Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

21. Developing Innovative
    Marketing Plans

Text © The McGraw−Hill

Companies, 2002

Developing Innovative Marketing Plans 629

Some firms, on the other hand, plan more formal and permanent relationships

with nationals in foreign countries. The relationships might involve licensing, con-

tract manufacturing, management contracting, and joint venturing.

Licensing is a relatively easy way to enter foreign markets. Licensingmeans sell-

ing the right to use some process, trademark, patent, or other right for a fee or

royalty. The licensee takes most of the risk because it must invest some capital to

use the right. Further, the licensee usually does most of the planning for the mar-

kets it is licensed to serve. If good partners are available, this can be an effective

way to enter a market. Gerber entered the Japanese baby food market this way but

exports to other countries.^11

Contract manufacturingmeans turning over production to others while retain-

ing the marketing process. Sears used this approach when it opened stores in Latin

America and Spain. This approach doesn’t make it any easier to plan the market-

ing program, but it may make it a lot easier to implement.

For example, this approach can be especially desirable where labor relations are

difficult or where there are problems obtaining supplies or government cooperation.

Growing nationalistic feelings may make this approach more attractive in the future.

Management contractingmeans the seller provides only management skills—

others own the production and distribution facilities. Some mines and oil refineries

are operated this way—and Hilton operates hotels all over the world for local own-

ers. This is a relatively low-risk approach to international marketing. The company

makes no commitment to fixed facilities—which can be taken over or damaged in

riots or wars. If conditions get too bad, key management people can fly off on the

next plane and leave the nationals to manage the operation.

Joint venturingmeans a domestic firm entering into a partnership with a foreign

firm. As with any partnership, there can be honest disagreements over objectives—

for example, how much profit is desired and how fast it should be paid out—as well

Licensing is an

easy way

Contract manufacturing

takes care of the

production problems

Management

contracting sells

know-how

Joint venturing is

more involved

To establish a presence more

quickly in India’s developing

market, Cummins entered a joint

venture to produce engines with

an Indian firm. That relationship

has been a springboard to other

joint ventures for Cummins’

filtration and exhaust products.