Levels Of International Marketing Involvements
When a firm decides to go international, its degree of variation is however not straight jacketed as a firm might enter international markets with one product but at different degrees. It may also enter the same market with different products and different degrees. All these are dependent on what is considered best and feasible at the point of entering such market.
It may as well enter different international markets with different products at different degrees. The following are possible ways of engaging in international marketing or the different levels of international marketing.
- Causal or Accidental exporting – This is passive level of involvement. The firm may be selling abroad without even knowing it. Resident buyers for foreign compaies wnd distributors may be buying the firms goods and sending them abroad while the firm considers these typical domestic sales. In other cases, the firm may be aware of its sales abroad but does nothing to encourage the occasional orders. Opportunistic firms may see such occasional exporting as a way to upload an unexpected surplus or some obsolete inventory (dumping). This sort of causal exporting probably occurs in a large numbers of firms but it does not represent any real commitment to or involvement in international marketing.
- Active Exporting – For many reasons such as unsolicited orders from abroad, overseas move by a competitor, success story about exporting etc. A firm may decide to seek export sales activity thereby allocating some resources to export operation or some outside organisation to handle export activities. There are also possibilities for co-operative exporting as in a piggy bank operation. The main point here is that the firm is making a commitment to seek export business.
- Foreign Licensing – A firm may license foreign manufacturers to produce its products in the foreign market instead of exporting to such countries. This practice represents somewhat greater degree of involvement than exporting in that the company’s products are now being produced in foreign markets, though by proxy. Licensing may prove more practical than exporting because of the high cost of shipping, high tariff barriers or quota restrictions or nationalistic preferences for locally produced goods, market knowledge and distribution capabilities. The licensor enters an agreement with a license in the foreign market, offering the right to use a manufacturing process, trademark, patent, trade secret or other items of value for a free or royalty. The licensor gains entry into market at little; the licensee gains production expertise or a well known product or name, without having to start from scratch.
- Overseas Marketing by the firm – A sales office marketing subsidiary may be established abroad this represents a further commitment to international business the product may come from domestic plants, license or contract manufacturing, but the foreign marketing is controlled more directly by the firm through its physical presence in the market.
- Foreign production and foreign marketing – A firm reaches the utmost degree of international involvement when it engages in its own foreign manufacturing operations. Significant financial and managerial resources probably will be needed for foreign production through these requirements may vary. Foreign manufacturing and a joint venture will mean a sharing of cost and risk with the partner, who is usually a national.
Acquisition of an existing producer in a foreign market is a popular and quick way of entering the market. Although this may cost more than starting a plant from the ground, the demand of management are definitely much less. The classification of levels of international marketing and the involvement given here is not meant to be obsolete, nor the categories mutually exclusive. It does illustrate however, that there are many alternatives open to the firm.