Marketing, in its broadest sense, entails identifying, designing for, notifying, and getting a product or service to those who need it or are willing to pay for it. Any organization that relies on or desires to serve a market or a social group that has any choices must engage in marketing:  a corporation, a hospital, an NGO focused on public health, a college or university.

These notes are organized into the basic components of an international marketing plan:

• Place
• Placement
  
• Product Adaptation
• Pricing
• Promotion
• Distribution

PLACE:  ANALYZING  MARKET  POTENTIAL  AND  MARKET   SHARE
Given the set-up costs of international marketing (information, negotiation, logistics, risk), which  foreign market is worth pursuing?

Estimating total market potential
It is generally more profitable to enter an underserved market and grow with the market, than to enter a stable market by taking market share from competitors.  How can we identify an "underserved market"?

cross-country comparisons:  predict the total market potential in a given country (M_j) on the basis of the relevant population (P_j)  (all people?  women?  children?  households with >$50,000 annual income?) times the ratio of market size (M_i) to relevant population (P_i) in a range of countries i:  M_j = P_j  x  M_i/P_i

• Market size could be measured by units purchased, value purchased, or number of people (or households) making purchases of the product.
• The comparison countries i could be countries that are similar to the potential market country, or countries that have somewhat higher incomes, or a high-income country (on the assumption that the potential market country could conceivably have the same level of per capita sales as a high-income country.

regression analysis of nation-by-nation consumption (or consumption per capita) of the target product, as a function of national income (or income per capita) is a quick way to tell whether a particular target market is likely to be already saturated (consuming as much or more than the international norm, given its income level) or is likely to grow.  This entails plotting the consumption or purchases in a country against its income (or per capita consumption against per capita income), and plotting this for many countries to come up with the general relationship between national income and consumption of the product/service.  Is the potential market country below this general trend?

income elasticity of demand:  how does total demand for your type of product in a country change in response to changes in per capita income?

• If the demand change is proportional to the change in per capita income, the income elasticity is 1.  If the demand change is less than or more than proportional to changes in income, the income elasticity is < or > 1.
• This can be estimated by graphing or statistically relating total sales per capita against per-capita income across different countries (cross-section comparison) or across time in one country (time-series comparison).
• This can then be used to project per capita demand in a country based on projections of that country’s GDP per capita.

• If the usage gap is positive and large, then a given company might be able to increase its sales in that country merely by increasing local awareness of the benefits of the product in general:  it’s more important to enlarge the market than to fight for share of the small existing market.

• A mass-market producer may find that income levels in the potential export market and export costs (transportation, tariffs, distribution) mean that the product is actually a luxury product in the export market.
• Cultural differences may mean that the good or service will always be a niche product in the export market -- but a niche that domestic producers are not serviing in the potential export market.
• The export market may be saturated with moderate-quality, low-cost products in this sector, but face a dearth of more expensive, high-performance products.
• Many countries with low per-capita income levels also have very skewed income distributions, yielding a substantial market for luxury goods and services;  or for good-quality but very low-cost, smaller, or reduced-feature products.
  

PRODUCT   ADAPTATION
Why might an exporter adapt a product for a foreign market?

• legal requirements for content or packaging
• cultural prohibitions
• dominant income levels, influencing what consumers are willing to spend for consumer products
  
• dominant wage levels, influencing what producers are willing to spend for capital equipment that substitutes for labor
  
• dominant lifestyle differences:  size of housing, eating habits, gender-specific labor-force participation
• characteristics of local infrastructure

1.  “We sell what we produce” — production orientation

• commodity products
• special international cachet of the unmodified product (Champagne)
• passive export strategy (selling abroad only when convenient, to sell excess production)

• products with widespread potential appeal
• industrial products
• gaining and sustaining scale economies in production
  
• extending the product life cycle

• desire to use a valuable trade name abroad, whatever the product:  this may lead to international licensing or FDI
  
• desire to enter a particular, lucrative, foreign market

Use brand extension and minor modifications for product adaptations in those markets that seem worthwhile for profit or strategic reasons (keeping competitors out of a foreign market, or keeping competitors from predatory pricing in another market).

• The export price should be high enough to cover the fully-allocated (direct and indirect) marginal costs (not average cost) of replacing inventory (in the future).
• Recognize, however, that the exported product must enter a distribution sequence abroad, with profit taken at every step of the way.  Therefore, determine whether fully-allocated production costs + tariffs + logistics (transport/storage) + distribution costs yield a price that is too high to be competitive in the foreign market.
• Set and update price to allow for fluctuations in the exchange rate:  you need to be low enough to be competitive in the foreign market, but high enough to cover fully-allocated marginal costs.

 DISTRIBUTION  CHANNELS
“the course — physical path or legal title — that goods take between production and consumption”  [DRS: 582]
 

	Short channels (few intermediate handlers or owners)	Long channels (more, intermediate handlers or owners)
Type of product	industrial, capital goods	consumer
Price level	expensive	inexpensive
Sales volume (in the foreign market)	high	low
Availability of reputable distributors	low	high
After-sales service	important	unimportant
Price elasticity of demand	high	low

AFTER-SALES  SERVICE
This is difficult to provide in foreign settings, because the fixed costs are high (think of the difficulty of establishing a new automobile brand in the U.S.). 

INTERNET  SALES 
Sales and transmission of information, entertainment, and some services can be provided directly between producer and final use, using electronic means for payment and delivery.