Question

Explain the stages of international marketing involvement.

Answer 1

There are 5 central stages in international marketing involvement to have in consideration:

Stage 1: Domestic-market establishment

The domestic market is often an appropriate place to test products and check performance before tackling the complexities of international trade. It can also give a good indication of performance. However, in some instances, this stage of the export process doesn’t serve any purpose at all.

Because international-market development requires resources of time and money on the part of the exporter, it’s important to ensure that a strong foundation has been built in the domestic market upon which to base future export-market-expansion activities, so that international activities do not compromise the company’s core business.

Stage 2: Export research and planning
When companies begin trading abroad, they often target a country similar to their own in language, financial structures, legal and economic systems or culture.

Before venturing into an unfamiliar market, companies should prepare themselves properly. By analyzing how successful the proposed product or service may be in a potential market, the exporter can narrow the target markets down to three or four.

Stage 3: Initial export sales
When implementing an export plan, it’s advisable to begin modestly by testing the market. A graduated strategy enables the novice exporter to acquire practical experience in a market without incurring unnecessary or unmanageable risk.

Developing markets in phases enables the exporter to monitor their progress and make any necessary changes as they progress along the path to export success.

Stage 4: Expansion of international sales
If initial sales have been good, planning for larger orders and expanded activity should follow. This stage is usually accompanied by intensified market research, more aggressive participation in international trade shows and other marketing activities and greater emphasis on strengthening networks and contacts in the target market.

The firm may enter negotiations with potential local partners to strengthen its position in the market in win-win business relationships.

Stage 5: Investment abroad
If sales are brisk, profits encouraging and opportunities promising, the company may choose to expand its presence in the target market. It can, for example, open a local office, tighten relations with local partners, buy an existing local company, form a joint venture or invest in R&D or production facilities.

The target market may serve as a stepping stone to adjacent markets and become a focal point for a larger trade strategy.

These stages must be considered to succeed in international markets.