choosing a strategy, in a given situation, to develop a global market

8.2 Marketing Strategy – International Marketing

Learning Objective

To be able to choose an appropriate international marketing strategy for a given situation and explain how it can be used to develop a global market.

1. Globalisation & Economic Collaboration

• Globalisation creates worldwide supply‑chains, digital platforms and common standards that lower transaction costs.
• Economic collaborations – e.g. the EU single market, USMCA, ASEAN Free Trade Area – remove or reduce tariffs, harmonise regulations and give legal protection to foreign investors.
• Implication: the more integrated a region, the easier it is to use low‑cost entry modes (exporting, licensing) and to adopt a standardised product mix. In less integrated markets, firms may need higher‑control modes (joint venture, wholly‑owned subsidiary) and greater adaptation.

2. Why Companies Go International

• Market seeking – access larger or faster‑growing markets.
• Resource seeking – obtain natural resources, cheaper labour or specialised skills.
• Efficiency seeking – achieve economies of scale (production) and economies of scope (R&D, marketing).
• Strategic‑asset seeking – acquire brands, technology, distribution networks or patents.

3. International Market Identification & Selection

Two‑stage process: (a) identify a shortlist of attractive markets; (b) select the most suitable market(s) based on the firm’s capabilities.

Market‑Attractiveness vs. Firm‑Capability Matrix

4. Planning the International Marketing Strategy (8.2.1)

A marketing plan is the written blueprint that links the chosen objectives to the resources, research and actions required to achieve them. The five core elements are:

1. Objectives – specific, measurable targets (e.g., 5 % market‑share in Brazil within 3 years, or €10 m sales from Asia by 2027).
2. Resources / Budget – financial, human and technological assets allocated to the plan.
3. Market Research – primary and secondary data that inform market‑size, consumer behaviour, competitor analysis and regulatory constraints.
4. Marketing‑Mix Programme – detailed actions for product, price, promotion and distribution adapted to the chosen entry mode.
5. Monitoring & Review – key performance indicators (KPIs), timetable for evaluation and contingency measures.

Benefits of planning: provides a clear direction, facilitates coordination across functions, and makes performance measurement possible. Limitations: over‑reliance on forecasts, inflexibility to rapid market change, and the risk of “analysis paralysis”.

5. Entry‑Mode Options

1. Exporting – direct (own sales force) or indirect (agents, distributors).
2. Licensing – permit a foreign firm to use patents, trademarks or technology for a fee/royalty.
3. Franchising – a specialised form of licensing that also supplies a proven business model.
4. Joint Venture (JV) – a new, jointly‑owned company with a local partner.
5. Strategic Alliance – a non‑equity partnership for specific activities (R&D, marketing, distribution).
6. Foreign Direct Investment (FDI)
   • Wholly‑owned subsidiary – greenfield (build from scratch) or acquisition (buy an existing firm).

When choosing an entry mode, consider four core dimensions:

• Control – influence over brand, quality and marketing.
• Cost & Investment – initial outlay and ongoing operating costs.
• Speed of entry – how quickly the firm can start selling.
• Risk exposure – political, economic, cultural and operational risks.

6. Approaches to the International Marketing Mix (8.2.2)

• Standardisation (Global Strategy) – identical product, price, promotion and distribution in all markets.
  Typical objective: cost‑leadership through economies of scale.
• Adaptation (Multi‑Domestic Strategy) – modify one or more elements of the mix to meet local tastes, regulations or cultural norms.
  Typical objective: rapid market‑share growth in heterogeneous markets.
• Transnational Strategy – core product is standardised for efficiency, but selected elements (e.g., packaging, promotion, pricing) are adapted for local relevance.
  Typical objective: achieve both global efficiency and local responsiveness.

7. Factors Influencing the Choice of Strategy

• Degree of market homogeneity vs. heterogeneity.
• Competitive intensity and the nature of rivals (global vs. local).
• Cost considerations – economies of scale versus localisation costs.
• Regulatory environment, trade barriers and intellectual‑property protection.
• Company resources, capabilities, and risk appetite.
• Impact of globalisation and regional trade agreements (see Section 1).

8. Decision‑Making Process (Weighted Evaluation)

1. Analyse target market(s) – size, growth, cultural, legal, and macro‑environmental factors.
2. Conduct internal audit (SWOT) – identify strengths, weaknesses, opportunities and threats.
3. Identify strategic options – list all relevant entry modes and marketing‑mix approaches.
4. Evaluate options – use a weighted scoring matrix (example below).
5. Select the optimal strategy – balance control, cost, speed and risk; develop an implementation timetable.
6. Monitor & review – adjust the strategy as market conditions, competition or internal capabilities change.

Evaluation Matrix – Example

Calculate a weighted score for each mode (Score × Weight ÷ 100). The highest‑scoring option is the recommended entry mode.

9. Worked Example – Choosing a Strategy for “AquaFit”

Company profile: AquaFit designs high‑performance smart‑water‑bottles in Germany. They want to enter the Brazilian market.

1. Market analysis – Brazil’s middle class is expanding (≈ 70 million consumers), strong fitness culture, but import duties on electronic accessories are 20 %.
2. SWOT
   • Strength: Innovative IoT technology and strong EU brand image.
   • Weakness: Limited knowledge of Brazilian retail channels.
   • Opportunity: Growing demand for connected fitness gear.
   • Threat: Economic volatility and high tariff.
3. Strategic options considered
   • Direct exporting through an online platform.
   • Licensing the technology to a Brazilian electronics firm.
   • Joint venture with a local sports‑equipment retailer.
   • Wholly‑owned subsidiary (greenfield plant).
4. Evaluation using the matrix – The joint venture scores highest on control, risk mitigation and adaptation while keeping investment lower than a full subsidiary.
5. Decision – Form a 50/50 joint venture with “FitBrasil”, a well‑established retailer, to co‑develop a Brazil‑specific product line (e.g., colour palettes, local‑language app) and share the distribution network.

10. Key Points to Remember

• Globalisation and regional trade agreements influence both market attractiveness and the choice of entry mode.
• Standardisation works best when markets are similar; adaptation is required when cultural, legal or economic differences are significant.
• The transnational strategy seeks the “best of both worlds” but demands sophisticated coordination.
• Choosing a strategy is a balance between control, cost, speed and risk – use a weighted evaluation matrix to make the decision transparent.
• Regularly review the chosen strategy; market conditions, competition and internal capabilities evolve over time.