A company should enter fewer countries when: Market entry and market control costs are high.

h. Product and communication adaptation costs are high. Population and income size and growth are high in the initial countries chosen. Dominant foreign firms can establish high barriers to entry

A companys entry strategy typically follows one of two possible approaches:

A waterfall approach, in which countries are gradually entered sequentially; or A sprinkler approach, in which many countries are entered simultaneously within a limited period of time. Increasingly, especially with technology-intensive firms, they are born global and market to the entire world right from the outset.

These marketers are able to capitalize on the potential of developing markets by changing their conventional marketing practices to sell their products and services more effectively Economic and cultural differences abound; a marketing infrastructure may barely exist; and local competition can be surprisingly stiff.

The challenge is to think creatively about how marketing can fulfill the dreams of most of the worlds population for a better standard of living.

Many companies prefer to sell to neighboring countries because they understand these countries better and can control their costs more effectively

Once a company decides to target a particular country, it has to determine the best mode of entry. Its broad choices are indirect exporting, direct exporting, licensing, joint ventures, and direct investment.

The normal way to get involved in an international market is through exporting. Occasional exporting is a passive level of involvement in which the company exports from time to time, either on its own initiative or in response to unsolicited orders from abroad. Active exporting takes place when the company makes a commitment to expand into a particular market.

Companies typically start with indirect exporting that is, they work through independent intermediaries. Domestic-based export merchants buy the manufacturers products and then sell them abroad. Domestic-based export agents seek and negotiate foreign purchases and are paid a commission. Included in this group are trading companies.

Cooperative organizations carry on exporting activities on behalf of several producers and are partly under their administrative control.

Export-management companies agree to manage a companys export activities for a fee.

Companies eventually may decide to handle their own exports. The investment and risk are somewhat greater, but so is the potential return.

Domestic-based export department or division. Might evolve into a self-contained export department operating as a profit center. Overseas sales branch or subsidiary. The sales branch handles sales and distribution and might handle warehousing and promotion as well. It often serves as a display and customer service center. Traveling export sales representatives. Home-based sales representatives are sent abroad to find business. Foreign-based distributors or agents. These distributors and agents might be given exclusive rights to represent the company in that country, or only limited rights.

Electronic communication via the Internet is extending the reach of companies large and small to worldwide markets.

Marketers are using the Web to reach new customers outside their home countries, to support existing customers who live abroad, to source from international suppliers, and to build global brand awareness.

Finding free information about trade and exporting has never been easier: www.ita.doc.gov U.S. Department of Commerces International Trade Administration www.exim.gov Export-Import Bank of the United States www.sba.gov U.S. Small Business Administration www.bxa.doc.gov Bureau of Industry and Security, a branch of the Commerce Department

Licensing is a simple way to become involved in international marketing. The licensor issues a license to a foreign company to use a manufacturing process, trademark, patent, trade secret, or other item of value for a fee or royalty. The licensor gains entry at little risk; the licensee gains production expertise or a well-known product or brand name.

Licensing has potential disadvantages. The licensor has less control over the licensee than it does over its own production and sales facilities. If the licensee is very successful, the firm has given up profits; and if and when the contract ends, the company might find that it has created a competitor.

To avoid this, the licensor usually supplies some proprietary ingredients or components needed in the product (as Coca-Cola does).

But the best strategy is for the licensor to lead in innovation so that the licensee will continue to depend on the licensor.

In contract manufacturing, the firm hires local manufacturers to produce the product. Contract manufacturing gives the company less control over the manufacturing process and the loss of potential profits on manufacturing. However, it offers a chance to start faster, with less risk and with the opportunity to form a partnership or buy out the local manufacturer later.

Finally, a company can enter a foreign market through franchising, which is a more complete form of licensing.

The franchiser offers a complete brand concept and operating system. In return, the franchisee invests in and pays certain fees to the franchiser.

Foreign investors may join with local investors to create a joint venture company in which they share ownership and control.

A joint venture may be necessary or desirable for economic or political reasons. The foreign firm might lack the financial, physical, or managerial resources to undertake the venture alone; or the foreign government might require joint ownership as a condition for entry.

Joint ownership has certain drawbacks. The partners might disagree over investment, marketing, or other policies. One partner might want to reinvest earnings for growth, and the other partner might want to declare more dividends.

Joint ownership can also prevent a multinational company from carrying out specific manufacturing and marketing policies on a worldwide basis.

The ultimate form of foreign involvement is direct ownership of foreign-based assembly or manufacturing facilities.
The foreign company can buy part or full interest in a local company or build its own facilities.

If the market appears large enough, foreign production facilities offer distinct advantages. First, the firm secures cost economies in the form of cheaper labor or raw materials, foreign government investment incentives, and freight savings.

Second, the firm strengthens its image in the host country because it creates jobs. Third, the firm develops a deeper relationship with government, customers, local suppliers, and distributors, enabling it to adapt its products better to the local environment.

Fourth, the firm retains full control over its investment and therefore can develop manufacturing and marketing policies that serve its long-term international objectives. Fifth, the firm assures itself access to the market in case the host country starts insisting that locally purchased goods have domestic content.

The main disadvantage of direct investment is that the firm exposes a large investment to risks such as blocked or devalued currencies, worsening markets, or expropriation. The firm will find it expensive to reduce or close down its operations, because the host country might require substantial severance pay to the employees.

International companies must decide how much to adapt their marketing strategy to local conditions.

At one extreme are companies that use a globally standardized marketing mix worldwide. Standardization of the product, communication, and distribution channels promises the lowest costs

At the other extreme is an adapted marketing mix, where the producer adjusts the marketing program to each target market.

Between the two extremes, many possibilities exist. Most brands are adapted to some extent to reflect significant differences in consumer behavior, brand development, competitive forces, and the legal or political environment.

Satisfying different consumer needs and wants can require different marketing programs. Cultural differences can often be pronounced across countries

Kotler, P. and Keller, K. (2006) Marketing Management, Twelfth Edition. Prentice-Hall. Pearson Education, Inc.