Download Chapter 17 - Jacksonville State University

This chapter covers:
17
•Differences between
domestic and
international
marketing
•The marketing mix
Marketing Internationally
•Distinguishing among
products
•Product modification
•Product strategies
•Glocal advertising
•The effect of the
internet on marketing
•Distribution strategies
International Business
by Ball, McCulloch, Frantz,
Geringer, and Minor
McGraw-Hill/Irwin
Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter Objectives
 Understand why there are differences between domestic and
international marketing
 Explain why international marketing managers may wish to
standardize the marketing mix regionally or worldwide and why it is
often impossible to standardize the marketing mix worldwide
 Appreciate the importance of distinguishing among the total product,
the physical product, and the brand name
 Explain why consumer products generally require greater
modification for international sales than industrial products or
services
 Discuss the product strategies that can be formed from three product
alternatives and three kinds of promotional messages
 Explain “glocal” advertising strategies and the effect of the internet
 Discuss the distribution strategies of international marketers
17-2
Marketing

Marketers everywhere must
 Know their markets
 Develop products or
services to satisfy
customers’ needs
 Price the products or
services so that they are
readily available
 Make them available to
the buyers
 Inform potential
customers and persuade
them to buy
17-3
Standardization, Adaptation,
or Completely Different?
 Management would prefer global standardization
of the marketing mix, but seldom easy
 Significant cost savings
 Longer production runs
 Standardized advertising, promotional materials, and
sales training
 Standardized corporate image
 Standardized pricing strategies
 Easier control and coordination
 Reduction of preparation time
17-4
Product Strategies


17-5
Central focus of marketing
mix
The total product includes
 Physical product
 Brand name
 Accessories
 After-sales service
 Warranty
 Instructions for use
 Company image
 Package
Types of Products

Industrial Products
 Many can be sold
unchanged worldwide
(ie. transistors)
 If changes are required,
they may be cosmetic (ie.
printing instructions in
another language)
 In developing countries
problems with



17-6
Overload equipment
Maintenance
Local legal requirements

Consumer Products
 Generally, consumer
products require greater
adaptation than do
industrial products
 However, some can be
sold unchanged to certain
market segments
 Large automobiles,
sporting equipment,
and perfumes
 Greater dissimilarity as
you go down the
economic strata
Types of Products

Services

17-7
The marketing of
services, is similar to the
marketing of industrial
products.
 Services are easier to
market globally
compared to consumer
products
 Laws and customs may
force some changes
Foreign Environmental Forces

Sociocultural Forces
 Dissimilar cultural patterns generally necessitate
changes in food and other consumer goods
 May require

Redesign of product


Change of brand names, labels, or colors



17-8
Top-load versus front-load washers
Colors have different meanings
Brand name has different meaning
Translation of instructions or labels
Foreign Environmental Forces
 Legal


Laws concerning
 Pollution
 Consumer protection
 Operator safety
Laws prohibiting classes of imports


17-9
Forces
Food and pharmaceuticals influenced by laws concerning
purity and labeling
Legal forces may prevent use of brand name worldwide
 In some countries brand may be registered to someone
else
Foreign Environmental Forces

Economic Forces
 Great disparity in income
throughout the world an
obstacle to product
standardization.
 Many products from the
industrialized countries
are too expensive for
consumers in developing
countries

17-10
Must either simplify the
product or produce a
different, less costly one

Physical Forces
 Physical forces, such as
climate and terrain,
prevent international
product standardization
 Heat
 High humidity
 Special packaging
 High altitudes
 Baking products and
motors
 Rough roads
Promotional Strategies
 Promotion

17-11
Is communication that
secures understanding
between a firm and its
publics
 to bring about a
favorable buying
action and achieve
long-lasting
confidence in the firm
and the product or
service it provides
Promotional Strategies
 Formulation of distinct promotional strategies is
based on the combination of three alternatives
 Marketing the same physical product everywhere
 Adapting the physical product for foreign
markets
 Designing a different physical product with
 (a) the same, (b) adapted, or (c) different
messages
17-12
Six commonly used
promotional strategies



Same product--same
message
 Avon, Maidenform
Same product--different
message
 Honda’s campaign in
America is different than
in Brazil
Product adaptation--same
message
 In Japan, Lever Brothers
puts Lux soap in fancy
boxes because much of it
is sold for gifts
17-13

Product adaptation--message
adaptation


Different product--same
message


In Latin America, Tang is
sweetened and promoted as
a mealtime drink
Product is produced in low
cost plastic squeeze bottle
for developing countries,
but advertised the same
Different product for the
same use--different message

Welding torches rather than
automatic welding machines
are sold in developing
countries
The Promotion Mix

Advertising

Personal Selling

Sales Promotion

Public Relations

Publicity
17-14
Advertising

Paid, nonpersonal presentation of ideas, goods, or
services by an identified sponsor
 Among all the promotional mix elements,
 advertising is the one with the greatest
similarities worldwide
 Today, the major American agencies are all
global, with wholly owned subsidiaries, joint
ventures, and working agreements with local
agencies
17-15
Global and Regional Brands

Reasons for increase in use of global or regional
brands





17-16
Cost is most often cited
There is a better chance of obtaining one regional source to
do high-quality work
The belief that a single image throughout the region is
important
Establishment of regionalized organized organization
where many functions are centralized
Global and regional satellite and cable television are
becoming available
Top Ten Brands 2003
Coca-Cola
 Microsoft
 IBM
 GE
 Intel
 Nokia
 Disney
 McDonald’s
 Marlboro
 Mercedes

17-17
Advertising

Branding
 Global, regional or
national
 Managers may convert
or use a combination
 Private brands
 Serious competitors
 Making alliances with
international retailers
 Trend very common in
Europe
17-18

Media
 Satellite TV expanding
availability of media
 International print media
available
 Reader’s digest has 48
foreign editions
 Cinema and billboards
used heavily in Europe
 In developing countries,
vehicles equipped with
loudspeakers
Advertising
 Internet Advertising
 Appealing factors of online advertising
 An affluent, reachable audience
 Web contacts feature interactivity, which
shrinks distance
 The possibility exists of involving customers
in determining which messages and
information they receive
 For some groups, the Internet may be among
the best media choices
17-19
Advertising
 Foreign Environmental
Forces
 A basic cultural decision
for the marketer is
whether to position the
product as foreign or
local
 The preferred position
depends on the
country, the product
types, and the target
market
17-20
Advertising
 Foreign Environmental
Forces
 Unfortunately for the
advertiser, almost every
language varies from one
country to another
 To avoid translation
errors, the experienced
advertising manager will
use
 a back translation.
 plenty of illustrations
with short copy
17-21

The youth market
 The young often prefer
American look and
American label
 American fast-food also
influences youth around
the world
 Very much an
international market
segment
 MTV Europe runs
unified English ads
Advertising

Legal Forces

17-22
Have pervasive influence on advertising

Affect media availability

Restrict kinds of products that can be advertised

Some countries illegal to use comparative advertising

Members of advertising industry have established selfregulatory bodies in many nations

Some Middle Eastern countries restrict use of women in
advertising and their style of dress
Advertising

What should be the
approach of the
international advertising
manager?
 Think globally, but act
locally
 Neither purely global or
purely local
 Pan regional approach



17-23

Latin America
Middle East
Africa
Atlantic
Personal Selling

The importance of personal selling compared to
advertising depends to a great extent on
The relative cost
 The funds available
 Media availability
 The type of product sold

Manufacturers of industrial products rely on
personal selling
 Consumer products overseas may use more
personal selling in developing countries

17-24
Personal Selling
 Personal Selling and the
Internet
 The Internet would seem
to eliminate the need for
personal selling, but this
may not be the case
 Successful personal

17-25
selling depends on
establishing trust
Although the Internet
makes communication
easier, it may make
building trust harder

International
Standardization
 An overseas sales force is
similar to the home
country in
 Organization
 Sales presentation
 Training methods
 Recruitment of
salespeople in foreign
countries can be difficult
Sales Promotion


Provides the selling aids for the marketing function and
includes such activities as
 the preparation of point-of-purchase displays, contests,
premiums, trade show exhibits, cents-off offers, and
coupons
Cultural and economic constraints make some sales
promotions difficult to use.
 If a premium is to fulfill the objective of being a sales aid
for the product, it must be meaningful to the purchaser
 Sales promotion is generally not as sophisticated overseas
as it is in the U.S.
17-26
Public Relations

Various methods of
communicating with the
firm’s publics to secure a
favorable impression

Marketing of the firm

Improve image and
overcome negative
perceptions

Can work through
government agencies
17-27
Pricing

Important consideration in formulating marketing
strategy

Major determinant of profit
To obtain the maximum benefit from pricing
management must see pricing is one of the
marketing mix elements that can be varied to
achieve the marketing objectives of the firm
 Pricing is made more complex by

Interaction with the other functional areas
 Environmental forces

17-28
Interaction between Marketing
and Other Functional Areas
 The finance people want
prices that are both
profitable and conducive to
a steady cash flow
 Production supervisors want
prices that create large sales
volumes, which permit long
production runs
 The legal department
worries about possible
antitrust violations when
different prices are set
according to type of
customer
17-29



The tax people are
concerned with the effects of
prices on tax loads
The domestic sales manager
wants export prices to be
high enough to avoid having
to company with parallel
importing
The marketer must address
all these concerns and
consider
 Legal forces
 Environmental forces
Standardizing Prices
 Pricing for overseas markets
is more complex because
management must be
concerned with
 Foreign national pricing
 Domestic pricing in
another country
 International pricing
 Setting prices of goods
for export for both
unrelated and related
firms
Distribution
 In the international arena, marketing managers
must concern themselves with two functions rather
than one
 Getting the products to foreign markets (exporting)
 Distributing the products within each market
 In making decisions on distribution
 care must be taken to analyze the interdependence with
other marketing mix variables.
 Channel decisions are critical
 These are long term decisions
17-31
Distribution Strategies
 International Standardization
 Management would prefer to standardize
distribution patterns internationally
 However, two fundamental constraints exist
 The variation in the availability of channel
members among the firm’s markets
 The inconsistency of the influence of the
environmental forces
 Economic differences can also make
standardization difficult
17-32
Channel Selection
 Direct or Indirect Marketing
 The first decision that

management must make
is whether to use
middlemen
Export sales may be
consummated by local
agents if


17-33
Management believes this is
politically expedient
The country’s laws demand
it
 Factors Influencing Channel
Selection
 Market Characteristics
 Best coverage
 Product Characteristics
 Company Characteristics
 Financial and managerial
resources
 Middlemen’s
Characteristics
 After-sales servicing
Cultural Differences






Never touch the head of a Thai or pass an object over it; the
head is considered sacred in Thailand.
Avoid using triangular shapes in Hong Kong, Korea, and
Taiwan; the triangle is considered a negative shape.
The number 7 is considered bad luck in Kenya and good luck
in Czechoslovakia, and it has magical connotations in Benin.
The number 10 is bad luck in Korea, and 4 means death in
Japan.
Red is a positive color in Denmark, but it represents witchcraft
and death in many African countries.
A nod means no in Bulgaria, and shaking the head from side
to side means yes.
The "okay" sign commonly used in the United States and the
United Kingdom (thumb and index finger forming a circle and
the other fingers raised) means zero in France, is a symbol for
money in Japan, and carries a vulgar connotation in Brazil.
Honda Japan