You cannot directly convert M4R audio (iPhone ringtone) to MP3 in iTunes, but there is a workaround. Rename extension .m4r to .m4a and import it to your iTunes library. Then simply right-click on it and convert it to MP3. Just make sure you have the MP3 encoder set in preferences.
Alternatively, you have to use some of the dedicated audio conversion program for the purposes of m4r to mp3 conversion.