The Value of a Product Manager for Companies
Product management is needed in companies that have several products and brands where the need for integrated management of the product lifecycle makes the difference between success and failure. Hence, these companies need to create the post of a product manager who can help them manage the end to end product development in a seamless […]
Corporate Governance in the West and the Rest of the World
The previous articles discussed how good corporate governance is imperative to the existence of a structured and functioning economy. In this article, we look at the ways in corporate governance is practiced in the developed economies of the West and in the developing economies in the rest of the world. To start with, the ongoing […]
Gathering Information and Measuring Market Demand
In this dynamic market with the free flow of information and innovative marketing programs, needs and wants of consumers are always changing. As per capita income increases consumers are willing to explore more alternatives for purchase decision. Companies should be aware of changing situation all the time to take the right decision. This calls for […]
13 Most Common Advertising Techniques Used by the Advertisers
Today every company needs to advertise its product to inform the customers about the product, increase the sales, acquire market value, and gain reputation and name in the industry. Every business spends lot of money for advertising their products but the money spent will lead to success only when the best techniques of advertising are […]
Outdoor Advertising – Billboards, Buses, Cabs, Subways and Walls
Outdoor advertising communicates the message to the general public through highway billboards, transit posters and so on. Outdoor advertising is a very important form of advertising as the ads are huge and are visible to one and all. The important part of the advertising is that the message to be delivered should be crisp and […]
21st century world is presented as a flat world. It is not flat because earth is changing shape but because way communication has evolved. Flow of information, goods and services is faster. Branded products like Gucci are available in developed countries like USA and in developing economies of India and China. Growth in number of multi-national companies has been exponential. Not every company is open to idea of globalization but it is prudent for companies to consider internationalizing their operation at some point. Companies can achieve globalization through analysis and research.
Is there a need to be global? The 1st question companies have to address. There are definite challenges in going international, right from product design and mix, to people with international marketing knowledge.
A company may decide to become a global player, if international markets offer better profitability than the domestic market. A company may decide to become a global player to achieve economies of scale or if international company is giving competition in the domestic market.
A company may decide to be a global player if there is customer movement from one country to another. However, becoming a global player has share of dreaded consequence if companies ignore culture, regulatory requirement, political environment, foreign exchange policy and competition in the identified international market.
Once the company has decided to become international, next step is to identify which market to enter. Companies can choose to explore one market initially and then build up from that or companies may decide to enter in several markets and diversify the risk. For example, European Union, it is one of the single largest market with access to 15 countries.
The next step is the evaluation of the potential markets. Companies generally prefer to go international by selling to the neighboring countries. For example, US companies prefer doing business in Canada. One of the reasons is better understanding of the market as there are similar in culture, language and laws. Companies choose to enter the market which has high rating in market attractiveness, low risk level and where they enjoy a competitive advantage.
There are various ways of entering the international market. Indirect and direct exporting is one way of becoming international.
In indirect exporting involves selling goods to domestic export agents as a first step to become a global player.
In direct exporting companies open sales branch or overseas subsidiary.
Licensing is another way of entering global markets; here company (licensor) enters into an agreement to allow another company (licensee) to sell and manufacture the product in the chosen market. Investment and risk level associated with indirect/direct exporting and licensing is minimal.
Another way to enter the market is a joint venture. Company forms partnership with the local player facilitating direct entry into the market. The reason of the joint venture could be political as well as economical.
The last form of entering is through direct investment. In direct investment, company enters the global market through direct ownership. This can be done by buying a local company or facility. Companies can also set up their own manufacturing facility.
Once the market and format of entering in the market are finalized, it is time for the company to work out the marketing strategy. Company has to work out the option between standardized marketing of one size fits all or come out with completely new strategy for the new market. Alternatively, companies can choose to mix and match in product, promotion, price and place.
At product level, company may choose to enter the global market without changes in the original product, or company may choose to modify the product as per the local market taste and preference or company may decide to introduce completely new products.
For promotion company may choose standard or may modify as per the local market needs. Pricing is a tricky issue. Therefore, companies can set uniform price across global market or introduce market based price in each market or use cost based approach to set the price. At distribution channel level company have to figure the best way to reach the market.
A company entering a global market also has to be aware of cultural, political, legal, and technological factors in respective markets.
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