Planning for Involvement in International Market

International Marketplace

A market is a structure that allows people and businesses to exchange goods and services. For example, the United States is a market. China is a market. Together, the U.S., Canada, and Mexico are a market that is governed by NAFTA, the North American Free Trade Agreement.

Now, let’s define an international market.

International market is not defined as one geographic location, but allows the trade of goods and services anywhere in the world. For example, Apple is a U.S. company. It purchases supplies from several countries, and then has its products manufactured in Taiwan. Once the product has been assembled, it is transported to the U.S., Europe, Australia, and Asia.

Entering the international marketplace is a huge opportunity for a company to meet the needs of an international market, while possibly increasing sales exponentially. Of course, there are advantages and disadvantages, as with any marketing strategy. But the international market is definitely an excellent opportunity for any marketer.

Creating the international marketing plan

A marketing plan is the full beginning-to-end strategy used to bring a product to market, and get it in the hands of the consumer. It requires planning and excellent organizational skills. The marketer wants to understand the consumer insight, and meet those needs with the product and marketing plan.

Small businesses will obviously have a smaller plan than a large corporation, and it’s important the marketer doesn’t over-do it. Small businesses should have a marketing plan that is around 15 pages or less.

Before the plan can be written, the following information should be available:

• The company’s latest financial statements, as well as sales figures broken down by product and location
• A list of each product or service the company offers, including the markets they target
• A table that breaks down the organization, especially if it is a large company
• A written statement from the marketing team detailing their understanding of the marketplace
• Statements from each employee involved in the marketing process that detail what they think must be included in the new marketing plan

When beginning, the marketer will want to focus on three items:

1. Completion date

The marketer must set a date for when the plan should be completed. It can be a long process, involving many people and departments. So it is key the marketer has a goal end-date.

2. Who is responsible?

Each member of the marketing team should have a defined role, which they should clearly understand and be prepared for. They must be responsible for their part; otherwise the plan will never come together.

3. The budget

A marketing plan can cost a lot of money, so establish a budget and stick to it. You don’t want to end up with no money, and have to finish the marketing plan without funds.

Entry into the International Market

In order to enter into an international market, a company must have a mode of entry. There are many ways to enter the international market, but we will detail the top methods here.

1. Licensing

Licensing consists of three types of licensing contracts.

Licensing is when a company requires a fee for the use of its brand. Franchising is when the company (the franchiser) provides branding expertise to the franchisee. Examples include McDonald’s, Subway, and Dunkin’ Donuts.

Turnkey contracts are major corporate agreements to build large plants. They usually include the training of employees.

2. International Agents

Agents are often used as a way for a company to enter the international market. Agents are people or organizations that are contracted by a business to market on their behalf in a certain country. Agents don’t own any of the products they simply earn a commission on any products sold.

Agents usually represent more than on company at a time. They are inexpensive, but can be difficult to manage. If a company intends to go international, it should make sure the agent contract is revocable. It can be difficult for the marketer to work in the international market, especially in the beginning, when it is new. So setting goals and targets can be difficult at first.

Using an agent can be an easy solution for a company new to the international market, but be aware that the agent can represent a competitor at the same time. So be aware there might be conflicts of interest. They can also be costly to recruit and train, and with a international market, there can be language and cultural issues.

Distributors are another option, and they are similar to agents, except they do take ownership of the product. Ownership gives them incentive to move the product quicker, and attempt to make a profit from it. Otherwise, they have the same pros and cons as an agent.

3. Strategic Alliances

This term describes a series of different types of professional relationships that can work as an intermediary between the company and the international marketplace. Sometimes, there can be a strategic alliance between competitors.

Here are some examples of strategic alliances:

• Shared manufacturing – An example would be two car companies sharing the same manufacturer.
• Research and Development – This could happen when two companies decide to share R&D facilities.
• Distribution alliances
• Marketing alliances

These types of alliances are non-equity, so each company remains independent.

4. Joint Ventures

Joint ventures are usually equity relationships, with a new company being formed to handle the international split. There are several reasons why a company would set up a joint venture to help them enter the international market. Some of these reasons are:

• Access to new technology
• Just to gain entry into a foreign market
• To gain access to new distribution channels, manufacturing, or R&D

5. Overseas Manufacturers

If a company is large enough, owning an overseas manufacturing plant might be the best choice. Investing in the plant, machinery, and labor can also be cheaper, if currency rates are working in the company’s favor. This is referred to as Foreign Direct Investment (FDI).

This can be a newly built plant, or the company could acquire a current business that has acceptable facilities.

Benefits of planning in international markets

Many marketing experts have argued that a well-developed planning process is fundamental for the achievement of a coherent approach when attacking international markets. The principal benefits of planning in international markets are:

• International market Planning encourages proactivity rather than reactivity so that the company is able to steer its own destiny rather than simply react to events. Firms need to gain competitive advantage by moving into new markets or developing more aggressive strategies in old markets.
• It encourages a systematic process of analysis of all the factors involved in decisions, rather than simply those uppermost in the decision-maker’s mind at a particular moment.
• Firms are forced to state objectives and policies clearly and precisely so that they are not misinterpreted by individual managers who might be quite remote from the point at which decisions are made.
• As the management task becomes more complex in dealing with many different markets it is essential that managers become more focused in their thinking.
• As the environment becomes increasingly complex and unstable, planning prepares the company for reacting quickly and decisively in a coordinated and effective way.
• It helps the company to coordinate strategies in different markets for the benefit of the company as a whole, so that it can out-perform the competition
• As ease of communication and mobility increases, customers must be able to find familiar product or service ‘offers’ in each market.
• Planning facilitates the development of common performance and quality standards which can be used for company-wide control.
• The participation of managers in the international market planning process increases ownership and loyalty and also allows easier intra-company transfer and career development. This is particularly important where there are major cultural differences.
• A better understanding of the requirements of other functions and subsidiaries in different countries reduces internal company conflict and encourages the selection of strategies which will be beneficial for the whole company.
• International market Planning necessitates the development of company-wide standardized information transfer systems so that the accessibility and value of information is improved.
• Short-term action and control measures and long-term strategies can be integrated through effective market planning.

The extent to which individual companies realize these benefits in practice, however, is dependent on a number of largely internal and controllable factors such as the nature and structure of the company, the stage of evolution of the organization and the managerial philosophy, all of which have a major impact on the culture of the firm. MNEs (multi-national enterprises) are making fundamental decisions about the way that they will operate in future.