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11/8/2013

Mod 6
International Marketing
Units 19 - 22

Key Concepts of International


Marketing

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The US Scenario
1 out of every 3 U.S. farm acres is producing for export
1 of every 6 U.S. manufacturing jobs produces for export
$1 of every $7 of U.S. sales goes abroad
1 of every 3 cars, 9 out of 10 TVs, 2 out of 3 suits, and
every CD Player sold in the U.S. is imported.
Travel and tourism is the #1 source of U.S. foreign
exchange.
$1 of every $4 of U.S. bonds & notes is issued to
foreigners.

International Marketing
Scope and Challenge
International Marketing - is concerned with planning
and conducting transactions across international
borders to satisfy the objectives of individuals and
organizations.
Identifying and satisfying consumer needs abroad;
better than the national and international competitors,
under the constraints of the internationalization stage
of the firm and the global environment - Nathalie
Prime
Some Governments pursue economic policies aimed at
increasing export earnings on a national scale.

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Rationale Behind International


Marketing

There is a trend toward a global economy.


Excess Capacity
Competitive Pressures
Markets across the world being sought after by
more competitors
Explosion of international trade
Global linkages are becoming important
Economies of scale and scope
Saturated markets in the home country
New trade agreements

International Marketing
If we only distributed pictures in the U.S., wed
lose money. It takes the whole world now to
make the economics of movie-making work
- William Mechanic
President, 20th Century Fox
Half the people in the world have yet to take their first
picture. The opportunity is huge, and its nothing fancy.
We just have to sell yellow boxes of film.
- George M.C. Fisher
CEO, Eastman Kodak Company

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International Marketing
Comparing Domestic and International Marketing

Similarity:
- Both carry out transactions that meet the needs of
individuals and organizations

Differences:
- International markets have greater growth potential
- Some tasks associated with international marketing not
included (or less intense ) than in domestic marketing (e.g.,
cultural research, political factors, exchange rates, trade
laws, long distance distribution.)

IM and Exporting
International Marketing is more than exporting,
because it involves:
Marketing products that have been manufactured or
assembled in the target country
Establishing a permanents presence in the foreign
country
Licensing and franchising
Sourcing components from foreign states.

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IM and Multinational Marketing


International marketing means marketing
across national frontiers.
Multinational Marketing means the integrated
coordination of the firms marketing activities
throughout the world.

IM Opportunities & Challenges


Opportunities

Integrate global knowledge


Expand long-run production
Lengthen and rejuvenate product life cycles
Competitive supply chains

Challenges

International logistics
Small business mindset
Political and economic stability
Increased competition

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IM Small Business Mindset


Many believe only
MNCs must carry out
international
marketing
Smaller firms can also
be major players: 50%
of German exports
from firms with 19 or
fewer employees

Roadmap When Going for Global Market


It is about the international trade system, economic,
political-legal, and cultural environments affect a
companys international marketing decisions.
Three key approaches to entering international
markets.
Companies adapt their marketing mixes for
international markets.
Three major forms of international marketing
organization.

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Globalisation

Many U.S.
companies
have made
the world
their market.

Major International Marketing


Decisions

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The Global Marketing Environment


The International Trade System:
Restrictionstariffs, quotas, embargos, exchange controls,
and non-tariff trade barriers.
The World Trade Organization and GATT:
Helps Tradereduces tariffs and other international trade
barriers.
Regional Free Trade Zones:
Groups of nations organized to work toward common goals in
the regulation of international trade.

Political Legal Environment

Attitudes towards International Buying


Government Bureaucracy
Political Stability
Monetary Regulations
Geopolitics

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Cultural Environment
Sellers must examine the ways consumers in
different countries think about and use
products before planning a marketing
program.
Business norms vary from country to country.
Companies that understand cultural nuances
can use them to advantage when positioning
products internationally.

Deciding Whether To Go Global


Reasons to consider going global:
Foreign attacks on domestic markets
Foreign markets with higher profit opportunities
Stagnant or shrinking domestic markets
Need larger customer base to achieve economies
of scale
Reduce dependency on single market
Follow customers who are expanding

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Deciding Which Markets to Enter


Before going abroad, the company should try to
define its international marketing objectives and
policies.
What Volume of Foreign Sales is Desired?
How Many Countries to Market In?
What Types of Countries to Enter?
Choose Possible Countries and Rank Based on
Market Size, Market Growth, Cost of Doing
Business, Competitive Advantage, and Risk Level

Colgate Goes to China


Using aggressive promotional and educational
programs, Colgate has expanded its market
share from 7% to 35% in less than a decade.

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Market Entry Strategies

Market Entry Strategies


Exporting:
Indirect: working through independent international
marketing intermediaries.
Direct: company handles its own exports

Joint Venturing:
Joining with foreign companies to produce or market
products or services.

Approaches:

Licensing
Contract manufacturing
Management contracting
Joint ownership

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Joint Ownership

KFC entered Japan through a joint ownership


venture with Japanese conglomerate
Mitsubishi.

Market Entry Strategies


Direct Investment:
The development of foreign-based assembly or
manufacturing facilities.
This approach has both advantages and
disadvantages

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IM- Marketing Mix Strategies


Three approaches for marketing a product or service at
an international level:
Standardisation refers to the approach taken in which the
marketing mix is used in the same way in different
countries.
Selling largely the same products and using the same
marketing approaches worldwide
Adaptation relates to the approach in which the business
strategy is deliberately changed so that it relates to each
market.
Producer adjusts the marketing mix elements to each
target market, bearing more costs but hoping for a larger
market share and return.
Globalisation looks like an extreme form of
standardisation but does not depend upon it.

Marketing Mix Adaptation

In India, McDonalds serves chicken, fish, and vegetable burgers, and the
Maharaja Mactwo all-mutton patties, special sauce, lettuce, cheese,
pickles, onions, on a sesame-seed bun.

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Five Global Product & Marketing


Strategies

Global Product Strategies


Straight Product Extension:
Marketing a product in a foreign market without
any change.

Product Adaptation:
Adapting a product to meet local conditions or
wants in foreign markets.

Product Invention:
Creating new products or services for foreign
markets.

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Global Product Strategies


Product This is a part of the marketing mix that
many companies aim to standardise.
The augmented view of the product includes the
physical product plus the brand and company name
and trademarks.
It includes the packaging, warranties and guarantees.
It is possible, therefore, to standardise part of the
product and adapt other elements.
Some companies will keep the same physical product,
but may change the packaging and the labeling.
Language change is an obvious adaptation.

Global Pricing Strategies


Companies face many problems in setting their
international prices.
Possible approaches include:
Charge a uniform price all around the world.
Charge what consumers in each country will pay.
Use a standard markup of costs everywhere.

International prices tend to be higher than domestic


prices because of price escalation.
Companies may become guilty of dumping a foreign
subsidiary charges less than its costs or less than it
charges in its home market.

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Global Pricing Strategies


Price - Very difficult to standardise price because
it is influenced by so many country factors.
Many differences in the tariff rates charged for
imports, value added tax rates, distribution channel
margins and the prices set by the main competitors.
There are considerable differences in the ability of
consumers to pay a particular price level.
Whilst a company can have a policy to charge good
value prices in the middle of the market and,
therefore, have a standardised process approach, the
practical implementation will give rise to many
detailed adaptations.

International Pricing

The European Union countries have adopted the euro as a common


currency, creating pricing transparency and forcing companies to
harmonize their prices throughout Europe.

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Whole-Channel Concept for


International Marketing
Place (Distribution)This is a marketing mix element
that is strongly influenced by market and country
forces.
It is difficult to standardise the implementation of
distribution although the initiatives of organisations such
as Tesco and Wallmart the phenomenon of the
hypermarket is becoming global.

Global Promotion Strategies


Can use a standardized theme globally, but
may have to make adjustments for language
or cultural differences.
Communication Adaptation:
Fully adapting an advertising message for local
markets.

Changes may have to be made due to media


availability.

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Global Promotion Strategies


PromotionThe selling part of promotion is
usually adapted.
The reason for this is the interface between the sales
force and the country distribution channel.
Because distribution channel members are strongly
influenced by the culture in the country, the sales
force, if it is to be successful, has to adapt to local
requirements.

Public relations and sales promotions are also


often adapted to fit local requirements. It is the
advertising decision that stands the best chance
of standardisation.
Use of media that are less culturally specific

Global People Strategies


People One of the most difficult elements of
the services marketing mix to standardise.
By definition, people are individuals and in
addition people differ between different cultures.
Standardisation can be achieved to some extent
through careful and methodical training.

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Global Process Strategies


Process The process element of the services
marketing mix relates to things such as how
the service is delivered, ordering systems and
so on.
Compared to the people element, process is
generally much easier to standardise
Eg, McDonalds processes for taking orders,
cooking these orders and treating customers in
their outlets are very highly standardised
throughout the world.

Global Physical Evidence Strategies


Physical Evidence Like process, this element
can be standardised to a high degree.
Eg at McDonalds where the layout and dcor is
more or less standardised throughout the world.
Standardising physical evidence is particularly
important in trying to develop a uniform company
image, and is often a key part of franchise services
marketing.

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Deciding on the Global Marketing


Organisation
Organize an export department
Create international divisions
Geographical organizations
World product groups
International subsidiaries

Become a global organization

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