INTERNATIONAL MARKETING 92% of the world's consumers live outside the U. S. Thus, international marketing is very important. When selling to foreign markets, one must realize that there are major differences between other countries & the U.

S. Aside from political and legal differences, there are economic, technological, social (family, religion, education, health... ) & cultural differences. Each 1 billion in trade deficit yields a loss of 25, 000 jobs. [See text for how international trade is measured and protectionism vs. free trade.

] Gray Goods - Goods imported from unauthorized dealer; problem = no manufacturer's warranty. Dumping = Sale of export goods at less than "normal" value (less than cost or less than home-country price). Strategic Adaptations Of The Marketing Mix 1 Keep The Product & Promotion The Same Worldwide (Global Marketing) - e. g. , world brands such as Coca Cola and Marlboro. - Theodore Levitt is the guru of the "globalization" or "global marketing" approach.

- Promotion mix elements such as advertising present the biggest problem to standardizing a marketing strategy across all borders because promotion is based on a communication process, which can differ from country to country - even if the languages are the same (e. g. , the U. S. & the U. K.

). 2 Adapt Only The Promotion - e. g. , in most of the world, bicycles are promoted as transportation; in U. S. as leisure.

3 Adapt Only The Product - e. g. , Canadians prefer a more bitter beer; Barbie looks Asian in Japan. 4 Adapt Promotion & Product - e. g. , American cereals in Asia = snack food; therefore, need different flavors (e.

g. , tofu). 5 Backward Invention - Simplify product & use less technology. This makes the product more affordable & usable in certain foreign markets. Some Ways To Operate In Foreign Markets 1 Exporting - A company sells what it produces to foreign markets via export merchants (e. g.

, export trading companies) or export agents (e. g. , export management companies) or a firm's own sales branches. [Risk of tariff & devaluation.

] 2 Direct Investment & Ownership - Investment in production and or distribution facilities can occur either through a wholly-owned foreign subsidiary or a joint venture with a foreign company. [Risk of nationalization. ] Joint Ventures - domestic & foreign firms become partners. Strategic Alliance - a formal long-term agreement between firms in order to accomplish global objectives without formal ownership by either company. 3 Contracting (Licensing, Franchising, Contract Manufacturing & Management Contracting) Licensing = selling rights to name, process or patent for a fee or royalty; e. g.

, magazines such as Cosmopolitan & Playboy; Am pex licensed VCR technology to Japan. Contract Manufacturing - Domestic firm contracts with a foreign firm to do production; marketing is done by domestic firm. Management Contracting - Seller provides management skills only; e. g. , Hilton Hotels. 3 Major Risks In Int'l Mktg: 1 Radical Change In Government - a company's factories may be nationalized.

2 Change In Export Rates - foreign currency may be devalued; a firm may want to hedge with options. [E. g. , many tech firms hurt by Asian economic crisis. ] 3 Foreign Markets May Impose Tariffs, Taxes, Quotas On Your Product - They do so to make imports more expensive relative to domestic goods.