Read this extract from a marketing consultant's report on options for Apsa, a Spanish food distribution company planning to expand into an international market. Then fill in the missing information on the next page.
International marketing is a major step beyond simple exporting. Exporting remains essentially focused on the home producer. International marketing, in contrast, establishes a genuine presence in new markets and involves major capital investment.
APSA's marketing strategy in seeking to expand in Central and South America involves four options:
1. International marketing strategy: setting up manufacturing and sales subsidiaries. This offers the opportunity for full integration in the target market. However establishing subsidiaries is of course very capital intensive, and can be risky unless a lot of preliminary market research is done. Research must include finding out about the economy, local habits and customs, as well as about the markets for the products. This would be appropriate for Argentina, where establishing a subsidiary may be the best option. With this kind of international marketing, the subsidiaries should operate as independent cost centres with local management.
2. A second option is franchising, or other joint ventures or partnerships with established players in the market This is usually less capital intensive and is probably best for Peru and Bolivia. Another advantage is that franchising is common in the food and drinks industry. With franchising individuals pay to use the name of a well-known manufacturer. The franchisor can insist on various policies, standards and purchasing practices, as well as receiving license payments and other fees from the franchisees.
3. A compromise, some way short of international marketing, is to use overseas agents and distributors. This is closer to a simple exporting strategy than international marketing, but it can be effective, and is definitely much cheaper. We recommend this option in Mexico and Chile. A possible problem is conflict of interest where an agent also handles a competitor's products. We suggest Apsa should try to obtain sole distribution agreements for these countries.
4. The fourth option is to abandon plans for international marketing and keep a simple export strategy, using direct links between APSA and customers. We do not recommend this as growth potential is very low.
Central/South American expansion: Options and recommendations
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