouped into 4 categories such general monetary and fiscal
policies, broad social legislation and policies set by regulatory agencies,
subsidies and tariffs and import quotas, and laws affecting marketing itself
(including competitors and consumers).
2.6 Social-cultural. The socio-cultural consists of the demographic
characteristics, customs and values of the population within which the
marketing firms are operating.
3. Market penetration. Market penetration is a strategy for company growth
by increasing sales of current products to current market segments without
changing the product.
4. Method of international market entry. International market entry is useful
in order to determine how to penetrate the abroad market;
4.1 Export [indirect export, direct export, intra-corporate-transfer].
Exporting is defined as the process of sending goods or services from one
country to other countries for use or sale there. It is relatively easy to
undertake and are often the first international step for a company.
4.2 International licensing. Licensing is another means foreign market.
It is where a licensor, sells the right to use its intellectual property.
4.3 International Franchising. Franchising is more common in the
United States than elsewhere in the world. It represents the major
international franchisor. Example; Burger King, Dunkin Donuts, KFC, Mc
Donald, etc.
4.4 Specialized entry mode [management contracts, turnkey
project]. Firm may used specialized strategies to enter foreign market
without making long-term investments.
4.5 Foreign direct investment [Greenfield strategy, acquisition
strategy, joint venture]. Foreign direct investment (FDI) is entering
international market through ownership of assets in host countries. A firm
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3. Mohd Zahid Laton, FPP UiTM Pahang
may first enter the foreign market through exporting, licensing or
franchising.
5. Deciding whether to go abroad market. Before going abroad, the company
must weigh several risks and answer many questions about its ability to operate
internationally such;
5.1 Can the company learn to understand the preferences and buyer
behavior of consumers in other countries?
5.2 Can company offer competitively attractive products?
5.3 Will company be able to adapt to other countries business cultures
and deal effectively with foreign nationals?
5.4 Do the company’s managers have the necessary international
experience?
5.5 Has management considered the impact of regulations and the
political environments of other countries?
6. Deciding which market to penetrate. Before going abroad, the company
should;
6.1 Define its international marketing objectives and policies.
6.2 Decide what volume of foreign sales it wants.
6.3 Choose in how many countries it wants to market.
6.4 Decides on the types of countries to enter.
7. Deciding the international marketing program. Companies that operate
in one or more foreign markets must decide how much to adapt their marketing
strategies and programs to local conditions depends to the marketing mix elements
such;
7.1 Product. Several strategies can be considers such;
i. Straight product extension. Marketing a product in a foreign
market without any change.
ii. Product adaption. Adapting a product to meet local conditions
or wants in foreign markets.
iii. Product invention. Creating new products or services for
foreign markets.
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4. Mohd Zahid Laton, FPP UiTM Pahang
7.2 Promotion. Companies can either adopt the same communication
strategy they used in the home market or change it for each local market.
Consider advertising messages. Some global companies use a standardized
advertising theme around the world. Colors also are changed sometimes to
avoid taboos in other countries. Even names must be changed.
7.3 Price. Companies also face many problems in setting their
international prices. It could set a uniform price all around the world, but this
amount would be too high a price in poor countries and not high enough in
rich ones. Example, a Gucci handbag may sell for $60 in Italy and $240 in
U.S.A. Why? Gucci faces a price escalation problem. It must add the cost of
transportation, tariffs, importer margin, wholesaler margin, and retailer
margin to its factory price.
7.4 Distribution channels / place. Companies must design international
channels that take into account all the necessary links in distributing the
seller’s products to final buyers, including the seller’s headquarters
organization, channels among nations, and channels within nations.
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