In the search for a greater and vast market, many companies globally decide to take their products to the international market. The need to reach out to the international market more often than not is faced with hitches and challenges one of which is the mode of entry into this market. This is largely influenced by the international markets and other authorities and bodies that control the markets. It is, therefore, necessary to consider what route of entry into any international market one would want to enter through to gain maximum advantage through it.
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This paper attempts to give short descriptions of the four common stages in internationalization (international marketing) while also discussing how major decisions in international marketing affect these four stages. The paper also will give an outlook on the four major channels between producer and consumer and will finally look at the role of direct marketing in this outlook.
Stages in Internationalization
In looking at these stages Hashmi (2009), concluded that any company or individual who gets into the business of internationalization will have to go through one or more of these processes: Direct exportation, indirect exportation (use of agents), foreign presence, and home manufacture and foreign assembly. The processes largely depend on the destination thereof in balance with many factors that come into play when the product is moving from producer to consumer.
When the exporter decides to export his product directly, his is the burden to research about the market quality, the planning of the foreign distribution, and the collection of his product by the consumer. It is a tasking venture and requires a lot of strategic planning on the side of the exporter in order to gain the most from it. Nevertheless, with proper guidance from the relevant commercial authorities, the process can make one gain maximum profit since it does not involve brokers or franchisers who will always sack up some of the exporter’s profits. Small-sized companies may be advised to go for this if they can commit a dedicated number of staff to it.
Unlike direct exportation, sources incorporate the services of a firm that acts as an agent on behalf of the exporter. These agents are capable of finding a viable market on behalf of the producer. International trade consultants have enough trade contacts to ease the producer’s burden on time consumption in looking for markets. Nevertheless, the exporter still has a form of control over the process. This is a good way of getting a hold of new techniques in the market and also getting to know more about the competitors that one is facing in his line of production.
Another way of handling the international market is by the exporter or his representative accompanying the product to the consumer. The representative stands on behalf of the company and uses the company’s samples to attract potential consumers. He may work on a commission basis and he is usually under a contract that clearly defines terms, method of sale, and termination of the agreement. He may decide to operate exclusively or non-exclusively.
Home Manufacture and Foreign Assembly
As the name suggests, the exporter will concentrate on converting the raw material into a finished product. This is most cases will be a part of the main product that will require assembly to be complete. An example is how a company in, say, Japan will manufacture a certain microchip and ship the merchandise to the United States for assembly probably by companies like Dell or Apple. Companies decide to do so if they especially have specialized in a certain field and will require the help of another company overseas to finish up on the product.
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The four processes that are involved in the international market when an exporter decides to sell are greatly influenced by one of five of the following according to an article in case studies of the factors that impact the international market (2010). The company should understand the preferences of the customer. Indirect exporting will be preferred especially in a situation where the exporter does not necessarily understand what the market prefers in a foreign land. This is simply because the agent may have a better understanding of the foreign market as compared to the exporter. The exporter must also consider the cost of exporting. Direct exporting happens to be the cheapest means of exporting but portrays the lowest form of market knowledge. Sticking the balance is therefore necessary.
Laws and regulations of a certain foreign land always affect market prices. Government policies concerning the prices of certain imports always vary from country to country. Consultancy is therefore advised if the seller will not want to risk losses for his product. Nevertheless, consultancy is always an expense that the exporter will have to incur in the process of selling. Another factor to be considered is the compatibility of the product
. Many products that are exported may lack functionality in the place they have been taken to. For example, it is of no use for a cell phone company to export its products to a country with no network provider. Again, knowledge about the market is necessary for exporters to understand this and consultancy may be preferred when considering the type of exportation he wants t to undertake.
Finally, the cultural background of a certain community affects the importation of certain goods in the country. It will be of no use to export pork meat to an Islamic state, having considered the religious implication of the country. Cultural factors may also affect the importation of some products to the positive side. Generally, the process of exportation that a seller will undertake may vary if he /she will consider these factors.
Types of Marketing channels between Producer and Customer
Depending on factors similar to the ones mentioned above, the producer will prefer using any of the four channels to maximize his profit and reach a greater and more vulnerable market. The balance to be made is his own choice.
The Role of Direct Marketing
The first channel in the diagram shown above showing the exchange from producer to consumer is known as direct marketing. It is a simple strategy that is adopted is adopted by specific types of companies to hit a given target specified by the same company. Industries like the banking industry may choose to deal directly with the consumer. No channels of distribution characterize this marketing strategy. In a sense, the marketing strategy and communication employed by such companies are strictly channeled to the consumer, unlike brand labels that are done at the wholesale level for most manufactured products (Marketing teacher, 2010).
In this respect, many companies decide to use this type of structure as a marketing tool for their companies so that they can give free offers, for example, the strategy undertaken by low-cost airlines. These companies advertise themselves to the consumer and in the long run after they have acquired a formidable number of customers they then start giving promotional offers and free offers that make the customer be retained through time.
Marketing strategy is a tool that will take any type of producer or exporter to another level as a businessman. The better a person’s prowess at having his product marketed, the more he gains in profits. Different goods and services need different marketing approaches, and the factors that have been given above should be taken into consideration while choosing the approach that one wants to take while marketing his product. Understanding the market may from, time to time, call for consultancy especially when it comes to the international markets. Using direct exportation may be cheaper than any other type of exportation, but one has to be careful about the factors affecting the market, and also the type of product one is exporting.
Hashmi, Ahmad. “How does an organization enter an overseas market?” Marketing and Selling (2009). Web.
“International Business and International Marketing”. Case Studies and Management. Resources (2010). Web.
“Internationalization Stages”. Marketing teacher (2010). Web.
“Types of marketing channels”. Scribd. (2010). Web.