International Marketing Strategies

Marketers must address two key areas when developing international marketing strategies: selecting an entry strategy and deciding on a strategic orientation.

Entry strategy. An entry strategy is the approach used to market products in an international market. The basic options include exporting, joint ventures, and direct investment. Each option has advantages and disadvantages in level of investment and amount of control.

Exporting is a method of selling products to buyers in international markets. The exporter might sell directly to international buyers or use intermediaries, such as exporting firms from the home country or importing firms in the foreign country. Exporting typically requires the lowest level of investment, but it offers limited control to the marketer. Carrier (commercial air conditioners), Caterpillar (construction equipment), and Chrysler (cars) are firms actively engaged in exporting.

At the other extreme is direct investment where the marketer invests in production, sales, distribution, or other operations in the foreign country. This normally requires the largest investment of resources, but it gives the marketer the most control over marketing operations.

In between these extremes are various joint-venture approaches. Joint ventures include any arrangement between two or more organizations to market products in an international market. Options are licensing agreements, contract manufacturing deals, and equity investments in strategic partnerships. Investment requirements and marketing control are usually moderate, although this depends upon the details of each joint venture. Examples of joint- venture strategies include Apple Computer’s licensing of its new PowerPC chip to Asian firms such as Taiwan’s Acer; the joint venture for pesticides, named Qingdao Ciba Agro Ltd., the marketing partnership between Delta Airlines and Virgin Atlantic Airways to coordinate flights and give access to London’s Heathrow Airport.

International strategic orientation. Firms operating in international markets can use two different orientations toward marketing strategy. With a standardized marketing strategy, a firm develops and implements the same product, price, distribution, and promotion programs in all international markets. With a customized marketing strategy, a firm develops and implements a different marketing mix for each target market country. Most international marketing strategies lie somewhere between these extremes, leaning toward one or the other.

These different marketing mixes may involve changes to the communications mix, the product itself, or both. At the corporate level, a global strategy views whole world as a global market. A multinational strategy recognizes national differences and views the collection of other countries as a portfolio of markets.

The Coca-Cola, for example, uses a largely standardized marketing strategy, where the brand name, concentrate formula, positioning, and advertising are virtually the same worldwide, but the artificial sweetener and packaging differ across countries. TGI Friday’s restaurants are successful in the Far East using the same concepts as in the United States. Nissan, in contrast, uses a more customized marketing strategy by tailoring cars to local needs and tastes.

Some companies are moving from customized to standardized marketing strategies. Appliance marketers traditionally customized products for each country. But Whirlpool, through extensive research, found that homemakers from Portugal to Finland have much in common. It now markets the same appliances with the same basic marketing strategy in 25 countries.

The adaptation versus standardization decision is subject to a number of sometimes conflicting factors. Factors encouraging standardization include economy-of-scale advantages in production, marketing effort, and research and development. In addition, increasing economic integration in Europe and intensifying global competition also favor standardization. In many cases, however, demand and usage conditions differ sufficiently to warrant some modifications in marketing-mix offerings. The factor favoring adaptation in international strategy includes differing use conditions, governmental and regulatory influences, differing consumer behavior patterns, and local competition. Adaptation is also consistent with the market orientation principles of the marketing concept. Accordingly, standardization may only hold for brands with universal name recognition and for products that require little knowledge for effective use, such as soft drinks and jeans.

One study of 35 companies in Japan, Europe, and the United States that have successfully strong brands across countries revealed four common ideas about effective global branding:

1. Stimulate the sharing of insights and best practices across countries.

2. Support a common global brand-planning process.

3. Assign managerial responsibility for brands in order to create cross-country synergies and to fight local bias.

4. Execute brilliant brand-building strategies.

Comprehension questions:

1. What must marketers address when developing international marketing strategies?

2. What is entry strategy?

3. What is exporting?

4. What can you say about direct investment?

5. What is a standardized marketing strategy?

6. What does a global strategy view?

7. What does a multinational strategy recognize?

Referring to Unit 8