Flashcards in Unit 3. Chapter 19. Globalisation and international marketing Deck (14)
The growing trend towards worldwide markets in products, capital and labour, unrestricted by barriers.
Def. International marketing
Selling products in markets other than the original domestic market.
Why sell products internationally? (4)
• Home markets are saturated
• Higher profits from lower costs (possibly from cheaper labour or materials)
• Spreading risks
• Legal differences create opportunities abroad
How is international marketing different (4)
• Political differences: changes in international governments can lead to risks in operating there
• Economic and social differences: living standards, age groups, tax rates, interests rates etc.
• Legal differences: for example guns are legal to sell in the US but not in other countries.
• Cultural differences and language differences
Methods of entry to international markets (6)
• Directly exporting
• Indirectly exporting
• Joint ventures
• Investing into foreign subsidiaries
Benefits (2) and limitations (2) of directly exporting
• Complete control over international marketing of the product
• No commission is taken by intermediaries -> lower costs
• With no local agent, the business may lack important local knowledge
• The business has to handle the logistics of transporting which is time consuming
Benefits (2) and limitations (2) of indirectly exporting
• Local agents has local market knowledge
• Transport and administrative procedures are handles by the agent
• Less control over marketing
• Commissions have to be paid
Franchising and Joint ventures
have been explained in AS
Licensing (what it is + 2 benefits + 2 limitations)
• Business licence another firm to produce the products under the original business's brand.
• Saving time and costs from transportation
• Avoids capital costs of setting up another firm abroad
• Lapses in quality
• Unethical production methods
Subsidiaries (what it is + 2 benefits + 2 limitations)
• Company owned branches in foreign countries
• Head office has control over operations, but can also completely decentralise to allow local managers to control
• All profits after tax belong to the company - no commission payment
• Expensive, much higher capital cost required
• Decentralised foreign subsidiaries can take unethical decisions which could affect the business's overall reputation
Def. Pan-global marketing
Adopting a standardised product across the globe as if the entire world were a single market - selling the same goods in the same way everywhere.
Def. Global localisation
Adapting the marketing mix, including differentiated products, to meet national and regional tastes and cultures.
Advantages (2) and disadvantages (3) of pan-global and pan-regional marketing
• Establishes a 'common identity', which aids consumer recognition
• Cost reduction due to economies of scales
• Lost market opportunities
• Different legal restrictions for safety of the products and the advertisement e.g. in some countries gambling is illegal to advertise
• Setting same prices doesn't account for the range of consumer incomes