decision to enter the market

Four steps. The internationalization process typically has four stages:
1.       No regular export activities
2.       Export via independent representatives (agents)
3.       Establishment of one or more sales subsidiaries
4.       Establishment of production facilities abroad

Deciding Which Markets to Enter
§  How Many Markets to Enter
Waterfall approach: gradually entering countries in sequence
     Sprinkler approach, entering many countries simultaneously.
     Born global approach. Born to the worldwide
§  Developed versus Developing Markets
Focus on the BRIC: Brazil, Russia, India, and China (Emerging market) Many firms are using lessons gleaned from marketing in developing markets to better compete in their developed markets
§  Evaluating Potential Markets
Its readiness for different products and services, and its attractiveness as a market, depend on its demographic, economic, sociocultural, natural, technological, and political-legal environments.
      In general, a company prefers to enter countries that have high market attractiveness and low market risk, and in which it possesses a competitive advantage.
Deciding How to Enter the Market
Five Modes of Entry into Foreign Markets
a)       Indirect exporting (less Investment, less risky)
b)      Direct exporting
c)      Licensing
l  Management contracts
l  Contract manufacturing,
l  Franchising
d)      Joint ventures
e)       Direct Investment （High risk, high investment, high return）
Deciding on the Marketing Program
§  Global Similarities and Differences
§  Four cultural dimensions of Differentiate countries
§  Marketing Adaptation
§  Global Product Strategies

Four cultural dimensions of Differentiate countries
§  Individualism versus collectivism
   (High collectivism: Japan; low: United States)
§  High versus low power distance
   (High: Russia; low: Nordic countries).
§  Masculine versus feminine
  (Highly masculine: Japan; low: Nordic countries)
§  Weak versus strong uncertainty avoidance
  (High avoidance: Greece; low: Jamaica)

Marketing Adaptation
The best global brands are consistent in theme but reflect significant differences in consumer behavior, brand development, competitive forces, and the legal or political environment.
Think Global, Act Local
World’s Local Bank.
Global Product Strategies
§  PRODUCT STANDARDIZATION
Philips reserves higher-end, premium products for developed markets and emphasizes products with basic
§  PRODUCT ADAPTATION STRATEGIES
   Straight extension：introduces the product in the foreign   market without any change.
   Product adaptation：alters the product to meet local conditions or preferences. Regional version, country version, city version, retailer version.
   Product invention creates something new.
2.             BRAND ELEMENT ADAPTATION: Choice between phonetic and semantic translations. E.g. Electrolux’s British ad line for its vacuum cleaners—“Nothing sucks like an Electrolux”—would certainly not lure customers in the United States!
Global Communication Strategies
Changing marketing communications for each local market is a process called communication adaptation. If it adapts both the product and the communications, the company engages in dual adaptation.
§  Three strategies:
1.Vary from culture.
The company can use one message everywhere, varying only the language, name, and perhaps colors to avoid taboos in some countries.
2.Same theme, different execution.
Use the same message and creative theme globally but adapt the execution.
3.country-specific ads （Coca-Cola）In China. The red Coca-Cola is the symbol of sharing and family reunion
§  GLOBAL ADAPTATIONS
a)       Legally and culturally acceptable.
b)      Appropriateness.
c)      Vary their messages’ appeal.

Global Pricing Strategies
§  Multinationals selling abroad must contend with price escalation and transfer prices (and dumping charges). Two particularly thorny pricing problems are gray markets and counterfeits.
Global Distribution Strategies 
Whole-Channel Concept for International Marketing （5 steps）
•       Seller
•       Seller's international marketing headquarters
•       Channels between nations
•       Channels within foreign nations
•       Final buyers
Country-of-Origin Effects
§  Building Country Images
Country-of-origin perceptions are the mental associations and beliefs triggered by a country.
Company and national image are complementary to each other
The good national image will increase the local company’s sales，and a strong company that emerges as a global player can do wonders for a country’s image.
§  Consumer Perceptions of Country of Origin
Japan for automobiles and consumer electronics; the United States for high-tech innovations, soft drinks, toys, cigarettes, and jeans; France for wine, perfume, and luxury goods.

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