Unit 02. Global Marketing Mix

Unit 02. Global Marketing Mix • International product policy • Pricing credit terms of business • Distributional decisions • Promotional impact on international marketing.

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Chapter 01

Exporting and Importing marketing and International Marketing

International product policy

What may sell abroad The international marketer needs to determine what the market offering should be in a foreign market : •Defining the product offering •Products versus Services/Rights Definition of a product: A product is anything that can be offered to a market for attention, acquisition, use or consumption, that might satisfy MKT a 4134 want or need. Philip3 International Kotler(1994)

Marketing

What may sell abroad Competition is changing globally and important writers have signalled this change in writing of the ‘new competition’. Philip Kotler (1994) states: The new competition is not between what companies produce in their factories but between what they add to their factory output in the form of packaging, services, advertising, customer service, financing, delivery arrangements, warehousing and other things thatMKT people value. (p.433) 4 4134 International Marketing

What may sell abroad Livingstone (1989) has pointed out, there are three important elements to consider in terms of production: 3.The size of the market 4.The level of local technology 5.The local distribution of the factors of the production. Example: McDonalds, the US hamburger chain, entry to the UK.

MKT 4134 International Marketing

McDonalds 5 Hamburger

What may sell abroad Segmentation could usefully be percervveid after conducting study of the enduring characteristics, such as target market geography, topography and demography. International market segmentation according to Wind and Douglas (1972)

Firm

Identify macro Segments of country

Profile each country On enduring and Situation specific characteristics

X country segments

Customer segments

Y customer segments

Customer segments Based on enduring and Situation specific Characteristics

Devaluate on the Segmentation Criteria and specific firm constraints MKT 4134 International Source: Wind., and Douglas,S.(1972) International market segmentation. 6 Marketing European Journal of Marketing.

Modification versus standardizationthe issues The rich industrial countries, which make up the membership of the Organization for Economic Cooperation and Development (OECD), account for 15% of the countries in the world, but 55% of the global GNP. Jain (1989) points to a few reasons as to why this then should lead to standardization. • The purchasing power of the OECD residents as expressed in discretionary per capita income is 8 to 15 times that of residents of the LDCs or NICs. • Television penetration within OECD countries exceeds 75%, whereas in NICs it is 25% and 7 4134 International less than 10% in MKT LDCs. Marketing

Modification versus standardizationthe issues

Product modification Mandatory product modifications arise as a result of the following:

Legal requirements; Tariffs; ‘invisible’ tariffs Nationalization- as response to lack of company presence on the market other than just in sales. Technical requirements- Regulation for such things as foodstuffs, drugs, electrical equipment are few examples. Taxation- for example with regard to cars; ‘road tax in UK’. Climate- special modifications for higher or lower working temperatures for machinery. MKT 4134 International Marketing

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Modification versus standardizationthe issues

Product modification Other factors influencing modifications include: Consumer tastes. Consumers tastes will have an important bearing on the name used; product features, labeling, packaging and materials. KFC in Japan.. Low personal disposable income. Literacy and low levels of education. Poor maintenance standards. Tide; Product of Procter and Gamble Local labour costs. MKT 4134 International 9 Marketing

Modification versus standardization- the issues Product standardization factors.

–

influencing

• Production economies of scale; Production, R&D, Marketing • Development costs; escalating costs of new product development in the automobile industry or the aircraft industry. • Stocks cost as a result of maintenance of wide range of products and high level of service. • Components that are interchangeable across product models. • Technological content. Example B to B Markets • Consumer mobility. Leads to familiarity with international products such as Coca-Cola, Pepsi, KFC’s Coke Bic razors or Gillette. 10 • Market homogeneityMKT 4134 International Marketing

Modification versus standardization- the issues Benefits of Standardization Cost savings through experience-curve effects and economies of scale. Consistency, with customers acknowledging consumer mobility and cross-border flows of television, radio, newspaper, and periodical ads. The remaining barriers are common to all markets, such barriers as social conventions regarding products use and purchasing patterns. MKT 4134 International Marketing

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Product standardization and World Product Mandates Framework for determining marketing programme standardization Target Market

Market Position

Nature of Product

Degree of programme Standardization

Performance in Programme markets

Environment Organization Factors

Source: Jain,S.C. (1989) Standardization of 12 inter MKT 4134 International Marketing strategy, Journal of Marketing. national Marketing

Product standardization and World Product Mandates Framework for determining marketing programme standardization Target market 2. Geographic area 3. Economic factors Nature of product 2. Type of product 3. Product positioning Market position 2. Market developments 3. Market conditions 4. Competition

Organization factors 2. Corporate orientation 3. Headquarters-subsidiary relationship 4. Delegation of authority Environmental factors 2. Physical environment 3. Legal environment 4. Political environment 5. Marketing infrastructure

Source: Jain,S.C.MKT (1989) Standardization of inter 4134 International Marketing Journal of Marketing. national Marketing strategy,

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Branding Branding is an important as a means of distinguishing a company offering, and differentiating one particular product from its competitors. Branding is a means by whereby the consumer can identify a particular product, and , if satisfied with it, ask it by name. The American Marketing Association (AMA) defines a brand as a "name, term, sign, symbol or design, or a combination of them intended to identify the goods and services of one seller or group of sellers and to International differentiate MKT 4134 Marketing them from those of other sellers”.

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Branding…. The objectives that a good brand will achieve include:

• Delivers the message clearly • Confirms your credibility • Connects your target prospects International emotionally MKT 4134 Marketing

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Branding…. Branding is perceived as a means of guarantee of quality offered by the manufacturer to the consumer. There is the expectation of standardization, that each and every product will meet these expectations. Where there is a high degree of standardization accompanied by a high degree of customer satisfaction, the brand is likely to become the market leader. Brand names fall into 3 categories (Fisher 1989); 4. Descriptive, like Corn Flakes and British Rail. 5. Associative, like Fruit Bursts and InterCity. 4134 Internationalor 6. Stand-alone, likeMKT Hob-nobs Casey Marketing Jones.

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Branding…..

Selecting a brand name: Good brand name should be able to meet a number of criteria, such as being short, unique, memorable and able to connote an important quality or image. It has to be available to use, registrable and protectable. The name should describe the product, be distinctive, be pronounceable, lend itself to graphic display, be acceptable, be legal, be suggestive of the product that it represents, and be easy to remember. Example: Coke and Pepsi are well-known worldwide, even in markets where there is general scarcity. MKT 4134 International Marketing

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Branding: Types of branding Individual brand names Family brand names

Types of Brands

Company name & Individual product name

Separate family names

No-name, unbranded merchandise MKT 4134 International Marketing

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Branding problems… Brand names take account of good commercial sense- making use wherever possible. Problem arises when brand does not reflect the culture or language where the product is being sold. For example;

Sales of Tide in Denmark were low until it was deduced that it was the Danish word for menstrual flow For example;

Shell used to have a slogan ‘I love Shell’ and they benefited greatly from French colloquial usage when they used their slogan in France 4134 International ‘C’est celle que MKT j’aime’, a phrase Marketing

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Branding problems… The problem with names is that more and more are being registered, making the search for a suitable name more difficult and creating a market for professional names search engine. Namestormers (US company) follow a six-step approach: • Information gathering. • Old-fashioned brainstorming. • Individual name development. • Feedback and evaluations. • Limited trademark search and profanity check. • Report preparation.

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Packaging

Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packaging contains, protects, preserves, transports, informs, and sells. It is fully integrated into government, business, institutional, industry, and personal use. Packaging and package labelling have several objectives:

Physical protection Barrier protection Containment or agglomeration Information transmission MKT 4134 International Marketing Marketing

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Intellectual property There are six property:

• • •

•

•

main

kinds

of

intellectual

Patents, which are for innovators, i.e. new kinds of technology-3G Copyright for literary, artistic, dramatic and musical works. Trademarks which are words, symbols or pictures used to distinguish the goods or services of one person from those of another. Industrial designs which are for the shape, pattern or ornamentation of an industrial object. MKT 4134 International Marketing apply Plant breeders’ rights

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Brand name protection.. Brand piracy (product counterfeiting) Kaikati (1982) identified five different basic ways of forging famous trademarks which have been developed: 3.Outright piracy 4.Reverse engineering 5.Counterfeiting 6.Passing off 7.Wholesale infringement Brand piracy or product counterfeiting is becoming much MKT 4134 International Marketing ever more prevalent than

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Brand name protection.. Five corporate strategies to handle counterfeiting Kaikati (1981) has advanced the following counter-strategis form his research of counterfeiters and their victims. 3.Compete and attempt to overcome the opposition. 4.Avoid conflict and withdraw from the fray. 5.Accommodate the opposition, where the objective is appeasement. 6.Collaborate.

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