International Marketing

chapter 3
Harcourt, Inc.

Objectives
Understand the importance of

international marketing Appreciate opportunities and challenges offered by international marketing Recognize effects of global environment on international marketing
Dr. Rosenbloom

Objectives

Understand market selection Recognize gradual internationalization Appreciate forms of market entry Comprehend international adjustments to the marketing mix Understand implementation steps for international marketing
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International Marketing
Heinz

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Bates Worldwide

International Marketing
Larousse Encyclopedia

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Bates Worldwide

International Marketing
Uni on

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Bates Worldwide

Intl Marketing Defined

The process of planning and

conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations

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Opportunities
Integrate global

knowledge xpand long!run production "engthen and rejuvenate product life cycles #ompetitive supply chains
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Challenges

International logistics $mall business mindset %olitical and economic stability Increased competition
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Small Business Mindset

&any believe only &'#s must carry out international marketing

$maller firms can also be major players( )*+ of ,erman exports from firms with -. or fewer employees

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International Environment
Cultural Environment Cultural Acceptance Socio-Economic Environment Political/Legal

International marketer

surveys(

Depth of traditional beliefs and attitudes and dominant cultural elements %ower of opinion leaders and change agents #ommunication from different media

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International Environment

Cultural Environment

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International Environment
Cultural Environment Cultural Acceptance Socio-Economic Environment Political/Legal
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nhanced by internal training

#ulture!specific information packets ,eneral cultural information $elf!specific information /finding own cultural paradigm0

International Environment
Cultural Environment Cultural Acceptance

%opulation and its characteristics

1ging of world populations for example

Socio-Economic Environment Political/Legal

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conomic Integration

'12T13 43 & R#5$4R

International Environment
!ultural En&iron%ent !ultural "cceptance
)rowth *ate

lderly population boom changes 4.$. market characteristics

3.5 3 2.5 2 1.5 1 0.5 0 1910- 1930- 1950- 1970- 1990- 2010- 20301930 1950 1970 1990 2010 2030 2050

#ocio$Econo%ic En&iron%ent 'olitical(Legal

+ecades

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Source http !!"""#census#gov!

International Environment
Cultural Environment Cultural Acceptance Socio-Economic Environment Political/Legal
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6ost country

&inimum wage legislation Regulatory measures "ack of enforcement Import7 xport restrictions3 etc.

6ome country

International Environment
Cultural Environment Cultural Acceptance Socio-Economic Environment Political/Legal
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Intellectual property rights #ommon law 8s #ode law

Tradition7precedence vs comprehensive written statutes 5ften a mixture of two systems

International Environment
Cultural Environment Cultural Acceptance Socio-Economic Environment Political/Legal
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International "aw 9orld Trade 5rganization

Defines economically acceptable practices for its member nations Intent is to provide stable markets

Market Selection

Identification and $creening %rocess

All Countrie Preliminar" Screen#
1. $eneral countr" %actor 2. $eneric pro&uct- peci%ic %actor

+e,ecte& Countrie

Pro pective !arget Countrie E timate 'ar(et Potential )" Pro&uct !"pe #
1. Si*e o% national mar(et 2. Potential o% national mar(et

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1 of 2

Market Selection

Identification and $creening %rocess

-ig. 'ar(et Potential Countrie E timate Sale Potential )" Compan" Pro&uct # 1t.er !arget 'ar(et
1. Pro&uct compari on 2. Competition 3. 'ar(et tructure /. C.annel tructure 5. 0inal con umer

+e,ecte& Countrie

Pro pective !arget Countrie

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2 of 2

Market Selection

#oncentration vs Diversification

2ew markets vs &any markets Dual #oncentration

: 2ocus on a segment in a few countries : $uitable for smaller companies

Dual Diversification
: 2ocus on most segments in most markets : 4sed by large consumer!products companies Dr. Rosenbloom

Internationali$ation %rocess

Role of &anagement

&anagerial commitment to international markets is crucial ;ecome aware of opportunities nter in a limited fashion and evaluate results

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Internationali$ation %rocess

&otivations to go abroad

!o%petiti&e pressures ,&erproduction +eclining do%estic sales E-cess capacity #aturated do%estic %arkets 'ro-i%ity to custo%ers(ports

*eacti&e Dr. Rosenbloom

Internationali$ation %rocess

&otivations to go abroad
'roacti&e
'ro it ad&antage Uni.ue products /echnological ad&antage E-clusi&e in or%ation /a- 0ene it Econo%ies o scale

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Entr& Strateg&

2irst Tier

Direct exporting7importing Indirect exporting7importing "icensing and franchising 2oreign Direct Investment <oint ventures #ontract manufacturing

$econd Tier

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Entr& Strateg&

Indirect xporting and Importing

Intermediary used to deal with foreign customers or firms "ow management commitment 5ften unintended or unaware

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Entr& Strateg&

Direct xporting and Importing

#ontrol international activities better #an lead to further growth with trading partners &ust find customers3 markets

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Entr& Strateg&

Intermediaries

Importer7 xporters fre=uently use them : xport &anagement #ompanies / #&0 : Trading #ompany

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Entr& Strateg&

"icensing

4se of intellectual property for compensation "ow capital investment and involvement #apitalize on R>D #an create competition

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Entr& Strateg&

2ranchising

,rant by parent company to independent entity to do business in a prescribed manner $ell franchiser?s products using name and marketing techni=ues or business approach 2ranchise must offer high uni=ueness with high standardization

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Entr& Strateg&
2oreign Direct Investment

,enerally large &'# due to capital and risk factors 'eed for wide market access remedied by ac=uisition #ircumvent barriers to trade ,overnment incentives

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Entr& Strateg&

2ull 5wnership ! often desirable and often impossible <oint 8enture ! collaboration between @A organizations

$hare assets3 risks3 profits %artner brings local expertise3 influence

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Entr& Strateg&

$trategic 1lliances ! Informal or formal arrangements between @A companies with common objective

2lexible to environmental conditions %ooling of expertise

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Entr& Strateg&

#ontractual 1rrangements

#ross!marketing 5utsourcing #ontract manufacturing

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International E'pansion
B 9ays to 1pproach International

&arkets
'a(e no pecial provi ion 2ncorporate &i%%erence into a regional/glo)al trateg" to allo3 %or local implementation 4glo)ali*ation approac.5

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International E'pansion

B 9ays to 1pproach International &arkets

A&apt to local con&ition in eac. target mar(et 4multi&ome tic approac.

'a(e no pecial provi ion

Dr. Rosenbloom

International E'pansion

B 9ays to 1pproach International &arkets

A&apt to local con&ition in eac. target mar(et 4multi&ome tic approac. 2ncorporate &i%%erence into a regional/glo)al trateg" to allo3 %or local implementation 4glo)ali*ation approac.5

'a(e no pecial provi ion

Dr. Rosenbloom

International E'pansion
B 2actors to &arket 1pproach
Market Characteristics
)o&ern%ent regulations !usto%er characteristics, e-pectations, and pre erences 'urchase patterns #tate o econo%ic de&elop%ent !o%petiti&e o erings !li%ate and geography

Dr. Rosenbloom

International E'pansion

B 2actors to &arket 1pproach

Product Characteristics
'roduct constituents Brand 'ositioning 'ackaging !ountry o origin

Market Characteristics
)o&ern%ent regulations !usto%er characteristics, e-pectations, and pre erences 'urchase patterns #tate o econo%ic de&elop%ent !o%petiti&e o erings !li%ate and geography

Dr. Rosenbloom

International E'pansion

B 2actors to &arket 1pproach

Product Characteristics
'roduct constituents Brand 'ositioning 'ackaging !ountry o origin

Market Characteristics
)o&ern%ent regulations !usto%er characteristics, e-pectations, and pre erences 'urchase patterns #tate o econo%ic de&elop%ent !o%petiti&e o erings !li%ate and geography

Company Considerations
'ro ita0ility Market opportunity 'olicies

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International E'pansion

Dr. Rosenbloom

International E'pansion

&andates most marketing!mix adjustments ,overnment regulations are most prevalent

$tandards /language3 I$5 .***3 etc.0

%roduct positioning changes

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International E'pansion

,lobal products

5nly changes possible are to positioning %roduct timing based on economic growth 2oreign exchange factor xtra costs incurred /shipping3 etc.0

%rice competition

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International E'pansion

#limate and geography

2ood product distribution is different in many countries

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International E'pansion

#annot contain features7ingredients in violation of law7custom $tandardization applied most successfully in culturally similar markets %romotional features and packaging often varied

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International E'pansion

CIs it worth itDE #an the company justify internationalizationD

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Implementing (orld"ide Marketing

Headquarters

Division C Division B Division A

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Implementing (orld"ide Marketing

&anagement %rocess

Information flows between head=uarters and country organizations Information flows between country Headquarters organizations

Division C Division B Division A

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Implementing (orld"ide Marketing

&anagement %rocess

%ersonnel exchange 6ead=uarters coordinates and leverages combined resources #entralized marketing strategy with local marketing augmentations #ertain marketing!mix aspects are left localized /distribution channels3 etc.0
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Implementing (orld"ide Marketing

5rganization $tructure

&atrix style has replaced the country division model %roduct groups coordinate efforts at head=uarters
: limination of work overlap : #apitalizes on expertise of specialists

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