The International Marketing Mix

When launching a product into foreign markets do you standardise or adapt your marketing mix to the foreign market? A company can adopt to use a standardised marketing mix around the world or an adapted marketing mix in each country.

International Product Strategies Standardisation Vs Adaption

So what should an organisation do? Adapt or sell a standardised product? Basic marketing concepts tell us that we will sell more of a product if we aim to meet the needs of our target market. In international markets ,we have to take into consideration consumers cultural background, buying habits, levels of personal disposable income etc in order to deliver a tailored marketing mix program to suit their needs. The arguments however for standardisation suggest that if you go through the process of adapting the product to local markets it does little but add to the overall cost of producing the product and weakens the brand on the global scale. In todays global world, where consumers travel more, watch satellite television, communicate and shop internationally over the internet, the world now is becoming a lot smaller. Because of this there is no need to adapt products to local markets. Brands such as Coca-Cola, MTV, Nike, Levis are all successful global brands where they have a standardised approach to their marketing mix, all these products are targeted at similar groups globally. In many circumstances a company will have to adapt their product and marketing mix strategy to meet local needs and wants that cannot be changed. Mcdonald is a global player however, their burgers are adapted to local needs. In India where a cow is a sacred animal their burgers are served with chicken or fish. In Mexico burgers come with chilli sauce. Coca-cola is some parts of the world taste sweeter then in others. Yes we can argue that standardisation is better for the organisation because it reduces cost, however many organisations will have to think global, but act local if they are to successfully establish them selves in foreign markets.

International Promotion Strategy

As with international product decisions an organisation can either adapt or standardise their promotional strategy and message. Advertising messages in countries may well have to be adapted because of language barriers or the current message used in the national market may be offensive to overseas residents. The use of certain colours may also need to be thought about. In India red is the

colour worn by the bride in weddings, white is the colour for mourning in Japan. The level of media development has to also be taken into account. Is commercial television well established in your host country? What is the level of television penetration? How much control does the government have over advertising on TV and radio? Is print media more popular then TV? Many organisation go for a strategy of adapting advertising messages to local markets to best meet consumer demand.

International Pricing Strategies

Pricing on an international scale is difficult. As well as taking into account traditional price considerations (see marketing mix pricing) i.e.: Fixed and variable costs, Competition, Company objectives , Proposed positioning strategies, Target group and willingness to pay, the organisation needs to consider the costs of transport, any tariffs or import duties that may be levied on their product(s) when they are sold on the international scale. Also what currency do you expect to be paid in? Will it be home or international currency? Exchange rate fluctuation will also impact profitability and influence pricing decisions. Other factors to consider include local incomes, what are income and PDI levels. What is the general economic situation of the country and how will this influence pricing? The internet is now making pricing more transparent for consumers. Goods can be purchased online from any overseas organisations at local currency prices, a prime examples is dvds which are purchased from sites like www.dvdsoon.com which deliver internationally.

International Distribution Strategies

A standard distribution channel in the UK may go from a Manufacturer, wholesaler, retailer to consumer or direct from a manufacturer to a retailer. In an overseas market there may well be more intermediaries involved. For example in Japan there are approximately five different types of wholesaler a product goes

through before the product reaches the final consumer. In your international market , is it dominated by major retailers or is the retail sector made up of small independent retailers? Is internet distribution common for your product.

Marketing theory
International marketing
International marketing involves recognising that people all over the world have different needs. Companies like Gillette, Coca-Cola, BIC, and Cadbury Schweppes have brands that are recognised across the globe. While many of the products that these businesses sell are targeted at a global audience using a consistent marketing mix, it is also necessary to understand regional differences, hence the importance of international marketing. Organisations must accept that differences in values, customs, languages and currencies will mean that some products will only suit certain countries and that as well as there being global markets e.g. for BIC and Gillette razors, and for Coca-Cola drinks, there are important regional differences - for example advertising in China and India need to focus on local languages. Just as the marketing environment has to be assessed at home, the overseas potential of markets has to be carefully scrutinised. Finding relevant information takes longer because of the unfamiliarity of some locations. The potential market size, degree and type of competition, price, promotional differences, product differences as well as barriers to trade have to be analysed alongside the costeffectiveness of various types of transport. The organisation then has to assess the scale of the investment and consider both short- and long-term targets for an adequate return. Before becoming involved in exporting, an organisation must find the answers to two questions: 1. Is there a market for the product? 2. How far will it need to be adapted for overseas markets? The product must possess characteristics that make it acceptable for the market - these may be features like size, shape, design, performance and even colour. For example, red is a popular colour in Chinese-speaking areas. Organisations also have to consider different languages, customs and health and safety regulations.

Standardisation
If a company offers a product, which is undifferentiated between any of the markets to which it is offered, then standardisation is taking place. The great benefit of standardisation is the ability to compete with low costs over a large output. The diagram below illustrates the use of a standardised products and marketing mix:

In most markets, however, there are many barriers to standardisation. It is not difficult to think about the standard marketing mix for a product and how this might vary from one country to another. For example:

product - tastes and habits differ between markets price - consumers have different incomes place - systems of distribution vary widely promotion - Consumers' media habits vary, as do language skills and levels of literacy.

With differentiated marketing, on the other hand, an organisation will segment its overseas markets, and offer a marketing mix to meet the needs of each of its markets. The great benefit of standardisation is that costs are lowered, profitability is increased and the task of supplying different markets becomes substantially easier. The diagram illustrates the process of adapting the marketing mix to meet the needs of different geographical

markets:

However, it could also be argued that the success of many products in international markets has come about because marketers have successfully adapted their marketing mix to meet local needs. To a large extent the standardisation/adaptation dilemma depends upon an organisation's view of its overseas markets and the degree to which it is prepared to commit itself to meeting the needs of overseas customers. There are three main approaches, which can be applied: 1. Polycentrism - with this marketing approach, a business will establish subsidiaries, each with their own marketing objectives and policies, which are decentralised from the parent company. Adaptation takes place in every market using different mixes to satisfy customer requirements. 2. Ethnocentrism - overseas operations are considered to be of little importance. Plans for overseas markets are developed at home. There is little research, the marketing mix is standardised and there is no real attention to different customer needs and requirements in each market. 3. Geocentrism - standardisation takes place wherever possible and adaptation takes place where necessary. This is a pragmatic approach. A confectionery and soft drinks manufacturer like Cadbury Schweppes typically produces a range of standard items that are sold throughout the globe using similar marketing mix. However, differences may occur in such aspects as distribution channels and pricing as well as advertising in languages that are relevant to particular cultures. In addition such a company would produce some products which cater for particular tastes, and which are relevant to particular cultures. New products might then be tested in a regional area, before consideration of which other areas of the globe to roll out that product to. Standardisation - refers to manufacturing, marketing or employing other processes in a standard way. Differentiation - is the process of making products or aspects of the marketing mix different so as to appeal to different markets.

Read more: http://businesscasestudies.co.uk/business-theory/marketing/internationalmarketing.html#ixzz1u0gVuFLv

GLOBAL MARKETING MIX: DISTRIBUTION

In order for global marketers to be successful, the availability and accessibility of products and service to customers is imperative. Distribution channels make up the place in the 4 ps of the marketing mix (along with product, price and promotion). How to best deliver your goods to their intended destination can change drastically across international markets. Understanding what factors influence global logistics and choosing the most reliable channel can be one of the most critical challenges faced by the global marketer. Supply and distribution chain management decisions pose large organizational and financial risks to any company. The following post lists and explains some important facts about international marketing channels.

What is meant by the distribution processes and structures?

No matter what type of country or market you are in, your products and services eventually go through a distribution process. The distribution process includes the handling and distribution of goods, the passage of ownership (title), and - most important from the standpoint of marketing strategy - the buying and selling negotiations between producers and middlemen and between middlemen and customers. Each country market also has a distribution structure, where goods pass from producer to the end-user. Within each structure are a variety of middlemen whose responsibilities and actions reflect the existing competition, the characteristics of the market, and resulting cultural factors. In summary, processes and structure change from those in emerging markets to those in highly developed nations.

Traditionally, import-oriented distribution structures existed, where importers controlled a fixed supply of goods, and the marketing system developed around the idea of selling a limited supply of goods at high prices to a smaller number of customers. It used to be a sellers market, where market penetration and mass distribution were not necessary because demand exceeded supply. Additionally,

distribution systems were local rather than national, and the importer-wholesaler traditionally performed most marketing activities. This left few opportunities for independent agencies that support a fully integrated distribution system to develop.

Today, few countries fit the import-oriented model used in the past, though it is understood that channel structures become more advanced with economic, political and social development. Traditional channel structures give way to modern forms, alliances, and processes. The pressures for a country to change come from inside and outside influences. Multinational marketers must look for new ways to profit from market segments whilst still occasionally paying the costs associated with traditional systems.

What is the goal achieved by understanding your distribution network? Each industry and country has a distribution network with many channel choices and structures that are unique and fixed- at least for the short term. It may be very difficult and complex to penetrate a new market due to existing distribution layers and conditions. On a global scale, there exists a mixture of traditional, new and evolving systems used. The goal of any multinational organization is to build the most efficient and effective channels among their alternatives, ultimately to establish a competitive advantage.

Distribution Patterns

To better understand the distribution system used in a foreign country, marketers must never assume it is the same as what they practice domestically. There are many observed distribution patterns in retailing and wholesaling that can help explain the complexities of different distribution tasks. Size patterns, the use of direct marketing, and the resistance to change all affect how distribution channels and structures are composed. For example, in Italy, many small retailers specialize in different brands and product lines, while in Finland, most retailers sell more of the same products and services. Retail size has a direct impact on how to distribute. In some markets companys may sell to large, dominant retailers directly, whereas in other areas there may be no way to reach the same amount of customers by distributing to smaller retailers. Many underdeveloped countries pose similar challenges to Italy when it comes to distributing. If you are a global marketer you need to weigh out the costs and benefits from distributing to specific foreign markets.

One way that marketers are able to overcome the challenges posed by structures in place in underdeveloped nations is through direct marketing. Direct marketing occurs when consumers are targeted through mail, telephone, email, or door-to-door selling. This technique aims to bypass the complications that come along with choosing the right wholesalers and retailers. For example, direct sales through catalogs have proved largely successful for companies looking to enter a foreign market.

Despite the many advancements in technology and processes made possible to existing and emerging markets, resistance to change is still common in many locations. Ultimately, it is the consumer that either accepts or rejects a given distribution structure. Many cultures are accustomed to when and how their products and services are made available, and may not respond positively to adjustments. A countries resistance to change is demonstrated in my recent case study of Wal-Marts Expansion into Japan.

Choosing Your Middleman

Whether marketing domestically or internationally, your options range from taking control of the distribution process in its entirety (by establishing subsidiaries and marketing directly to the end user), or depending on one or more intermediaries for distribution of your products and services. For instance, McDonalds is a global corporation that establishes restaurant subsidiaries that sell directly to the consumer. Thus, you cannot get a Big Mac at any other retailer besides McDonalds. In contrast, Red Bull is a global corporation that relies heavily on intermediaries to package, transport and sell their energy drinks.

The channel process includes activities that start with manufacturing and end with the final sale to the customer. As a global marketer, you most likely will depend on a channel process that includes many different middlemen. In most cases it is advisable to have an organization or division in your company that directly communicates with each channel. These team members work to ensure goods and services move out of and into foreign countries successfully. Ideally, a company should control or be directly involved in selecting channel members that are practical, cost effective, and align with the companys stated marketing objectives.

There are 3 types of middlemen involved in distribution structures.

Home-Country Middlemen: Are located in the firms home country and provide marketing and distribution services from a domestic base. The parties relegate foreign-market distribution to others; such as manufacturer or global retailers, export management companies, or trading companies. Home-country middlemen are most helpful for companies with small international sales volumes, those inexperienced in foreign markets, those who do not want to get too involved with the complexities of international marketing, or those wanting to go global with minimal financial and managerial commitment.

Foreign-Country Middlemen: For marketers desiring greater control over the distribution process, foreign-country middlemen are hired. Often times they are utilized temporarily or for special purposes, but can also be manufacturer reps or separate foreign distribution companies. An advantage of foreign-country middlemen is that they can create a shorter channel for the company and have more market expertise.

Government-Affiliated Middlemen: Marketers must familiarize themselves with the governments that they operate in, as government-affiliated middlemen are often responsible in delivering products, services and commodities for the governments own use. These channel members may work on a federal, regional or local level. In some nations, the public sector has huge purchasing power and influence on suppliers and other middlemen.

Factors affecting choice of channels:

Before deciding on any channel of distribution or middlemen, the international marketer must understand the characteristics of their market and the established system most commonly used in the foreign market they are entering. Ask yourself the following questions prior to the selection process:

1. 2. 3. 4.

Who is the specific target market within and across countries? What are my goals in terms of volume, market share, and profit margin? What are my financial and organizational commitments to the development of international distribution? How can I control the length and characteristics of my channels, the terms of sale and overall channel ownership?

Locating, Selecting and Motivating Channel Members

Remember, the actual process of building the channels for international distribution that you prefer is seldom easy. Many firms are unsuccessful at penetrating new markets because they are unable to construct an adequate system of channels. Locating middlemen should begin with the study of the market and determining evaluation criteria for those who can serve your market. Selecting prospective middlemen can be difficult; make sure you implement a screening process to avoid hiring those with a bad reputation or whom cant be trusted. Once screening is completed, use your companys legal resources to form a detailed agreement or contract that protects your company and its products and services. Finally, dont forget the importance of the middlemans effect on overall distribution success. Implement motivation techniques in order to maintain the channel members interest and support in your operations. Motivation can be achieved by financial rewards, psychological rewards, effective communication, company support or strengthen corporate relationships.

What is International Marketing Strategy?

Marketing can simply be defined as an organizationalfunction and a set of processes for creating, communicating and delivering the value to the customers and managing the customer relationships in such a way that is beneficial for both the customers as well as the stakeholders. At international level, marketing can simply be defined as the process of finding out the needs of customers in foreign countriesand then providing them the required entities at right place and at right price.

The basic concept of marketing is the same even at international level, but some modifications are always required. Only a few multinational organizations are lucky enough to use the same marketing strategy in the whole world, for examplea pen manufacturing organization that uses a marketing slogan finest writing in the world will not be required to change its marketing slogan in any part of world. But a majority of multinational organizations need to modify or specifically formulate their marketing strategy at the international level. Formulation of strategy

For formulating its international marketing strategy every organization follows a five step procedure. This includesmarket assessment, product strategy, price strategy, place strategy and promotion strategy. The last four segments of strategy formulation are the popular 4 Ps of marketing but the first segmentmarket assessmentis a new factor to be considered while formulating an international marketing strategy. Now we will briefly discuss about each segment. Market assessment The market assessment includes a five step screening procedure-

First screening-The first screening includes the basic identification of the customers needs in the potential markets of the world. Here, an organization prepares a list of various countries where it can sell its goods and services. Second screening-The second screening includes the shortening of the list prepared in first screening on the basis of financial and economic analysis of various potential markets. Under financial analysis, organizations consider the fiscal policy, monetary policy, prevailing interest rates, inflation rates etc., and under economic analysis, organizations scan the markets for the size, intensity and growth potential. In this way, organizations exclude all unfavorable countries from their list. Third screening- Under the third screening, the organization considers the legal and political forces of various potential markets. This is a very important step because, before entering a country, an organization must ensure that the hostcountrys laws will protect their patents, copyrights and other intellectual rights. Choosing a politically unstable nation like Pakistan, Iran etc will always be detrimental for the organizations success. Fourth Screening- Under the fourth screening, organizations consider the socio-cultural forces of potential markets. In some countries like India, culture and moral values dont allow men and women to use intoxicants, so those organizations that produce intoxicants should be defensive for such markets. Moreover, religious factors are also veryimportant to consider, for example, in India, the Hindu religion doesnt allow its followers to eat beef, so when Mc Donalds entered India they removed beef from their menu list, which otherwise is the highest selling product in the USA for Mc Donalds.

Fifth Screening- If after four screenings, the organization finds a choice between two or more nations, and then at the fifth stage they should consider the competitive environments in all the potential markets. Now, some organizations prefer to choose those markets where the competitors are less in number. On the other hand, some organizations prefer to choose those markets where the level of competition is very high; such organizations believe that the cutting edge competition will also boost their performance. This choice entirely depends upon the specific philosophy followed by the organizations. Final selection- After making all the screenings, organizations will opt for the final selection. This step includes field tripsorganizations send their executives to the actual locations for practical evaluation. Such field trips are very common and can do a great deal to supplement the currently available information. Sometimes, these trips take the form of a trade mission. Based on the outcome of the screening and the supplemental data, an MNE will make a choice regarding the goods and services to be offered overseas. Product strategy

Product strategies will vary, depending on the specific good and the customers. Some products can be sold in all countries without any modifications but some products and their marketing strategy are required to be changed according to specific requirements of the market. No modification required- There are some products that dont require any modification with the change in the country, for examplepens. A penmanufacturing company will not be required to modify their products when launching into a new country. In fact, a company that is using a slogan like finest writing in the world will not be required to change even their marketing strategy.

Modification required- On the other hand, some organizations are required to modify their products. This modification depends upon many factors like economy, culture, local laws etc; for example, in the USA, chewing gum packages often contain 10 to 20 sticks, because the USA is a highly intensive market and people in that country have a high purchasing power. But in many other countries, weak purchasing power of the customers limits the packaging of the gum to only 5 sticks. Similarly, other modifications are required with the change in the country.

Promotion

strategy

Promotion is the process of stimulating demand for a companys goods and services. Multinational enterprises promote their goods and services in different countries through advertisement and personal selling. Depending upon the product and the customers, organizations adopt one of following strategies of promotionSame Same Different product product product same different same promotion promotion promotion message message message

Different product different promotion message Pricing strategy

Multinational enterprises price their products depending upon the specific market. Pricing of a product depends upon many limiting factors like government regulations, price escalating factors, legal forces etc, for example, in some countries governments fix the maximum and minimum selling price of a product.

Place

strategy

Multinational organizations should always sell their products at a place that is most convenient for the customers. Organizations should fix distribution channels according to the affordability and convenience of the customers in the host country.

Five Major Product Strategies Available To Global Marketers?

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There are five major product strategies in international marketing. Product communications extension This strategy is very low cost and merely takes the same product and communication strategy into other markets. However it can be risky if misjudgments are made. For example CPC International believed the US consumer would take to dry soups, which dominate the European market. It did not work. Extended product - communications adaptation If the product basically fits the different needs or segments of a market it may need an adjustment inmarketing communications only. Again this is a low cost strategy, but different product functions have to be identified and a suitable communications mix developed. Product adaptation - communications extension The product is adapted to fit usage conditions but the communication stays the same. The assumption is that the product will serve the same function in foreign markets under different usage conditions. Product adaptation - communications adaptation Both product and communication strategies need attention to fit the peculiar need of the market. Product invention This needs a totally new idea to fit the exclusive conditions of the market. This is very much a strategy which could be ideal in a Third World situation. The development costs may be high, but the advantages are also very high.

5 Traditional Marketing Steps To Become An International Business by CINDY on 19 MARCH, 2008 International Business Development With An Easy 5 Step International Marketing Plan So you want to get more international clients, and realize that you need to do some international marketing. But you are not quite sure what to do. Well lets have a look at the different areas of international marketing. Companies often go through these steps one after the other, but not always. You could start an export business for example without going through the first step of Domestic Marketing.

Each step clearly explains: where your company is selling, and what product you are selling. You will see very clearly where your companys business requirements are today with regards to International Marketing. This will also give you a better understanding of what your next step is towards getting more international clients.

1 Domestic Marketing First of all there is Domestic Marketing. This is where most companies start. This is the marketing you do for your local market in your own country. There are no international links in this business. Your Company: A domestic company, buying and selling its products within one country.

Your Product: Is a domestic product for the domestic market.

2 Export Marketing

This is often the second step towards International Marketing. If this is effectively a companys second step to International Marketing, the company needs to spend a little time and effort on the foreign market research and analyzing all client feedback during this phase.

Your Company: Sells the same product for his domestic market to a few other foreign markets. There is no effort to adapt the product to the foreign markets needs. The company remains centered on its domestic market, with minimum cross cultural marketing efforts.

Your Product: Is a domestic product for a foreign market.

3 International Marketing

This is a vital stage for the company. The company will have to adapt to the market on several levels. There is often a real learning curve to adapt your products, marketing and sales to foreign markets.

The good news is that most of the skills your company will acquire to adapt to one market will be used again for all of the other countries you want to target.

Your Company: Is now adapting its marketing, communication and products to the foreign market. At this stage in International Marketing the company is only dealing with a 1 or 2 countries.

Your Product: Becomes one foreign product for one foreign country.

4 Multinational Marketing

This is the fourth step. It is a logical extension of International Marketing. This is a term that might be a bit obsolete today, with the internet. It seems to be used more for the large established companies.

Your Company: Now sells to many foreign countries. And the company now has the skills to go into more countries and will naturally tend to expand into the neighboring countries.

Your Product: Becomes one foreign product for one wider foreign region covering a group of countries.

5 Global Marketing: This is the last phase in International Marketing. There are few companies involved. They are the companies with brand names known worldwide. Your Company: Operates in such a large number of countries, you could almost say it sells its products worldwide.

Your Product: The company will naturally move towards cutting costs and will aim to find one product for all countries. In Global Marketing the product will not be created for the domestic market and sold abroad, as in Export Marketing. In Global Marketing one product is created to satisfy the needs of all markets all foreign countries and your domestic market.

Where Is Your International Marketing Today? By looking at where your companies markets and products are today you can identify the type of International Marketing you should be using. You can then move towards your next step in International Marketing. These steps logically follow one after the other for brick and mortar companies and the majority of todays e-businesses.

The internet makes international business development easier today than ever before. Remember, simply having a website online will not make your company global. You will have to work at it a little. You will need to apply the right international marketing for your business current market and product range. Your company will get more and more international clients as it moves through the different marketing stages. The whole notion of global business become more accessible for everyone.

Read the whole story Stages of International Marketing Involvement by V S RAMA RAO on OCTOBER 18, 2009 Once a company has decided to go international, it has to decide the degree of marketing involvement and commitment it is prepared to make. These decisions should reflect considerable study and analysis of market potential and company capabilities a process not always followed. Many companies begin tentatively in international marketing, growing as they again experience and gradually changing strategy and tactics as they become more committed. Others enter international marketing after much research and with fully developed long range plans, prepared to make investments to acquire a market position and often evincing bursts of international activities.

Regardless of the means employed to gain entry into foreign market, a company may make little or no actual; market investment that is, its marketing involvement may be limited to selling a product with little or no thought given to development of market control. Alternatively, a company may become totally involved and invest large sums of money and effort to capture and maintain a permanent, specific position in the market. In general, one of five (sometimes overlapping) stages can describe the international marketing involvement of a company. Although the stages of international are presented here in a linear order, the reader should not infer that a firm progresses from one stage to another; quite to the contrary, a firm may begin its international involvement at any one stage or be in more than one stage simultaneously. For example, because of a short product life cycle and a thin but widespread market for many technology products, many high tech companies large and small see the entire world, including their home market, as a single market and strive to reach all possible customers as rapidly as possible.

No direct foreign marketing:

A company in this stage does not actively cultivate customers outside national boundaries; however this companys products may reach foreign markets. Sales may be made to trading companies as well as foreign customers who come directly to the firm. Or products may reach foreign markets via domestic wholesalers or distributors who sell abroad without explicit encouragement or even knowledge of the producer. As companies develop web sites on the internet, many receive orders

from international Web surfers. Often an unsolicited order from a foreign is what piques the interest of a company to seek additional international sales.

Infrequent Foreign marketing:

Temporary surpluses caused by variations in production levels or demand may result in infrequent marketing overseas. The surpluses are characterized by their temporary nature; therefore sales to foreign markets are made as goods are available, with little or no intention of maintaining continuous market representation. As domestic demand increases and absorbs surpluses, foreign sales activity is withdrawn. In this stage, little or no change is seen in company organization or product lines. However, few companies today fit this model because customers around the world increasingly seek long term commercial relationships. Further, evidence exists that financial returns from initial international expansions are limited.

Benetton, one of the largest clothing manufacturers in Italy has a global presence across 120 countries and more than 5,000 stores.

While it is initial few years of operation witnessed expansion within Italy, the company ventured outside Italy for the first time in 1969 when it opened its store in Paris.

Benetton entered India in 1991-92 as a joint venture with DCM Group, now a 100 per cent subsidiary. Brand United Colors of Benetton is present across 106 stores in 45 cities and brand Sisley was launched in India in 2006.

Regular Foreign marketing:

At this level, the firm has permanent productive capacity devoted to the production of goods to be marketed in foreign markets. A firm may employ foreign or domestic overseas intermediaries or it may have its own sales force or sales subsidiaries in important markets. The primary focus of operations and production is to service domestic market needs. However, as overseas demand grows, production is allocated for foreign markets, and products may be adapted to meet the needs of individual foreign markets. Profit expectations from foreign markets move from being seen as a bonus to regular domestic profits to a position in which the company becomes dependent on foreign sales and profits to meet its goals.

Meter Man, a small company (25 employees) in southern Minnesota that manufactures agricultural measuring devices, is a good example of a company in this stage. In 1989, the 35 year old company began exploring the idea of exporting; by 1992 the company was shipping product to Europe. Today, a third of Meter Mans sales are in 365 countries, and soon the company expects international sales to account for about half of its business. When you start exporting you say to yourself this will be icing on the cake, says the director of sales and marketing. But now going international has become critical to existence.

more at http://www.citeman.com/7460-stages-of-international-marketinginvolvement.html#ixzz1u1kYULch

The International Franchise Market

Are you a 'brand entrepreneur' or a 'corporate developer'? We discuss the licence models and types of investment options available to investor/developers in the international franchise market.

When it comes to franchising in the international market, your mindset and business accomplishments are more important than capital available. You must be clear in your mind whether you are a 'brand entrepreneur' or a 'corporate developer', as this will determine the type of licence and the franchise sector you are most suited to. Are you a brand entrepreneur with a proven track record developing a business within your market, or a corporate entrepreneur with specific sector experience establishing multiple sites?

Franchising has often been described as a 'business marriage' between someone with a blueprint and system for doing business (the franchisor) and someone keen to replicate that blueprint locally, regionally, nationally or on a multi-national basis (the franchisee). The franchisor invests in developing the business, branding, operations manuals, training and support, benefiting from rapid brand development, a motivated investor-developer and bypassing the need for corporate investment. The franchisee invests capital, time and effort in developing the business, enjoying proven systems, support, training, collective brand value and fast-forwarding past the business conception and developmental phases. In recent years a number of new terms have emerged to describe the different franchisor/investor relationships that have come into play on the world franchise market. The main terms are: Single Unit or Multi-Unit Licence Typically requiring a low investment, these will usually be acquired through a Master Franchisee already established in a country. If a Master is not in place, it is rare for a franchisor to sign such agreements as this brings direct responsibility for providing training and support for franchisees onto the franchisor, who may lack the local market knowledge required. There are exceptions, especially for single units located in internationalised locations such as major airports; this process is known as Direct Franchising. Regional Master Licence A fast growing method of international franchising where a country is divided into regions, for example the UK could be divided into seven regional territories, with each Regional Master Franchisee sub-franchising. National Master Licence In this case, the Master Franchisee takes control of an entire country and operates a policy of sub-franchising, although some corporate expansion may also take place, especially in establishing a pilot operation. Regional Corporate Developer Licence Again dividing a country into regional licenses, but with no ability to sub-franchise. Development of the territory is carried out entirely through the corporate investment of the Regional Corporate Developer. National/Multi-National Corporate Developer This arrangement is reserved for large corporate entities with the investment capital to fully exploit the market(s). There is usually an agreement with the franchisor to open 'x' number of outlets in 'y' years in order to maintain the exclusivity of the agreement. The geographical areas franchisors tend to target for expansion can be divided into

three: the Americas (USA, Canada, South America and the Caribbean); Asia (China, South East Asia, Australia and India); and Europe (Western and Eastern Europe, Scandinavia, Russia, and Turkey, plus areas in the Middle East and Africa). In addition, you can divide the world franchise market into three broad sectors: Food, Beverage & Hospitality; Retail; and Services. You can marry each of these with the type of licence typically offered by franchisors from that sector. In Food, Beverage & Hospitality most franchisors are seeking National or Regional Corporate Developers. This means that organisations can make a significant investment in opening a number of restaurants across their territory, be it national or regional. In this sector it is rare to find a Regional or National Master Franchise arrangement involving subfranchising. The picture is the same in retailing, with the exception of concessions and product licensing. Where franchisors are offering a business format franchise, they are usually only looking for Corporate Developers to train in how to operate the business rather than teaching an organisation or individual about the market from scratch. Corporate Developers are typically suited to Food, Beverage, Hospitality and Retail. A Corporate Developer with have previous or existing Food & Beverage or retail operational experience with significant funding to develop a brand within a region with little or no sub-franchising. Within the services sector, there are as many opportunities available as Food, Beverage & Hospitality and retail combined. This sector can also be divided into three: business-to-business, business-to-consumer and professional services. To qualify for a licence from these areas you will need to be a brand entrepreneur with a good business marketing background, but not necessarily industry experience. For instance, you don't need to know about will writing to take on the development of a will writing brand, or have previous experience in business brokering to become the Master Franchisee of a business brokering brand. Where we encounter entrepreneurial individuals looking at international franchising, they tend to steer towards the services sector. The typical profile of a Master Franchisee in this sector is an individual who has already developed a successful business in his or her own market. They have most likely exited their company and want to get back into business but without starting from the beginning and reinventing the wheel. Rather they want to take a proven system and brand and use their own market knowledge and skills to grow that brand in their market. Brand Entrepreneurs are typically suited to service franchising. Service franchising lends itself to Master Franchising at National and Regional level with the growth of the network fuelled by sub-franchising. Article published on: 01st May 2009

Business To Business
Franchise opportunities in this sector provide a wide range of services to other businesses. Business franchise opportunities (B2B franchises) are more likely to be attractive to those interested in dealing with businesses than consumers. Business to business franchises or otherwise known as white collar franchises include accountancy franchises, business advice franchises computer franchises, consultancy franchises, cost management business franchises, financial management franchises, ink cartridge franchises, IT and telecommunication franchises, office supplies franchises, printing franchises, recruitment franchises, sales training franchises, small business supply franchises, web design franchises and many more operating to those who seek a professional franchise for sale.

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November 2, 2011
Beyond BRIC: A Look at Some Potential Breakout Franchise Markets
Franchising is a business format with American roots that has grown globally by a considerable amount, particularly in the past couple of decades.

Consider this, fifteen years ago relatively few franchisors were operating internationally, and the ones that had gone International were typically the large-scale ones. Nowadays, 32 percent of the franchise units operated by the top 200 franchisors in the United States are located outside of the U.S. That number represents a 33 percent jump in the number of international units operated by those franchisors in the past 10 years.

In addition to the United States, countries such as England, Australia and Canada have found a high level of success in spreading their franchise concepts domestically and around the world. And additional players like France, Spain, and Germany are getting into the international franchising game, and also experiencing marked success.

With the launching of our new franchise portal for Mexico within the past month (and another soon launching for South Africa), its obvious that a worldwide financial malaise hasnt stopped the growth of franchising. But where are some places where franchising may boom next?

The U.S. Department of Commerce estimates that over 75 percent of the expected growth in the worlds trade over the next two decades will come from developing countries, specifically emerging markets. Eighty percent of the worlds population lives in these emerging markets, but they currently only combine for an estimated 25 percent of the worlds gross domestic product.

When you hear the phrase emerging markets typically the first countries to come to mind are the larger ones such as the BRIC countries of Brazil, Russia, India and China, along with maybe a couple others. However, smaller countries have future growth potential that simply shouldnt be ignored.

Many of the countries that warrant consideration are part of regions once unified, but have since dissolved into historically-new entities. Places such as the former Soviet Union, former Yugoslavia, and other countries in Eastern Europe fit into this description.

According to the East Europe Franchise Association, the region that also includes some countries geographically located in central Europe as well is a vast and emerging marketplace for franchising consisting of 30 countries with over 450 million people.

So where are the main growth areas within this vast and emerging marketplace? Kristin Houston, leader of the U.S. Commercial Service Global Franchise Team, points to the countries of Ukraine, Slovakia, Poland, Hungary, and the Czech Republic. These five countries have grown 67 percent in the last three years alone. The sectors of retail, automotive services, real estate, education/training, hotel and hospitality, and quick-service restaurants are currently the most in-demand franchise areas.

Here are some additional quick facts on the franchise landscape in these specific countries:

Ukraine

Around 42 percent of the Ukrainian franchising market consists of non-Ukrainian franchising brands Fast food is the predominate franchise industry in the country Some areas Ukrainian franchising businesses have been successful in include office supply delivery, outsourcing services, staff and management training, copy and printing services, and translation services Other franchise sectors with a strong base in the country are in customer service such as cleaning and washing services, repair, tourism, ticket delivery, organization of entertainment, etc. Banking and financial-related systems are newer areas gaining traction Franchise relations are regulated by the Civil Code of Ukraine and the Commercial Code of Ukraine, with special chapters of these acts dedicated to franchising Hotel and hospitality is highly regarded as a future growth area Slovakia There are over 100 franchising models are present in the Slovak market, of which about two-thirds are within the retail trade sector and about one-third in services The Slovak Franchise Association has adopted the European Code of Ethics for Franchising There are currently no specific regulations in Slovakia in regards to franchise agreements Poland Has some of the most developed franchise systems in Eastern Europe There are over 300 franchising brands in Poland and more than 13,500 franchising outlets Around 30 percent of the franchising systems in Poland come from foreign countries with most foreign-based franchise systems coming from Germany, France and the U.S. Popular franchise sectors include the following: textiles, retail food sales, professional development services, body care salons (hairdressers services and beauty salons), fuel stations, financial services and fast food The majority of regulations applicable to franchise agreements are found throughout the Polish Civil Code, the Commercial Companies Codes, the Act on Abatement of Unfair Competition and many other laws since Polish law does not specifically regulate franchising agreements Hungary

The Hungarian franchise market consists of approximately 300 brands, 50 percent of which are Hungarian owned

The other 50 percent of the Hungarian franchise market are either subsidiaries of international companies or Hungarian master franchisees Some of the first franchises in Hungary included popular hotel chains and fast food franchises. Several Hungarian franchise companies are active internationally. Under Hungarian law, a franchise agreement is considered an atypical agreement, and neither any specific law nor the Hungarian Civil Code regulates these agreements Czech Republic

There are around 150 franchise brands are in the Czech Republic Like many other European countries, the Czech Republic lacks legal regulation specifically applicable to franchising About 62 percent of the franchising concepts are in the service sector, and 38 percent are in retail Almost 50 percent of franchise concepts operate in food and beverage, real estate or clothing/shoes sectors To fully find success internationally, a franchisor will have to adjust and adapt their model to not only the regulations (including currency exchange and tax laws) of where they desire to operate, but also that areas language, working hours, and culture.

In addition, the fact that there are few established franchise laws in many of these countries shouldnt discourage franchisors from establishing outlets in these countries. Organizations such as the International Franchise Association and the International Trade Administration branch of the U.S. Commerce Department offer franchisors who seek to operate internationally many of the resources needed during the process.

Also, although they are becoming more financially-sound and developing a stronger middle class, these countries still havent been cultivated by a high number of franchisors. Consequently, hopeful entrepreneurs within these countries are generally eager to learn business principles through the methods and procedures franchisors have to offer.

Franchise businesses have quite a bit to offer emerging markets because they are designed to be replicated. Thus, they require less experienced entrepreneurs to begin, and provide business-learning opportunities within a support structure. All of this can help emerging market countries further develop their economies.

According to Houston, 95 percent of the worlds potential consumers are beyond U.S. borders. Going International is a way for franchisors to sustain growth opportunities for their business for years to come, and it wouldnt be surprising to hear of major franchise growth in the East Europe region in the not too distant future.

Sources: Franchising World Magazine (March 2011), U.S. Commercial Service, East Europe Franchise Association, International Franchise Association, Australian Trade Commission

Advantages and disadvantages of franchising The challenges of starting a small business and keeping it going cannot be underestimated and many do fail, even in the very good times. The hurdles can be substantial and the ability to get a business up to speed, making profit and supporting you is not achieved by many. Franchising has attracted the attention of many over past years and the tough economic climate has highlighted its strengths and shown that there is a more secure way to start your own business. Its formula of a locally owned and run enterprise, driven by a small business owner, with branding, economies of scale and support from the wider network, gives the business a far better chance of success. However, this is only the case if it is done well. A good franchise will offer you a proven business format with the initial and continuing support that you will need. Your business will work under the brand established by your franchisor using the business system they have developed and proven in the marketplace. You will pay an initial fee to set up using the brand and the proven business format. You will then pay continuing fees for ongoing support that will help you to operate and allow you to build the business and, eventually, a capital asset that you can sell. The ongoing support is one of the key reasons for the success of franchising. The franchisor has already gone through the pain of finding out what works and what doesnt they have invested in the systems and are now willing to teach you how to replicate it. However, dont think you can pick and choose which parts of the systems you want to use. It is very much all or nothing. However, if you are paying for a proven system, why wouldnt you follow it? What are the advantages of franchising? About 90% of all franchisees reported profitability over the last 12 months. The business format is proven. You have the opportunity to build your capital as well as your earnings. It is your business and you are the owner manager, providing you follow the system, you decide what goes. The major banks are very supportive of good franchising. What are the disadvantages of franchising? Running any business is hard work, demanding the highest level of personal and family commitment.

Buy a franchise
Advantages and disadvantages of franchising
Buying a franchise can be a quick way to set up your own business without starting from scratch. But there are also a number of drawbacks.

Advantages

Your business is based on a proven idea. You can check how successful other franchises are before committing yourself. You can use a recognised brand name and trade marks. You benefit from any advertising or promotion by the owner of the franchise - the 'franchisor'. The franchisor gives you support - usually including training, help setting up the business, a manual telling you how to run the business and ongoing advice. You usually have exclusive rights in your territory. The franchisor won't sell any other franchises in the same territory. Financing the business may be easier. Banks are sometimes more likely to lend money to buy a franchise with a good reputation. You can benefit from communicating and sharing ideas with, and receiving support from, other franchisees in the network. Relationships with suppliers have already been established.

Disadvantages

Costs may be higher than you expect. As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor.

The franchise agreement usually includes restrictionson how you can run the business. You might not be able to make changes to suit your local market. The franchisor might go out of business. Other franchisees could give the brand a bad reputation, so the recruitment process needs to be thorough You may find it difficult to sell your franchise - you can only sell it to someone approved by the franchisor. All profits (a percentage of sales) are usually shared with the franchisor.

A. Advantages from the Franchisors point of view: 1. Financial: Franchising creates another source of income for the franchisor, through payment of franchise fees, royalty & levies in addition to the possibility of sourcing private label products to franchisees. This capital injection provides an improved cash flow, a higher return on investment and higher profits. Other financial benefits that the franchisor enjoys are reduced operating, distribution and advertising costs. Of course that also means more allocated funds for research and development. Additionally, there will always be economies of scale with regard to purchasing power. 2. Operational: The franchisor can have a smaller central organization when compared to developing and owning locations themselves. Franchising also means uniformity of procedures, which reflects on consistency, enhanced productivity levels and better quality. Effective quality control is another advantage of the franchise system. The franchisee is usually self motivated since he has invested much time and money in the business, which means working hard to bring in better organizational and monetary results. This also reflects on more satisfied customers and improved sales effectiveness. 3. Strategic: To the franchisor, franchising means the spreading of risks by multiplying the number of locations through other peoples investment. That means faster network expansion and a better opportunity to focus on changing market needs, which in its turn means reduced effect from competitors. 4. Administrative: With a smaller central organization, the business maintains a more cost effective labour force, reduction of key staff turnover and more effective recruitment. B. Advantages from a Franchisees point of view: 1. Avoiding the unnecessary trial and error period in starting and operating a new business. 2. Lower financial risk, compared to other ventures, because investment costs are lower and profit margins are higher. 3. Business Format Franchising complete packages ensure a ready to go turn-key franchised unit.

4. Managing a small business whilst depending on the power of the franchisor company which has a bigger organization. 5. The franchisee has an opportunity to run a proven business concept with a successful operational track record. 6. The opportunity to learn the latest developments and changes in the local and global market from the franchisor and focus entirely on developing the sales revenues. 7. The benefit of operating under a recognized trade name/trademark, which can have better marketing results. 8. The franchisee has access to accumulated business experience and technical know-how in managing the business. 9. A unified store design which leverages the business reputation in marketing the concept. 10. Easier purchasing, storing, and product display systems. C. Disadvantages from a Franchisors point of view: 1. Considerable capital allocation is required to build the franchise infrastructure and pilot operation. At the beginning of the franchise program, the franchisor is required to have the appropriate resources to recruit, train, and support franchisees. 2. At the beginning of the franchise program there is a broader risk that the trade name can be spoiled by misfits until such time the franchisor is capable of selecting the right candidate for the business. 3. There is a risk that franchisees exercise undue pressure over the franchisor in order to implement new policies and procedures. 4. The franchisor has to disclose confidential information to franchisees and this may constitute a risk to the business. D. Disadvantages from a Franchisees pint of view: 1. The requirement to pay the franchise fees and royalty to the franchisor, which in some cases can be exaggerated. 2. The transfer of all goodwill built in the local market to the franchisor upon expiration or termination of the franchise contract. 3. The necessity of abiding by the franchisors operating systems, standards, policies and procedures. 4. Reduced corporate profit margin due to payment of royalties and levies.