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Lecture 6

Lecture 6. Export Market Entry Strategies Non-Export Mode. EXPORT MARKETING ENTRY STRATEGIES. Entry mode Marketing plan Target Country Target Market Penetration Penetration Channel of distributions. International Marketing Channel of Distribution.

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Lecture 6

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  1. Lecture 6 Export Market Entry Strategies Non-Export Mode

  2. EXPORT MARKETING ENTRY STRATEGIES Entry mode Marketing plan Target Country Target Market Penetration Penetration Channel of distributions

  3. International Marketing Channel of Distribution • A system composed of marketing organizations that connect the manufacturer to the final users of consumers of the products in a foreign market. Product MANUF CONSUMER Border

  4. Elements of Entry Strategy (Decision) We should decide: • Objectives and goals in the target market • Needed policies & resource allocations • The choice of entry modes to penetrate the market • The control system to monitor performance of the market • A time schecule Sales Appoach: just to sell and no need to stay long

  5. Entry Modes • Entry mode is an institutional arrangement necessary for the entry of a company’s products, technology, human & financial capital into a foreign country/market.

  6. Chanels between nations • Exporting: Simply & easy way. (Direct-indirect) • Licencing: International expercing by licence agreement • Contract Manufacturing: Contracting 4 manufacturing. Toyotasa/Nike (marketing by contractor) • Management Contracting: Local investor + outside company Money know-how Low risk • Manufacturing: Manufacturing abroad. (by himself) Goverment, competitive pressure, market demands, restrictions, imports, cost, supplying power. • Assembly Operations: Represents cross between exporting and foreign manufacturing. Manufacturer exports components & parts. Assembled in market • Joint Venture: Forming new company for national interests.

  7. Channels within nations • Distributors / Subsidiary • Wholesalers • Retailers • Consumers • Stores/malls

  8. Type of Entry Mode (How far shall we expand?) • Target Market • The nature, size & geographical distribution of customers. • The needs, requirements, & preferences of these customer. • The level of economic development of the market • Products • Nature of the product • Unit volume + weight + bulk • Technical complexity. • Availability of Marketing Organization Existing structure of distribution: YAYSAT (star) • Company Considerations • Marketing management capability & know how • Newness of the company to international marketing activities • Size of the company & width of its product line • Financial strenght & ability to generate additional capital • CAC if needed • Govermental Policies • General regulations • Discourage export

  9. How can we decide entry strategy? • Naive rule: Only one way usance entry mode for each target. (Sadece distributorler ile export yapacağız.) • Pragmatic rule: Use a workable entry mode. For each workable. (Low risk rule) + profitable ( en iyi olmayabilir) • The strategy rule: (Use right entry mode for each markets) All entry modes are evaluated systematicaly then choose the best mode.

  10. NON – EXPORT ENTRY MODES There are 3 basic alternative ways that a manufacturer can engage in overseas production: • A manufacturing plant can be established • Assembly operations can be set up • A strategic alliance can be formed with one or more Co.

  11. Manufacturing Facilities • Location • Climate for foreign capital (Political/economic/industry/dynamics/size/geographical /tax). • Production Considerations (Lost/ personnel&labor/facilities/cost of power transport) Real estate/cost of raw materials/capital equipment. • Special conditions (Industry conditions/competition). • Political Risk • Transfer risk (Capital, payments, products, tech persons). • Operational risk (Policies, regulations, local op. Marketing, production, financing, biz, focus) • Ownership-control risk (Inhibit ownership/control) • General instability risk (Future viabilility)

  12. 2. Assembly Operations • Manufacturer exports all or most of its products in a “knocked-down” condition. These parts are put together to form the complete product. • Nigeria

  13. 3. Strategic Alliances a- Licencing b- Contracting c- Joint-Venture

  14. a- Licencing: • A company in one country (licensor) enters into a contractual agreement with a company or person in another country (licensee) whereby the licensee is given the right to use something owned by the licensor. Contract Licensor Licensee Giving right Border

  15. Involves: Technology know how, manufacturing process (patented&non-patented) • Trade mark, brandname, logo • Product/facility design • Marketing knowledge&processes • Other types of knowledge&trade secrets • Initial payment (machinery) • Annual minimum (min. guarantee) • Annual percentage fee (royalty) • Additional fee (initial payment prohibition). /New plants.

  16. b- Contract Manufacturing: • Technology transfer + direct investment. (IBM, HP, DE produced by SCI, solectron, menix).

  17. Management Contracting: • The local investor provides the capital for enterprise, while the international marketer provides the necessary know-how to manage the company. (Hilton)

  18. c- Joint-Venture: • Partnership in two sides – technical and emotional. • Technical: Joining of technical contributions • Emotional: Feeling of cooperative effort. • A new company.

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