International Marketing – SS3 Marketing Lesson Note (First Term)

International marketing is the total system of business activities designed to plan, price, promote and distribute goods and services to potential foreign customers.

Behavioural objectives

By the end of the lesson, students should be able to:

1. define marketing;
2. state the three levels of marketing;
3. define international marketing;
4. list and explain the features of international marketing;
5. state reasons why firms market abroad and the ways of entering foreign markets.

What is marketing?

Marketing is the set of activities undertaken by an individual or a company to satisfy customers through value addition and good relations with them, thereby increasing the brand value.

• Value addition: making a product more useful or attractive to the buyer, for example by better packaging or service.
• Customer relations: keeping buyers satisfied so that they return and recommend the product.
• Brand value: the worth that customers attach to a company’s name and products.

What are the levels of marketing?

There are three levels of marketing: domestic marketing, international marketing and global marketing.

• Domestic marketing: the total system of business activities designed to plan, price, promote and distribute goods and services within a single country.
• International marketing: the total system of business activities designed to plan, price, promote and distribute goods and services to potential foreign customers.
• Global marketing: defined as “marketing on a worldwide scale, reconciling or taking advantage of global operational differences, similarities and opportunities to reach global objectives.”

How does domestic marketing differ from international marketing?

Domestic marketing sells within the home country, while international marketing sells to customers in one or more foreign countries.

What are the features of international marketing?

The features of international marketing are the differences a company meets when it sells in foreign countries.

1. Different legal systems: every country has a different legal system for different commodities, and this may become a hassle for a company.
2. Market characteristics: the market characteristics of various countries vary depending on environmental factors, demand patterns, government control and so on.
3. Monetary system: the government of each country decides its monetary system, and the exchange value of a country’s currency is determined by the forces of demand and supply.
4. Procedures and documentation: every country has its own procedure for documentation. Every company must comply with these rules and regulations for imports and exports.

• Example of law: a food product sold abroad must meet the food safety rules of the buyer’s country.
• Example of market difference: a product popular in Nigeria may not suit the climate or tastes of another country.
• Example of money: a change in the naira exchange rate changes the price a foreign buyer pays.
• Example of documents: exporters prepare an invoice, a packing list and customs papers for each shipment.

Why do firms market in foreign countries?

Firms market abroad to sell more, earn foreign money and reduce the risk of depending on one market.

• Larger market: the home market may be too small to take all the goods produced.
• More profit: more customers bring more sales and income.
• Foreign exchange: exporters earn foreign currency for the country, for example from cocoa, cashew and sesame.
• Spreading risk: a fall in demand at home is cushioned by sales abroad.
• Use of spare capacity: extra output keeps machines and workers busy.
• Competition: a firm may follow rivals into foreign markets to keep its share.

How does a firm enter a foreign market?

A firm can enter a foreign market by exporting, licensing, franchising, a joint venture or direct investment.

• Exporting: selling goods made at home to buyers abroad, directly or through agents.
• Licensing: allowing a foreign firm to make or sell your product in return for a fee.
• Franchising: allowing a foreign business to use your brand name and methods for a fee.
• Joint venture: sharing ownership and risk with a local firm in the foreign country.
• Direct investment: setting up a factory, branch or subsidiary in the foreign country.

How is the marketing mix applied abroad?

The marketing mix is the combination of product, price, place and promotion, and each must be adjusted for the foreign market.

• Product: change size, labelling, language or packaging to suit local rules and tastes.
• Price: include transport, insurance, taxes and exchange rate effects.
• Place: choose agents, wholesalers and shipping routes that reach the buyers.
• Promotion: use the local language and respect local customs in advertising.

What problems does international marketing face?

International marketing faces problems that come mainly from differences between countries.

• Trade barriers: import duties and quotas make foreign goods dearer or limit their quantity.
• Language and culture: poor translation or ignoring custom can offend buyers.
• Exchange rate changes: profit may fall when the value of a currency moves.
• Transport and delay: long distances raise costs and can damage goods.
• Documentation: missing or wrong papers can hold goods at the port.

Which bodies support international trade in Nigeria?

• Nigeria Customs Service: controls the movement of goods in and out of the country and collects duties.
• Nigerian Export Promotion Council (NEPC): helps Nigerian firms to export non-oil products.
• Standards Organisation of Nigeria (SON): sets and checks product standards.
• NAFDAC: regulates food, drugs and cosmetics.

Evaluation

Students answer these questions as classwork:

1. Define marketing.
2. Discuss the levels of marketing.
3. State three differences between domestic and international marketing.
4. List four reasons why a firm may sell goods abroad.
5. Name three ways of entering a foreign market.

Assignment

State and explain the four features of international marketing.