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SMK University of Applied Social Sciences Henrika Sakienė INTERNATIONAL MARKETING Course Handbook Klaipeda, 2015 Henrika Sakiene INTERNATIONAL MARKETING Course Handbook Approved by the decision of the Academic Board of SMK University of Applied Social Sciences, 05th November 2014, No. 1. The publication is financed within project “Joint Degree Study programme International Marketing and Branding preparation and implementation“ No. VP1-2.2-SMM-07-K-02-086 funded in accordance with the means VP1-2.2-SMM-07-K “Improvement of study quality, evelopment of Internationalization” of priority 2 “Lifelong Learning” of the Action Programme of Human Relations Development 2007 – 2013. © Henrika Sakiene, 2015 © SMK University of Applied Social Sciences, 2015 ISBN 978-9955-648-65-9 LIST OF CONTENT Chapter 1 The nature of international marketing 8 Chapter 2 Social responsibilities and international marketing environment 15 Chapter 3 The Marketing international environment: culture, economic, political and legal environment 19 Chapter 4 Multinational consumer’s differences. B2B market, B2C market 25 Chapter 5 International market research. Export market selection 31 Chapter 6 Market entry strategies and entry modes 38 Chapter 7 Product internationalization 46 Chapter 8 International pricing strategies 54 Chapter 9 International communication strategies and promotion 63 Chapter 10 Distribution and handling of export orders. Marketing logistics chains 71 Chapter 11 International Marketing planning 80 Chapter 12 International marketing challenges 88 List of References 96 Introduction International Marketing and Branding study programme prepares marketing professionals for international business companies and companies that are still planning to enter foreign markets. People who work in business sector are seeking for the main business aim – gaining the profit. To achieve this we must know not only principles of marketing to be able to commercialize and present to customers our goods but also be able to prepare such a marketing mix that could be accepted in different markets abroad. Ideas, technologies, and products either services can be sold profitably only if we will know to who and how to present them. The variety of products and services in the market is so wide, that if the company wants to be noticed, it must present their goods in such a way, that everyone notice them. Another important thing is that global market uses wide range of communication channels and about good or bad instances consumers find out in very short notice. That is why marketing professional must know about all possible outcomes of each decision in their work and cannot make any mistakes. It’s best to learn from others mistakes, not from our ones. That’s why it’s so important to study international marketing theory and solve all the tasks. The course introduces the field of international marketing: the main international marketing models and concepts, principals of work in B2B and B2C international markets. Students will be introduced with cultural, social, political and economic factors which make impact on international marketing decisions. Globalization and internationalization of the companies require abilities to use relevant marketing solutions and tools, know international market entry schemes and selection procedures. Students will gain practical knowledge by solving problems, answering questions and analyzing case studies directly connected with international marketing issues. The course allows to get acquainted with foreign consumer’s behavior, the factors determining it, the process of purchasing goods, and the international marketing planning. The Aim of the course unit and the „International Marketing“ teaching material is to introduce students the main international marketing principles for B2B and B2C markets, international marketing environment, market selection methods and entry modes, marketing mix preparation for foreign markets, other theories of international marketing, their application in business companies and organizations. After completion of this study course students will be able to plan and organize international marketing activities following company’s strategic goals, be able to analyze international marketing environment, select the most effective markets, adapt product to local market requirements, choose right pricing methods and organize product deliveries in the global world. Very often marketing is understood as social process where consumer’s spending money can satisfy their needs. On the one hand consumers must understand their needs and look for the satisfaction themselves. On the other hand – producers or businesses in general must create marketing management systems that help then to find out what needs consumers have and what would satisfy them most. The best solutions can ensure constant either high level of profits for businesses. Marketing can be described as the process of market research and analysis, planning and control of resources, implementation of various actions that help to compete in the market, satisfy consumers I N T E R N AT I O N A L M A R K E T I N G 7 and business itself. Marketing starts before production. Marketing is preparation work that must be done by managers and business owners before it’s been decided to produce product of introduce service to the market. Nowadays every business is a kind of international business, because most of businesses buy products either services needed for their operations abroad and sell own products and services not only in local markets. Lithuania, Poland and other European countries are part of Europe Union and also part of its market which has free trade principles, that means possibilities to introduce goods and services for all EU consumers without any restrictions. Students of Joint Degree Study Programme International Marketing and Branding by studying International Marketing course unit will achieve these study programme outcomes: • Be able to apply knowledge of practice, applied theory and methods in marketing and branding in multicultural business environment. • Be able to understand and reflect upon central theories and models of business–to-customers and business-to-business marketing. • Be able to perform marketing and market research to determine consumer behaviour differences in foreign markets also to process and evaluate research results. • Be able to assess the competitive position of a business or product as a basis for the preparation of the company‘s marketing mix with a focus on international market. • Be able to indentify product development opportunities and to prepare the plan for entering international markets. • Be able to make effective decisions on the marketing mix changes in order to solve real problems implementing the company‘s strategic plans. After fulfilling International Marketing course students will: 1. Be able to understand influence of environmental factors on international marketing solutions. 2. Be able to organize international marketing activities in various international markets. 3. Be able to plan and organize marketing activities for B2B and B2C product and services in the international environment. 4. Be able to understand needs and social shifts of targeted audience within international environment. 5. Be able to organize international marketing research and use statistic data. 6. Be able to select and enter international market and organize activities there. 7. Be able to make market, customer and competitor analysis and make strategic decisions depending on current situation. 8 Henrika Sakienė 8. Be able to use brand development strategies in the various international markets. 9. Be able to organize international marketing activities in various international markets. 10. Be able to prepare international marketing plan and organize implementation activities and control. Studying the material of International Marketing students will find 12 chapters. Each chapter starts from the main goal of the analyzed topic, then students will find concepts and main theory of the topic. It is recommended to answer self-test questions before moving to tasks section. Answering to self-test questions will help to improve understanding of theory. Every chapter ends with the list of references for the addition information for the topic. Wish you to be patient studying the International Marketing theory and to be creative solving the tasks and case studies. Best regards, Henrika Sakienė I N T E R N AT I O N A L M A R K E T I N G 9 CHA PTER 1. THE NATuRE OF INTERNATIONAL MARKETING The main aim of this chapter is to introduce students to the concepts used in international marketing and the meaning of international marketing. Concepts International marketing – multinational process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services and to create exchanges that satisfy individual and organizational objectives. International marketing is the performance of business activities designed to plan price, promote and directs the flow of the company’s goods and services to consumer or user in more than one nation for profit (Cateora, Gilly, Graham, 2011). Global/transnational marketing focuses upon leveraging a company’s assets, experience and products globally and upon adapting to what is truly unique and different in each country (Keegan, 2002). Analyzing opinions of different authors appears that - International marketing is simply the application of marketing principles to more than one country. The marketing mix must be simply adapted in some way to take into account differences in consumers and segments. International marketing is a broader concept and includes export marketing. Export marketing is concerned with the production of good in one country and marketing them in different countries of the world while international marketing is a boarder concept and includes globalization. International Marketing is essential for all countries-small & big; developed & developing and rich & poor. This is because no country in the world is self sufficient as regard all the requirements and no country can live in complete economic and political isolation. Every country has to import something from other country and has to export whatever surplus available. The natural resources are not divided equally among the countries of the world. There is disparity among countries as regards geographical area, population, climate condition, availability of natural resources, economic growth, technology development, production activities and so on. Such disparity leads to inter dependent of countries. It is this situation which serves as base for the conduct of large scale international marketing activities (Cateora, Gilly, Graham, 2011). Table No.1 The Key Elements of International Marketing Mix Product Price Place Promotion -Product adaptation -Packaging and labeling -Translation of technical literature -Quality management -Licensing and contract manufacturing -Choice of pricing strategy -Competitor analysis -Discount structures -Credit management -Delivery terms -Costing and budgeting -International distribution -Control of agents -Export documentation -Cargo insurance -Joint-ventures and subsidiaries -Advertising, public relations and sales promotion -Direct marketing -Control of salespeople -Translation of sales literature -Exhibiting -Marketing research 10 Henrika Sakienė The objectives of International Marketing • To bring countries closer for trading purpose and to encourage large scale free trade among the countries of the world. • To bring integration of economies of different countries and thereby to facilitate the process of globalization of trade. • To establish trade relations among the nations and thereby to maintain cordial relations among nations for maintaining world peace. • To facilitate and encourage social and cultural exchange among different countries of the world. • To provide assistance to developing countries in their economic and industrial growth and thereby to remove gap between the developed and developing countries. • To ensure optimum utilization of resources at global level. • To encourage world export trade and to provide benefits of the same to all participating countries. • To offer the benefits of comparative cost advantage to all countries participating in international marketing. • To keep international trade free and fair to all countries by avoiding trade barriers (Cateora, Gilly, Graham, 2011). Differences between Domestic and International Marketing Domestic Table No.2 International Research data is available in a single language and is usually easily accessed Research data is generally in foreign languages and may be extremely difficult to obtain and interpret Business is transacted in a single currency Many currencies are involved, with wide exchange rate fluctuations Head office employees will normally possess detailed knowledge of the home market Head office employees might only possess and outline knowledge of the characteristic foreign markets Promotional messages need to consider just a Numerous cultural differences must be taken single national culture into account Market segmentation occurs within a single country Market segments might be defined across the same type of consumer in many different countries. Domestic International Functional specialization within a marketing department is possible International marketing managers require a wide range of marketing skills I N T E R N AT I O N A L M A R K E T I N G 11 Distribution and credit control are straightforward Distribution and credit control may be extremely complex Selling and delivery documentation is routine and easy to understand Documentation is often diverse and complicated due to meeting different border regulations Distribution channels are easy to monitor and control Distribution is often carried out by intermediaries, so is much harder to monitor Competitors’ behavior is easily predicted Competitors’ behavior is harder to observe, therefore less predictable New product development can be geared to the needs of the home New product development must take account of all the markets the product is sold in. Resourse: (Colovic, 2006) Reasons for marketing abroad • No country is able to produce all goods required by it, but can import the goods which it is not in a position to produce due to natural or other economic factors. • International marketing is necessary as the cost of production is not the same in all countries. Countries exchange commodities on the basis of comparative cost is always beneficial. • International marketing is necessary in order to meet the growing need of different countries and for providing better standard of living to people. • Need of closer economic and cultural cooperation. • International marketing is needed due to surplus production in some countries supplemented by shortage of production in some other countries. • Bridging gap between developed and developing countries. International marketing not only brings exchange of goods and services but also facilitates transfer of technical know-how and skills. • International marketing efforts benefits to all participating countries and also develops cooperation among countries. It is needed as it is a key to world peace and prosperity. Benefits of International Marketing can be identified to a country and to a company. Benefits of International marketing to company: • A company exporting abroad earns substantial profit out of its export operation. This is because export marketing is normally more profitable than domestic marketing. Even the loss in domestic marketing can be compensated from the profit earned out of export. • A company exporting abroad earn foreign exchange out of its operation and the same can be used for the import of essential goods, new machinery, technology, etc. this facilitates large scale export in future. 12 Henrika Sakienė • A company exporting goods abroad is in position to utilize its production capacity fully as it has capacity to use the entire production for domestic and export marketing. • A company exporting goods abroad is normally a sound company with financial stability and good earning capacity. It can face problems of domestic marketing because of the support marketing (Cateora, Gilly, Graham, 2011). Benefits of International Marketing to a country: • International marketing provides better life and welfare because it provides goods which cannot be produced in the home country due to geographical limitations. • It enables every country to export whatever is available as surplus. • International marketing creates new demand for goods. This facilitates industrial activities and brings industrial development. • International marketing provides to participating countries the benefits of comparatives costs. • International marketing leads to cooperation among the countries. • Facilitates cultural Exchange • Easy availability of foreign exchange for import of capital goods, modern technology and other essential requirements is possible due to international marketing (Vijeikis, Vijeikiene, 2003) Difficulties of International Marketing • Payment difficulty due to difference currency systems • Risk and uncertainties in transportation • Government restrictions • Difficulties in communication (different cultures, language barriers, etc.) • Time difficulty (time zones, longer procedures and etc.) • Difficulty in the preparation of documents • Miscellaneous difficulties such as ○ Difference in weights and measures in different countries, ○ Political affiliations of countries, ○ Trade barriers and trade blocs, ○ Differences in the marketing practices followed in different countries, ○ War or international tensions. • Need of international marketing research (higher costs) • Need for long term planning (higher qualification of managers, more information needed, etc.) • Importance of advanced technologies (costs saving, competitiveness, etc.) (Colovic, 2006). I N T E R N AT I O N A L M A R K E T I N G 13 SELF-TEST QUESTIONS: • Describe what is international marketing in your own words? • What do we understand as international marketing mix? • What are the parts of marketing mix? • What could be the main objectives of the international marketing? • What are benefits of international marketing to company? • What are benefits of international marketing to country? • What are the difficulties of international marketing? • How do you understand difficulties in communication? Task No.1 – List at least 10 brands of products which are being sold just in your local market. Also make a list at least of 10 brands of products what are being sold in a few markets abroad and in your country. Which list was easier to make? Why? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………............................................................................................. ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………............................................................................................. Task No.2 – Choose one of your favorite sweets brand produced in your country (for instance – Karūna) and list the actions that company had to proceed introducing this product to local market. What is the marketing mix of your chosen product in local market? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………............................................................................................. ………………………………………………………………............................................................................................. 14 Henrika Sakienė Task No.3 – Thinking of the product chosen in Task No.2, list the actions that company has to do before it will introduce this product to another country. What marketing managers must have in mind preparing product X marketing mix for foreign country? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No.4 – List the reasons why company X (choose any company in your country) should be entering international markets. ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No.5 – There are mentioned some international marketing difficulties in the theory. Some of those difficulties are risks of international trade and international marketing. Discuss the possible ways to manage those risks or at least minimize their impact to company. ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………... ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No.6 – Imagine you are working in a company that produces dairy products (curd, yogurt and etc.). Your company is planning to present their production to Latvia market. How those products must be changed from the ones that are in Lithuanian market? What should be different entering Swedish market? French? Why? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………...................................... ………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………….................. I N T E R N AT I O N A L M A R K E T I N G 15 Case study No.1 – Starbucks story Every day, we go to work hoping to do two things: share great coffee with our friends and help make the world a little better. It was true when the first Starbucks opened in 1971, and it’s just as true today. Back then, the company was a single store in Seattle’s historic Pike Place Market. From just a narrow storefront, Starbucks offered some of the world’s finest fresh-roasted whole bean coffees. The name, inspired by Moby Dick, evoked the romance of the high seas and the seafaring tradition of the early coffee traders. In 1981, Howard Schultz (Starbucks chairman, president and chief executive officer) had first walked into a Starbucks store. From his first cup of Sumatra, Howard was drawn into Starbucks and joined a year later. A year later, in 1983, Howard traveled to Italy and became captivated with Italian coffee bars and the romance of the coffee experience. He had a vision to bring the Italian coffeehouse tradition back to the United States. A place for conversation and a sense of community. A third place between work and home. He left Starbucks for a short period of time to start his own Il Giornale coffeehouses and returned in August 1987 to purchase Starbucks with the help of local investors. From the beginning, Starbucks set out to be a different kind of company. One that not only celebrated coffee and the rich tradition, but that also brought a feeling of connection. Our mission to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time. Today, with more than 18,000 stores in 62 countries, Starbucks is the premier roaster and retailer of specialty coffee in the world. And with every cup, we strive to bring both our heritage and an exceptional experience to life (Starbucks, 2014). Discuss the presented case. Find more information about Starbucks company on the internet. What could be the factors of Starbucks success? What is different in Starbucks in all the countries that are operating? What always stay the same? …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………… 16 Henrika Sakienė CHAPTER 2. SOCIAL RESPONSIBILITIES ANd INTERNATIONAL MARKETING ENVIRONMENT The main aim of this chapter is to introduce students to the social responsibility meaning, its importance in international business and international marketing. Concepts Social responsibility - corporate social responsibility is self-regulation by a company with the objective of embracing responsibility for the company’s actions and creating a positive impact through its activities on its customers, employees, communities and the environment. A company may build into its mission, strategy and everyday operations elements that serve to promote specific goals, for example, using recycled paper or organic hand soap in the offices to help save the environment. The term corporate social responsibility (CSR) first appeared in the late 1960s in reaction to the global challenges, such as climate change, financial crises, multiplying trade and investments, that started to evolve in the international sphere. Companies have begun to realize that besides gaining economic profit they must take responsibility and incorporate actions into their business models to solve local or even global problems and improve social well-being. Although direct effects haven’t been proved and much criticism has risen around CSR, companies identify some obvious benefits. Implementing the values and goals of CSR improve the judgment and reputation of the business among customers. In a strong, competitive market it also makes the business stand out from its rivals. CSR may also prompt current and potential employees to commit themselves to the company and promote its values in their private lives (Kozenkow, 2014). Business firms produce goods and services by utilizing scarce resources to satisfy customer needs. In their activities, companies should be innovative, cost effective, productive and effective. If they become successful, in the long run, they should contribute positively to the societies’ welfare objectives. It requires that companies should be sensitive for the expectations of customers with respect to the social issues and to the environment (Kotler, 2003). For organizations to have social responsibility means an organization should concern for the people and environment in which it transacts business (http://www.knowthis.com/principlesof-marketing-tutorials). It is expected that socially responsible firms will somehow financially outperform other less responsible firms in the long run. This might result from customer loyalty, better employee morale and motivation, or public policy favoring ethical conduct (Perner, 2010). To be competitive in the long run, companies should adopt strategic plans to optimize the objectives of all partners as stakeholders, management, workers, customers, society and all the humanity. Today, international companies donate millions of dollars to various nonprofit organizations through various initiatives including philanthropy, cause-related marketing, employee voluntarism, and other innovative and creative marketing programs. At the same time, social responsibility requires that firms should produce new products at high quality and services at reasonable prices. Additionally, these firms could be customer-oriented. I N T E R N AT I O N A L M A R K E T I N G 17 No country, least of all the poorest, can afford to remain isolated from the world economy. Every country should seek to reduce poverty. The International community should endeavor-by strengthening the international financial system, through trade, and through aid-to help the poorest countries integrate into the world economy, grow more rapidly, and reduce poverty. That is the way to ensure all people in all countries have access to the benefits of globalization. In order to manage globalization process fairly, international reform efforts and democratic transnational institutions should be created and empowered (Recep Yücel, 2010). 18 Henrika Sakienė SELF-TEST QUESTIONS: • What do you call the social responsibility? • What benefits company get because of its social responsibility? • What social responsible companies do you know? • How to identify socially responsible companies? Task No.1 Look at the local market and identify at least 3 companies that are socially responsible. How that can be noticed? Discuss those examples with your colleagues. ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No.2 Look at international market and find at least 3 examples of companies that are socially responsible. How they benefit from that? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No.3 Discuss how benefits of social responsibility appear? What benefits for company and for society you can identify? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 19 Task No.4 How company should become socially responsible? Choose company and plan how company could adopt social responsibility. ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Case study No.1 A Good Example The Body Shop is the most cited example of establishing CSR early in an exceptional way. The natural-cosmetics company promotes social and environmental issues. It implemented a shared campaign with Greenpeace to save the whales; a campaign against overly skinny models to avoid perpetuating bulimia and anorexia; and an initiative called Community Fair Trade to help people sell their products in developing countries. It also regularly sponsors local charity and community events. Search internet and find out how The Body Shop does that? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Case study No.1 A Cautionary Example H&M, the clothing store implemented the CSR strategy of producing clothing items from organic cotton. The organic-clothing line gave consumers a positive image towards H&M for years. But this image was easily destroyed when three different reports in one year accused the company of using genetically modified cotton from India in its products. Today, H&M’s new line represents only low prices but not organic clothing. ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… 20 Henrika Sakienė CHAPTER 3. THE INTERNATIONAL MARKETING ENVIRONMENT: CuLTuRE, ECONOMIC, POLITICAL ANd LEGAL ENVIRONMENT The main aim of this chapter is to analyze the parts of international marketing environment and to teach students how to collect information needed for international marketing environment analysis. Concepts International marketing environment – the external world in which the organization and its potential customers have to exist, and within the context of which marketing decisions have to be made. Culture – an integral system of learned behavior patterns that are distinguishing characteristics of the members of any given society. Acculturation - adjusting and adapting to a specific culture other than one’s own – is one of the keys to success in international operations. Trade sanctions and embargoes – governmental actions that distort the free flow of trade in goods, services, or ideas for decidedly adversarial and political, rather than strictly economic, purposes. Political risk is defined as the risk of loss when investing in a given country caused by changes in a country’s political structure of policies, such as tax laws, tariffs, expropriation of assets, or restriction in repatriation of profits. Intellectual property (IP) – refers to a legal entitlement of exclusive rights to use an idea, piece of knowledge, or invention. Edward T. Hall, who has made some of the most valuable studies on the effect of culture on business, makes a distinction between high- and low-context cultures. In high-context cultures, such as Japan and Saudi Arabia, context is at least as important as what is actually said. The speaker and the listener rely on a common understanding of the context. In low-context cultures, however, most of the information is contained explicitly in the words. Unless we are aware of this basic difference, messages and intentions can easily be misunderstood. If performance appraisals of marketing personnel are to be centrally guided or conducted in a multinational corporation, those involved must be acutely aware of cultural nuances (Edward T.Hall, 2000). In some cases, the international marketer may be accused of cultural imperialism, especially if the changes brought about are dramatic or if culture-specific adaptations are not made in the marketing approach. There is a growing fear among many countries that globalization is bringing a surge of foreign products across their borders that will threaten their cultural heritage. I N T E R N AT I O N A L M A R K E T I N G 21 Elements of Culture Language • Verbal • Nonverbal Religion Values and attitudes Table No.3 Manners and customs Material elements Aesthetics Education Social institutions Source: Cengage Learning, 2013 Language capability serves four distinct roles in international marketing: 1. Language aids in information gathering and evaluation efforts. Rather than rely completely on the opinions of others, the manager is able to see and hear personally what is going on. People are far more comfortable speaking their own language, and this should be treated as an advantage. The best intelligence on a market is gathered by becoming part of the market rather than observing it from the outside. For example, local managers of a multinational corporation should be the firm’s primary source of political information to assess potential risk. 2. Language provides access to local society. Although English may be widely spoken and may even be the official company language, speaking the local language may make a dramatic difference. For example, firms that translate promotional materials and information are as being serious about doing business in the country. 3. Language capability is increasingly important in company communications, whether within the corporate family or with channel members. Imagine the difficulties encountered by a country manager who must communicate with employees through an interpreter. 4. Language provides more than the ability to communicate. It extends beyond mechanics to the interpretation of contexts. Realize that in several cultures, “yes” will not mean “I agree” but rather only signals “I hear what you’re saying”, so it does not convey consent (David A. Ricks, 2006). Economics variables relating to the various markets’ characteristics – population, income, consumption patterns, infrastructure, geography, and attitudes toward foreign involvement in the economy – form a starting point for assessment of market potential for the international marketer. These data are readily available but should be used in conjunction with other, more interpretive data because the marketer’s plans often require a long- term approach. Data on the economic environment produce a snapshot of the past; in some cases, old data are used to make decisions affecting operations two years in the future. Even if the data are recent, they cannot themselves indicate the growth and the intensity of development. Some economies remain stagnant, plagued by natural calamities, internal problems, and lack of export markets, whereas some witness booming economic development. 22 Henrika Sakienė Economic data provide a baseline from which other more market – or product-specific and even experiential data can be collected. Understanding the composition and interrelationships between economic indicators is essential for the assessment of the other environments and their joint impact on market potential. The international marketer needs to understand the impact of the economic environment on social development. The emergence of economic integration in the world economy poses unique opportunities for and challenges to the international marketer. Eliminating barriers between member markets and erecting new ones nonmembers will call for adjustments in past strategies to fully exploit the new situations. New trading blocs and the expansion of the existing ones will largely depend in future trade liberalization and political will within and among countries. As developed markets have matured, marketers are looking at both emerging and developing markets for their future growth. To succeed, marketers will have to be innovative, pioneer new ways of doing business, and outmaneuver local competitors, many of them intent on becoming global players themselves (M.R. Czinkota, I.A. Ronkainen, 2013). The political and legal environment in the home country, the environment in the host country, and the laws and agreements governing relationships among nations are all important to the international marketer. Compliance with them is mandatory in order to successfully do business abroad. Such laws can control exports and imports both directly and indirectly and can also regulate the international business behavior of firms, particularly in the areas of boycotts, antitrust, corruption, and ethics. To avoid the problems that can result from changes in the political and legal environment, the international marketer must anticipate changes and develop strategies for coping with them. Whenever possible, the manager must avoid being taken by surprise and thus not let events control business decisions. On occasion, the international marketer may be caught between clashing home- and hostcountry laws. In such instances, the firm needs to conduct a dialogue with the governments in order to seek a compromise solution. Alternatively, managers can encourage their government to engage in government-to-government negotiations to settle the dispute. By demonstrating the business volume at stake ant the employment that may be lost through such governmental disputes, government negotiators can often be motivated to press hard for a settlement of such intergovernmental difficulties. Finally, the firm can seek redress in court. Such international legal action, however, may be quite slow and, even if it results in a favorable judgment for the firm, may not be adhered to by the government against which the judgment is rendered. In the final analysis, a firm conducting business internationally is subject to the vagaries of political and legal changes and may lose business as a result. The best the manager can do is to aware of political influences and laws and strive to adopt them as far as possible M.R. Czinkota, I.A. Ronkainen, 2013). I N T E R N AT I O N A L M A R K E T I N G 23 SELF-TEST QUESTIONS: • What’s included in the company’s international marketing environment? • Why it is important verbal / non verbal communication? • What economic indicators you would look at choosing market for new product? • Why some countries have negative view towards new foreign products? And their marketing? Task No.1 Where would you look for information about company’s international marketing environment? Please, make a list of possible places to look for information. ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………….…………………………………………….…………………………… Task No.2 Find and discuss examples of products that are particularly vulnerable to changing consumer tastes. What products could not be successful in foreign markets without modification? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………….………………………………………………….…………………………… Task No.3 Choose a company / product and research its international environment. What influence on company’s marketing and its results can make elements of environment? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………….…………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………….………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………….…………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… 24 Henrika Sakienė Task No.4 Your company decided to enter X foreign market (X – choose yourself). Of course there are some competitors. What information you will be looking for about your possible competitors? Where you will be looking for it? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….……… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………….…………………………………………………………………………………… …………………………………………….………………………………………………………………………………………………………… Case study No.1 – Cultural peculiarities 8th of March is called International Woman’s Day. There are always presented flowers to women that day. The most common flower that day is tulip. Some Lithuanian business people one year decided to offer Russian market yellow tulips on that day. That’s because Russian ladies receive only red tulips from their man. The business idea to sell different color tulips that day failed. No one was buying yellow flowers. Find out why? What research had to be made before presenting yellow tulips to Russian market? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… …………………………………………………….………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No. 5 Proctor&Gamble have various products in their washing powder line. Products like Ariel, Tide are being sold in all of the countries, just presented differently. Lithuanians believe that Ariel is better than Tide, Ukrainians believe that Tide washed better… Its all because of the advertising campaign that is presented in those countries. Why do you think Proctor&Gamble position those products differently in various countries group? ……………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………….………………………………………………… ……………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 25 Task No.6 Why do you think this product failed in Latvian market? What chances this product would have in Lithuanian market? Why do you think so? Can you find other products that had or would not succeed in different markets without modification of their brands? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… …………………………………………………….………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… …………………………………………………….………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… 26 Henrika Sakienė CHAPTER 4. MuLTINATIONAL CONSuMER’S dIFFERENCES. B2B MARKET, B2C MARKET The main aim of this chapter is to introduce students to the concepts of B2B and B2C market, the differences between them. Concepts Consumer behavior - the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs; and the impacts that these processes have on the consumer and society. B2B is a business marketing, or business-to-business (B2B) marketing, sale is made to a business or firm. B2C - Consumer marketing, or business-to-consumer (B2C) marketing, sales are made to individuals who are the final decision makers, though they may be influenced by family members or friends. If you want to appeal to consumers who may hire your services or purchase your product, this is known as business to consumer content, or B2C. If you’re a business selling to industry colleagues or vendors, your content marketing strategy will fall within the business to business arena, or B2B. Although it’s less common, some businesses have both B2B and B2C components. The automotive industry is a good example: Manufacturers must appeal to the consumers who purchase their vehicles, but also to their distributors and suppliers (Demand Media, 2015). These terms were coined to differentiate Internet commerce businesses that sold to primarily to consumers verses those whose market are other businesses. These terms have expanded their definitions to refer to any business who sells primarily to the end customer (B2C) or to other businesses (B2B), both online and offline. Although the marketing programs are the same for each type of business (events, direct marketing, internet marketing, advertising, public relations, word of mouth and alliances), how they are executed, what they say, and the outcome of the marketing activities differ (Murphy, 2015). B2C • Product driven • Maximize the value of the transaction • Large target market • Single step buying process, shorter sales cycle • Brand identity created through repetition and imagery • Merchandising and point of purchase activities • Emotional buying decision based on status, desire, or price The ultimate goal of B2C marketing is to convert shoppers into buyers as aggressively and consistently as possible. B2C companies employ more merchandising activities like coupons, displays, I N T E R N AT I O N A L M A R K E T I N G 27 store fronts (both real and Internet) and offers to entice the target market to buy. B2C marketing campaigns are concerned with the transaction, are shorter in duration and need to capture the customer’s interest immediately. These campaigns often offer special deals, discounts, or vouchers that can be used both online and in the store (Murphy, 2015). B2B • Relationship driven • Maximize the value of the relationship • Small, focused target market • Multi-step buying process, longer sales cycle • Brand identity created on personal relationship • Educational and awareness building activities • Rational buying decision based on business value Although the goal of B2B marketing is to convert prospects into customers, the process is longer and more involved. A B2B company needs to focus on relationship building and communication using marketing activities that generate leads that can be nurtured during the sales cycle. B2B companies use marketing to educate various players in the target audience because the decision to purchase is usually a multi-step process involving more than one person (Murphy, 2015). The business buyer is sophisticated, understands your product or service better than you do, and wants or needs to buy products or services to help their company stay profitable, competitive, and successful. The B2C buyer is usually looking for the best price and will research the competition prior to shopping B2C marketing needs to convince the person to buy and build trust and loyalty with their customers. A strong brand is important to both the B2B and the B2C markets, but for different reasons. With B2C, a strong brand can encourage the consumer to buy, remain loyal and potentially pay a higher price. In B2B markets, brand will only help you be considered, not necessarily chosen. The bottom line is that the difference between B2B and B2C marketing comes down to the buyers’ emotional perspective about the purchase. Consumers make buying decisions based on status, security, comfort and quality. Business buyers make buying decisions based on increasing profitability, reducing costs and enhancing productivity (Murphy, 2015) B2B versus Consumer Marketing: Similarities and Differences Whereas emotional factors play a large role in B2C purchases, B2B purchasing decisions tend to be less emotional and more task-oriented than consumer buyer markets. Business customers often look for specific product attributes such as economy in cost and use, productivity, and quality. Additionally, B2B purchasers generally spend more money, as the buying process tends to be more complex and lengthy. While consumer marketing is aimed at large groups through mass media and retailers, the negotiation process between the buyer and seller is more personal in business marketing. Sales representatives and marketers are often assigned to market to individuals who act as influencers or 28 Henrika Sakienė decision-makers in the customer organization. The bulk of a consumer’s interaction with a brand typically happens via an advertisement, promotion, or transaction. In contrast, B2B marketing can include numerous meetings between the seller and buyer before a transaction occurs. The evaluation and selling process for B2B purchases are longer and more complex than consumer purchases. However, business marketing generally entails shorter and more direct channels of distribution to target audiences. Different aspects of the promotional mix can be easily personalized due to the relationship between a B2B salesperson and the individual buyer (Boundless, 2015). Marketing to a business and marketing to an individual are similar in terms of the fundamental principles of marketing. Both B2C and B2B marketing objectives reflect the fundamental principles of the marketing mix, and in both situations, the marketer must always: • Successfully match product or service strengths with the needs of a specific target market • Position and price products or services to align products and service offerings with the market • Communicate and sell products or services so that they effectively demonstrate value to the target market (Boundless, 2015). Strategy of B2B Marketing vs. B2C Marketing The first step in developing your marketing strategy for B2B is similar to the first step in a B2C strategy: identify who the customer is and why they need to hear your message. From there, the marketing activities diverge (Murphy, 2015). Purchasing motivation. This is probably the biggest and most important factor in the difference between B2B and B2C marketing. Companies marketing their goods and services to other businesses must focus on the practical benefits of their products. They aren’t selling someone based on gut response; they are marketing to an entire chain of command. The purchaser needs to convince his or her boss that the product they purchase makes financial sense. Consumer purchases are based largely on emotional connections with the products. Consumers, in large part, need not consult with other parties before they make their decisions and therefor tend to act on emotion. Length of marketing period. B2B marketing is a long game marketing effort. You may get a connection when the company is not ready to purchase, but must maintain that relationship until funds are freed up for the purchase. Much of consumer marketing is based on the concept of scarcity. If customers don’t “act now” they’ll miss out on something great. Delivery methods. While both marketing efforts involve social media, B2C marketing interaction is more often directed at consumers, such as print ads, billboards or TV commercials. B2B marketing is all about relationships. Because when you sell a business, you sell more than one unit, you sell numerous units, it’s important to maintain direct one-on-one contact with perspective customers (Templeman, 2014) With the advent of the internet, the behavior of buyers – the way they identify, understand, evaluate, and buy products – has fundamentally changed. This change has led to a revolution in B2B marketing tactics, actually making the B2B marketing function much more important to the B2B sales process (Oracle, 2015). I N T E R N AT I O N A L M A R K E T I N G 29 SELF-TEST QUESTIONS: • What is B2B marketing? • What is common for B2B marketing? • What is B2C marketing? • What is common for B2C marketing? • Describe the main similarities and differences between B2B and B2C marketing. Task No.1 Discuss what are differences between value offers for car buyers in B2C and B2B markets? How it is best to communicate those offers to different consumers? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No.2 Choose the product that is used by private consumers and business entities. Describe how this product marketing mix differs (if differs) for consumer market and for business market. Which parts of marketing mix differ most? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No.3 You got job in a hotel. Your customers are domestic and foreign consumers, also business representatives. How you would communicate service proposals to private clients and to business clients? How would you recommend to communicate with clients your front desk workers? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… 30 Henrika Sakienė Task No.4 B2B and B2C marketing differences can be described in such a way: • Whereas emotional factors play a large part in a consumer’s decision to purchase a product, B2B purchasing decisions are less emotional and more task-oriented. • Lengthy and complex sales cycles help build strong B2B seller-buyer relationships and brand loyalty compared to B2C marketing. • Business marketing generally entails shorter and more direct distribution channels to target audiences. • B2C and B2B marketing objectives both reflect the fundamental principles of the marketing mix. Debate and find examples proving each statement. ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No.5 You are purchasing manager of a large organization with an enormous annual spend. Most of your contracts are awarded by tender. What would your attitude be to the following offers from potential suppliers, and to what extent would they influence your decision-making: - a bottle of whisky at Christmas? - an invitation to lunch to discuss your requirements? - an offer of the free use of the supplier’s managing director’s Spanish villa for two weeks? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 31 Task No.6 What do you think are the advantages and disadvantages of long-term, close buyer-seller relationships? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………......................................... Task No.7 What marketing tools you would use to form loyalty of your customers? A) you are selling stationary for households. B) you are selling stationary for business entities. ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………......................................... ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………......................................... Case study No.1 – Use of social media in B2C and B2B marketing Social media is popular and most of people can’t imagine their lives without social media in the future. Every country has a set of its own most popular social media channels. Besides that – some channels are popular information spreaders for private consumers, some are popular among business people and businesses. For instance, accommodation services for private consumer’s are accessed by Facebook mostly, but for business information is presented through Twitter either LinkedIn. In some countries exist other social media channels. Research and discuss which channels are popular in your country? Where would you place offers for business and for private consumers? ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………….................…………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………....................................... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………............................................... 32 Henrika Sakienė CHAPTER 5. INTERNATIONAL MARKET RESEARCH. EXPORT MARKET SELECTION The main aim of this chapter is to introduce students to the main tools for international market research and criteria used for export market selection. Concepts Marketing research is the process or set of processes that links the consumers, customers, and end users to the marketer through information — information used to identify and define marketing opportunities and problems; generate, refine, and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process. Marketing research specifies the information required to address these issues, designs the method for collecting information, manages and implements the data collection process, analyzes the results, and communicates the findings and their implications. Secondary Data (existing data) is information that is easily available on the internet or from governmental sources. Primary Data is documentation and research that you have created or conducted yourself. SWOT analysis – a method of developing a marketing strategy based on an assessment of the Strengths and Weaknesses of the company and the Opportunities and Threats in the market. International market research can be used to: determine new markets, test products and determine public opinions on certain strategies. Although different, they all follow a basic step-bystep process: 1. Define the objective of the research 2. Identify the actions needed to collect the research 3. Identify how to achieve those actions 4. Identify the sources of information needed to achieve your objective 5. Determine how to collect data in person, online, in hard copy 6. Conduct analysis of the research collected 7. Make recommendations based on the information collected These general stages can be used as a how-to guide in market research. It is recommended that stages one and three should be thoroughly developed and carefully considered. Once the goals, objectives and actions are defined, and your carefully planned research campaign competed, you will have sufficient data to make correct conclusions and recommendations (Tradestart, 2014). There are two types of data to be used in research. Secondary data (existing data) is information that is easily available on the internet or from governmental sources. It can be valuable information for companies in the beginning stages of market selection. It allows companies to determine where the largest markets are, what countries are growing the fastest, which demographic is the largest, and where the business trends are going. I N T E R N AT I O N A L M A R K E T I N G 33 However, secondary data has its limitations. It can be become out-of-date quickly and irrelevant to your research. Also in some developing countries, secondary data is either non-existent or outof-date. Secondary Sources are: • Country reports • Articles in business newspapers • Books • Studies by consulting firms • Trade commissioners’ reports • Reports by commercial banks or international organizations Primary data is documentation and research that you have created or conducted yourself. Primary data is usually completed through these methods: • Observation • Experimentation • Interviews and surveys Expert estimation Primary Sources are: • • • • • • • Corporate annual reports Records of shareholders meetings Corporate websites Company product catalogues Personal interviews with company executives or with company customers Market surveys and focus groups (Tradestart, 2014) In the end, the purpose of market research is to collect information from a variety of sources in order to make conclusions and recommendations on new/ existing strategies. It allows company to address preferences, trends and cultural influences and act on up incoming opportunities that you might not have known. It effectively gives you new information on your specific targeted group and is essential to your success in a new market (Tradestart, 2014). The company that is planning to enter foreign market must perform certain procedures to ensure that business risks are foreseen and minimized. It is recommended to fulfill certain procedures before deciding upon the market to enter (export market). Research Trade Barriers, Competition and Culture Identify trade barriers that could impact your products. These may include duties, taxes, and quotas, labeling requirements, health standards and red tape. If excessive, your goods may be restricted or too expensive. Study competitors, their products, prices, distribution methods, consumers and level of aftersale service. If intense competition exists, consider smaller markets that may be unattractive for big multinationals, but large enough for you. 34 Henrika Sakienė Sensitivity to foreign cultures is not only polite, it is good business. Study a culture’s character in advance. If your product design is not suitable, evaluate the costs to adapt. Investigate Intellectual Property Protection and Other Laws Assess each country’s legal practices, safety and environmental regulations, and commercial code. Confusing and bureaucratic requirements can be expensive to satisfy. Investigate how piracy is handled. If protection is not a priority, avoid this market. Study Economic Indicators and Levels of Stability Research how much of your product each target market produces domestically, imports and exports. If demand is increasing, review the country’s economic growth rate and per capita income. If indicators are positive, examine currency and political risks. Scrutinize Human and Physical Infrastructure If your product requires a skilled support staff, make certain it is available. If not, calculate the expense of obtaining support from other locations. Unreliable phone networks, inoperable roads during poor weather or undependable refrigerated storage for frozen foods, for example, can be costly problems. Plus, shipping costs using circuitous routes can quickly add up. Correctly Weigh the Factors Success is best achieved if research reveals all hidden costs. And keep in mind: while the right foreign markets may exceed export expectations, the wrong markets can be extremely costly in terms of time and money (Manzella, 2005). I N T E R N AT I O N A L M A R K E T I N G 35 SELF-TEST QUESTIONS: • What information is needed for the company marketing managers to make market entry mode decision? • What you need to know about the competitors? • Describe parts of the international markets research processes. • What constitutes a primary marketing research data? • Where could be the secondary data obtained? • How you can collect primary marketing research data? Task No.1 Discuss why is international market research an essential tool for the marketing manager? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.2 How many sources of secondary data can you list? Check your list against what your library has to offer. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.3A Let’s say you start working in furniture industry. The company that you work for (choose one from your domestic market) wants to enter foreign market, but has not chosen to which of whose (Germany, United Kingdom, Italy, Latvia, Sweden, Russia, Ukraine) markets to present their production first. Plan the international market research. Define the objective of the research, define the objective of the research, and identify the actions needed to collect the research, identify how to achieve those actions, identify the sources of information needed to achieve your objective, determine how to collect data in person, online, in hard copy. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… 36 Henrika Sakienė Task No.3B Choose 2 of markets named in Task No.3A and perform international market research. Which data is easy to collect, what data you could not collect easy? Conduct analysis of the research collected and make recommendations based on. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… Task No.3C After fulfilling Task No. 3B, perform SWOT analysis of researched international markets based on chosen furniture producing company in your domestic market. Strengths Weaknesses Opportunities Threats Task No.4 Based on SWOT analysis in Task No.3C, present your conclusions and marketing action offers to company. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 37 Case study– A Hair-Raising Global Tracking Study Category: Beauty Products Methods: Product Awareness and Usage, Global Marketing Research, Product Attributes, Customer Target Profile, Tracking Research Summary An international innovator of premium beauty products targeted to women wanted to better understand hair care needs and product usage among females in four countries. This research was conducted to help the company develop targeted marketing initiatives, enhance product offerings, and understand targets for new products. Strategic Issues The hair care market is often considered a mature market with little potential for expansion; however, the majority of hair product categories have experienced substantial growth over the past decade. This company’s hair care product line caters to several different segments by hair type, texture, and color. The company’s products have grown to include some of the best-known brands in women’s beauty worldwide. Maintaining market leadership in a highly competitive market, developing differentiated products, and building customer loyalty were the primary goals for this client. They wanted to gain a deeper understanding of the target and user segments and their needs and to gauge the opportunity for existing and new products. Research Objectives The objective of the study was to understand characteristics of the target and user segments for each product and potential new product, and draw comparisons across four countries: United States, Germany, United Kingdom, and Canada. Specifically, the research was designed to: Determine the incidence of the female hair segments (e.g., color-treated blondes, brunettes, and redheads, frizzy hair, etc.) by country. • Understand the differences in awareness, attitudes, and usage of hair care products by country. • Identify the most common hair care conditions that women are concerned about. Marketing Research Design and Methods The research was conducted among a representative sample of females in four of the countries where the company distributes its products. Surveys were conducted via the Internet using Decision Analyst’s American Consumer Opinion® online panel, which is a proprietary, double opt-in panel of households that have agreed to participate in Internet surveys exclusively for Decision Analyst. The panel currently includes over eight million men, women, and children in over 200 countries. The worldwide Internet panels set a new standard in data quality and comparability from country to country. These panels are all carefully recruited and rigorously managed. Questionnaires were translated and tested by Decision Analyst’s highly experienced international division. For international studies, Decision Analyst is fully staffed in all areas of research • 38 Henrika Sakienė project design and management with representation from Western Europe, Eastern Europe, and Asia. The questionnaire included pictures and drawings of various hair types to assist the respondent with reporting her specific hair characteristics, resulting in higher-quality data for the client. Results Results provided incidence levels by product usage, target group, hair type, hair texture, and other characteristics by country. The research also provided detailed customer target and usage profile information by product and potential new product. Of particular interest to the client was how these profiles differed by country. The study was extremely valuable to the client. Findings revealed that because women’s usage and attitudes about hair care and products vary by country, different marketing strategies were required. Likewise, the incidence of particular target and user groups varied by country. The results were used to develop product enhancements and new product positioning to better fit the needs and wants of the consumer. The client applied the research in developing targeted advertising campaigns (Decision Analyst, 2011). Discuss this example and identify what we can learn from it. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 39 CHAPTER 6. MARKET ENTRY STRATEGIES ANd ENTRY MOdES The main aim of this chapter is to introduce students to the market entry strategies and entry modes used in international business. Concepts Exporting can be defined as the marketing of goods produced in one country into another. Licensing is where your own organization charges a fee and/or royalty for the use of its technology, brand and/or expertise. Franchising involves the organization (franchiser) providing branding, concepts, expertise, and in fact most facets that are needed to operate in an overseas market, to the franchisee. Joint venture an enterprise in which two or more investors share ownership and control over property rights and operation. Market entry strategies A mode of entry into an international market is the channel which your organization employs to gain entry to a new international market. These options vary with cost, risk and the degree of control which can be exercised over them. Here you will be consider modes of entry into international markets such as the Internet, Exporting, Licensing, International Agents, International Distributors, Strategic Alliances, Joint Ventures, Overseas Manufacture and International Sales Subsidiaries. Finally we consider the Stages of Internationalization. Exporting Exporting is the most traditional and well established form of operating in foreign markets. Exporting can be defined as the marketing of goods produced in one country into another. Significant investments in marketing are required. The tendency may be not to obtain as much detailed marketing information as compared to manufacturing in marketing country; however, this does not negate the need for a detailed marketing strategy. The advantages of exporting are: • manufacturing is home based thus, it is less risky than overseas based • gives an opportunity to “learn” overseas markets before investing in bricks and mortar • reduces the potential risks of operating overseas. The disadvantage is mainly that one can be at the “mercy” of overseas agents and so the lack of control has to be weighed against the advantages. A distinction has to be drawn between passive and aggressive exporting. A passive exporter awaits orders or comes across them by chance; an aggressive exporter develops marketing strategies which provide a broad and clear picture of what the firm intends to do in the foreign market. Exporting methods include direct or indirect export. In direct exporting the organization may use an agent, distributor, or overseas subsidiary, or act via a Government agency. 40 Henrika Sakienė Indirect exporting the major problem is that of market information. The exporter’s task is to choose a market, find a representative or agent, set up the physical distribution and documentation, promote and price the product. Indirect methods offer a number of advantages including: • Contracts - in the operating market or worldwide • Commission sates give high motivation (not necessarily loyalty) • Manufacturer/exporter needs little expertise • Credit acceptance takes burden from manufacturer (FAO, 2015). Licensing Licensing is defined as “the method of foreign operation whereby a firm in one country agrees to permit a company in another country to use the manufacturing, processing, trademark, knowhow or some other skill provided by the licensor”. Licensing involves little expense and involvement. The only cost is signing the agreement and policing its implementation. Licensing gives the following advantages: • Good way to start in foreign operations and open the door to low risk manufacturing relationships • Linkage of parent and receiving partner interests means both get most out of marketing effort • Capital not tied up in foreign operation and • Options to buy into partner exist or provision to take royalties in stock. The disadvantages are: • Limited form of participation - to length of agreement, specific product, process or trademark • Potential returns from marketing and manufacturing may be lost • Partner develops know-how and so license is short • Licensees become competitors - overcome by having cross technology transfer deals and • Requires considerable fact finding, planning, investigation and interpretation. Franchising involves the organization (franchiser) providing branding, concepts, expertise, and in fact most facets that are needed to operate in an overseas market, to the franchisee. Those who decide to license ought to keep the options open for extending market participation. This can be done through joint ventures with the licensee (FAO, 2015). Joint ventures Joint ventures can be defined as “an enterprise in which two or more investors share ownership and control over property rights and operation”. Joint ventures give the following advantages: • Sharing of risk and ability to combine the local in-depth knowledge with a foreign partner with know-how in technology or process • Joint financial strength • May be only means of entry and • May be the source of supply for a third country. I N T E R N AT I O N A L M A R K E T I N G 41 They also have disadvantages: • Partners do not have full control of management • May be impossible to recover capital if need be • Disagreement on third party markets to serve and • Partners may have different views on expected benefits. Ownership: The most extensive form of participation is 100% ownership and this involves the greatest commitment in capital and managerial effort. The ability to communicate and control 100% may outweigh any of the disadvantages of joint ventures and licensing. However, as mentioned earlier, repatriation of earnings and capital has to be carefully monitored. The more unstable the environment the less likely is the ownership pathway an option (FAO, 2015). International Agents and International Distributors Agents are often an early step into international marketing. Put simply, agents are individuals or organizations that are contracted to your business, and market on your behalf in a particular country. They rarely take ownership of products, and more commonly take a commission on goods sold. Agents usually represent more than one organization. Agents are a low-cost, but low-control option. If you intend to globalize, make sure that your contract allows you to regain direct control of product. Of course you need to set targets since you never know the level of commitment of your agent. Agents might also represent your competitors – so beware conflicts of interest. They tend to be expensive to recruit, retain and train. Distributors are similar to agents, with the main difference that distributors take ownership of the goods. Therefore they have an incentive to market products and to make a profit from them (The Marketing Teacher, 2014). Strategic Alliances (SA) Strategic alliances is a term that describes a whole series of different relationships between companies that market internationally. Sometimes the relationships are between competitors. Essentially, Strategic Alliances are non-equity based agreements i.e. companies remain independent and separate. Overseas Manufacture or International Sales Subsidiary A business may decide that none of the other options are as viable as actually owning an overseas manufacturing plant i.e. the organization invests in plant, machinery and labor in the overseas market. This is also known as Foreign Direct Investment (FDI). This can be a new-build, or the company might acquire a current business that has suitable plant etc. Of course you could assemble products in the new plant, and simply export components from the home market (or another country). The key benefit is that your business becomes localized – you manufacture for customers in the market in which you are trading. You also will gain local market knowledge and be able to adapt products and services to the needs of local consumers. The downside is that you take on the risk associated with the local domestic market. An International Sales Subsidiary would be similar, reducing the element of risk, and have the same key benefit of course. However, it acts more like a distributor that is owned by your own company. 42 Henrika Sakienė The Internet The Internet is a new channel for some organizations and the sole channel for a large number of innovative new organizations. The eMarketing space consists of new Internet companies that have emerged as the Internet has developed, as well as those pre-existing companies that now employ eMarketing approaches as part of their overall marketing plan. For some companies the Internet is an additional channel that enhances or replaces their traditional channel(s). For others the Internet has provided the opportunity for a new online company (The Marketing Teacher, 2014). Figure 1. Alternative Market – Entry Strategies (Paproski, 2012) Marketing decisions entering foreign market There are identified five marketing strategies used by firms for entry into new foreign markets: • Technical innovation strategy - perceived and demonstrable superior products • Product adaptation strategy - modifications to existing products • Availability and security strategy - overcome transport risks by countering perceived risks • Low price strategy - penetration price and, • Total adaptation and conformity strategy - foreign producer gives a straight copy. In building a market entry strategy, time is a crucial factor. The building of an intelligence system and creating an image through promotion takes time, effort and money. Brand names do not appear overnight. Large investments in promotion campaigns are needed. Transaction costs also are a critical factor in building up a market entry strategy and can become a high barrier to international trade. Costs include search and bargaining costs. Physical distance, language barriers, logistics costs and risk limit the direct monitoring of trade partners. Enforcement of contracts may be costly and weak legal integration between countries makes things difficult (FAO, 2015). I N T E R N AT I O N A L M A R K E T I N G 43 Table No. 4 Examples of elements included in the export marketing mix Product support Price support - Product sourcing - Match existing products to markets - air, sea, rail, road, freight - New products - Product management - Product testing - Manufacturing specifications - Labeling - Packaging - Production control - Market information - Establishment of prices - Discounts - Distribution and maintenance of pricelists - Competitive information - Training of agents/ customers Promotion/selling support - Advertising - Promotion - literature - Direct mail - Exhibitions, trade shows - Printing - Selling (direct) - Sales force - Agents commissions - Sale or returns Inventory support - Inventory management - Warehousing - Distribution - Parts supply - Credit authorization Distribution support Service support Financial support - Funds provision - Raising of capital - Order processing - Export preparation and documentation - Freight forwarding - Insurance - Arbitration - Market information/ intelligence - Quotes processing - Technical aid assistance - After sales - Guarantees - Warranties/claims - Merchandising - Sales reports, catalogues literature - Customer care - Budgets - Data processing systems - Insurance - Tax services - Legal services - Translation - Billing, collecting invoices - Hire, rentals - Planning, scheduling budget data - Auditing Prepared following data from: FAO (2015), The Marketing Teacher (2014), Onkvist, Shaw (2004) and etc. 44 Henrika Sakienė SELF-TEST QUESTIONS: • Describe briefly the different methods of foreign market entry. • What are the advantages and disadvantages of licensing, joint venture and export as market entry strategies? • Review the general problems encountered when building market entry strategies. • When is best to use agents or distributors? • What does it mean franchising? When it could be used? • Which entry modes you would recommend for commodities and which for service companies? • What are international market entry modes? • How to choose right mode? What are criteria for choosing entry mode? Task No.1 Identify main advantages of entry foreign market through internet? Are any disadvantages there? Try to find different arguments for different products / countries. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.2 An organization wishing to „go international“ faces three major issues: 1) Marketing - which countries, which segments, how to manage and implement marketing effort, how to enter - with intermediaries or directly, with what information? 2) Sourcing - whether to obtain products, make or buy? 3) Investment and control - joint venture, global partner, acquisition? Decisions in the marketing area focus on the value chain. The strategy or entry alternatives must ensure that the necessary value chain activities are performed and integrated. Discuss those issues. Chose one of the domestic companies that does not operate in foreign market yet and discuss possibilities for it to enter foreign market. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 45 Task No.3 Take a major non-traditional crop or agricultural product which your country produces with sales potential overseas. Devise a market entry strategy for the product, clearly showing which you would use and justify your choice indicating why the method chosen would give benefits to your country and the intended importing country(s). …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.4 What differences you can identify entering new market with B2B and B2C products? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.5 How would be different entering to new market with services? What strategy to enter foreign market for your chosen service you would choose? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.6 Choose the company either its product/service and identify which of entry mode you would recommend for the company entering United Kingdom market? What entry would choose entering Russia? Why? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… 46 Henrika Sakienė Task No.7 Choose any of local fashion designers production. What entry mode would you recommend to designer? What are the choices and advantages / disadvantages of them? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.8 Choose your favorite local sweets. Is it possible to introduce those sweets to foreign markets? Would they like it? What entry mode would you recommend? What are the choices and advantages / disadvantages of them? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 47 CHAPTER 7. PROduCT INTERNATIONALIZATION The main aim of this chapter is to introduce students to the possible decision for product internationalization and its importance for international business enterprises. Concepts Internationalization - is the process of readying products for international markets and ensuring that they can seamlessly be localized in the future. Localize – to make or become local in attitude, behavior and etc. Internationalization involves redesigning and re-engineering a product to prepare it for localization, so that it will eventually be ready for use by consumers from all over the world. Thus, it’s a practice should give some serious consideration to if you’re thinking about taking a product to global markets. Internationalization is not necessary in every situation, and most frequently applies to web and software. However, you may need to internationalize if you are: Launching a product or service globally for the first time • Designing a new product or service and you want to ensure it will function worldwide • Looking to expand your product or service into new international markets • Seeking to avoid a painful localization process that results from internationalization issues discovered while localizing your product or service • Selling a product or service with a language specific functionality that must be addressed for new markets It’s essential that internationalization is completed before localization begins, or else the product may need to be re-engineered during the localization process. This scenario undoubtedly leads to delays in scheduling and higher project costs. Internationalizing before localizing will save you from the hassle of trying to do both at the same time, and will also reduce the time it takes to localize while increasing your time-to-market (Donoghue, 2013) Undoubtedly, there are many success stories in international new product adoption and diffusion. Yet many managers remain naive about key success factors in international new product adoption and diffusion. In particular, companies repeatedly overlook that consumers in different countries have different purchasing behaviors, and that adjustments are required for products and business systems to make them work in multiple countries. Although consumers across countries differ, there are ways to determine how varied they are and how to adapt to those variations. The premise of globalization is that consumers around the world will accept the same product or one that is similar, and that business people operate in the same way. While it is certainly true that individuals all share a common humanity, there are important cultural differences among them that must be considered when operating internationally (Craig et al., 2005). Consumers are not always rational in their purchasing behavior and, they are not willing to change their consumption habits in favor of products that are increasingly available in the market (Kotler, 2006). • 48 Henrika Sakienė Because cultural values and norms are strong drivers determining people’s attitudes and behaviors, cultural differences remain an important aspect of international innovation adoption and diffusion research. Individuals communicate differently in the different parts of the world, a better understanding of culture’s influence on social interactions, which in turn influences the adoption of new products, enables firms to deliberate their market expansion strategies. More specifically, culture is an important determinant of consumers’ decision making on adoption of new products because word-of-mouth referrals that fuel adoption of new products in a given country would be expected to differ from those of another country because of cultural variations (Yalcinkaya,2008). National culture becomes critical here because social interaction referrals that create marketing opportunities in a given country would be expected to be different from those of another country because of cultural differences. Hofstede (2001) defined national culture as the collective programming of the mind which distinguishes the members of one human group from another. There were identified five cultural dimensions along which countries differ: individualism, power distance, uncertainty avoidance, masculinity, and long-term orientation. A country can be positioned along these five dimensions to provide overall summary of a country’s cultural type. For instance, in general, Australia, Canada, Denmark, Ireland, Great Britain, The Netherlands, Sweden, and the USA are smaller in power distance, more individualistic, more feminine, weaker in uncertainty avoidance, and more short-term oriented whereas Argentina, Brazil, Greece, Japan, Mexico, Portugal, Taiwan, Turkey, and Venezuela are larger in power distance, more collectivist, more masculine, stronger in uncertainty avoidance, and more long-term oriented. Power distance Hofstede (2001) defines power distance as the extent to which a society accepts that power in institutions is distributed unequally among individuals. In societies with a high degree of power distance, status and authority are very important. In general, people in high-power distance societies tend to be less innovative. In these societies, subordinates tend to be afraid of their bosses, and bosses tend to be autocratic. In low-power distance cultures, subordinates are more likely to challenge bosses and bosses tend to use a consultative management style. Given that status, age and authority play an important role in high-power distance cultures, consumers will follow the adoption behavior of their leader and will adopt new products adopted by their superiors. In high-power distance cultures, low-status individuals have considerable dependence on high-status individuals or opinion leaders have a strong influence on adoption of new products. In addition, a large power distance tends to be associated with centralization and more dependent decision making on others, whereas a small power distance tends to be associated with decentralization and greater independent decision making (Hofstede, 2001). As a result, in high-power distance cultures, individuals are likely to have limited authority to make purchasing decisions. In low-power distance cultures, individuals are more independent and can develop and apply leadership qualities and decision-making skills. In individualistic cultures, independence is highly valued. Individualism is defined as the extent to which people are expected to stand up for themselves as a member of the group or organizaI N T E R N AT I O N A L M A R K E T I N G 49 tion. Individuals are expected to look out for themselves and personal task accomplishment is put before group interest. By contrast, in collectivist cultures, qualities such as loyalty, solidarity, interdependence, conflict avoidance and identification with the group are strongly emphasized. Because individualistic societies may tend to form a larger number of looser relationships and because a high-individualism ranking indicates that individuality and individual rights are paramount within the society, it is anticipated that the social interactions among the members of the society will not be strong, which lessens the importance of word-of-mouth effect in adoption of new products. On the other hand, because individuals tend to act according to the best interest of the group in collectivistic cultures and tend to form stronger relationships among themselves, the level of communication among the members of these societies is likely to higher. As a result, information exchange about the new product increases and uncertainty associated with the new product decreases, which promotes the adoption of new products (Yalcinkaya, 2008). Hofstede (2001) defines masculinity as the value placed on traditionally male values. More specifically, masculinity and femininity refer to the sex role pattern in society at large, to the extent it is characterized by male or female characteristics. Masculine cultural values tend towards competition, ambition, career advancement, and self-achievement. Because significant importance is placed on individual achievements in masculine cultures, the acquisitions of products that help to produce such achievements have a higher value. Further, achievement, heroism, assertiveness, and material success are valued in a masculine culture, individuals in these cultures tend to emphasize performance and growth and focus on excelling to be the best. One symbolic means of demonstrating achievement is by having the latest and most novel product, hoping that new products bring success and ultimately higher status in the society. To ensure a higher status and recognition in their society, individuals in masculine cultures therefore are more motivated to find innovations that create clear distinction between them and the others. On the other hand, feminine values foster care, sympathy, and intuition. Individuals in feminine cultures adopt new products slower rate than masculine cultures, since higher status and recognition are not their highest priority. Uncertainty avoidance is defined as the extent to which a society feels threatened by ambiguous situations and tries to avoid them by providing particular rules, regulations and religions. Cultures with low-uncertainty avoidance scores have a high tolerance for improbability and ambiguity and exhibit less willingness to take risks. Societies that are high in uncertainty avoidance continuously feel the inherent uncertainty in life while societies low in uncertainty avoidance more easily accept uncertainty. This means societies that are low in uncertainty avoidance are more willing to take risks. It is logical to expect high level of social interactions in high-uncertainty avoidance cultures since potential adopters would like to reduce the amount of uncertainty, thus the risk associated with innovations, by exchanging their experiences with the innovation (Yalcinkaya, 2008). Long-term orientation is defined as the extent to which a society exhibits a pragmatic, futureoriented perspective rather than a conventional historic or short-term perspective (Hofstede, 2001). Because long-term oriented cultures value perseverance toward slow results, thrift, and adaptations of traditions to new circumstances, individuals are cautious to novel ideas and doubtful to sudden changes. By contrast, in short-term oriented cultures, the focus is on the past and the pre50 Henrika Sakienė sent. Individuals in these cultures respect tradition and personal stability and value novelty. Hence, short-term oriented cultures are expected to be more innovative than long-term oriented cultures. Individuals in short-term orientation cultures expect to see quick outcomes while individuals in longterm orientation cultures prefer long-term goals. In order to achieve these quick results, individuals in short-term orientation cultures experience materialist consumption pressures (e.g. keeping up with trends). One important way to accomplish this is to interact with other members of the society since a high level of interpersonal communication yield faster adaptation of new products. Furthermore, new products with little or no past history are likely to be viewed with caution from individuals in long-term orientation since these cultures emphasize saving and are more comfortable with a slow adaptation of novel concepts (Yalcinkaya, 2008). So in conclusion we can summarize that: • New product adoption is slower in high-power distance cultures than in low-power distance cultures. • New product adoption is slower in individualistic cultures than in collectivistic cultures. • New product adoption is slower in feminine cultures than in masculine cultures. • New product adoption is slower in high-uncertainty avoidance cultures than in low uncertainty avoidance cultures. • New product adoption is slower in long-term oriented cultures than in short-term oriented cultures. I N T E R N AT I O N A L M A R K E T I N G 51 SELF-TEST QUESTIONS: • What do you call product internationalization? • Describe how can be products adopted to various foreign markets? Give examples. • How to identify if product needs internationalization? • When products need to be localized / internationalized? • How different markets react at new product? • What do we call high-power distance cultures? • What do we call individualistic cultures? • What are peculiarities of feminine cultures / masculine cultures? • What do we mean by long-term oriented cultures? Task No.1 Choose 3 products and analyze how those products are presented in different foreign markets? Are their packages the same? Is the taste the same? Find out about how priced vary in different markets. How those products are advertised in each of markets? Present your findings to your colleagues. What can you learn from that? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.2 Kotler states: “Competition is determined not so much by what companies produce, but by what they add to their product in the form of packaging, services, advertising, advice, delivery (financing) arrangements and other things that can be of value to consumers”. Please, comment this statement and add examples to it? How important this is in international context? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….………………………………………………………………………… 52 Henrika Sakienė Task No.3 How might the product adoption differ for B2C and for B2B products? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.4 Select 5 countries. Try to characterize them. Are they high-power distance cultures or lowpower distance cultures? Individualistic cultures or collectivistic cultures? Feminine cultures or masculine cultures? High-uncertainty avoidance cultures or low uncertainty avoidance cultures? Long-term oriented cultures or short-term oriented cultures? Why do you think so? Discuss that with your colleagues. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.5 Choose your national product and give ideas how to adopt it to your neighbor country? Why do you offer to do like this? What would be differences presenting this product to USA market or Japan? Discuss this with your colleagues. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 53 Case study No.1 – Mood-lites The entrepreneur: Kathryn Goetzke White, 34, founder of Innovative Analysis Inc. in Annapolis, Maryland Product description: Mood-lites, dubbed “light bulbs for your lifestyle,” are colored light bulbs that were created according to research on how colors affect moods. Available in seven colors, from Happy (yellow) to Serenity (turquoise), the 25-watt Mood-lites produce a soft glow similar to a candle. With a suggested retail price of $4.95 to $5.95, Mood-lites are sold in Linens ‘n Things and specialty outlets such as spas, natural-food stores and college bookstores nationwide. They’re also sold in some Ace Hardware and Bed Bath & Beyond stores. Startup: Goetzke White financed the business with personal savings, credit cards and loans from family and friends. She spent $25,000 for research, consultant fees, trademarks and preliminary work, as well as $50,000 for inventory. Sales: More than $1 million projected for 2005 The challenge: Overcoming retailer resistance when introducing a new product category When Kathryn Goetzke White developed her Mood-lites, she knew interior home lighting was a big market and believed consumers would love her colorful light bulbs. But she also knew that getting her products in stores nationwide would prove quite a challenge, as retailers typically resist new product categories for fear of ending up with unsold merchandise. Then Goetzke White had a bright idea for breaking through the resistance: persuade retailers that her colorful Mood-lites were part of a larger consumer trend. Thanks to sales help from her 35-year-old husband, John, Goetzke White developed an action plan that created quick acceptance of the Mood-lites product line. Steps to Success 1. Find a trend that fits. Goetzke White had her product idea for several years, but didn’t pursue it until she saw a Home Depot ad that talked about color therapy and how to paint a room a certain color to create a mood. At that point, she felt her product could sell because the color therapy concept was being accepted by major retailers. “My undergraduate degree was in psychology, and I was intrigued by moods and different influencers of moods,” she says. “I knew that certain colors created different moods--for example, blue is associated with the ocean and water, images that bring a sense of tranquility. I was tired of basic white lighting and decided to combine color therapy with the upsurge in candle sales for soft mood lighting. Adding an oil-based coating gave that glow that makes Mood-lites different from other products on the market.” 2. Develop a marketing story. While Goetzke White was sure people understood the concept of colors and their impact on mood, she wanted to complete the story to inspire consumers to make a purchase. Today, she’s obtaining trademarks for each of the colors: Serenity for turquoise, Tranquility for sapphire, Passion for crimson, Happiness for yellow, Energy for orange, Creativity for purple and Renewal for green. 3. Create interest with PR. In fall 2004, Goetzke White started an extensive PR campaign to get articles about Mood-lites in magazines. “The goal was not only to sell Mood-lites, which were available on our website, but really to help sell retailers,” she says. “I felt the positive energy created by the PR would show the market was interested in Mood-lites. We hired a PR firm, and articles were published in many newspapers as well as Home, Residential Lighting, For Me Magazine and New 54 Henrika Sakienė York Magazine’s Metro, among others. Those articles were a big help when I approached retailers to carry Mood-lites.” 4. Package the product to create exposure. A new product needs to be noticed on a shelf. “One of the best moves I made was to produce the package so it could fit on clip strips [plastic strips with six to 12 clips to hold individual packages],” says Goetzke White. “Retailers love these strips, as they allow them to move the product into the store, save on shelf space and entice customers with new products. We’ve produced a header [a small card with sales copy] for the clip strips showcasing the bulbs in use, and we also have a display box for stores [that] carry Mood-lites on the shelf.” 5. Find markets that enhance the product’s image. Some of Goetzke White’s earliest customers were doctors and massage therapists, who used Mood-lites to create a relaxing environment for patients. “We’re expanding distribution to include spas and gyms with massage therapists, yoga practitioners and spinning rooms,” she says. “The intent is to get exposure for the brand. Clients of these customers will see the effectiveness of [Mood-lites] and want to try them at home.” Lessons Learned 1. Retailers support new trends. Products tied to new trends typically sell well and sell at high margins--just the types of products retailers want. Consumers are curious about new trends, and that curiosity produces sales and store traffic. Because published articles show the product is part of a trend, they effectively generate retailer interest. 2. Go with the flow, not against it. Inventors often come up with ideas to change how things are done. Their product introduction strategy calls for persuading people that there is a better way to do something. That strategy almost never works; inventors just don’t have the money to change a market. They should instead find a way to show how their product is an extension of products people already use. Goetzke White’s tactic of adding an oil-based finish to light bulbs to create a soft glow was expensive and time-consuming, but it allowed Mood-lites to go with the flow of candle therapy. 3. Keep products front and center. People usually shop with a purchase in mind. Rarely do people notice other products unless they are displayed prominently enough to catch their attention. Using clip strips, which can be provided by the inventor or the retailer, is a low-cost tactic that often produces impulse sales, and most inventors can afford it. 4. Get expert advice. Inventors without marketing experience often don’t know how to best position a product in the market (Business Case Studies, 2014). Discuss how this product could be introduced in different countries? Where would you recommend to sell it abroad? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 55 CHAPTER 8. INTERNATIONAL PRICING STRATEGIES The main aim of this chapter is to help students to understand the factors that affect a firm’s pricing decisions and importance for companies to conduct research before setting prices for the various markets. Concepts Price – money which has to be paid to buy something. Price leadership – a situation where the producers model their prices on those of one leading producer. Pricing policy – a company‘s policy in giving prices to its products. Penetration pricing pursues the objective of quantity maximization by means of a low price. Skim pricing attempts to “skim the cream” off the top of the market by setting a high price and selling to those customers who are less price sensitive. Skimming is a strategy used to pursue the objective of profit margin maximization. International pricing goes hand-in-hand with market research and marketing strategy. Though successful domestic pricing can help you evaluate an international market strategy, it’s recommended that you develop a pricing model separately for each new market you plan to enter. There is no “right” way to price as long as you are earning more than you’re spending – though a value-based pricing model and a strong marketing strategy can be significantly more profitable. Additionally, your cost structure in international market is likely to be different and your prices should take that into account (Onkvist, Shaw, 2004). Pricing decisions are complex in international marketing. A firm may have to follow different pricing strategies in different markets. Whatever might be the strategy followed, pricing has to reflect the proper value in the eyes of the consumer. Pricing is an important strategic and tactical competitive tool that can be used by a firm in international marketing. Choice of a pricing strategy is dependent on: 1) Corporate goals and objectives 2) Customer characteristics 3) Intensity of inter-firm rivalry 4) Phase of the product life cycle Regardless of the target market, every pricing strategy must take into consideration the following: • Fixed and variable costs of production • Current demand and projected demand growth • • • 56 Regulatory and other legal factors Product and company positioning Competition Henrika Sakienė Preparing a product for international distribution with added export costs requires additional considerations, including: • Tariffs • Currency and political risks • Governmental protectionist policies • Consumer receptivity to foreign goods A simple questionnaire or competitor analysis can also help you determine how price-sensitive consumers are. Protectionist policies, price floors and ceilings, anti-dumping control, and public policy can all add unexpected costs or limit the prices you’re allowed to charge for your product. The development of pricing strategy should be done simultaneously with marketing strategy. If your offering is in an industry with many competitors offering undifferentiated products you’ll have a hard time pricing even slightly higher than the competition. International pricing can become more complex if the foreign government is providing a subsidy to competitors and artificially reducing the prices they can charge. In this case, an international marketing strategy that positions your product as a premium offering is likely the best course of action. Political risk is a primary concern when exporting to developing countries. Currency risk, however, is an ongoing concern and should be factored into every international pricing strategy. Some countries have strict regulations on the packaging and labeling of products displayed in retail stores. If your product requires modifications to comply with these regulations you must factor those costs into your pricing model. Before you select a pricing model you must determine the short-term and long-term goals of your business. Some possible objectives and targets you should consider include: • • • • • Be viewed as a luxury brand Be viewed as a value or high-quality brand Maximize short-term profits to attract investors Maximize short-term revenue to please new investors Profit maximization (Lief International, 2015). Pricing Models When choosing a pricing model you should factor in the above-mentioned pricing factors and business objectives. There is no “right way” to price – but there definitely is a wrong way Value-based Pricing Pricing based on the value provided can be the most profitable strategy around – assuming the value created is more than the cost of production. The perception of value is a major factor and “lifetime value” is a difficult concept to measure and sell – the real price would have to be limited by the perceived “fair” value. Fair-value Pricing Music, movie, and software piracy has grown rampant because of a perceived misalignment between the “fair” value of the digital goods and their retail price. Consumers are unwilling to pay I N T E R N AT I O N A L M A R K E T I N G 57 for the fixed costs of development because they appear to provide no additional value to them. Even if a good provides considerable value there is a limit to the price a consumer will pay – adequate market research can provide insights into these price points. Cost-plus Pricing Using a pricing strategy that adds a profit margin on top of the calculated cost-per-unit is by far the most common strategy employed by companies that are not large enough to have a marketing department. This method is a good starting point because, as long as you’ve accurately calculated your fixed and variable costs, you will always make a profit. This model’s big weakness is its reliance on an accurate volume estimate – a weaker-than-expected market can increase your variable cost and reduce or even eliminate your profit margin. Branding-related Pricing Many very successful companies employ a pricing strategy that is based only remotely on their costs of production. The lowest costs strategy or Premium brand strategy dictates and pricing strategy (Lief International, 2015). Pricing strategies 1) Skimming Strategies: One of the most commonly discussed strategies is the skimming strategy. This strategy refers to the firm’s desire to skim the market, by selling at a premium price. Skimming refers to the objective of achieving highest possible contribution in a short time. To use this approach, the product has to be unique and the target market should be willing to pay the high price. Success of this strategy depends on the ability and speed of competitive reaction. This strategy delivers results in the following situations: oWhen the target market associates quality of the product with its price, and high price is perceived to mean high quality of the product. oWhen the customer is aware and is willing to buy the product at a higher price just to be an opinion leader. oWhen the product is perceived as enhancing the customer’s status in society. oWhen competition is non-existent or the threat from potential competition exists in the industry because of low entry and exist barriers. oWhen the product represents significant technological breakthroughs and is perceived as a ‘high technology’ product. In adopting the skimming strategy the firm’s objective is to achieve an early break-even point and to maximize profits in a shorter time span or seek profits from a niche (Chand, 2014). 2) Penetration Pricing Strategies: As opposed to the skimming strategy, the objective of penetration price strategy is to gain a foothold in a highly competitive market. The objective of this strategy is market share or market penetration. Here, the firm prices its product lower than the others do in competition. Penetration pricing uses deliberate low prices to stimulate market growth and capture market share. It can be useful when there is a mass market and price sensitive customers. 58 Henrika Sakienė This strategy delivers results in the following situations: o When the size of the market is large and it is a growing market. o When customer loyalty is not high customers have been buying the existing brands more because of habit rather than any specific preferences for it. o When the market is characterized by intensive competition o When the firm uses it as an entry strategy o Where price-quality association is weak. 3) Differential Pricing Strategies: This strategy involves a firm differentiating its price across different market segments. The assumption in this strategy is that different market segments do not communicate or have different search costs and value perceptions of the product. In other words heterogeneity in the market motivates a firm to adopt this strategy. 4) Geographic Pricing Strategies: This strategy seeks to exploit economies of scale by pricing the product below the competitor’s in one market and adopting a penetration strategy in the other. The former is termed as second market discounting. This second market discounting is a part of the differential pricing strategy where the firm either dumps or sells below its cost in the market to utilize its existing surplus capacity. So, in geographic pricing strategy, a firm may charge a premium in one market, penetration price in another market and a discounted price in the third. 5) Product Line Pricing Strategies: These are a set of price strategies, which a multi-product firm can usefully adopt. An important fact to be noted is that these products have to be related, in other words belonging to the same product family. Faced with multi-products and fluctuating demand, the firm may adopt a combination of the following strategies to effectively manage its product line or maximize its profits across the product line. • Price Bundling: This strategy is used by a firm to even out the demand for its product. This is useful strategy for perishable; time-bound products like food, hotel room or a seat on a flight and for products cannot be substituted, like the package of stereo music system. Off-season discounts and, season tickets for music festivals are examples of price bundling strategy. This is a passive strategy aimed at correctly bundling the prices of related items so that the firm is able to maximize its profits. • Premium Pricing: This strategy is used by a firm that has heterogeneity of demand for substitute products with joint economies of scale. Consider the example of a color television set. There are different models available with different features, like the one with a remote control and another without it. Both are substitutable and satisfy the customer needs. But the firm may opt to premium price the first model and position it as the top of the product line for high income or upper income group of customers or for whom communicating that “they have arrived” is important. I N T E R N AT I O N A L M A R K E T I N G 59 • Image Pricing: This strategy is used when consumers infer quality from the prices of substitute models or competing products. The firm varies its prices over different brands of the same product line. This strategy is commonly used in textiles, cosmetics, toilet soaps and perfumes. • Complementary Pricing: This strategy is used by a firm that has customers with high transaction costs for one or more of its products. Transaction costs are all those costs that a customer has to incur to buy the product, like the registration fees that a flat buyer has to pay in order to be a legal owner or the processing fees that the bank may charge to give a credit card to the customer. • Captive Pricing Strategy: Here a special price deal is offered to loyal customers or those who are regularly buying one of the products of the firm. As may be observed this is a strategy aimed at building customer loyalty. • Loss Leader Strategy: This is another example of complementary pricing strategy. This strategy involves dropping the price on a well-known brand to generate demand or traffic at the retail outlet. • Two-Part Pricing: This strategy is used by products that can be divided into two distinct parts. For example, membership of a video library has two parts – one is the membership fee, which is annual and the other is rent for each time frame for which a videocassette is rented. As may be observed the price has two components, the fixed fees and the variables usage fees (Chand, 2014). 60 Henrika Sakienė SELF-TEST QUESTIONS: • What is the price? • What factors affect the price? • What has the impact on pricing of goods market demand? • How is the price influenced by the competition? • List and describe the pricing objectives. • What psychological pricing methods do you know? • How we can set the price for new goods? • Describe skimming price strategy. • When is used penetration pricing strategy? • What factors do organizations consider when making price decisions? • How do a company’s competitors affect the pricing decisions the firm will make? • What is the difference between fixed costs and variable costs in pricing? Task No.1 Define penetration pricing and find an example of an organization that has used it for one of its products in international markets. ……………………….………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.2 Define skimming pricing and find an example of an organization that has used it for one of its products in international markets. ……………………….………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.3 To what extent and why do you think that a marketing manager’s pricing decisions should be influenced by the competition’s pricing in international market? ……………………….………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 61 Task No.4 Choose a product or service. Research its prices in different countries and for different segments. Are the prices the same? Why they differ? Identify reasons for different pricing. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.5 Find examples of Differential Pricing Strategies. When is possible to use this strategy? For which products is it used? Discuss with your team. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.6 Discuss with your colleagues about examples of Product Line Pricing Strategies. When is possible to use this strategy? For which products is it used? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.7 Different authors identify various pricing methods. To set the specific price level that achieves their pricing objectives, managers may make use of several pricing methods. For instance: • Cost-plus pricing - set the price at the production cost plus a certain profit margin. • Target return pricing - set the price to achieve a target return-on-investment. • Value-based pricing - base the price on the effective value to the customer relative to alternative products. • Psychological pricing - base the price on factors such as signals of product quality, popular price points, and what the consumer perceives to be fair. In addition to setting the price level, managers have the opportunity to design innovative pricing models that better meet the needs of both the firm and its customers. For example, software traditionally was purchased as a product in which customers made a one-time payment and then 62 Henrika Sakienė owned a perpetual license to the software. Many software suppliers have changed their pricing to a subscription model in which the customer subscribes for a set period of time, such as one year. Afterwards, the subscription must be renewed or the software no longer will function. This model offers stability to both the supplier and the customer since it reduces the large swings in software investment cycles. Find in your market examples for each mentioned pricing methods. Choose an innovation and identify its pricing methods. Could there be a few methods combined together? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Case study No.1– Benefit Pricing, Optimizing The Price Point for a Product Line Extension Category: Health & Wellness Company Methods: Choice Modeling, Market Evaluation, Name Research, New Product Development, Pricing Research Summary A leading Health & Wellness Company was planning to add a new product to their existing product line and wanted to ensure that the product extension was a good fit and was priced optimally within the line. Strategic Issues The company currently has a large line of products that offer a variety of benefits. Before launching the new product, the manufacturer needed to determine the best approach for the launch (including pricing) and to ensure that the product would have a positive impact on market share. Research Objectives Objectives included: Determining reactions to the new product among health & wellness professionals who currently recommend other products in the line. • Understanding the appeal, value proposition, and optimal name and pricing for the new product. • I N T E R N AT I O N A L M A R K E T I N G 63 Research Design and Methods Over 300 health & wellness professionals participated in an online survey. The new product was evaluated for appeal and a choice task was used to evaluate brand dispensing trade-offs across a range of price points for the new product, holding current products at constant current market prices. The resulting data was modeled and calibrated to assess the optimal price point for the new product and to understand current product line cannibalization. Results The new product was well received by the health & wellness professionals, although the research revealed the benefit of the new product may be difficult to explain to consumers. The research also determined the most preferred name and an optimal price point for the product that increased share for the line with the lowest cannibalization rate (Decision Analyst, 2011). Discuss this example and identify what we can learn from it. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… 64 Henrika Sakienė CHAPTER 9. INTERNATIONAL COMMuNICATION STRATEGIES ANd PROMOTION The main aim of this chapter is to introduce students to the products promotion and advertising peculiarities for international markets. Concepts Integrated marketing communication concept – the concept or principle that a company should link all its promotions, either of its own image or of the products and services it sells, in a consistent way on several different levels. Promotion mix - is the act of combining promotional methods such as advertising, new media, direct mail marketing, selling, use of retail displays, and merchandising for the sale of products and services. Trade show - An exhibition for companies in a specific industry to showcase and demonstrate their new products and services. Generally trade shows are not open to the public and can only be attended by company representatives and members of the press. Also, an exhibition of businesses offering franchises and/or business opportunity packages for sale. International communication is a fundamental activity in an international company’s marketing mix. Once a product or service is developed to meet consumer needs and is properly priced and distributed, the intended consumers must be informed of the product’s availability and value. International communication consists of those activities which are used by the marketer to inform and persuade the consumer to buy. A well-designed promotion mix includes advertising, sales promotions, personal selling, and public relations which are mutually reinforcing and focused on a common objective. According to S.Chand (2014) developing an international communication strategy involves five steps: 1. Determining the promotional mix (the blend of advertising, personal selling, and sales promotions) by national markets. 2. Determining the extent of worldwide standardization. 3. Developing the most effective message(s). 4. Selecting effective media. 5. Establishing the necessary controls to assist in achieving worldwide marketing objectives. Communication is the side of international marketing with the greatest similarities throughout the world. Paradoxically, it may also have the distinction of involving the greatest number of unique culturally related problems. Adapting promotional strategy to cultural peculiarities which exist among the world’s markets is the challenge confronting the international market. You can use the same strategies internationally within the framework of each country’s laws and accepted practices. In some countries you have more creative options and in others, fewer. It’s important to know each country’s culture and having knowledgeable feet on the ground so you don’t run afoul of laws and customs. I N T E R N AT I O N A L M A R K E T I N G 65 Maintain your business and product introductory strategies using PR and advertising in other countries, but recognize that implementation may be vastly different, depending on the country. Incorporate an education component to your PR strategy if your product is unfamiliar, as well. Advertising laws also vary greatly among different countries; in some nations it’s governmentregulated and you need government approval before airing or distributing ads. It is recommended to use a sales force familiar with a specific country’s culture and get feedback on pricing. In some countries, residents view a lower-priced product to be so inferior in value that they won’t consider buying it. In addition to pricing and sales strategy, however, pay attention to what influences prospective customers in each country. In many developing countries, consumers rely on word-of-mouth referrals or guidance from influential individuals, such as community leaders, so reaching out to those individuals is a viable marketing communication strategy (Johnson, 2013). Advertising is usually the most visible component of communication, but it is not the only component of communication. To communicate with and influence customers, several promotional tools are available. Marketers have at their disposal the major methods of promotion i.e. advertising, sales promotion, publicity, pubic relation, personal selling and word of mouth. Taken together these comprise the promotion mix. But in the present scenario, the promotional tools have widened their scope and number of types. There are many other promotional tools also which are considered under the promotion mix such as e- commerce/internet marketing, sponsorship, exhibitions, packaging, point-of-purchase displays, corporate communications/ identity, event marketing, trade shows, and customer service. When these tools are integrated in a harmonious manner to reach and exceed the promotion objective, the outcome is called Integrated Marketing Communication (IMC). IMC has been adopted as the best possible way to promote one’s offering according to the situation (Chand, 2014). Media Choices for International Marketing Promotion in international marketing include: • The work ethic of employees and customers to be targeted by media. • Levels of literacy and the availability of education for the national population. • The similarity or diversity of beliefs, religion, morality and values in the target nation. • The similarity or diversity of beliefs, religion, morality and values in the target nation. • The family and the roles of those within it are factors to take into account (Marketing Teacher, 2015). Advantages and disadvantages of Personal selling in international marketing communication: • It is beneficial where wages tend to be low, since staffing costs will be comparatively low. • Where there are many languages, you’ll need trained sales personnel that can convey your message in specific tongues (see culture above). • The sales force will need to be supported. Commercial administration staff will have to take care of sales enquiries, send out product literature and samples, and make quotations – often online. • You’ll need to invest time and effort in recruiting, motivating, organizing and training a local sales force. Recruits will need to know about products and markets, language and culture, the location of target segments, customer buyer behavior – and that’s just the beginning. 66 Henrika Sakienė There is a dilemma as to whether to place expatriate employees into your international target market, or to recruit locally. Local is best! • Where business etiquette varies from culture to culture, you’ll need to train your people in what to expect – or recruit salesmen from the local market. The knowledge of target market, TV channels, radio programmes and etc. is needed when choosing media channels for advertising. Have in mind that only right time and place can achieve right results. Other media channels for promotion: • Web-based marketing using your own domestic site, or one developed specifically for the target market. Affiliate or pay-per-click advertising may be available. • International tradeshows, trade missions, sponsorship (for example international sporting events), Public Relations (for example oil companies) and a variety of other international marketing communications are available to the international marketer (Marketing Teacher, 2015). International trade fair is massive, stage-set, and usually regular trade event at which a large number of manufacturers from a particular industry present their products and show their capabilities to distributors, wholesalers, retailers, and end-users. Some trade fairs (like Hanover Book Fair) attract participants and visitors from all over the world and provide widespread interactions and exposure. Trade fairs are a popular means of sales promotion because their average cost of making a face to face contact is about 44 percent of a personal sales (Business Dictionary). Language choice could affect branding choices, and the names of products and services. Hidden messages and humor would be especially tricky to convey. Design, symbolism and aesthetics sometimes do not transcend international boundaries. For example Japanese aesthetics sometimes focus upon taste and beauty. Also look at Japanese cars from the front – they have a smiling face. • I N T E R N AT I O N A L M A R K E T I N G 67 SELF-TEST QUESTIONS: • What is called integrated marketing communication? • What is the international communication? How it differs from communication in local market? • What are an international communication strategy development steps? • What communication channels are available in international marketing? • How to choose communication channels for international marketing communication? • What is a trade fair? Task No.1 Look at those five steps for international communication strategy development. Discuss each of them. Choose the product either service, that could be introduced in foreign market and try to prepare international communication strategy for it. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.2 What difficulties you faced preparing Task No.1? Where did you collect information for your international communication strategy? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… 68 Henrika Sakienė Task No.3 What communication channels you would choose entering Russian, Ukrainian, Lithuania, Polish markets? Would be the same channels entering China? Portugal? Germany? USA? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.4 What communication channels you would choose entering foreign market with new B2B products (for instance 3D printers)? And what channels would be used introducing 3D printer for private users? How you decide on different media channels? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.5 Choose the most successful in your opinion international web-based marketing examples. How they succeeded? What we can learn from them? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 69 Task No.6 Everyone knows websites like amazone.com, aliexpress.com, ebay.com and etc. Those web pages are popular in all the world. How the owners of those web pages managed to make them so well known? What is so specific about them? Can we use those pages to enter international market with new product? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.7 In the Chapter 9 are listed advantages and disadvantages of Personal selling in international marketing communication. Discuss those advantages and disadvantages. Maybe you can identify more advantages and disadvantages? Choose the product / service that you would like to introduce to foreign market. How personal selling would help you introducing this product to any of EU markets? How it would look like if you would introduce this product to Kazakhstan? Russia? Ukraine? China? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… 70 Henrika Sakienė Task No.8 Let’s say you are in charge of entering new foreign market with your companies production. You got assignment to recruit staff for personal sales in that new foreign market. What would be your action to motivate, organize and train local sales force? Have in mind that recruits will need to know about products and markets, language and culture, the location of target segments, customer buyer behavior and etc. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.9 Your company is local canned food producer. It was decided to enter Norwegian food market. What promotional tools you would recommend to use in this case? What are advantages and disadvantages introducing canned food under the promotion mix such as e- commerce/ internet marketing, sponsorship, exhibitions, packaging, point-of-purchase displays, corporate communications/ identity, event marketing, trade shows, and customer service? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.10 Research what international trade shows canned food producers could visit in Europe? In whole world? Where and when they are organized? Which ones could be called “must visit”? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… I N T E R N AT I O N A L M A R K E T I N G 71 Task No.11 Find out what are other international trade shows organized? Where would you go to find trade partners if you are selling meat products? Tourism services? Fashion products? Technologies? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.12 Choose your favorite local product. What does it advertisement looks like? What words are said in advertisement? Let’s say this product will be introduced in other foreign market. How you would change this advertisement before showing it to Latvian, Polish, Portuguese, Russia markets? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.13 How would you use public relations facilities introducing your product (let’s say it is again 3D printer) for your chosen market? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………..…………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… 72 Henrika Sakienė CHAPTER 10. dISTRIBuTION ANd HANdLING OF EXPORT ORdERS. MARKETING LOGISTICS CHAINS The main aim of this chapter is to introduce students to the distribution for international orders, the different channels of distribution and show their advantages and disadvantages, the export process and the meaning of international marketing logistics. Concepts Marketing logistics involves planning, implementing, and controlling the physical flows of materials and final goods from points of origin to points of use to meet customer requirements at a profit. A channel is an institution through which goods and services are marketed. Institutional distribution - the middleman between producer and end consumer who may take title and change the form of the product handled, e.g. wholesaler, retailer. Physical distribution - the logistics of the distribution system including transport, storage and order processing. Contracting represents an intermediate institutional arrangement between spot market trading and vertical integration. International marketing logistics involve planning, delivering, and controlling the flow of physical goods, marketing materials and information from the producer to an international market as necessary to meet customer demands while still making a satisfactory profit. Maintaining an organization’s competitive edge means understanding and implementing an effective marketing logistics strategy regarding product, price, place and promotion. These four functions of marketing logistics help the organization to reach the target customers and deliver the products or services sold by the organization to these customers (Noordin, 2011). One function of marketing logistics is finding out who your customer is and how to get the product or service to the customer. Each customer can have individualized needs so the logistical services provided may vary from customer to customer. Regardless of these differences, the customers expects 100 percent conformance and assured reliability at all times with every transaction. The goals of this aspect of marketing logistics include filling the order, on-time delivery, precise invoicing and zero damage. An organization bases pricing decisions on both internal and external factors. Marketing logistics must recognize price drivers. Discounts for quantities and the related logistical cost structure can impact the price the customer will ultimately pay for the product or service. Additional factors driving price include the shipping costs based on the size, weight and distance the organization will ship the item. Further, the size of the manufacturing run, labor costs and the types, quantities and quality of the materials used in the manufacturing process can affect price. Promotion is another important aspect of an organization’s marketing logistics process. When bringing a product to market, the organization must coordinate the logistics of the various marketing I N T E R N AT I O N A L M A R K E T I N G 73 materials. For example, the art department might design the artwork for the product’s box and an outside supplier might manufacture the boxes with the artwork. Marketing logistics can help to ensure that all of these entities work together and produce the marketing materials needed to sell the product (Kotler, Keller, 2006). The function of place in marketing logistics allows the organization to simplify the transactions between a logistics provider and the customer. The organization must execute logistics in such a way that the customer is not aware of the complexities involved in the logistics process. For the customer, the output is always more important than the process. The organization should, therefore, never expose the backroom processes involved with logistics delivery to the customer. Also the location of the factory, warehouse and customer can greatly impact the marketing logistics process by increasing or reducing costs. Physical distribution aspects cover transport and warehousing. Sometimes exporters are in the hands of agents, merchants or other middlemen, in the latter much more needs to be understood of the channel itself. The more is known about the end user and the channel to reach him/her the better equipped will be the exporter to understand and meet the needs and also to perhaps gain more of the exported added value. The longer the channel, the more likely that producer profits will be indirectly reduced (Carter, 1997). Channels are an integrative part of the marketer’s activities and as such are very important. They also give a very vital information flow to the exporter. In deciding on channel design the following have to be considered carefully: Market needs and preferences • The cost of channel service provision • Incentives for channel members and methods of payment • The size of the end market to be served • Product characteristics required, complexity of product, price, perish ability, packaging • Middlemen characteristics - whether they will push products or be passive • Market and channel concentration and organization • Appropriate contractual agreements • Degree of control (Keegan, 1989). In many countries there is a move to vertical or horizontal integration within channels, especially in developed countries where large chains dominate. The converse is the scenario in many less developed countries. Decisions on what channels and entry strategy to adopt depend heavily on the risks, availability and costs of channels. Brokers do not take title to the goods traded but link suppliers and customers. Brokers have many advantages, not least of which is they can be less costly overall for suppliers and customers: • They are better informed by buyers and or sellers. • They are skilled socially to bargain and forge links between buyers and sellers. • They bring the “personal touch” to parties who may not communicate with each other. • They bring economies of scale by accumulating small suppliers and selling to many other parties. • 74 Henrika Sakienė They stabilize market conditions for a supplier or buyer faced with many outlets and supply sources (Carter, 1997). Associations, voluntary chains and cooperatives can be made up of producers, wholesalers, retailers, exporters and processors who agree to act collectively to further their individual or joint interests. Members may have implicit or exclusive contracts, membership terms and standard operating procedures. These forms of coordination have a number of advantages: • They counter the “lumpy investment” phenomenon by spreading the cost of investment among members. • They can reduce or pool members’ risks by bulk buying, providing insurance and credits, pooling market prices and risk. • They lower transaction costs of members through arbitration of disputes, provision of market information systems, been a first stop for output. • They can reduce marketing costs through the provision of promotion, protection of qualities and monitoring members’ standards. • They can act as a countervailing power between buyers and producers (Carter, 1997). Contracting represents an intermediate institutional arrangement between spot market trading and vertical integration. Marketing and production contracts allow a degree of continuity over a season, cycle or other period of time, without the “instantaneous” of spot trading. Integration vertically involves the combination of two or more separate marketing or production components under common ownership or management. It can involve investments “forward” or “backward” in existing activities or investments in interlinked activities. Integration horizontally means the linking of marketing or production separable at the same level in the system, for example, a group of retailers International merchant/agent: A good merchant is characterized by the following characteristics, in comparison to the producer/seller selling direct: • Well informed • Well disciplined • Knows the detail of his business • Thinks in terms of probabilities and absolute terms (risk/reward) • Is concerned but not dogmatic - he can accept when he is wrong • Reports to few and knowledgeable people An international merchant acts as a bridge between producers and consumers. He performs the following functions: • Language - conducts communications in suppliers’ and consumers’ preferred language • Space utility - he prepares the logistics function including sea and/or land transportation arrangements, documentation preparation and arrangements for insurance coverage • Time utility - financing through own/banking facilities • Currency risks - buys and sells in currencies required by sellers and buyers, does currency conversions, provides financial information and technical assistance and offers a currency gap guarantee • I N T E R N AT I O N A L M A R K E T I N G 75 Market risks - takes a long or short market basis position, deals with hedging, options, offtake and supply deals and price guarantee contracts • Terminal exchanges - provides a brokering service and fixations • Countertrade - handles the cotton side of the deal • Quality - gives information on quality available, give quality recommendations for consumers, handles quality option/basket contracts and shows quality alternatives and, • Culture - handles and is a link between remote developing areas and highly advanced and sophisticated centers of the world (Keegan, 1989). According to Carter (1997) merchants can provide following services to a producer: • Up-to-date market information • Information on competitors and prices • Financing (producer and end user) • Buying of all exportable qualities • Buying on local terms • Prompt payment • Buying when producer can/wants to sell • Buying unfixed at seller’s call and, • Contract guarantee for proper fulfillment. Despite all these benefits, the choice of a merchant and/or agent has to be taken after careful consideration of the following criteria: • Knowledge - of local circumstances (political, business and general, and of textiles in particular); • Professionalism - know-how • Market coverage - covers large segment of end users • Finance - financially sound and not dependent on sales to poor customers • Language ability - avoid misunderstandings • Integrity - particularly on pricing and, • Infrastructural sound, with good communications and administration. In comparing the direct producer seller channel versus the merchant/agent channel, the question of control over distribution activities is the most telling argument as is the relationship which can be built up between producer and consumer. Table No. 5 Comparison of international merchant and producer/seller • Merchant Global presence Can choose to do nothing Flexible sourcing/selling Can offer client alternatives Staffing flexibility Currency/market risks Market information wide Handles prompt payments Quality guarantees Producer/seller Local/single market growth Forced to act Always long Limited assortment Local staff Currency risks Limited market information May have to wait for payment May not guarantee same quality Resource: Carter, 1997 76 Henrika Sakienė As well as the institutional elements of distribution, channel management includes services and physical elements - transport, warehousing and inventory management. These are very specialized areas of distribution and include different modes of transport - land, sea, air, and services offered by freight forwarders, agents, insurance etc. According to A Basic Guide to Exporting (2008) when shipping a product overseas, the exporter must be aware of packing, labeling, documentation, and insurance requirements. It is important that exporters ensure that the merchandise is: • Packed correctly so that it arrives in good condition; • Labeled correctly to ensure that the goods are handled properly and arrive on time at the right place; • Documented correctly to meet foreign government requirements, as well as proper collection standards; and • Insured against damage, loss, pilferage and delay. Most exporters rely on an international freight forwarder to perform these services because of the multitude of considerations involved in physically exporting goods. Freight forwarders assist exporters in preparing price quotations by advising on freight costs, port charges, consular fees, costs of special documentation, insurance costs, and their handling fees. They recommend the packing methods that will protect the merchandise during transit or can arrange to have the merchandise packed at the port or containerized. If the exporter prefers, freight forwarders can reserve the necessary space on a vessel, aircraft, train, or truck. Exporters should be aware of the demands that international shipping puts on packaged goods. Exporters should jeep four potential problems in mind when designing an export shipping crate: breakage, moisture, pilferage and excess weight. Specific marking and labeling is used on export shipping cartons and containers to meet shipping regulations and ensure proper handling, also insure compliance with environmental and safety standards. Exporters may find it useful to consult with a freight forwarder when determining the method of international shipping. Since carriers are often used for large and bulky shipments, the exporter should reserve space on the carrier well before actual shipment date. This reservation is called the booking contract. Export shipments are usually insured against loss, damage, and delay in transit by cargo insurance. Carrier liability is frequently limited by international agreements. Finally, it is very important to consider the effects of tariffs, port handling fees, and taxes when determining your product’s final cost as they can be high. Typically, the importer pays these charges. However, these costs will influence how much the buyer is willing to pay for your product (A Basic Guide to Exporting, 2008). I N T E R N AT I O N A L M A R K E T I N G 77 SELF-TEST QUESTIONS: • What do we call marketing logistics? • What are differences between “institutional” and “physical” distribution? • What are the principle advantages of using brokers, personalized trading networks and associations in the marketing of international commodities? • Why distribution decisions of goods and services is important for international marketing? • What does make influence on choosing distribution channels? • What distribution strategies you know? Describe each of them. • What are advantages of brokers? Task No.1 The international marketer and the distributor might have different expectations concerning their relationship. Why should these expectation be spelled out and clarified in contract? What expectation each of partners might have? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... Task No.2 Channels of distribution tend to vary according to the level of economic development of a market. The more developed the economy, the shorter the channels tend to be. Why? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... 78 Henrika Sakienė Task No.3 One method of screening candidates is to ask potential distributors for a sample marketing plan. What items would you want to be included to this plan? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... Task No.4 Should the distribution channels of Volkswagen and Porsche be the same? Why? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... Task No.5 What are the factors that affect the length, width, and number of marketing channels? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... I N T E R N AT I O N A L M A R K E T I N G 79 Task No.6 Table No.5 compare Merchant and Producer/seller. Discuss what are advantages of each. Deciding about presenting your company’s product to new foreign market you have to choose between finding a merchant or opening department of your own for sales abroad. What would be criteria for your decisions? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... Task No.7 Is there an ideal mode of transportation based on market location, speed, cost, and hazard criteria? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... Task No.8 What are products suitable for air shipping? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… Task No.9 Find out what are the functions of a freight forwarder and a customhouse broker? Is it worthwhile to use these agents? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... 80 Henrika Sakienė Case Study No.1 – Supply Chains after the Japanese Earthquake On March 11, 2011, Japan was hit by one of the largest earthquakes in recorded history, with a magnitude of 8,9. The aftermath left over 13,000 dead and even more lost or displaced. The earthquake also had far-reaching effects on the state of the Japanese economy and its international clientele. The quake hit Japan’s northeastern region, where many manufacturing factories are located. In March and April 2011, there were sharp decreases in output of components for Japanese-made cars, technology and other goods. Nissan, Honda, Suzuki, Mazda, Mitsubishi, Sony and Panasonic all had to temporarily shut down production in March. In the following months, prices of Japanesemade goods rose. Just a few months later, output began to increase. The production halt at car factories decreased global supply. Earthquakes and other unpredictable natural disasters affect more than just their immediate victims. As seen with this example of Japan, the international supply chain was directly affected, as were global consumers (Czinkota, Ronkainen, 2013). Search the web to find out more about sales figures of those companies during 2011 and later. How those companies were solving the situation? What can we learn from that? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………………………………………………………………………….............. …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... ………………………………………………………………………………………………………………………………………………………..... …………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………..... I N T E R N AT I O N A L M A R K E T I N G 81 CHAPTER 11. INTERNATIONAL MARKETING PLANNING The main aim of this chapter is to discuss with students concepts and main procedures for international marketing planning. Concepts Marketing plan – a plan, usually annual, for a company’s marketing activities, specifying expenditure and expected revenue and profits. Marketing strategy – a strategy or long time plan for marketing activities. Internationalization is the process of increasing involvement of enterprises in international markets, although there is no agreed definition of internationalization. There are several internationalization theories which try to explain why there are international activities. Marketing control is the process of taking actions or steps to bring the desired results and actual result closer. Planning is an essential part of developing a successful international business. It is a process that examines a firm’s business in relation to: • Where it is now • Where it wishes to go • How it can get there Generally it follows the process of: • Company and market assessment • Generation of achievable objectives • International strategy development • Evaluation of alternative marketing strategies • Operational programs to support the strategy The plan is principally of benefit to the company’s managers and current or potential owners of the business. It is a document prepared at a point in time that should describe a clear and concise series of activities that will achieve a particular international marketing objective, in line with the selected marketing strategy (Paproski, 2012). As we know, before giving way to a plan, a strategy is a set of visions integrated by one or more administrators regarding the performance of the company. These visions may not necessarily be clear and complete, because they systematise relevant issues for the future development of the organisation particularly at an international level and in most cases are inadequate for the reality, because they lack a prior diagnosis (Mercal, 2014). Company should define its internationalization strategy, which could answer the questions: o Where? (Which countries and markets are the most attractive for your business, range of products/services supply, and actual position?); o To Whom? (Who are the main players in each of those markets? Who are their main clients, distributors and other agents?) 82 Henrika Sakienė o What? (Which brands, solutions, products and ranges are the most attractive? At which prices?) o How? (Which is the preferential entering way for that market? via exportation, local partnership? Of which kind? Exterior investment? If yes, with which partner? How to get to know your company and its products? (Mercal, 2014). The international marketing strategy plan should have these parts (Paproski, 2012): I. SITUATION ANALYSIS: 1. Company Analysis – history, legal status, revenue, product‘s/services, key managers, experience, R&D activities, technologies, patents/copyright or trademarks, company’s domestic market position, access capacity for export, financial resources of the company, main competitors in the local market. 2. Organization’s Assets and Skills - competitive strategy, distinctive competences, unique selling proposition, the chief factors that will account for international success, products differentiation, superior service/support to end-users and channel intermediaries, company’s image/reputation, competitive advantage in terms of its personnel, 3. Market Analysis (Business Environmental Analysis) a successful international market strategy requires identification of an attractive overseas market and establishment of a competitive position within that market. 3. 1 Political/Legal/Institutional Factors 3. 2 Regulatory Environmental Factors (Present and Anticipated) 3. 3 Economic Conditions 3. 4 Social and Cultural Factors 3. 5 Demographic Trends 3. 6 Technological Environment and Trends 3. 7 Natural Environment (Effect of Seasonal or Climatic Factors) 3. 8 Physical Environment (Infrastructure Indicators) 4. Nature of Demand – market segmentation, buyer characteristics, the major method of procurement in each segment, predicted customers response to the company’s product/service offerings. 5. Size and Extent of Demand - the size of the market, sales figures for the relevant product category, projected sales, proportion of sales in each segment, size of the import market, import market growing/declining/static as a proportion of the total market. 6. Stage of the Product Life Cycle 7. Cost Structure of the Industry - cost factors in production, marketing and distribution; compare costs to foreign suppliers, particularly local suppliers; the average margins and price levels through the distribution channels. I N T E R N AT I O N A L M A R K E T I N G 83 8. Competitor Analysis – the major competitive manufacturers/suppliers (overseas and locally based) of these products, their market share, the number of competitors, substitute products, basic types of competition: Brand competitors, Product competitors, Generic competitors, Total budget competitors. II. SWOT ANALYSIS Situation Analysis needs to be analyzed in order to assess the market opportunities in relation to the likely barriers to market entry or expansion. Analyze the information in the SWOT analysis and discuss the implications for your company in the new market. Table No.6 SWOT matrix Strengths Weaknesses • Identify the company’s strengths • Relative to those of its competitors. • What are the characteristics of the company’s product/service offering that are not generally matched by competitors? •Identify the company’s weaknesses relative to those of its competitors. •What are the characteristics of the company’s product/service offering that are not generally equal to its competitors? The Company (Internal) The Market (External) Opportunities • Identify the trends and actions external to the company which may provide opportunities. • These market opportunities may be current or emerging. • What is the nature and extent of these opportunities in the target market and what are the consequences for the company? Threats •Identify the trends and actions external to the company which may create threats. •These market threats may be probable or possible. •How likely are these threats in the target market and what are the consequences for the company? Resource: Paproski, 2012 III. OBJECTIVES: 1. International Objectives 2. Market Objectives - Short-term (1 - 3 years) and Long-term (4 - 5 years and longer). Objectives should be measurable wherever possible. IV. RECOMMENDED MARKETING STRATEGY Target markets and positioning statements should be clearly identified. Often it is useful to clearly define a positioning strategy in a single sentence which summarizes in a general way what the company seeks to achieve and how it will do it. 84 Henrika Sakienė V. MARKETING MIX STRATEGIES AND TACTICS 1. Product • Modify existing product(s) - (what features and benefits will your products provide?) • Develop new product(s) • Add or drop products from the line • Determine product positioning • Develop branding approach • Register product designs, brand name, trademarks, etc. • Tailor product packaging and labeling to the market • Initiate product registration 2. Price 3. Distribution 4. Promotion • Overall communication message that is suited to the local culture • “Pull” or “Push” approach • Type of promotion (personal selling, point-of-sale promotions, direct mail, etc.) • Media to be used (radio, television, print, etc.) • Use of Social Media platforms such as Facebook, Youtube, Twitter, etc. • Branding (family versus individual) • Trade shows, conferences, etc., in which you will participate VI. PLANNING BUDGET – The recommended cost of a marketing program is subject to serious consideration and approval by management. VII. IMPLEMENTATION AND CONTROL - all the tactics and actions required for the successful implementation of the market entry/expansion program; control measures based on sales volume, sales value, or marketing contribution over a period of time, also based on the number of distribution points obtained, quantity of floor stock placed, level of consumer awareness, change in consumer attitudes, amount of brand switching, or other measures that are appropriate and relevant (Paproski, 2012). 1. Formal Project Plan for Implementation of Recommendations - Key people/groups responsible for each activity; Estimated commencement and completion dates; Estimated costs 2. Monitoring of Action Plan 3. Formal Contingency Plans VIII. APPENDIXES To define and structure the internationalization strategy of the company and its way of entering, we have to define the objectives and the position of its products for each market (marketing-mix). In this phase it is identified which is the policy to follow, with its products, prices, promotion, and how to put them in a distribution circuit to make them reachable to its clients (Mercal, 2014). I N T E R N AT I O N A L M A R K E T I N G 85 SELF-TEST QUESTIONS: • What is the first step before defining internationalization strategy? • What information we will need for company‘s situation analysis? • What are parts of international marketing plan? • What determines the marketing budget? • What do you think should go in to the international marketing plan appendixes? Task No.1 Find out what could be the basic reason why country operation would not embrace a new regional or global plan? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... Task No.2 Find out which company in your area is planning to enter foreign market. Help them to define their internationalization strategy by answering questions: Where? To Whom? What? How? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………..................................................... Task No.3 Use SWOT analysis of the chosen company. What are the implications of your analysis for the company’s short and long term priorities? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………..................................................... 86 Henrika Sakienė Task No.4 What is the danger in oversimplifying the globalization approach? Would you agree with the statement that “if something is working in a big way in one market, you better assume it will work in all markets”? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………..................................................... Task No.5 Choose a product and perform the situation analysis for this product. Of course some of the information could be found only in the company producing / selling this product. Where else you can find needed information? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………..................................................... Task No.6 What international marketing strategy you would choose for innovations either technologies selling company? Why? …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………..................................................... I N T E R N AT I O N A L M A R K E T I N G 87 Task No.7 What differences of B2C and B2B international marketing plan you can think of? Comment your opinion. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… Task No.8 How can a company measure its competitive advantage? How does a firm know if it is gaining or losing competitive advantage? Find any global company and its source of competitive advantage. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... 88 Henrika Sakienė Case study No.1 Innovators solve problems in two key ways: by acquiring or developing technologies and by altering business models or capabilities. In India, IT-based software and service providers used offthe-shelf software and hardware from the West but devised new ways of organizing work. Tata Motors focused on technology as well as capabilities when it set out to create the world’s cheapest car (www.tatamotors.com/products-services). Examine the advantages of both of these methods. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... I N T E R N AT I O N A L M A R K E T I N G 89 CHAPTER 12. INTERNATIONAL MARKETING CHALLENGES The main aim of this chapter is to introduce students to the possible challenges in international marketing and teach them to identify possibilities and challenges in the future. Concepts ROI - return on investment. KPI - key performance indicators. As far as international marketing is not a simple thing, companies that are planning to challenge international markets must plan properly to avoid possible losses. Disruptive digital technologies and the new expectations of the global consumer are forcing global firms to adjust and innovate. Just 15% of senior marketers feel prepared to deal with the rapidly changing consumer, and just 8% believe agencies are succeeding in their support of global brands (Laker, Anderson, 2012). B. Hill (2013) and F.Laker, H.Anderson (2012), K.Freedman (2014) after their researches were performed made conclusions and identified following challenges for firms and marketing managers in international marketing: • Identifying a True Market Need A key to success in business is offering products and services for which customers have a compelling need. The customer has a problem that needs to be solved, and the product or service provides the solution in such an effective way that its benefits are not difficult to communicate. Identifying the true needs of large numbers of people in a foreign country is not easy. • Understanding customer wants and needs across different segments The economic picture of different countries has to be factored in to campaigns. The need to align campaigns to differing cultural and social sensitivities is well-established. But targeting messages on a global scale also requires a deep understanding of how industries, geography and demographics will affect messaging. Brand affinity and buying preferences are affected further by the relative strength of country economies — yet another layer of complexity. • Dilution of Brand-Name Power Due to the Internet, movies and other forms of entertainment, different culture and the corporate symbols of that culture--brand names--are well known across the globe. This does not mean that the companies or their products will be popular when introduced in other countries. Being aware of a brand name is not the same as preferring it. It can be a long and expensive process to gain the trust of consumers who have used their own local companies or products for years or even generations. 90 Henrika Sakienė • Cultural Nuance Consumers are influenced to purchase products by marketing messages delivered through the media, including print media such as magazines. Humor is often used in commercial messages to get the consumer to pay attention. But what is considered extremely funny in one culture can be perceived as confusing or insulting in another. To produce effective advertising requires more than accurate translation of the message from one language to another. It requires a deep understanding of the culture, customs, morals and even religious views that predominate in that country. What motivates consumers to buy products varies from country to country. • How to reach customers in a meaningful way That knockout creative concept that ticks all the boxes in one territory may fall flat in another for any number of reasons. Adapting an idea to suit different cultures and outlooks — while remaining true to the key messages behind the campaign — remains a major challenge for the global brands. • How to handle the creative development process There are differing schools of thought on how to achieve global campaign consistency matched by seamless local relevance; but the mantra of ‘act global think local’ remains a central tenet for global marketing directors. Localization of the big idea for different territories is the default for all global brand guardians, but the methodology for doing so is somewhat polarized. Whatever route people are taking, it’s clear that localization and a focus on smart implementation are firmly on the agenda when it comes to rolling out global creative that resonates wherever it lands. • Localization revisited Ads that tested exceptionally well in one country, just over one in 10 did equally well in another country – raising real questions about the cost efficiencies of cross-border campaigns. Add to this the growing tensions between local and global roles and it becomes clear the need for organizational design and digital platforms that allow for a multi-channel, multi-disciplinary mindset across the organization. • Multi-channel misses The opportunity to grow revenues from multi-channel consumers requires investments in digital experiences that are too large for a single market, but which must provide flexibility for localization. • Communication Style Business executives from different countries can encounter several barriers to effective communication besides obvious language differences. In some countries emphasis is placed on building relationships before a business deal is seriously considered. Executives from different countries may place a higher value on things such as facial expression instead of just the words that are being said. I N T E R N AT I O N A L M A R K E T I N G 91 • Distance and Time Even with technologies such as video conferencing, executives in other countries may prefer to establish relationships on a personal level. Time zone differences can make it difficult to coordinate projects where collaboration is required. • Finding Reliable Partners Finding people who are trustworthy and competent can be a challenge. • Disruptive technologies New technologies – from social media and mobile apps to in-store digital experiences and mobile payments – represents a set of obstacles that could appear if marketers won‘t invest in their knowledge and newest technologies. The scale of these investments must be at a global level within the organization. There is a need to adapt to and embrace disruptive technologies and social mediadriven personalized marketing. • Digital, social and the new marketing How to integrate social into a wider campaign remains a focus for many global marketers. Reliable reporting about the impact of social on awareness and sales remains elusive despite the deluge of data available. Digital media is forcing campaigns to be much more engaging. The new media is designed to allow people to talk back. Marketers understand the value of social but it seems its unpredictable nature is harder to control. • Globally connected consumers Global marketing’s core challenge has been to deliver relevant messages to the local market, but in an age where assets designed for one country are rapidly shared around the world, the challenge is to give global consumers a delicate balance of local, regional and global campaigns – simultaneously. • Organizational structures Coordination between digital and traditional marketing teams is more challenging just as the need for collaboration is becoming greater. • Internal coordination of marketing activities The global marketing challenge today is a challenge of execution. The bigger the brand, the more links in the chain. Today there are improved systems and communications, but also higher expectations for relevant, localized execution. Internal coordination of complex campaigns across business units remains a key challenge on the desk for global marketers. People tend to be focused on their own regions first and do not always understand the global context. Many worldwide campaign implementation models include an element of ‘adopt and adapt’ but there is some debate about how best to achieve the best results. 92 Henrika Sakienė • How to measure and report, learn and improve The biggest challenge with any global marketing role is ROI (return on investment). It’s more important than ever to show the value in what you do. It’s clear that working out rock-solid objectives with associated key performance indicators (KPI) at the outset is a ‘must-have’ for balanced reporting. At the same time, global marketers have to be able to ‘flex’ the interpretation of data coming from several different environments to make it meaningful and digestible. Delivering consistent measurement across a multitude of channels and geographies remains a challenge, particularly where boards demand short-term results. • The role of technology in campaign creation and implementation There’s a risk of letting technology lead the way, while it should merely be an enabler of creative ideas, following a strategic and operational vision. Digital Asset Management (DAM) remains a tactical challenge. Brands are striving to maintain a centralized repository of marketing assets. It’s also important to know what assets are being used, what are needed, when rights expire and so on. Marketing automation has provided smart efficiency, and we have certainly travelled a long way down the road to personalization in the last years. However, just how to deliver faultless, personalized advertising, at scale and worldwide, is still a nut to crack. I N T E R N AT I O N A L M A R K E T I N G 93 SELF-TEST QUESTIONS: • How technologies affect international marketing? • What are the social media challenges? • How international marketing planning might change according to marketing challenges? • What marketing managers might find as marketing challenges nowadays? • What knowledge must have a marketing manager to perform their work functions in a perfect way? Task No.1 What are the key drivers that today’s marketer has to understand in planning for the international marketplace? …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... Task No.2 Which of the international drivers and strategic efforts are likely to change more often and more rapidly? …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... 94 Henrika Sakienė Task No.3 Identify a global online retail firm and describe how it targets specific countries and engages the consumer in an interactive manner? …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... Task No.4 Identify five social networking sites and prepare a profile of the sites’ users in terms of demographic characteristics (for example, gender, age, geographic location). How can an international marketer use this type of information? …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... I N T E R N AT I O N A L M A R K E T I N G 95 Task No.5 Review the key products and services that have emerged during the digital revolution. What are those new products and services? Discuss your findings. …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... Task No.6 Choose three different products within the same market and explain how each one is trying to gain a competitive edge over the others. How the same products compete in different international markets? …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... Task No.7 Choose any imported product that you have purchased recently and show how the elements of the marketing mix came together to create the overall offering. How this products marketing mix could be changed to increase sales? …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... 96 Henrika Sakienė Task No.8 We have already studied about cultural communication differences. How would you recomend for marketers to minimize cultural communication misunderstandings between international companies branches either between business partners in different counties? …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... Case study No.1 – Apple examples Browse internet https://www.apple.com/education/real-stories/ and find out what cases Apple company provide for its users. What is the benefit Apple Inc. is getting from this section on their website? Discuss what other companies can learn from this. …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… ……………………………………………………………………………….……………………………................................................. …………………………………………………………………………………………………………………………………………………………… …………………………………………………………………………………………………………………………………………………………… …………………………….……………………………...................................................................................................... …………………………………………………………………………………………………………..................................................... 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Vijeikiene (2003), International Marketing, Vilnius 79.Yalcinkaya Goksel, A culture-based approach to understanding the adoption and diffusion of new products across countries, International Marketing Review, 2008, Vol. 25 Iss 2 pp. 202 – 214 80.Website for marketing essays (2014). http://www.ukessays.com/essays/economics/theessential-nature-of-international-marketing-economics-essay.php I N T E R N AT I O N A L M A R K E T I N G 101 Henrika Sakienė INTERNATIONAL MARKETING Course Handbook ISBN 978-9955-648-65-9 This Course Handbook was prepared with support from the European Structural Funds. This publication reflects the views only of the author, and the SMK University of Applied Social Sciences cannot be held responsible for any use which may be made of the information contained therein. Order no. 150730340 S. Jokuzys Publishing-Printing House. 2015 Nemuno str. 139, LT-93262 Klaipeda www.spaustuve.lt
