Discuss the five phases of international marketing involvement.
The first phase of international marketing involvement is when a firm has no direct foreign
marketing. Firms in this phase don’t seek international consumers, but they may reach them
through the internet, wholesalers, or distributors. The next phase is infrequent foreign marketing.
Firms in this phase market their products overseas if they have surplus of a product and with
little intention. The third phase is regular foreign marketing, where the firm’s primary focus is on
their domestic market, but they complement that market with continuous/permanent entry in
international markets. The fourth phase is international marketing where their primary focus is
on production/sales of goods outside of their domestic market. Lastly, the fifth phase is global
marketing. In this phase the firm combines their domestic and international market and looks at
the entire world as one market.
Differentiate between the current account, balance of trade, and balance of payments.
A current account is a record of all merchandise exports, imports, services, and transfer of funds.
On the other hand, the balance of trade is the difference between export and imports of goods.
The net effect of this can either be positive, negative, or zero. Balance of payments are the
difference between inflow and outflow of foreign exchange. This basically records all of a
nation’s international finance transactions and the net effect of this is always zero.
Explain the role of price as a free market regulator.
Free markets are markets without intervention of the government on tariffs, monopoly, and/or
price setting. Price regulates the free market because it influences supply and demand. The
higher a product is priced, the less people are going to purchase it. Therefore, demand will
decrease and they will need a smaller supply. On the other hand, the lower a product is priced,
the more people are likely to purchase it. This will increase demand, resulting in the need for a
larger supply.
"Culture is pervasive in all marketing activities." Discuss what this means.
Culture is pervasive in marketing because it needs to be considered and incorporated in all
marketing efforts in order for a product or brand to be successful. This means that pricing,
research, promotion, distribution, product, packaging, and style all need to be evaluated in terms
of cultural preferences and appropriateness. Products that aren’t meaningful will not be
successful. In order for a product to be successful, it is crucial that they make sure that it is
culturally acceptable to the demographic(s) they are marketing towards. Additionally, cultures
adapt and evolve so it is important to be continuously evaluating the impact that the previously
mentioned segments can have on culture and make changes to them accordingly.
Define (in your own words) the following terms: cultural imperative, cultural elective, and
cultural exclusive.
Cultural imperatives are customs within a culture that you need to conform to in order to be
successful. One common example of this is relationships in Japan, where you need to spend time
building relationships before you start talking business. This is because they greatly value
relationships and need to have a foundation of trust prior to forming business partners, ventures,
or alliances. Cultural electives are more relaxed - they are cultural customs that you may
conform to, but don’t have to in order to be successful. Lastly, cultural exclusives are customs
that are only for locals of that culture.
Discuss how government instability can affect marketing.
Government instability includes such things as a change in the form of government, a shift in
political parties, a rise in feelings of nationalism, and more. All of these types of changes affect
marketing because of the risks associated with foreign marketing. Government changes that
cause shifts to a countries restrictions, policies, export regulations, and more, can desecrate an
international company. This can cause such damage because trade barriers, taxes, tariffs, and
licencing changes can dramatically impact the operations and profitability of an international
business. Therefore, it is crucial for marketers to evaluate the current stability and expected
future stability of the market’s government.
What are intellectual property rights? Why should a company in international marketing
take special steps to protect them?
Intellectual property rights are rights that are given to the person/company that creates
something. They allow for exclusive or limited use of products, processes, designs, brand names,
and trademarks to prevent people/companies from facing losses through piracy. Basically, they
give a company rights so that another company can’t steal their product, name, look, etc.
Companies involved with international marketing need to be especially sure to protect these
rights because a significant chunk of money is spent on branding, product design, processes, and
more. They need to ensure that as they cross borders into different markets they protect their
brand since intellectual property rules can change from country to country. If they don’t protect
these, other companies in their international market can diminish their hard work by taking their
product design, name, and/or processes.
Discuss the differences between primary and secondary data.
Secondary data is data that has already been collected by another party. With secondary data,
you need to ensure there is availability of data, that it’s reliable, and that it’s comparable to what
aspect of international marketing you need it for. Secondary data is often used initially to save
time, money, and resources with marketing. On the other hand, primary data is data that is
specifically collected for the particular project at hand. Primary data uses quantitative and
qualitative data to answer the remaining questions that marketers need answered.
Differentiate between a free trade area and a common market. Explain the marketing
implications of the differences.
A free trade area is an agreement between two or more countries to reduce customs duties and
nontariff trade barriers among each other. Each country has their own tariff schedule for external
countries that they maintain. Free trade areas provide the involved countries with a larger market
without as many barriers. On the other hand, common markets eliminate all tariffs/restrictions on
internal trade while implementing standard external tariffs. They also remove all restrictions on
the free flow of capital, labor, and more among the member countries. Basically, common
markets create larger markets for goods, services and capital whereas free trade areas generally
create larger markets for goods.
Define (in your own words) the following terms: confiscation, expropriation, and
domestication.
Confiscation, expropriation, and domestication are all political risks. Confiscation is the most
severe; it occurs when a country takes a company’s assets without paying for it. Expropriation is
less severe and is when the government takes assets but partially reimburses the company for the
assets. When this happens the government will usually take over the company and run it. Lastly,
domestication occurs when a country slowly pushes foreign investors out of the market by
making it a law or regulation to have local ownership or more national involvement in a
company and their assets. Domestication tries to form a required balance between local nationals
and foreign investors so that foreign investors don’t hold the majority of a market and don’t reap
all the financial benefits.