Download Chap 16

International
Business
Environments & Operations
Chapter 16
Marketing Globally
Daniels
●
Radebaugh
●
Sullivan
16-1
Introduction

Any marketing approach should be compatible
with its overall aims and strategies

It is not necessary to follow the same strategy for
every one of your products and for every country
(e.g., can have mass market orientation and a
focused strategy in another)

Degree of global standardization versus local
responsiveness may vary
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Marketing Strategies
Overall international marketing strategies
should depend on the company’s:

Marketing orientation (e.g., companies using a sales
orientation find their greatest ability to sell the same
product in more than one country when consumer
characteristics are similar)

Target market (e.g., Identify the personality traits that
specifically affect international marketing, such as
materialism, ethnocentrism, cosmopolitianism)

The most common way of identifying a market
segment within a country is- Demographics
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Marketing Mix

Marketing Mix: product, pricing,
promotion, branding, distribution

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E.g., a production facility in an area with poorly
maintained roads would affect the distribution part
of a company’s marketing mix
A company should handle its own distribution when
dealing with global customers and high technology
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Market Orientation

Production Orientation: Focus on production- efficiency or
high quality and no emphasis on marketing

Sales Orientation: company tries to sell abroad what it can
sell domestically, assuming that consumers all similar globally


It actively promotes sales (differs from production orientation)
Customer Orientation: company figures out what and how
to sell to a country- by varying the product and the marketing
method

Strategic Marketing Orientation: The strategy combines
production, sales, and customer orientations

Social Marketing Orientation: consider potential political and
safety dimensions of its producers (e.g., environmental, health, social
and work-related problems that may arise when selling or making their
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products abroad (social responsibility)
Segmenting and Targeting Markets
Based on the marketing orientation, companies segment
markets for their products and services and then decide
which segment(s) to target and how
 Target single or multiple segments
 Use the same marketing mix to sell to all segments
 Tailor the products separately to each segment
 Vary the promotion and distribution separately for the
segments
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Segmenting Markets

Three Approaches

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By Country (e.g., population size and purchasing power)
 When segmenting by country, the business may
overlook similarities between different countries
By Global Segment (e.g, segments based on income)
By Multiple Criteria
 First look at countries as segments, identify segments
within each country, compare within-country segments
with other
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Why Firms Alter Products


Legal Considerations: explicit legal requirements usually
meant to protect consumers (purity, testing, labeling)
Packaging Requirements: different laws such as warning
labels (EU requires label for 0.9% or more of bioengineered
ingredients)



Environmental Protection Regulations: laws that protect
the environment (prohibit certain type of containers,
volume of container)
Cultural Considerations: religious and cultural differences
affect product demand (fat, sodium, sugar to fit local tastes)
Economic Considerations: cheaper model or inexpensive
for developing countries
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Issues of Standardization

IB needs to arrive at international product
standards and eliminate some wasteful product
requirements for alterations among countries.
A global standard has usually resulted from
companies’ wanting to copy a dominant producer
(e.g., making personal computers that are IBM
compatible)

Advantages of globally standardized prorgams:

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Cost savings
Improvement of local-level quality
Faster entry into different markets
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Alteration Costs

Some product alteration are cheap to make yet have an
important influence on demand (e.g., packaging because
of legal and climatic requirement)

Must compare the cost of an alteration with the
cost of lost sales from no alterations.

Cost saving strategy: standardize a great deal while
altering some end characteristics.
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Pricing Strategies
Price must be low enough to gain sales but high
enough to guarantee the flow of funds required
to carry on other activities such as R&D,
production, and distribution
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Potential Obstacles in International
Pricing
Government intervention
 Market diversity
 Pricing Tactics
 Export price escalation
 Fluctuations in currency value

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Pricing Tactics
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Skimming Strategy: charging a high price for a
new product first aiming at consumers willing to
pay the price, and then progressively lowering
the price
Penetration Strategy: introducing a product at
a low price to induce a maximum number of
consumers to try it
Cost-plus strategy: pricing at a desired margin
over cost
THE GRAY MARKET
 The selling and handling of goods through
unofficial distributors
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Pricing Obstacles

Export Pricing Escalation: Price escalation in
exporting most likely occur when there are
greater distances, lengthy channels, transport,
and more intermediaries increase the distribution
costs

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Rules against increasing export prices would least likely
be caused by a high inflation rate
Fluctuation in Currency Value


Receipt of funds in a foreign currency that, when
converted, buy less of the company’s own currency than
had been expected
Frequent readjustment of prices necessary to
compensate for continual cost increase
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Promotion Strategies

The Push-Pull Mix
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Push uses direct selling techniques by increased
supply
Pull relies on mass media to attract customers
Factors in Push-Pull Decisions
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Type of distribution system
Cost and availability of media to reach target markets
Consumer attitudes towards sources of information
Price of the product compared to income (The push
strategy is preferable to a pull strategy when the price of the
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product is high relative to incomes)
Branding Strategies

Brand

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The importance of using a brand to convey the perception of
whether a firm will deliver what it promises is more critical in
countries with strong cultural characteristics of uncertainty
avoidance
World Wide Brand versus Local Brand

Problems with Uniform Brands
 Language
 Brand Acquisition
 Country-of-Origin Image
 Generic and Near Generic Names
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Distribution Strategies
Distribution reflects different country environments:
 It may vary substantially among countries.
 It is difficult to change.
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E-Commerce and the Internet

Evidence suggests online shoppers universally
have some similar characteristics:
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Desire convenience
Are heavy users of e-mail and the Internet
Have favorable attitudes toward direct marketing and
advertising
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Managing the Marketing Mix

The difference between total markets potential
and companies’ sales is due to gaps

Gap Analysis: method to estimate a company’s
potential sales by identifying potential customers it is not
serving adequately.

A company would most likely use gap analysis to compare
consumption potential within its own sales
 When sales are lower than the estimated market potential for
a given type of product, the company has potential for
increased sales
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Types of Gaps
Usage Gap: less product sold by all
competitors than potential
 Product Line Gap: company lacks some
product variation
 Distribution Gap: company misses
geographic or intensity coverage
 Competitive Gap: competitor’s sales not
explained by product line and distribution
gaps

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