International Marketing

Strategy Introduction 1

Romero R. Linden 1
 What is Marketing

Marketing is the process of planning and

executing the conception, pricing,
promotion and distribution of ideas, goods
and services to create exchanges that
satisfy individual and organisational goals

- American Association of Marketing

2
 What is marketing?
Satisfying customers at a profit

Customer
Profits
needs

Marketing is a management process

of identifying, anticipating and satisfying
customer needs at a profit (CIM UK)

3
Elements of Marketing

Control Planning

Implementation

4
The Overall Marketing System
Intermediaries
Economic Technological
Environment Environment

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Political Socio-cultural
Environment Competitors
Environment

5
 3 Principles of Marketing
1. Create customer value that is greater
than the value created by competitors

2. Create competitive advantage

3. Focus or concentration of attention

6
The Marketing Mix
4 Ps

Additional 3 Ps
People
Processes
Physical Evidence

7
 Segmentation Targeting Positioning

Identify and describe Evaluate segments and Design a product

market segments. Decide which to go or a service to meet

after. a segments needs

and develop mix.

8
 18 Guiding Principles of marketing
Principle of the company- strategic direction has a marketing orientation
Principle of community all members of the organization work as a team to
satisfy customers

Principle of competition give value to the customers to win them

Principle of retention keep the satisfied customers
Principle of integration to cater to the unique differences in customers
there needs to be an integration with customers

Principle of anticipation be proactive not reactive. Even the needs of

customers may change.

Principle of brand product is identified with the brand.

Principle of service show concern for customer. Service is a value
enhancer.

CONTD.

9
 18 Guiding Principles of marketing contd.

Principle of selling Integration of the company,

customers and relationships
Principle of process- the customer satisfying activities
should go on as a process.
Principle of segmentation dividing the customers into
groups with similar needs
Principle of targeting- selecting one of the segments
Principle of positioning placing the offer in the minds of
the customer
Principle of differentiation- how you make your product
look different from others
Principle of marketing mix- blending the price, product,
place and promotion in a way that satisfies the customer.

CONTD.
10
 18 Guiding Principles of marketing contd.

Principle of relationships- make sure that the exchange

takes place

Principle of totality- maintain a balance in the activities

conducted to satisfy customers at a profit.

Principle of agility- Continuously adjusts to the changes in

the environment.

11
 Exercise
3 Groups
Pick a local marketing organisation that is
involved in international business and
identify if and how the 18 guiding
principles are applied..

12
 What is international
marketing?
A process of planning and executing the
conception, pricing, promotion and
distribution of ideas, goods and services
to create exchanges across boundaries
that satisfy individual and organizational
objectives.

13
 Basic Differences-International Vs.
Local Marketing
Sovereign political entities

These differences
Different legal systems
necessitate

the
Different monetary firm to adopt
systems

Lower mobilitydifferent strategies

of factors of production
in different markets
Differences in market characteristics

Differences on procedures and documentation

14
 Moving from local to foreign
markets
Motivation is created by

Internal stimuli (within the organisation)

External stimuli (outside the
organisation)

15
Internal
Managerial aspirations
International orientation
Differential advantages
Organizational characteristics & Commitment

External
Unsolicited orders
Change agents

16
 Driving Forces
Technology advances
Economic Agreements
Market needs and wants
Pressure to cut costs
Pressure to improve quality
Improvements in communication
Transportation technology
Global economic growth
Leverage

17
 Restraining Forces
Organisational Culture
National Controls and Barriers

18
 How international marketing differs from
domestic marketing

Geographical distances physical distance

Psychological distances difference in values, attitudes, lifestyles

Large scale operations

Dominance of MNCs /TNCs
Trade barriers
Trading blocs
International marketing research
Need for advanced technology
Foreign exchange regulations
Competition- Exporters from the own country
Exporters from other countries
Local suppliers in importing country
International organizations

19
 Barriers of international
operations
Long distance
High risks and uncertainties
Customs formalities
Trade barriers
Three faced competition
Payment difficulties
Documentation formalities
Language barriers

20
 Implications for managers
If the consumer needs were the same all over, a firm
could simply sell the same product worldwide.

Foreign Environment
(Uncontrollables)

Political / Legal Environmental

Economic
Forces Domestic Environment Uncontrollables
Forces
(Uncontrollables) Country Market A

(Controllables)

Product Price Competitive Environmental

Cultural
Forces Forces Uncontrollables
Promotion
Political / Country Market B
Legal Competitive
Channels of
Forces Structure
Distribution

Geography Environmental
Economic Level of
& Climate Technology Uncontrollables
Infrastructure Country Market C
Structure of
Distribution
21
Market 1 Market 2

Market 3

22
 Product Price
CUSTOMISE Country Country

1 2
Place Promotion

Standardise

23
 How organisations view the world
EPRG Framework

Polycentric

Ethnocentric

Regiocentric Geocentric

26
 Ethnocentric:

See only similarities in markets

International companies ; adhere to the notion that the
products that succeed in the home country are superior
and can be sold everywhere without adaptation.

Polycentric:
Each country is seen unique
Multinational companies; subsidiaries develop own
unique business and marketing structures

27
 Regiocentric / Geocentric

A hybrid of ethnocentric and polycentric views

sees similarities and differences

Regiocentric Views regions as unique and

develops an integrated regional strategy

Geocentric Views the world as a potential market

and develops an integrated global strategy

Global and transnational companies

28
 Stages in the evolution of a
company going international
Domestic

International- ability to exploit the parent companys knowledge and

capabilities through worldwide diffusion of products

Multinational- Flexible ability to respond to national differences

Global- Global market or supplier reach, which leverages the home

country organization, skills and resources

Transnational- Combines the strengths of each of the preceding

stages in an integrated network, which leverages worldwide learning
and experience

29
Companies Engaged in Foreign
Trade

30
31
32
33
34
35
 Each term is distinct and has a specific meaning which define the
scope and degree of interaction with their operations outside of their
home country.
International companies are importers and exporters, they have no investment outside of their home
country. They make their product or service only in their home country. (Walmart, Harley)

Multinational companies have investment in other countries, but do not have coordinated product
offerings in each country. More focused on adapting their products and service to each individual local
market. Highly centralised decision making and control (Unilever, GSK)

Global companies have invested and are present in many countries. They market their products through
the use of the same coordinated image/brand in all markets. Generally one corporate office that is
responsible for global strategy. Emphasis on volume, cost management and efficiency (Coca Cola,
Microsoft)

Transnational companies are much more complex organizations. They have invested in foreign
operations, have a central corporate facility but give decision-making, R&D and marketing powers to each
individual foreign market.(Nokia, Toyota)

36
 Exercise
HSBC is a truly International Organisation True or
False? Justify

Nestle is a truly Transnational Organisation True or

False? Justify

Munchee is a truly Multinational Organisation True or

False? Justify

MacDonalds is a truly Global Organisation True or

False? Justify

37
40
41
 The International
Marketing Environment

Romero R. Linden 42
Political / Legal
Economic
Socio-cultural
Technological

43
44
The Political and Legal
Environment

Romero R. Linden 45
 Political system- type of government (socialistic,
capitalistic, democratic)
Philosophy of the government is reflected in its
policies.

Philosophy of the government- policy towards private

sector and foreign business

Stability of the policy of the government

political risk

46
 Quality of the host governments economic
management
Change in government policy
Host countrys attitude towards foreign investment
Host countrys relationship with the rest of the world
Host countrys relationship with the home countrys
govt.
Attitude towards assignment of foreign personnel.
Extent of anti private sector influence
Fairness and honesty of administrative procedures
Closeness between govt. and people

47
 Implications for managers

Company should look at itself and the country

situation to decide on strategies.

Anticipate government policy changes.

Country managers need to be given the

authority to propose company strategy for taking
advantage of opportunities created by
government policy

When a transaction crosses borders must be

clear as to which nations laws apply
48
 Contd..
Patents and trade marks protected in one
country are not protected in another.
Global marketers must ensure that patents
and trademarks in each country where
business is conducted.

49
The Economic
Environment

Romero R. Linden 50
 Economic Systems
Based on dominant method of resource allocation

Market Allocation Consumers determine

resource allocation (economic democracy)
Eg: USA, Japan

Command Allocation State decides on what

produce and how to produce them
Eg: China, former Russia

Mixed Systems Mixed market allocation and

command allocation
51
Market and Economic Development

Stages of Market Development

A. Low income countries
B. Lower-middle income countries
C. Upper-middle income countries
D. High income countries

Stages of Economic Development

Less developed countries - A & D
Industrializing - C
Advanced, industrialized - D

52
 Income and Purchasing Power Parity
For most products, income is the single most valuable
economic variable

Income is the single most valuable and important

indicator of potential

PPP provides an actual comparison of the standard of

living in different countries

Income disparity exists between nations and within

nations. A wide degree of income disparity tends to breed
political unrest

53
Degrees of Economic Cooperation
Free Trade area
Group of countries agreed to abolish all internal barriers to trade
among themselves.
Customs Union
Eliminate internal barriers to trade and impose common external
barriers.
Common Market
Eliminate internal barriers to trade and impose common external
barriers and allow free flow of capital and labour.
Economic Union
Extensive political unity

54
 Economic cooperation
Stage of Abolition of Common Removal of Harmonising
Integration Tariffs and Tariffs Quota Restrictions of Economic,
Quotas Systems on Factor Social and
Movement Regulatory
Policies
Free Trade YES NO NO NO
Areas
Common YES YES NO NO
Unions
Common YES YES YES NO
Markets
Economic YES YES YES YES
Union

55
56
The Socio-Cultural
Environment

Romero R. Linden 58
 Learned behavioural traits shared by
members of a society.
Reflected in
language
aesthetics
education
religion
attitudes and values
social organization
59
 Culture
Culture is transmitted from one generation to
another. Its established

Explains the ways of living. How people live in

the social organizations;

-family
-educational institutions
-religious institutions
-governmental organizations
-business institutions 60
 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.
61
 The Nestle Way
Nestl
Nestl sells
sells more
more than
than 8,500
8,500 products
products produced
produced in
in 489
489
factories
factories in
in 193
193 countries
countries

Nestl
Nestl is
is the
the worlds
worlds biggest
biggest marketer
marketer of
of infant
infant formula,
formula,
powdered
powdered milk,
milk, instant
instant coffee,
coffee, chocolate,
chocolate, soups,
soups, and
and mineral
mineral
water
water

The Nestl way is to dominate its

markets can be summarized in four
points:
(1) think and plan long term
(2) decentralize
(3) stick to what you know, and
(4) adapt to local tastes

62
U.S. Globalization

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

63
 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.
64
 Joint Ownership

KFC entered Japan through a joint ownership venture with Japanese

conglomerate Mitsubishi.
65
66
Importance of culture to a marketer
The responses of people are learned.

Communication challenges in responding to

varying needs and maintaining business
relationships.

The greater the environmental sensitivity of a

product, the greater the need for managers to
address country specific conditions.

67
 Type of technology in use
Level of technological development
Speed with which new technologies are
adapted and diffused
Type of technology appropriate
Technology policy

68
70
International Marketing
Research

Romero R. Linden 71
 What is research?

Systematic and objective identification,

collection, analysis and dissemination
of information for the purpose of
improving decision making related to
the identification and solution of
problems and opportunities in
marketing.

72
Bridging Knowledge the Gap
GAPS

Existing Knowledge Expected Knowledge

COST/BENEFIT
RISK/REWARD
OPPORTUNITIES
THREATS

Research

73
 What is the need?
Learn what you can hope to accomplish
Learn what is not to be done

Obtain up to date information

Introduce new products
Develop existing mixes
Information about buyer behaviour for
decision making
Enable to calculate cost of entry and reward
for the risk
74
 Entry evaluation process
Assess which market or markets offer the
best opportunities for our products or
services to succeed.

Its a process
country identification
preliminary screening
in- depth screening
final selection
direct experience
75
 Which markets to enter
Preliminary screening of potential markets
Estimate industry sales potential in each market
Estimate company sales potential in each market

How to serve the selected markets

Need for a global customer database

Understanding consumer buyer behaviour

76
Entry evaluation process
Country identification

Preliminary screening

In- depth screening

Final selection

Direct
experience

77
Country identification
Undertake a general overview of potential new markets
Desk analysis (selection of about 200 highly potential
markets)
Include or discard markets after sufficient reasoning
Which foreign markets warrant detailed investigation.

Preliminary screening
Serious look at remaining countries
Assign scores, weights, ranks based on macro factors
(economics, currency stability, exchange rates, level of
domestic consumption)
Decide on a shorter list of countries
Which markets have a high potential
78
 In-depth screening
The countries left are those that are feasible for
entry

At this stage the micro factors within the local markets

are studied

- What prices could be charged

- What adaptations are required in our products / services
- What are the available distribution channels / networks
- How should communications with target markets be
done

79
 Final selection
Final scoring, ranking and weighting based
on focused criteria.
Competitor behaviour in the selected
markets is done at this stage

Direct experience
Marketing manager and representative should
travel to the selected destination to get first hand
information

80
 Possible categorization of global
customers in screening
Type 1 Fast-paced, competitive economies
Efficient product and service delivery, excellent quality assurance and an in
depth marketing plan are critical to success. If you are not fluent in the
language, you can work through a local partner to handle linguistic and
cultural differences

Type 2- Relationship- based, relatively affluent

economies
Interpersonal communication skills, cultural sensitivity and linguistic fluency
are vital to developing a business relationship with a local partner. Initially
relationships need to be developed at a senior level

Type 3- International financial Institution funded

economies
The economies are developing or changing. Market development takes
time. Flexibility and political astuteness are important

82
 Clustering markets on a regional
basis
Western Europe
Prosperous economies
Objectives of EU member countries to harmonize national laws
Language differences need to be catered in packaging and
advertising

Eastern and Central Europe

Differences in economic development
Minimal adaptation required from those sent to western Europe
Common language is Russian

83
 Clustering markets on a regional basis
(Contd.)

North America
High per capita income
High receptivity to innovations and new ideas
Arms length relationships between govt. and business

Asia-Pacific
Diversity of cultures

Latin America
Shift from protectionism towards market mechanism
84
 Clustering markets on a regional basis
(Contd.)
Middle east
No single societal type.
Connection is a key word in conducting business

Africa
Much opportunity for creativity in developing unique products
that fit the needs of the people

85
 How is this market specific
information obtained

MIS Marketing Information System

A system designed to provide managers and

other decision makers with a continuous flow
of information about markets, customers
competitors and company operations

(identify the areas of information desired and seek information)

86
Formal marketing research

Primary research data are collected for

specific research purpose

Secondary research used data . Data

already collected for other purposes

87
 Primary research process
Identify the problem
Develop a research plan
Collect data
Analyze
Present findings

88
 Who provides information
Central Intelligence Agency World Factbook -
https://www.cia.gov/library/publications/the-world-factbook/

Country briefings from the Economist www.Economist.com

Country/region information - http://www.ic.gc.ca/eic/site/ibi-iai.nsf/eng/h_bi18601.html
Trade data online - http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/TRADE
World market reports - http://www.worldmarketreports.com/
World Banks doing business: Benchmarking business
regulations - http://www.doingbusiness.org/ , http://www.doingbusiness.org/EconomyRankings/ ,
http://www.doingbusiness.org/LawLibrary/Default.aspx

World Trade Organization Trade Policy Reviews -

http://www.wto.org/english/tratop_e/tpr_e/tpr_e.htm

IDEAS-Information about European Union Institutions -

http://ideas.repec.org/p/iza/izadps/dp899.html

SCADPlus- Secondary periodical literature on the EU -

www.scadp.org.kh

89
 Reluctance to use research
Lack of sensitivity to differences in consumer
tastes and preferences

Limited appreciation of the different marketing

environments

Lack of familiarity with data sources and the

inability to use them

90
 Differences between domestic and
international research
New parameters
-Duties, foreign currencies, modes of transportation,
documentation
-methods of entry

New environments

Number of factors involved

Broader definition of competition

91
 Segmentation, Targeting and
positioning intl. mkts.

The market you segment is the one that was screened.

Information collected from research is used for

identifying segments

Assess the opportunity in target markets in terms of size

of the segment, anticipated growth potential, competition
and compatibility with the companys overall objectives.

92
Selecting a Target Market Strategy
Standardized Global Marketing Eg: Coke
Analogous to mass marketing in a single country
Same marketing mix for broad market

Concentrated Global Marketing Eg: Winterhalter

Devising a marketing mix to reach a single segment
of the global market

Differentiated Global Marketing Eg: Rover

Targeting 2 or more segments with different marketing
mix

93
95
Competitive Analysis and
Strategy

Romero R. Linden 96
Major International Marketing Decisions

97
98
 These forces of competition exert substantial pressure on
profitability of companies.
1. Threat of New Entrants
New entrants into an industry in a nation bring
Increase in manufacturing capacity
Desire to snatch market share
Suitable strategy to satisfy customer needs.

Generally entry of new players are the outcome of following

barriers
a) Economies of Scale:
Existing players enjoying economy of scale in marketing,
manufacturing, R&D etc..
99
b) Product Differentiation
High level of Product differentiation by an existing brand acts as
entry barrier for new players.
c) Overall Capital Requirement
Requirement of huge capital to initiate operation reduces
future competition.
d) Switching Cost
When customer perceives cost to change product or
supplier in the form of retraining, ancillary equipment cost
etc. is high it acts as entry barrier for new players.
e) Access to Distribution Channel
Establishing suitable marketing channel takes lot of
investment, training and time.
100
f) Government Policy
Extent of protection and treatment meted by host country
government.

g) Other Advantages
Favourable location, govt. subsidies, access to cheaper raw
material etc.
h) Competitor Response
Expected vigorous and unpleasant response from existing
Players discourage new entrants.

101
2. Threat of Substitute Products
Availability of substitute products limits price that market
leader can charge.

3. Bargaining Power of Buyers

Organised buyers like industrial customers gain leverage
upon sellers because
they buy in large quantities
they bargain hard to lower price as there are many
suppliers
there is possibility of backward integration.

102
4. Bargaining Power of Suppliers
Raw material and other suppliers enjoy bargaining power
when demand exceeds supply
when number of suppliers are limited
when product supplied is specialized in nature.

5. Rivalry among Competitors

In order to improve their positions and gain advantages, firms
quite often resort to
intense price competition
advertising wars and increased margin to channel members
competitive product differentiation and positioning. 103
Competition and Competitive Advantages

In todays economic scenario competition is growing nationally and

internationally, therefore for any firm to prosper or even to stay afloat
it should be aware of competition and
possess competence to deliver greater value to customers.

This competence is competitive advantage which varies from market to

market, industry to industry even market segment to segment.
Firms achieve competitive advantages through
Creating greater value as perceived by customers than the
competitors Generic Strategies.
Creating newer advantages faster than competitors Strategic Intent
Concept.

104
105
 Generic Strategies for Creating
Competitive Advantages
Michael Porter developed this model of creating competitive advantages
to beat competitors adopting following approaches

Overall Cost Leadership -- Firm gears up marketing machinery to

achieve larger volume of sale nationally and abroad, then go for economy
of scale manufacture. This brings down unit cost of manufacture and sale
compared to competitors, enabling selling at lower price providing greater
value to customers.
This cost leadership is further accentuated with Learning curve and
Experience curve cost reductions.
Product Differentiation It is a very appreciable competitive
advantage. The firm develops a unique product and by superior marketing
efforts create a brand image through Product Differentiation.
It allows the firm to charge premium price.
106
 Generic Strategies for
Creating Competitive Advantages cont.

Narrow Focus Advantages -- The firm studies need pattern of

different segments of market and then try to satisfy a narrow segment
through narrow differentiation.
e.g. Willys jeeps, Fair & Lovely Cream etc. focuses on satisfying specific
needs of customers.

Cost Focus The firm may exploit its lower cost of manufacture to
offer cut-throat price competition to win over a narrow market segment.
These generic strategies produce sustained result when are backed
by trade barriers.
e.g. Hindustan Levers strategy and success till 1990s.

107
 Theory of National Competitive
Advantage Michael Porter

The theory attempts to analyze the reasons for a

nations success in a particular industry
Porter studied 100 industries in 10 nations
postulated determinants of competitive advantage of
a nation were based on four major attributes
Factor endowments
Demand conditions
Related and supporting industries
Firm strategy, structure and rivalry

108
 Porters diamond
Success occurs where these attributes exist.
More/greater the attribute, the higher chance of success
The diamond is mutually reinforcing

109
 Factor endowments

Factor endowments:- A nations position

in factors of production such as skilled
labor or infrastructure necessary to
compete in a given industry
Basic factor endowments
Advanced factor endowments

110
 Basic factor endowments

Basic factors: Factors present in a country

Natural resources
Climate
Geographic location
Demographics
While basic factors can provide an initial
advantage they must be supported by
advanced factors to maintain success
111
 Advanced factor endowments

Advanced factors: Are the result of

investment by people, companies,
government and are more likely to lead to
competitive advantage
If a country has no basic factors,
it must invest in
advanced factors

112
 Advanced factor endowments

communications
skilled labor
research
Technology
education

113
 Demand conditions

Demand:
creates capabilities
creates sophisticated
and demanding
consumers

Demand impacts quality

and innovation

114
Related and supporting industries

Creates clusters of supporting industries that

are internationally competitive

Must also meet requirements of other parts of

the Diamond

115
Firm Strategy, Structure and Rivalry

Long term corporate vision is a determinant of

success
Management ideology and structure of the firm
can either help or hurt you
Presence of domestic rivalry improves a
companys competitiveness

116
 Determinants of Competitive
Advantage in nations
Chance
Company Strategy,
Structure,
and Rivalry

Two external
factors that Factor Demand
influence the Conditions Conditions
four
determinants.
Related
and Supporting
Industries
Government

117
 Porters Theory-predictions

Porters theory should predict the pattern of international

trade that we observe in the real world

Countries should be exporting products from those

industries where all four components of the diamond are
favorable, while importing in those areas where the
components are not favorable

118
 Implications for business

Location implications:
Disperse production activities to countries where they
can be performed most efficiently

First-mover implications:
Invest substantial financial resources in building a
first-mover, or early-mover advantage

Policy implications:
Promoting free trade is in the best interests of the
home-country, not always in the best interests of the
firm, even though, many firms promote open markets

119
 Porters Diamond
Competitive
Competitive Advantage
Advantage for Countries

Firm Strategy, Structure and Rivalry

Beer
Fashion Apparel
Consumer Electronics
Large,
Innovative
diverse
Strong designers
firms brewers
Complex
Competitive
positioning
Competitive styles
features

Factor Conditions Demand Conditions

Hops,
Fabric
barley,
suppliers
Components yeast Social
Stylistic
acceptance
buyers
Innovative buyers
Brewers
Fashion designers
Design Engineers Knowledgeable
Fashion conscious
Knowledgeable

Related and Supporting Industries

Advertising
Specialty industry
retailing
Media suppliers
Hospitality
Promotional
infrastructure
Media
Retail infrastructure

How would you revise this strategy to one supporting

firms strong in developing coffee brands?
120
121
International Market Entry
Planning Process

Romero R. Linden 122

Principal Motives for Intl Expansion

World Market
To seek lower production
factor costs

Economies To expand sales and

production volume
of Scale

Economies To exploit proprietary assets

of Scope
 Decision criteria for choosing a
suitable entry strategy
Political risk
Growth potential
Market access
Factor costs and conditions
Shipping considerations
Country infrastructure
Foreign exchange rate for countrys currency
Product market profile

124
 Basic Entry Decisions

Question: What are the basic entry

decisions for firms expanding
internationally?

Answer: A firm expanding internationally

must decide
which markets to enter
when to enter them and on what scale
how to enter them (the choice of entry mode)
 Which Foreign Markets?

The firms objectives

A balance of benefits, costs, and risks
Firms need to assess the long run profit potential of each market
The most favorable markets are politically stable, developed and
developing nations with free market systems, low inflation, and
low private sector debt
The less desirable markets are politically unstable developing
nations with mixed or command economies, or developing nations
where speculative financial bubbles have led to excess borrowing
Successful firms usually offer products that have not been widely
available in the market and that satisfy an unmet need
 Timing of Entry

After a firm identifies which market to enter, it

must determine the timing of entry, i.e. Early
entry or Late entry
Entry is early when an international business enters a
foreign market before other foreign firms
Entry is late when a firm enters after other
international businesses have already established
themselves in the market
 Timing of Entry
Firms entering a market early can gain first
mover advantages including
the ability to pre-empt rivals and capture demand by
establishing a strong brand name
the ability to build up sales volume in that country and
ride down the experience curve ahead of rivals and
gain a cost advantage over later entrants
the ability to create switching costs that tie customers
into their products or services making it difficult for
later entrants to win business
 Timing of Entry

First mover disadvantages - the disadvantages

associated with entering a foreign market before
other international businesses
These may result in pioneering costs (costs that an early
entrant has to bear that a later entrant can avoid) such
as
the costs of business failure if the firm, due to its ignorance
of the foreign environment, makes some major mistakes
the costs of promoting and establishing a product offering,
including the cost of educating the customers
 Timing of entry: 1st Mover Advantages
(Summary)
Preempt rivals; establish strong brand name;
capture demand
Build sales volume; ride down experience curve
ahead of competitors; cost advantage
Create switching costs; tie customers to 1st movers
products
Establish social ties ahead of following foreign
competitors
Timing of entry 1st-mover disadvantages;
Pioneering costs (Summary)
Time spent to learn dos-donts may benefit
competitors who can learn from 1st mover
1st mover who starts a new industry builds the
infrastructure
1st mover trains customers for followers
Breaks through host countrys adjustment to
foreignness issues
Regulations may change due to 1st movers entry
Followers benefit from 1st movers efforts/costs
 Scale of entry
Level of resources
How much is needed for a firm to commit to achieve success?

How much can the firm afford to commit?

1st mover advantages will require large scale resources

Small scale entry allows learning at low risk

Entry in small or large potential market may require the same

level of initial resources

A strategic commitment is difficult to reverse

Has a long-term impact

Means that the resources cannot be used elsewhere

 Summary

There are no right decisions with foreign

market entry, just decisions that are
associated with different levels of risk and
reward
Firms in developing countries can learn
from the experiences of firms in developed
countries
 The Internationalisation Process

134
Cavusgil & Nevins model of the incremental internationalization process of a firm
International Market Entry
Strategies

Romero R. Linden 135

Approaches to entry

136
 Approaches to entry
Exporting- Organisation makes a commitment to market overseas
on its own behalf
International agents and intermediaries

Licensing Own organisation charges a fee for the use of its

technology, brand or expertise
Franchising- Provide brand, concepts, expertise, and most facets
needed to operate in an overseas market
Strategic alliances shared manufacturing, research and
development, distribution alliances and marketing agreements
Joint ventures- Equity based venture setup with parties owning a
proportion of the new business
Direct Foreign Investments (Acquisitions or Green field operations)
137
 External or arms-length Modes of Entry
Firm does business overseas without own assets and
human resources in target market
Export
Sell domestically produced products abroad through local
independent agents or directly to customers
Indirect Export Through local agent
Direct Export Through formally appointed in-country
agent
 External or arms-length Modes
-Licensing
Licensor grants rights to licensee for
Intangible property use: patents, inventions, formulas,
processes, designs, copyrights, trademarks
Specified period of time
Specified compensation

Licensee typically gives licensor

Quality assurance rights
Strategic brand control if licensee sells to consumers using
the licensors brand name
 External or arms-length Modes -
Franchising, Alliances
Franchising
Franchisor, grants franchisee use of intangibles under the
condition that franchisee follow strict rules of operating
the business
Mode of operation is part of the brand image
Similarities to Licensing

International strategic alliances

Cooperative agreements between complementary or
competitive organisation from different countries
 Internal Modes of Entry
These involve Foreign Direct Investment

Wholly owned subsidiaries

Firms owned 100% by a company in a foreign country

International joint ventures

Firms that are owned jointly by two or more otherwise
independent firms; most IJVs are between two firms
One (or more) parent firms are non-resident in the host
market
Foreign participation varies from majority owned, to 50%
owned, to minority owned
Ownership and control attributes of entry strategies

FDI
100% Exports
0wnership

Equity Joint Venture

Licensing Franchising Management

0 Contract
0 Control 100%

142
Risk and control attributes of entry strategies

143
Advantages and Disadvantages of Different Modes of Entry
Advantages and Disadvantages of Different Modes of Entry
(Continued)
146
Segmentation, Targeting & Positioning
for
Competitive Advantage

Romero R. Linden 147

 Marketing Process Involves

Market orientation as a philosophy

Market segmentation
Targeting markets
Positioning
Marketing mix

148
 Marketing Strategy
Select bases for segmentation and identify appropriate market
segments.
Evaluate and appraise the market segments resulting from the
first step.
Select an overall market targeting strategy and specific target
segments.
Tailor a distinct position in selected markets
Develop marketing mixes that serves the desired positioning
strategy in the marketplace
Audit marketing environments and efforts

149
Segmentation Targeting Positioning

Identify and describe Evaluate segments and Design a product

market segments. Decide which to go or a service to meet

after. a segments needs

and develop mix.

150
Importance of Segmentation and Targeting

The focus of a successful marketing program is the

customer. Effectively marketing must fully understand the
needs.
Customers with decent life and individualism have
Heterogeneous demands, This has given rise to need
segmenting.
The process of understanding the customer and
choosing a group of customer you can serve best is
targeting.
So target a segmentation is core of the marketing
process.

151
The STP Process
Identify Total Market

Effective Segmentation

Bases for Segmentation

Select Target Segment

Positioning Strategy

Marketing Mix

Monitor, Evaluate and

Control 152
 Identify the Total Market
The first step in the target market selection
process is to specifically define the total
market of all potential customers for a
product category.

153
154
 Criteria for
successful segmentation

155
Segmenting Business Markets

156
 Advantage of Targeting Efforts

Cannot effectively serve all the segments, must

target marketing efforts to a segment or segments.
Marketing opportunities and unfilled gaps are
more accurately identified
Marketing mix is more delicately designed to meet
potential customers needs
Offer the greatest potential to achieve profit or
relationship goals

158
 Positioning

Positioning - Definition

designing an offer so that it

occupies a distinct and valued
place in the minds of the target
customer.
Philip Kotler

159
160
 Positioning Strategy

Key to developing the

appropriate marketing mix is the
positioning strategy of the
product.

161
 Presumptions of Positioning

All products have objective and

subjective attributes
Recognizable
Comparable

162
 Select Positioning Strategy
Effective positioning
What consumers currently think about the
product, especially in relation to competing
products
What the marketer wants consumers to
think about the product
Which positioning strategy will elevate the
consumers current product image to the
desired product image.

163
 Select Positioning Strategy

Position Mapping

Creating a visual description about

consumer perceptions of a product on
two or more dimensions in relation to
competitors.

164
Perceptual Mapping

165
 Select Positioning Strategy
The positioning strategy must determine where a
company wants to go
And how to get there by positioning the product
according to any of the following ways:
Price/Quality
Product Attributes
Product User
Product Usage
Product Class
Competition
Symbol

166
167
 The Marketing Mix

Place
Product
(Distribution)

Marketing
Mix

Promotion Price

Romero R. Linden

Objective 4
168
169
 Marketing Mix
The final steps are to develop and match a
marketing mix to the needs of the target
market
This must support the chosen positional
strategy in the selected target markets
Therefore determine the 4Ps or 7Ps of
its marketing mix as a tool to achieve the
desired position

170
 Recognize 4Ps and the 7Ps
Product customer value
Price cost
Place convenience
Promotion communication
People consideration
Processes co-ordination
Physical evidence confirmation
171
 Marketing Strategy and the
Marketing Mix

Product

Refers to goods, services, people,

places and ideas
Household consumers
Business-to-business customers
172
The Product Component Model

173
 Global Product Planning Strategic Alternatives

Strategy 2 Strategy 4
Product Extension / Product Adaptation /
Different Communication Adaptation Communication Adaptation
Eg: Levis Jeans / (Dual Adaptation)
Motorbikes Eg: Greeting Cards
Communication
Strategy 1
Product Extension / Strategy 3
Same Communication Extension Product Adaptation /
(Dual Extension) Communication Extension
Eg: Sensodine Toothpaste / Eg: Electrical Products
Gillette Razors

Same Different

Product

174
 Suitability of a strategy
Product - Function or need served by the
product

Market - Conditions under which a product is

used, the preferences of potential customers,
ability to buy

Costs - Costs of adaptation and manufacture

to the company
175175
 Marketing Strategy and the
Marketing Mix
Pricing decisions are complex and are driven
by a variety of considerations including:
Customer demand, costs, information
availability, competition, profit motives,
product considerations, and legal
considerations

Price

176
 Pricing
Production
Delivery costs
Competition
Market demand
Currency exchange rates
Market research and credit checks
Receivables/risk insurance
Business travel
International postage, cable and telephone rates
Commissions, training charges and other costs involving
foreign representatives.
Product or service modification and special packaging

177
 Pricing Strategies
Static pricing- charging the same price to all customers

Flexible pricing- adjusting prices for different types of customers

Full cost-based pricing- covering both fixed and variable costs of the
export sale

Marginal cost- covering only the variable costs of production and

exporting, while you pay overhead and other fixed costs out of
domestic sales

Penetration pricing- keeping your price low to attract more

customers, discourage competitors and gain quick market share

Market skimming- pricing the product high to make optimum profit

among high end consumers while there is little competition
178
178
Marketing and
promotion Transportation
Agent/distributor fees
Freight and related charges
advertising, media relations
Transportation / Carriage
Travel
Warehousing and storage
Communications
Insurance
Materials (brochures ,business cards)
Trade fairs and exhibitions
Customs
Production

Customs and other duties at port of entry
Unit cost of manufacture Customs brokerage fees
Product or service modification
Financing
Preparation

Costs of financing
Labeling Exchange rate fluctuations
Export credit insurance
Packaging
Marking

Documentation
Inspection
Certification
Document preparation
Cargo insurance 179
Freight forwarders views 179
 Marketing Strategy and the
Marketing Mix
Place
(Distribution)

Marketing channel is the network of

organizations that create time,
placements and ownership of utilities for
household consumers and business
customers.
180
 Channels of distribution
Essential linkages that connect producers
and customers.

Sell direct to customers

Operate through independent
intermediaries, usually at the local level
Depend on an outside distribution system
that may have regional or global coverage

181181
Intensity of Distribution
Channels of Distribution

183
 Marketing Strategy and the
Marketing Mix
Integrated Marketing Communication (IMC)
System of management and integration of
marketing communication elements
Advertising, publicity, sales promotion,
personal selling, sponsorship marketing,
and point-of-purchase communications

Promotion

184
Alternative Promotional strategies
Advertising- select the media that has a wide circulation
within your target audience
Promotional materials - redesign if necessary the
marketing materials and packaging to remove elements
that are inappropriate in the target market
Direct mail - Directly contact the potential buyers
BTL Media - Outdoor advertising
Personal visits
PR
Trade shows / Exhibitions
Internet

185 185
 Determinants of the promotional
strategy
Nature and level of competition
Variety of media in the target market
Level of economic development
Availability of local resources to assist with
the campaign
Local laws
Objectives
186

186
Digital Marketing
Digital Marketing Overview
Defition

What is digital marketing?

Digital marketing is the process of building and maintaining customer

relationships through online activities to generate sales and/or capture
customers that are searching on the Internet for answers.

Plain English: Getting found online

Digital Marketing Overview
What are the benefits of digital marketing?

Over traditional marketing *

Puts the consumer in control

Provides convenience
Drives brand loyalty
Reduces the selling cycle
Builds your brand
It is measurable
It is cost effective
Digital Marketing Overview
Digital marketing objectives

One way to make sure you are found on the web is with an optimized
digital marketing strategy. Most digital marketing strategies and
campaigns have 5 objectives:

1.Reach the right audience

2.Engage with your audience
3.Motivate your audience to take action
4.Ensure efficient spending on your campaign
5.Maximize return on investment (ROI)
Digital Marketing Overview
What does digital marketing consist of?

Key components

Website design (user experience)

Search engine optimization (SEO)
Pay per click (PPC)
Social media marketing (SMM)
Email marketing
Display advertising (banner ads)

Lets look more closely at some of these key

components.
Harnessing the Internet

192
193
Contents of a marketing plan

Executive summary
Product or service analysis
Market analysis
Competitive analysis
Goals
Marketing strategy
Implementation
Evaluation
Summary
194
194