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International*Marketing* * Exam*Revision* * * Topic*1:*Role,*Scope*&*Importance*of*International*Marketing* * International*Marketing:* • The"process"of"planning"and"undertaking"transactions"across"national"boundaries"that"involve" exchange" • Involves"taking"the"marketing"mix"across"international"borders" " Drivers*of*International*Marketing:* • Market"needs" o Transcend"international"boundaries/new"needs"and"wants" o Often"created"by"promotion" • Technology" o No"cultural"boundaries"apart"from"application"eg"iPhone" • Cost" o Economies"of"scale"drive"costs"down" o Cost"pressure" o Need"to"reach"bigger"markets" • Government" o Policies"and"measures"that"facilitate"international"involvement" • Communication" o Rapid"diffusion"and"innovation"–"little"time"delay"between"markets" " Holistic*Marketing:* • In"marketing"everything"matters;"consumers,"employees,"competition,"government* • Includes:* o Relationship"marketing:"relationships"with"key"partners* o Integrated"marketing:"Programs"to"create"and"deliver"value* o Internal"marketing:"So"everybody"in"company"is"driven* o Social"responsibility"marketing:"Broader"ethical"social"context* * Classification*of*Firms:* • Ethnocentric"Orientation" o Approach"in"home"country"is"applies"in"every"country"–"no"adaptation" • Polycentric"orientation" o Each"country"is"different"and"should"have"its"unique"marketing"approach" • Regiocentric"Orientation" o Views"the"region"as"the"market"and"develops"region"based"strategies" • Geocentric"Orientation" o Views"the"world"as"the"market"with"the"flexibility"to"respond"to"local"needs"and"wants" " Restraints*in*International*Marketing:* • Differences"between"national"markets* o Need"to"adapt"marketing"mix"due"to:* ! Economic"development* ! Culture* ! Legal/political"requirements* • Controls"over"entry"and"access"to"national"markets* o Tariff"bariers"to"support"local"businesses* • Actual"or"perceived"risk* o Commercial,"crossQcultural,"country,"financial* * * 1"|"P a g e " " Risk*in*International*Marketing:* • Commercial"risk" o Weak"partner" " " ○ Competitive"intensity" o Timing"of"entry" " " ○""""Poor"execution"of"strategy" • Financial"risk" o Foreign"taxation" o High"transfer"pricing" • Country"risk" o Social/political"unrest" " ○""""Market"access" o Economic"mismanagement" ○ Government"intervention" • CrossQcultural"risk" o Cultural"distances"" " ○""""Decision"making"styles" o Negotiation"patterns" " ○ Ethical"practices"" " Concepts*Underlying*International*Marketing:* • Comparative"Advantage" o Countries"should"focus"on"what"they"do"well"rather"than"trying"to"produce"everything" • Product"lifecycle"extension" o As"a"product"matures,"firms"seek"international"markets"in"which"the"product"is"still"in" earlier"stages" * * * Topic*2:*Deciding*Which*Market*to*Enter.* Addressing*the*Economic*&*Financial*Environment*for*International*Trade* * Recent*Trends:* • Increase"global"markets"and"competition" """""World"economy"effects"local"economies" • Reduction"of"trade"barriers" " " """""Growth"of"eQcommerce" • Increase"in"manufacturing"productivity" " Measuring*Environments:* • Income"" " •""""Physical"quality"of"life"(life"expectancy,"literacy"rate)" • Population" " •""""Debt"(ability"to"borrow,"attractiveness,"interest"on"debt)" • Geography" " •""""Resources"(influences"source"and"diversity"of"export"income)" • Infrastructure"(energy,"transport,"communication)" • Purchasing"Power"Parity"(PPP)"–"how"many"units"of"currency"are"needed"to"buy"in"country"A" what"one"unit"of"currency"will"buy"in"country"B."Shows"the"purchasing"power" Marketing*Implications*–*Need"to"monitor"environment"of"both"global"&"country"basis."Importance:" • Target"specific"markets" " " •""""Marketing"mix" • Identify"most"important"segments" •""""Market"potential" • Entry"strategy" " Financial*Environment* • Affects"relations"and"marketing"opportunities"between"countries* • Rates"of"exchange"fluctuate"and"are"influenced"by"economic"and"political"factors* • Having"transactions"in"foreign"currencies"involves"risk* * * * * 2"|"P a g e " " Financial*Management*–*Source*of*Funds:* • Banks"" o Provide"financing"depending"on;"relationship"with"exporter,"nature"of"transaction," perceived"risk,"availability"of"insurance" o Often"don’t"insure"in"promising"or"emerging"markets" • Government" o When"risks"aren’t"commercially"insurable,"or"the"gov."decides"that"it’s"in"the"nation’s" best"interest"to"fund"sales"to"a"country"with"a"high"credit"risk,"it"may"extend"a"loan" * Financial*Management*–*Coping*with*Recession:* • Pull"out"–"shortQterm,"easy"option"with"long"term"consequences"eg"untrustworthy"in"Asia* • Emphasise"product"value"–"despite"recession,"people"want"to"maintain"lifestyle* • Repackage"goods"–"Make"smaller"and"therefore"more"affordable* • Maintain"stricter"inventory"–"reducing"unnecessary"inventory,"and"improving"product"range* • Look"outside"region"for"expansion"opportunities* • Increase"advertising"in"the"region* • Increase"local"procurement"–"local"sourcing"is"cheaper* * International*Political*and*Legal*Environment* * Role*of*the*Government*in*International*Marketing:* • Participator:" o Commercial"activities"undertaken"by"government"(education,"health,"transport," defence,"infrastructure)" • Facilitator:" o Facilitate"marketing"through"export"incentives" o Operate"as"facilitator"to"overseas"business" • Regulator:" o Government"planning"activities"(influence"funding,"tax,"export"&"import"standards"and" controls" " Political*Risk:* • General"Instability"Risk"–"internal"threats;"revolution,"external"threats;"invasion* • Ownership"Risk"–"risk"to"property"and"expat"employees* • Operating"Risk"–"Interference"from"company"overseas* • Transfer"Risk"–"Prevention"of"moving"funds"between"countries* * Legal*Environment:* • Countries"differ"in;"legal"systems"&"laws,"degree"to"which"law"is"applied,"dispute"settlement" • Legal"complexities"are"greater"for"international"trade"than"domestic" " Impact*of*Law*in*Marketing*Mix:* • Product"–"Laws"to"protect"consumers* • Price"–"Price"control"(tariffs,"profit"margins)* • Distribution"–"Regulations"for"physical"distribution,"nature"of"channel* • Promotion"–"Prohibition"of"advertising,"words"or"expressions* "" Marketing*Implications*of*Legal*Risk:* • Differing"laws"in"host"country" • International"law"may"prevent"international"marketing"activities" • Different"legal"systems"and"approaches"to"interpretation" 3"|"P a g e " "