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Organising For Nondomestic Marketing





Two dimensions of organizing are important to the international marketing manager. The first concerns the way the firm is organized for entry into its nondomestic markets and the second deals with how the firm is organized internally to achieve its marketing objectives. In domestic marketing the entry question does not exist and one is immediately concerned with the structuring of the marketing activities within the firm’s organizational chart.

Entry alternatives. Basically, firms may enter an overseas market with varying degrees of decision-making control over their total operations, including their marketing efforts. The firm that enters an overseas market by establishing a wholly owned subsidiary or by having over 50% equity obviously has the greater degree of decision-making control.

When a firm is exporting to a market, it potentially has no say on how its product or service is to be marketed, although in practice it can discontinue exporting through an uncooperative middleman. Similarly, by licensing the production of its product, the firm has only those decision-making controls that are established in the original agreement. These generally relate to quality control and the territory covered. In either instance (exporting or licensing), the international marketing manager has limited control over the marketing techniques used in overseas market.

Many firms have tended to prefer entry through the use of wholly owned subsidiaries. This entry method provides a maximum operational control and the greatest protection to a firm’s technology and the quality of product sold under its brand name. However, it also entails the greatest risk.

In more recent years, the trend has been toward entry through a joint venture agreement. Among the joint venture’s advantages is the fact that it permits sharing the risk while still obtaining a measure of control and participating in the profits in the market. Further, since a joint venture agreement if often made with an existing firm in the overseas market, the joint venture may have the additional benefits of reducing competition and gaining local market expertise and contacts. An even more recent development is the establishment of country-company partnerships.



An even more compelling factor favoring a joint venture is the foreign investment regulations that now exist in a number of countries. The market in which the firm wishes to enter may simply require the establishment of a joint venture and dictate the percentage of equity that the outside investor may hold. This directly affects the decision-making control of the international marketing manager because his ability to conduct marketing planning becomes restricted.

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Channels of Distribution

A channel of distribution is the combination of middlemen that a company uses to move its products to ultimate purchasers. The two major types of middlemen that can be used are wholesalers and retailers.

Wholesalers purchase goods and resell them to retailers, other wholesalers, industrial users, institutes, commercial firms and government agencies. Wholesalers do not sell directly to ultimate consumers, but retailers do. There are three major types of wholesalers. Merchant wholesalers take title to the products they purchase and often offer a wide range of services. Merchandise agents and brokers bring buyers and sellers together; they do not take title to merchandise. Manufacturers establish sales branches and sales offices in order to perform the wholesaling function themselves.

Middlemen make a number of contributions to the economy. They reduce distribution costs by minimizing the number of transactions required. They perform all the marketing functions. Because they are specialists, they efficiently perform these marketing functions. Their operations result in increased value because time and place utility are created. They bring buyers and sellers together and act as information sources. Middlemen can be especially valuable for companies that are going into new markets, small firms, companies that are



Bringing out new products, and companies that do not have sufficient financial resources.

Firms that market consumer goods tend to use middlemen extensively. In all, approximately 95% of all consumer products flow through wholesalers and retailers. Industrial goods, however, tend to go directly to purchasers and not through middlemen. Around 80% of all industrial goods are marketed directly.

There are four major types of retailing establishment in the United States. By far the most dominant of these are stores. Automatic vending, direct selling, and mail order are much less important than stores. Within the store category, chain operations (operations that have two or more establishments under one ownership) tend to dominate.

Unit 3. Advertising

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Advertising All Over The World

In the world of advertising, selling products is the most important goal. As the companies are becoming more global, they are looking for new ways to sell their products all over the world. It is true that because of global communication, the world is becoming more smaller today. But it is also true that the problems of global advertising - problems of language and culture - have become larger than ever before. For example, Braniff Airlines wanted to advertise its fine leather seats. But when its advertisement was translated from English into Spanish, it told people that they could fly naked! Another example of wrong translation is when Chevrolet tried to market the Chevy Nova in Latin America. In English, the word “nova” refers to a star. But in Spanish, it means “doesn’t go”. Would you buy a car with this name?

To avoid these problems with translation, most advertising firms are now beginning to write completely new ads. In writing new ads, global advertisers must consider different styles of communication in different countries. In some cultures, the meaning of an advertisement is usually found in the exact words that are used to describe the product and to explain why it is better than the competition. It is true in such countries as the United States, Britain and Germany. But in other countries, such as Japan’s, the message depends more on situations and feelings than it does on words. For this reason, the goal of many TV commercials in Japan will be to create a positive mood or feeling about the product.

Global advertisers must also consider differences in laws and customs. For instance, certain countries will not allow TV commercials on Sunday, and others will not allow TV commercials for children’s products on any day of the week. In some parts of the world, it is forbidden to show dogs on television or certain types of clothing, such as jeans. The global advertiser who does not understand such laws and customs will soon have problems.



Finally, there is a question of what to advertise. People around the world have different customs as well as different likes and dislikes. So the best advertisement in the world means nothing if the product is not right for the market. Even though some markets around the world are quite similar, companies such as McDonald’s have found that it is very important to sell different products in different parts of the world.

All of these products must be sold with the right kind of message. It has never been an easy job for global advertisers to create this message. But no matter how difficult this job may be, it is very important for global advertisers to do it well. In today’s competitive world, most new products quickly fail. Knowing how to advertise in the global market can help companies win the competition for success.

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Advertising Agencies

Most advertising or promotion can be divided into three parts. One is the agency that plans and prepares the campaign. Another is the advertiser who pays the bills and whose name usually appears in the advertisement. And finally there are the media that carry the message to the public.

The function of the modern advertising agency, to help a company to market and advertise its goods and services efficiently, is fundamentally different from the function of the original advertising agents who were agents for the newspapers and magazines rather than the advertisers. The original agents acted as media brokers selling advertising space to anyone they could persuade to advertise and receiving commissions from the publications for the space they sold. Agencies began to employ copywriters, to think up and write effective advertising copy. Then, as it became more important to make advertisements stand out from the editorial and from an increasing number of other advertisements, graphic artists were employed. Finally, production staff were employed to order the printing services, ensure the best possible reproduction of advertising literature, arrange for TV and radio adverts to be produced.

Nowadays an advertising agency is an independent organization of creative people and businesspeople who specialize in developing and preparing advertising plans, advertisements, and other promotional tools. The agency also arranges or contracts for the purchase of advertising space and time in the various media. It does all this on behalf of different advertisers, or sellers - its clients - in an effort to find customers for their goods and services.

This definition offers some good clues as to why so many advertisers hire advertising agencies. The definition points out that agencies are independent: the are not owned by the advertiser, the media, or the suppliers. This independence allows the agency to bring an outside, objective viewpoint to the advertiser’s business. Good agencies possess the savvy, skill, and competence to serve the needs of a variety of clients because of their daily exposure to a broad spectrum of marketing situations and problems.

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