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Basics of Marketing - Kotler Philip
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Basics of Marketing - Kotler Philip
Decision on the methods of entering the market
Deciding to do sales in a particular country, the firm must choose the best way to enter the selected market. It can stop on export, joint business activity or direct investment abroad . Each subsequent strategic approach requires taking on more obligations and greater risk, but also promises higher profits. All these strategies for entering the foreign market are shown in Fig. 92 with the indication of options for possible actions in each specific case.
Fig. 92. Strategies for entering the foreign market
Export
The easiest way to enter the activity on the foreign market is export. Irregular export is a passive level of involvement, when the firm from time to time exports its surplus and sells goods to local wholesalers representing foreign firms. Active export takes place in those cases when the firm is set to expand its export operations in a specific market. In both cases, the firm produces all its goods in its own country. For export, they can offer them both in modified and unmodified form. Of the three possible options for the strategy, exports require minimal changes in the product mix of the firm, its structure, capital costs and program of activities.
The firm can export its goods in two ways. You can use the services of independent international marketing intermediaries (indirect export) or conduct export operations yourself (direct export). The practice of indirect exports is most common among firms that are just beginning their export activities. First, it requires less capital investment. The firm does not have to acquire overseas with its own trading apparatus or establish a network of contacts. Secondly, it is associated with less risk. International marketing intermediaries are domestic merchants-exporters, domestic export agents or cooperative organizations, which bring their specific professional knowledge, skills and services into this activity, and therefore the seller, as a rule, commits fewer mistakes.
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