Download International Marketing Chapter 7

International Marketing
Chapter 7
Building the Knowledge Base
Copyright © 1999 by Harcourt Brace & Company
All rights reserved. Requests for permission to make copies of any part of the work should be mailed to the
following address: Permissions Department, Harcourt Brace & Company, 6277 Sea Harbor Drive, Orlando,
Florida 32887-6777.
Defining the Issue
 What
is Marketing research?
 …links
consumer, customer, and public
to the marketer through information….
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
International and Domestic
Research
 Use
of similar tools and techniques as
in domestic research, but the
environments differ
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
The Primary Differences:
 New

(Duties, Exchange Rates, Entry Modes, etc.)
 New

parameters
environments
Legal, Customs, Culture
 Number
of factors involved
 Broader definition of competition
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Recognizing the Need for
Research
•CRITICISMS
•Subjective Assessment
•Less rigorous
•Less Formal
•Less Quantitative
•Discontinuous After
Initial Entry
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Reasons Executives View International
Research as Unimportant:

Lack of sensitivity to differences in consumer
tastes and preferences.

Limited appreciation for the different marketing
environments abroad.

Lack of familiarity with national and international
data sources and the inability to use them.

Limited business experience in a country or with
a specific firm may be used as a substitute for
organized research.
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
The Benefits of Research
V(dr)



- V(d) > C(r)
V(dr) is the value of the decision with research
V(d) is the value of decision without research
C(r) is the cost of research
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Determining Research Objectives
 Going
International: Exporting
 Going
International: Importing
 Market
Expansion
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Going International: Exporting
 Foreign-Market
Opportunity Analysis
Total and per capita GNP, mortality
rates, and population data
Individual market data product data,
market trends, and restrictions
Governmental restrictions
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Information Needs for the
Importing Decision:






Identify markets that produce desired supplies or materials
Reliability of a foreign supplier and consistency of its
product or service quality
government rules and regulations
Product or service quality
Length of delivery time
Government rules & regulations - foreign and domestic
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Market Expansion Data Needs:
Detailed information for penetrating a market
 Designing or fine-tuning the marketing mix
 Monitoring the political climate of a country.
 Determining Secondary Information
Requirements

– What do you really need to know?
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
A Sequential Process of Researching
Foreign Market Potential
Stage One
Preliminary Screening for Attractive Country Markets
Key Question:
Which Foreign Markets Warrant Detailed Investigation?
Stage Two
Assessment of Industry Market Potential
Key Question:
What is the Aggregate Demand of Each Market Selected?
Stage Three
Company Sales Potential Analysis
Key Question:
How Attractive is the Potential Demand for Company Products /Services?
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Most Critical International
Information for U.S. Firms

Government Data
–
–
–
–
Tariff information
U.S. export/import data
Nontariff measures
Foreign export/import
data
– Data on government
trade policy

Corporate Data
– Local laws and
regulations
– Size of market
– Local standards and
specifications
– Distribution System
– Competitive activity
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Sources of Data
 Governments
 International
organizations
 Service organizations
 Trade associations
 Directories and newsletters
 Databases
 Other firms
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Evaluating Data






Is it appropriate to the task at hand?
What is the quality of the data source?
What is the quality of the data?
How compatible and comparable are the data to
your problem?
Are data categories comparable?
Are there any societal implications of obtaining
data?
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
The Primary Research Process
 Determining
information requirements
 Industrial versus consumer research
 Determining research administration
 Determining the research technique
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Determining Information
Requirements
 Formulate
research questions to
determine precisely the information that
is sought.
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Industrial Versus Consumer
Research
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Determining Research
Administration
 Centralized? The research specifications are designed
by the home office and forwarded to country operations for
implementation.
 Coordinated? An intermediary such as an outside
research agency brings headquarters and country operations
together
 Decentralized? Headquarters established the broad
thrust of research and delegates design and implementation to
the local countries.
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Top 7 U.S. Research Firms







D&B Marketing Information Services
Information Resources Inc.
The Arbitron Company
Westat Inc.
Maritz Marketing Research
Walsh International/PMSI
The Kanter Group
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Determining the Research
Technique
Soft Data or Hard Data?
Developing the Sampling Plan
 Interviews?
Data Collection
 Focus Groups?
Analyzing & Interpreting the data
Presenting Data\
 Observation?
Follow Ups
 Surveys?
Relevant
Question Format
Timely
Question Content
Flexible
Question Wording
Accurate
Exhaustive
Convenient
Copyright © 1999 by Harcourt Brace & Company

All rights reserved
What you don’t want is:
How do we Gather Information?
Environmental Scanning
Scenario Building
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Delphi Studies
International Marketing
Chapter 8
The Export Process
Motivations to Internationalize
 Proactive



Motives
Profit advantage
Unique products
Technological advantage
 Reactive




Exclusive information

Managerial urge
Tax benefit
Economies of scale





Motives
Competitive pressures
Overproduction
Declining domestic sales
Excess capacity
Saturated domestic markets
Proximity to customers and ports
The Foreign Sales Corporation (FSC)
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Change Agents

Internal change agents

External change agents

Enlightened management
New management
Significant internal event

Demand
Other firms
Distributors
Banks
Chambers of commerce
Export agents
Governmental activities








Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Key Managerial Characteristics
Affecting Export Involvement
 Education
 International
Exposure
 Expertise
 International
orientation
 Commitment
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Internationalization Stages
 Innate,
or start-up, exporters
 Partially interested exporter
 Experimental exporter
 Export adaptation
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Internationalization concerns
Stage 1:
 Stage 2:
 Stage 3:
 Stage 4:
 Stage 5:
 Stage 6:

The completely uninterested firm
The partially interested firm
The exploring firm
The experimental exporter
The experienced small exporter
The experienced larger exporter
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Main Corporate Concerns
for the Firm









Financing
Information on business practices
Communication
Providing technical advice
Sales effort
Obtaining financial information
Handling documentation
Physical product
Marketing information gathering
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Corporate Strategy and
Exporting
 The
impact on the perception of risks
 The impact on profits
Profit and Risk
During Export
Initiation
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
International Marketing
Product Adaptation
Copyright © 1999 by Harcourt Brace & Company
Copyright © 1999 by Harcourt Brace & Company
All rights reserved. Requests for permission to make copies of any part of the work should be mailed to
the following address: Permissions Department, Harcourt Brace & Company, 6277 Sea Harbor Drive,
Orlando, Florida 32887-6777.
Product Variables
Augmented Product
Tangible Product
Core Product
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Standardization versus
Adaptation?
 The
fundamental international product
decision!
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
The Alternatives in
Approaching International
Markets:
 Sell
the Product
as it is
Internationally
 Modify
Product
for Different
Countries or
Regions
 Design
New
Products for
Foreign Markets
 Incorporate All
Differences into
One Product and
Introduce it
Globally
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Sell the Product as it is
Internationally
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Modify Product for Different
Countries or Regions
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Design New Products for Foreign
Markets
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Incorporate All Differences into
One Product Design and Introduce
it as a Global Product
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Factors Encouraging
Standardization:
 Economies
of scale in production
 Economies in product R&D
 Economies in marketing
 Shrinking” of the world marketplace /
economic integration
 Global competition
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Factors Encouraging
Adaptation:
 Differing
use conditions
 Government and regulatory influences
 Differing consumer behavior patterns
 Local competition
 True to the marketing concept
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Factors Affecting Adaptation:
Market
Characteristics
Product
Characteristics
Decision
to Alter
Domestic
Product
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Company
Considerations
The Market Environment
 Government
Regulations
 Nontariff Barriers
 Customer Characteristics, Expectations,
and Preferences
 Economic Development
 Competitive offerings
 Climate and geography
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Product Characteristics
 Product
Constituents
 Branding:Translation-Transliteration-Transparency-Transculture
 Packaging
 Appearance
 Method of Operation or Usage
 Quality
 Service
 Country-of-Origin Effects
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Company Considerations
 Organizational
capabilities?
 “Is
it worth it?”
 “Can we afford not to do it?”
 Can a specific ROI be attained?
 Quality, price, and user perceptions?
 Warranties?
 Managerial talent?
Copyright © 1999 by Harcourt Brace & Company
All rights reserved
Product Counterfeiting



…costs U.S. firms over $60 billion a year!
Counterfeiting is estimated at 2% to 5% of total world
trade annually!
The largest number of counterfeit goods come from:
– Brazil
– Taiwan
– Korea
– India
Copyright © 1999 by Harcourt Brace & Company
All rights reserved