Download Foreign market pricing

11
chapter
Global
Marketing
Standardization for Global Markets
Elements of the marketing mix - product, price, place, and
distribution - may need to be standardized in order to ease production
and introduction into new markets.
There are three basic options to determine whether, and to what extent,
modifications need to be made to the marketing mix:
Standardization approach: policy of making no or minimal changes to
the marketing mix for the global marketplace.
Multidomestic approach: policy of adapting the marketing mix to suit
each country entered
Globalization approach: creation of a regionally or globally similar
marketing mix strategy.
Standardization versus Adaptation
Factors Encouraging
Standardization
Economies in product R&D
Economies of scale in production
Economies in marketing
Control of marketing programs
“Shrinking” of the world
marketplace
Factors Encouraging Adaptation
Differing use conditions
Government and regulatory influences
Differing buyer behavior patterns
Local initiative and motivation in
implementation
Adherence to the marketing concept
Product Policy
Regional,
Country, or
Local
Characteristics
Product
Characteristics
Company
Considerations
Decisions
to Alter
Domestic
Product
Local behavior, tastes, attitudes, and traditions affect product decisions
made by marketers of consumer products.
Product Positioning
The perception by consumers of a firm’s product in
relation to competitor’s products.
Product Policy
Product characteristics and consumer benefit may dictate a need to
standardize or adapt products for the international promotion -ingredients,
packaging and labels, brand names, and service requirements may need
changed according to the country of promotion.
Company considerations
Company policy - “Is it worth it?” - may determine a need for product
adaptation.
Product Line Management – consist of local, regional, and global brands.
Companies concentrate on the most profitable products which vary
dramatically from market to market.
Product Counterfeiting
Pricing Policy
International pricing is complicated by government
influence, different currencies, and additional costs.
Export Pricing
Foreign Market
Pricing
Price
Coordination
Transfer
(Intracompany)
Pricing
International Pricing
Export Pricing
Average unit cost of
Standard
fixed,
Worldwide price variable, and export
related costs.
Cost plus
Method
Dual pricing
Domestic
and export
prices
are differentiated.
Market
differentiated
pricing
Based on customer
demand rather
than cost
Full allocation of foreign and
domestic costs to the product
(discounts available when necessary)
The direct costs of producing and
selling goods for export as the floor
Marginal beneath which prices cannot be set.
Cost
(Fix cost, R&D, domestic overhead,
Method domestic marketing disregarded)
Marginal cost used as a basis.
Major problem: Exporters may lack
of foreign market information.
Foreign Market and Transfer Pricing
Foreign market pricing requires price discrimination by firms
conducting business in multiple countries, it is determined by:
corporate objectives, costs, customer behavior and market
conditions, market structure and environmental constrains.
Foreign market price gaps have led to gray marketing (the
marketing of authentic, legally trademarked goods through
unauthorized channels).
Transfer pricing is the pricing of products as sold by a firm to its
own subsidiaries and affiliates. Taxes, import duties, inflationary
tendencies, unstable governments, and other regulations must be
considered to establish transfer pricing.
Price coordination have increased after the introduction of the
euro in the twelve members of the European Union. (Same or vey
similar price among a group of countries).
Distribution Strategies
Distribution Channels provide the essential links that
connect producers and customers.
Channel design refers to the length and width of the
distribution channel
11 C’s of Channel Design
1. Customers
2. Culture
3. Competitors
4. Company objectives
5. Character
6. Capital
7. Cost
8. Coverage
9. Control
10. Continuity
11. Communication
(Demographic and Psychographic)
(The distribution culture of a market)
(Channels utilized by the competition)
(Management goals may conflict the channel)
(Influences channel length & design)
(Company’s financial strength)
(Expenditures incurred in maintaining it)
(Area & quality of representation)
(Potential loss of ctr. by using intermediaries)
(Short/long term relationship with distributors &
product improvement)
(Helps convey the marketer’s goals to the
distributors & solve conflicts)
Distribution Policy
Intermediaries are chosen after the channel design has been determined.
Open communication is required for a channel relationship to work well.
Below is a framework for managing a channel relationship.
TABLE 11.2 Managing Relations with Overseas Distributors
E-commerce in Distribution
Internet spending continues to increase despite the
continuation of a global recession.
Firms can select digital intermediaries to
help them enter the e-commerce arena.
Once a firm enters into e-commerce it must:
be prepared to offer 24-hour order taking and customer
service
have regulatory and customs-handling expertise to deliver
international purchases
have an in-depth understanding of marketing
environments for further future developments
Promotional Policy
A combination of the various promotional strategies will
create the product and firm’s image among the intended target
market.
Media Strategy is applied to the selection of media vehicles
and the development of a media schedule.
Media spending varies dramatically around the world; the U.S.
spends the most, over $163 billion in 2007 followed by China
at $77 billion.
The top spenders include General Motors, Procter & Gamble,
AOL/Time Warner, Daimler/Chrysler, and Philip Morris.
Promotional Policy
Creative Strategy is the development of the content of a promotional
message such as an advertisement, publicity release, sales promotion
activity or Web-based promotion.
Personal selling describes the marketing efforts focusing on one-toone efforts with customers.
Sales promotion involves such activities as coupons, sampling,
premiums, consumer education and demonstration activities, centsoff packages, point-of-purchase materials, and direct mail.
Public relations is the marketing communication function charged
with executing programs to earn public understanding and
acceptance