h the product and itspromotion. This strategy may be required when neither theexisting product nor its promotion would appeal to foreignmarkets. In some cases, the international firm may developa completely new product for a foreign market. It can bevery costly to create a new product line for a foreignmarket. The distribution strategy used sometimes dependson the firm’s international organization. It does not matter ifit is licensing, exporting, or manufacturing in the hostcountry. International marketers use existing distributionchannels for the most part. Distribution channels link theproducer of a product to the consumer or industrial user.This international marketing channel is sequence ofmarketing organizations from nation to nation that directsthe flow of products. Most industrial products use shorterchannels.One of the most basic levels of international marketing islicensing. A license is a contractual agreement in which onefirm permits another to produce and market its product anduse its brand name in return for a royalty or othercompensation. This grant may be in the form of a directsale of rights or be limited to a certain period of time.International licensing can be tied to joint ventures betweenthe parent and the subsidiary. For example, an Americancandy manufacturer might enter into a licensing arrangementwith a British firm. The British producer would be entitledto use the American firm’s candy formula, and packagingto advertise the candy as though it were its own. Theadvantage of licensing is that it provides a simple method ofexpanding into a foreign market with no investment.However, if the licensee does not maintain the licensor’sproduct standards, the product’s image may be damaged.Another disadvantage is that a licensing arrangement doesnot usually provide the original producer with any foreignmarketing experience. Technology licensing is aconceivable alternative to the exportation of finish...
