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CHAPTER 4
MARKETING ENTRY STRATEGIES
FOREIGN MARKETING INVOLVEMENT
The foreign marketing involvement of a manufacturing company
may widely vary from a state of no direct involvement to a state of
total involvement. Several types of involvement are generally
observed, even though they are not mutually exclusive nor
sequentially progressive.
Depending on the kind and degree of its involvement in foreign
marketing, a firm has to re-orient and re-organize its activities to
cope with different levels of operational responsibilities inherent in
such involvement. To throw some light on the issue, some
guidelines are available from what is called EPRG orientation. The
EPRG framework attempts, four broad types of orientation of a firm
towards foreign marketing. They are:
1. ETHNOCENTRIC ORIENTATION :
The ethnocentric orientation of a firm considers that the products,
marketing strategies and techniques applicable in the home market
are equally so in the overseas market as well. In such a firm, all
foreign marketing operations are planned and carried out from
home base, with little or no difference in product formulation and
specifications, pricing strategy, distribution and promotion
measures between home and overseas markets. The firm generally
depends on its foreign agents and export-import merchants for its
export sales.
2. REGIOCENTRIC ORIENTATION :
In regiocentric approach, the firm accepts a regional marketing
policy covering a group of countries which have comparable market
characteristics. The operational strategies are formulated on the
basis of the entire region rather than individual countries. The
production and distribution facilities are created to serve the whole
region with effective economy on operation, close control and
co-ordination.
3. GEOCENTRIC ORIENTATION :
In geocentric orientation, the firms accept a world wide approach
to marketing and its operations become global. In global
enterprise, the management establishes manufacturing and
processing facilities around the world in order to serve the various
regional and national markets through a complicated but well
co-ordinated system of distribution network. There are similarities
between geocentric and regiocentric approaches in the
international market except that the geocentric approach calls for a
much greater scale of operation.
4. POLYCENTRIC OPERATION :
When a firm adopts polycentric approach to overseas markets, it
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attempts to organize its international marketing activities on a
country to country basis. Each country is treated as a separate
entity and individual strategies are worked out accordingly. Local
assembly or production facilities and marketing organisations are
created for serving market needs in each country. Polycentric
orientation could be most suitable for firms seriously committed to
international marketing and have its resources for investing abroad
for fuller and long-term penetration into chosen markets.
Polycentric approach works better among countries which have
significant economic, political and cultural differences and
performance of these tasks are free from the problems created
primarily by the environmental factors.
CONCLUSION :
The involvement decision is conditioned by a variety of internal and
external factors such as firms' export policy, resources and product
range, volume of export business, regulatory and procedural
conditions to be fulfilled both from exporting and importing angle.
From the foregoing, it will be evident that the scope of international
marketing for a firm will be determined by its decisions regarding
the means of entry into foreign markets as well as by the kind of
involvement the firm wishes to have in its international marketing
operations. It cannot be said that one kind of operation/orientation
is better than the other, as each has its own advantage and
disadvantage depending on the operating environmental factors.
However, a firm can adopt a policy of common or differential
approaches in respect of different marketing decision areas.
In practice, planning the ethnocentric approach is found to be most
common when overseas volume is insignificant, compared to the
total sales turnover, or if the firm does not want to go for higher
volume of overseas sales for some reason. Since little or no
investment is needed, ethnocentric oriented firms have the least
risk.
Main Points
An exporting company's international operation involves the
following strategies.
1. Ethno centric Operational strategy :
(with the help of overseas Agents)
Product formulation
Product specification
Pricing strategy
Distribution
Promotional measures
2. Regiono Centric Operational strategy : Catering to a
group of Countries having similarity in Marketing in market
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characteristic
3. Geo Centric Operational strategy : Creating globally
through well Co-Ordinated Net work
4. Poly centric operational strategy : Creating to Country to
country basis
There are various modes of entry available to a firm to enter
international markets. A firm may have a production faciity in its
home country or locate it in a foreign country. It has to choose the
alternative most suited to its needs and requirements.
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