Download WHAT INTERNATIONAL MARKETING IS:

• International Marketing
Understand the importance of international
marketing
Appreciate the opportunities and challenges
offered by international marketing
Recognize the effect of the global environment
on international marketing activities
Understand the process of market selection
Recognize the process of internationalization.
Appreciate the different forms of market entry
Comprehend the international adjustment of
the marketing mix
Understand the steps necessary for the
implementation of an international marketing
strategy
WHAT INTERNATIONAL MARKETING
IS:
• International marketing is the process of
planning and conducting transactions
across national borders to create
exchanges that satisfy the objectives of
individuals and organizations.
PLANNING FOR INTERNATIONAL
MARKETING
• How will my product fit into the
international market?
• What marketing adjustments are or will
be necessary?
• What threats from global competition
should I expect?
• How can these threats be turned into
opportunities?
Top 25 Multinational Firms
• TABLE 3.1
Opportunities
• TABLE 3.1
• Integrate global
knowledge
• Expand long-run
production
• Lengthen and
rejuvenate product
life cycles
THE INTERNATIONAL MARKETING
ENVIRONMENT
• Cultural Environment
• Socioeconomic Environment
• Legal and Political Environment
THE INTERNATIONAL MARKETING
ENVIRONMENT
Cultural
Environment
Socioeconomic
Environment
Political/Legal
• International marketer
surveys:
 Depth of traditional
beliefs and attitudes
and dominant
cultural elements
 Power of opinion
leaders and change
agents
 Communication
from different
media
Cultural Environment
• Four Dimensions of Culture
 Degree of Individualism
 Level of Equality
 Uncertainty Avoidance
 Material Achievement
Four Dimensions of Culture
Cultural
Environment
Socioeconomic Environment
• Population
 Age Distribution
 Income
 Infrastructure
Socioeconomic Environment
Cultural
Environment
Socioeconomic
Environment
Political/Legal
• Population and its
characteristics
Aging of world
populations for
example
• Economic
Integration
NAFTA, EU,
MERCOSUR
Socioeconomic Environment
Socioeconomic
Environment
Political/Legal
• Elderly population
boom changes U.S.
market
characteristics
Growth Rate
Cultural
Environment
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
Decades
Source: http://www.census.gov/
Legal and Political Environment
• Legal and Political Issues Facing
Marketers
 Intellectual Property Rights
 World Trade Organization (WTO)
 Common Law
 Code Law
 Antidumping Laws
Legal and Political Environment
Cultural
Environment
Socio-Economic
Environment
Political/Legal
• Host country
Minimum wage
legislation
Regulatory
measures
Lack of
enforcement
• Home country
Import/Export
restrictions, etc.
Legal and Political Environment
Cultural
Environment
Socio-Economic
Environment
Political/Legal
• Intellectual
property rights
• Common law Vs
Code law
Tradition/
precedence vs
comprehensive
written statutes
Often a mixture
of two systems
Legal and Political Environment
Cultural
Environment
Socio-Economic
Environment
Political/Legal
• International Law
• World Trade
Organization
Defines
economically
acceptable
practices for its
member nations
Intent is to
provide stable
markets
INTERNATIONAL MARKET SELECTION
• Identification of Potential Markets
• Selectively expanding
Screening Process in Target Market
Choice
• Figure 3.3
Market potential
Level of sales that might be
available to all marketers in
an industry in a given market.
Sales potential
Share of the market potential that
a particular marketer may hope
to gain over the long run.
Expansion – Concentration versus
Diversification
• Concentration – market development
strategy that involves focusing on a
smaller number of markets
• Diversification – marketing development
strategy that involves expansion to a
relatively large number of markets.
THE INTERNATIONALIZATION
PROCESS
Major Motivations to Internationalize
Proactive
Profit advantage
Unique products
Technological
advantage
Exclusive information
Tax benefit
Economies of scale
THE INTERNATIONALIZATION
PROCESS
Major Motivations to Internationalize
Competitive pressures
Overproduction
Declining domestic
sales
Excess capacity
Saturated domestic
markets
Proximity to
customers/ports
Reactive
ALTERNATIVE ENTRY STRATEGIES
• Indirect Exporting and Importing
• Direct Exporting and Importing
• Licensing (Franchising)
• Foreign Direct Investment
ALTERNATIVE ENTRY STRATEGIES
• First Tier
 Direct exporting/importing
 Indirect exporting/importing
 Licensing and franchising
• Second Tier
 Foreign Direct Investment
 Joint ventures
 Contract manufacturing
ALTERNATIVE ENTRY STRATEGIES
• Indirect Exporting
and Importing
 Intermediary used
to deal with
foreign customers
or firms
 Low management
commitment
 Often unintended
or unaware
ALTERNATIVE ENTRY STRATEGIES
• Direct Exporting
and Importing
 Control
international
activities better
 Can lead to further
growth with
trading partners
 Must find
customers,
markets
ALTERNATIVE ENTRY STRATEGIES
• Intermediaries
 Importers/Exporters
frequently use them
• Export
Management
Companies (EMC)
• Trading Company
ALTERNATIVE ENTRY STRATEGIES
• Licensing
 Use of
intellectual
property for
compensation
 Low capital
investment and
involvement
 Capitalize on
R&D
 Can create
competition
ALTERNATIVE ENTRY STRATEGIES
• Franchising
 Grant by parent
company to
independent entity to
do business in a
prescribed manner
 Sell franchiser’s
products using name
and marketing
techniques or
business approach
 Franchise must offer
high uniqueness with
high standardization
ALTERNATIVE ENTRY STRATEGIES
• Foreign Direct
Investment
 Generally large MNC
due to capital and risk
factors
 Need for wide market
access remedied by
acquisition
 Circumvent barriers to
trade
 Government incentives
ALTERNATIVE ENTRY STRATEGIES
• Full Ownership often desirable and
often impossible
• Joint Venture collaboration
between 2+
organizations
 Share assets, risks,
profits
 Partner brings local
expertise, influence
ALTERNATIVE ENTRY STRATEGIES
• Strategic Alliances Informal or formal
arrangements
between 2+
companies with
common objective
 Flexible to
environmental
conditions
 Pooling of expertise
ALTERNATIVE ENTRY STRATEGIES
• Contractual
Arrangements
 Cross-marketing
 Outsourcing
 Contract
manufacturing
Complementary Strengths Create
Value
• Figure 3.4
COMPREHENSIVE VIEW OF
INTERNATIONAL EXPANSION
• Figure 3.5
International Expansion
• 3 Factors to Market Approach
Market
Characteristics
Government
regulations
Customer
characteristics,
expectations, and
preferences
Purchase patterns
State of economic
development
Competitive
offerings
Climate and
geography
International Expansion
• 3 Factors to Market Approach
Market
Characteristics
Government
regulations
Customer
characteristics,
expectations, and
preferences
Purchase patterns
State of economic
development
Competitive
offerings
Climate and
geography
Product
Characteristics
Product constituents
Brand
Positioning
Packaging
Country of origin
International Expansion
• 3 Factors to Market Approach
Market
Characteristics
Government
regulations
Customer
characteristics,
expectations, and
preferences
Purchase patterns
State of economic
development
Competitive
offerings
Climate and
geography
Product
Characteristics
Company
Considerations
Product constituents
Brand
Profitability
Positioning
Market opportunity
Packaging
Policies
Country of origin
International Expansion
International Expansion
• Mandates most
marketing-mix
adjustments
• Government
regulations are most
prevalent
 Standards (language,
ISO 9000, etc.)
• Product positioning
changes
International Expansion
• Global products
 Only changes possible
are to positioning
 Product timing based
on economic growth
• Price competition
 Foreign exchange
factor
 Extra costs incurred
(shipping, etc.)
International Expansion
• Climate and geography
 Food product
distribution is different
in many countries
International Expansion
• Cannot contain
features/ingredients in violation
of law/custom
• Standardization applied most
successfully in culturally similar
markets
• Promotional features and
packaging often varied
International Expansion
• “Is it worth it?”
• Can the company
justify
internationalization?
Adjusting the Marketing Mix
• Standardized Approach
• Multi-domestic Approach
• Globalization Approach
Factors Affecting Marketing-Mix
Adjustments
• Figure 3.6
Product Decisions
• Design
• Branding
• Packaging
• Labeling
Promotion Decisions
• Positioning
• Copy
Promotion Decisions
• Figure 3.7
Distribution Decisions
• Tactical and Market-by-market
Pricing Decisions
• Price Escalation Due to Costs
• Foreign-exchange Rates
IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE
• Management Process
• Organization Structure
IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE
Headquarters
Division C
Division B
Division A
IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE
• Management Process
 Information flows between headquarters
and country organizations
 Information flows between country
organizations
Headquarters
Division C
Division B
Division A
IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE
• Management Process
 Personnel exchange
 Headquarters coordinates and leverages
combined resources
 Centralized marketing strategy with local
marketing augmentations
 Certain marketing-mix aspects are left
localized (distribution channels, etc.)
IMPLEMENTING MARKETING
PROGRAMS WORLDWIDE
• Organization Structure
 Matrix style has replaced the country
division model
 Product groups coordinate efforts at
headquarters
Supplemental Material
International Expansion
• 3 Ways to Approach International
Markets
Make no
special
provisions
International Expansion
• 3 Ways to Approach International
Markets
Make no
special
provisions
Adapt to local
conditions in
each target
market (multidomestic
approach)
International Expansion
• 3 Ways to Approach International
Markets
Make no
special
provisions
Adapt to local
conditions in
each target
market (multidomestic
approach
Incorporate
differences into a
regional/global
strategy to allow for
local
implementation
(globalization
approach)