Lecture International Marketing

International Marketing

Global Firm ●

A firm that, by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.

Importance of global marketing ❧ Economies of scale ❧ Lower marketing costs ❧ Power and scope ❧ Consistency in brand image Uniformity of marketing practices

Global Marketing in the 21st Century International Marketing Decisions 2. Looking at the global environment 3. Deciding whether to go international 4. Deciding which markets to enter 5. Deciding how to enter the markets 6. Deciding on the global marketing problem 7. Deciding on the global marketing organization

Global Marketing Environment ❧ The International Trade System ●

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Tariffs, quotas, embargos, exchange controls, nontariff trade barriers World Trade Organization Regional free trade zones • European Union • North American Free Trade Agreement • Other free trade areas

❧ Economic Environment ●

Industrial structure • Raw material exporting economies • Industrializing economies • Industrial economies

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Income distribution

❧ Political-Legal Environment ● ● ● ●

Attitudes toward international buying Government bureaucracy Political stability Monetary regulations barter, compensation,

❧ Cultural Environment ●

Impact of Culture on Marketing Strategy • Cultural traditions, preferences, behavior

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Impact of Marketing Strategy on Cultures • Globalization vs. Americanization

Looking at the Global Marketing Environment Deciding Whether to Go International Deciding Which Markets to Enter Deciding How to Enter the Market Deciding on the Global Marketing Program Deciding on the Global Marketing Organization

Deciding Whether to Go international ❧ Not all companies need to go international ● ●

Local businesses Domestic can be easier and safer

❧ May be drawn international by global competitor’s attack ❧ If domestic market growth low, global may bring higher sales ❧ The company needs to evaluate its abilities and the consumer and business environments in other countries.

❧ Factors drawing companies into the international arena: ●

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Global firms offering better products or lower prices can attack the company’s domestic market. The company discovers that some foreign markets present higher profit opportunities than the domestic market. The company needs a larger customer base to achieve economies of scale. The company wants to reduce its dependence on any one market. The company’s customers are going abroad and need servicing.

❧ Before going abroad, the company must weigh several risk: ●

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The company might not understand foreign customer preferences and fail to offer a competitively attractive product. The company might not understand the foreign country’s business culture or know how to deal effectively with foreign nationals. The company might realize that it lacks managers with international experience. The foreign country might change its commercial laws, devalue its currency, or undergo a political revolution and expropriate property.

Table 13.1: Blunders in International Marketing Hallmark cards failed when they were introduced in France. The French dislike syrupy sentiment and prefer writing their own cards. Philips began to earn a profit in Japan only after it had reduced the size of its coffeemakers to fit into smaller Japanese kitchens and its shavers to fit smaller Japanese hands. Coca-Cola had to withdraw its two-liter bottle in Spain after discovering that few Spaniards owned refrigerators with large enough compartments to accommodate it. General Foods’ Tang initially failed in France because it was positioned as a substitute for orange juice at breakfast. The French drink little orange juice and almost none at breakfast. Kellogg’s Pop-Tarts failed in Britain because the percentage of British homes with toasters was significantly lower than in the United States and the product was too sweet for British tastes.

Deciding Which Markets to Enter ❧ Define international marketing polices and objectives, and sales volume goals ❧ Decide how many countries to target ❧ Decide on the types of countries to enter ❧ Screen and rank each of the possible international markets using several criteria ● Market size, market growth, cost of doing business, competitive advantage, risk level ❧ Companies prefer to sell neighboring countries because they understand these countries better and control cost better.

Deciding How to Enter the Market Amount of Commitment, Risk, Control, and Profit Potential

Greater

Lesser

Direct Investment

Joint Venturing

Exporting

❧ Indirect export: ❧ The work through independent intermediaries to export their products ● Occasional exporting: passive level of involvement in which the company export from times to times. ● Active exporting:when company committed to expand its export to particular market.

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Direct export: Companies decide to handle their own export.the investment and risk are some greater but potential return.

❧ Licensing❧ License a foreign company to use trademark, manufacturing process, trade secret, or other item for a fee or royalty ❧ Joint ventures: Join with local investors ❧ Direct investment: -Ultimate form is direct ownership of foreign-based assembly or manufacturing facilities. ❧ Can buy part or full interest in a local company.

Deciding on the Global Marketing Program ❧ Standardized Marketing Mix ●

Same basic product, advertising, distribution, and other elements of the marketing mix are used in all international markets.

❧ Adapted Marketing Mix ●

The marketing mix elements are adjusted for each international target market.

Deciding on the Global Marketing Program Five International Product and Promotion Strategies Product

Promotion

Don’t Change Product Don’t Change Promotion

Adapt Promotion

Adapt Product

Straight Extension

Product Adaptation

Communication Adaptation

Dual Adaptation

Product Invention Develop New Product EXPORT COACHING, EXPORTMARKETING PLANS, MARKET DEVELOPEMNT PLANS, STUDY,PREPARATION, EXECUTION, CONTROL,CONTINUOUS ASSISTANCE

❧Product ❧ Product Strategies for the Global Market ●

Straight product expansion • Marketing the product with no changes

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Product adaptation • Altering the product to meet local conditions or the wants of the foreign market

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Product invention • Creating new products or services for foreign markets

❧Promotion ● ●

Communication adaptation Dual adaptation

❧ Global Promotion Strategies ●

Standardized global communication • Advertising themes are standardized from country to country with slight modifications

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Communication adaptation • Advertising messages are fully adapted to local markets

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Dual adaptation: company adopt both the product and communication.

❧Price • Companies have three choices

– Set a uniform price everywhere: same price all over the world – Set a market-based price in each country : what country can afford, – Set a cost-based price in each country: standard markup on cost.

Whole-Channel Concept for Distribution

Seller

Seller’s Headquarters Channels Between Nations Channels Within Nations Final User or Buyer COMPANY SPECIFIC INTERNATIONAL DISTRIBUTION CHANNELS RESEACH & DEVELOPEMENT

❧ Place (distribution channels) ● ● ●

Seller’s international marketing headquarters Channels between nations Channels within foreign nations

❧ Global Distribution Channels ●

Whole-channel view • • • • •

Seller’s headquarters organization Channels between nations Channels within nations Numbers and types of intermediaries Size and character of retail units abroad