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Global Marketing Integration
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Export marketing
The international marketing dimension involvesmarketing across national borders. This is differentfrom domestic marketing because the mere fact of crossing the border confronts with new economic,political, and legal constraints, such as floatingexchange rates, boycotts, and international law.
These constraints will usually force modification of the firm’s marketing program as it crosses national
boundaries.
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Foreign marketing
The foreign marketing dimension involves marketingwithin foreign countries, as a U.S firm markets inBelgium or Brazil. Such marketing is unlike domesticmarketing because that firm faces different kinds of competition, consumer behavior, distributionchannels, and promotional possibilities in Belgium or
Brazil from what it is familiar with at home. The tasksis further complicated because each country has anindividual idiosyncratic marketing environment.
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Multinational marketing
The multinational marketing dimension emphasizes thecoordination and integration of the firm’s marketing
in many diverse foreign environments. The uniquenature of each foreign market fragments theinternational marketing effort and bringsdiseconomies of scale. The international marketer must plan and control carefully to maximize the
integration and synergy in the global marketingprogram while minimizing the costs of adapting toeach foreign market.
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International Marketing Defined
International marketing: the performance of
business activities that direct the flow of acompany’s goods and services to consumers
or users in more than one nation for a profit.
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Country market Cenvironment(uncontrollable)
Country market Benvironment
(uncontrollable)
Country market Aenvironment
(uncontrollable)
The International MarketingTask
Po
litical/legalforces
Economicforces1
2
Competitivestructure
CompetitiveForces
Level of Technology
Price Product
PromotionChannels of distribution
Geographyand
Infrastructure
Foreign environment(uncontrollable)
Structure of distribution
Economic climate
Cultural
forces
3
45
6
7Political/
legalforces
Domestic environment(uncontrollable)
(controllable)
Irwin/McGraw-Hill
Copyright©2002 by The McGraw-Hill Companies, Inc. All rights reserved.
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Evolution of Marketing
Domestic Marketing - ethnocentric
Export Marketing- ethnocentric International Marketing - polycentric or
multidomestic
Multinational Marketing- regiocentric
Global Marketing - geocentric
Domestic export international multinational globalmarketing marketing
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Meeting International Challenges
Be prepared and develop activeresponses.
Develop new strategies.
New plans are needed.
Adaptation to the new
environment and markets.
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The main steps in the marketing
management process
R – STP – MM – I – C
R= researchSTP= Segmentation, Targeting, Positioning
MM= Marketing-mix
I= ImplementationC=control
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MARKETING-MIX
4 Ps 4Cs
1.Product Customer value
2. Price Cost to the customer 3. Place Convenience
4. Promotion Communication
-------------------------------------------------------------
5. Probe Customer, consumer
6. Phacilitate (Facilitate) Consumptionservices
7. Plan Curve
8. People Count
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The ProcessStages in the Marketing ProcessAnalysis:• Collect data from sources- primary and secondary, internal and external,
formal and informal. Screen data for opportunities to employ company
resources for competitive advantage.
Planning:• Develop a marketing plan which includes a situation analysis, goals and
objectives, long-term strategies and short-term tactics, cost and profit
estimates, and anticipated changes in organizational structure.
Implementation:
• Take actions to put the plan into action. Adjust implementation activitiesto account for environmental changes in market conditions.
Control:• Use annual planning (sales to forecast), profitability, and efficiency
controls to monitor the plan’s successes and failures.
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CHAPTER 2.
THE INTERNATIONAL ENVIRONMENT
1. ECONOMIC AND FINANCIAL FACTORS
2. SOCIO-CULTURAL ENVIRONMENT3. POLITICAL/LEGAL ENVIRONMENT
4. COMPETITION
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ECONOMIC AND FINANCIALFACTORS
1. Population, Income (Per capita income, GNP)2. Convertibility or possibility of effective utilization of
resources; financial stability.3. Banking facilities available and nature of credit
facilities offered, short medium and long-term(conditions, terms, interest rates. etc.)a) Domestic
b) foreignc) Governmental or other lending institutions andfacilities.
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ECONOMIC AND FINANCIAL
FACTORS
4. Availability of local and accounting services.
5. Currency, exchange rates and controls6. Capital repatriation and remittance of profits,licensing and other payments.
7. Availabilities of insurance
8. Situation of the Balance of Payments9. Communications and transports
10. Urbanization
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ECONOMIC AND FINANCIALFACTORS
11. Market prospect
+ Estimated size, trends, and potential of market in the country
+ Export markets and estimated size
+ Sources of market information
+ System of distribution of good
12. Product and product modification
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2.SOCIO-CULTURAL ENVIRONMENT
1. The elements of culture
Language
Nonverbal languageReligion
Values and attitudes
Manners and customs
Material elements
AestheticsEducation
Social institutions
Family
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2.SOCIO-CULTURAL ENVIRONMENT
2. Adapting to cultural differences
Some companies have made special effortsto adapt their products or services to variouscultural environments.
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Cultural factors
+ Never touch the head of a Thai or pass and object over it. Thehead is considered sacred in Thailand
+ Avoid using triangular shapes in Hong Kong, Korea, and Taiwan.+ The number 7 is considered bad luck in Kenya and good luck in
the Czech republic and Magical connotation in Benin, Africa.
+ The number 10 is bad luck in Korea
+ The number 4 means death in China
+ Red represents death in many African countries.+ Red is a positive color in Denmark
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Cultural factors
+ In Canada information on products is often providedin English and French.
+ Swiss chocolate manufactures know that UScustomers believe Swiss chocolate product are of high quality (value), so that companies emphasizetheir Swiss origin and thus generate high sales.(attitude)
In short, by being aware of the value and attitudesof the people in the culture, a business firmeffectively position its product.
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Cultural factors
Education influences many aspects of culture.
Education also helps to provide infrastructureneeded for developing managerial talent.
For example, educationally advanced countrieslike England, France… are more likely to be
markets for computers and other high –techequipment than poor countries.
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2.SOCIO-CULTURAL ENVIRONMENT
3. The authors of Managing Culture Differences(Philip R. Harris and Robert T. Moran, 1987) offer
the following ten tips to deflate the stress andtension of cultural shock:
Be culturally prepared.
Learn local communication complexities
Mix with the host and nationals.
Be creative and experimental.
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2.SOCIO-CULTURAL ENVIRONMENT
Be culturally sensitive
Recognize complexities in host cultures. Perceive oneself as a culture bearer.
Be patient, understanding, and accepting of oneself and hosts.
Be most realistic in expectations. Accept the challenge of intercultural
experiences
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3. POLITICAL/LEGAL ENVIRONMENT
Role of government Government controls
+ License requirements+ Tariffs+ Quotas+ Extra taxes+ Qualitative controls+ Exchange controls
Promotional activities Financial activities Information services Export facilitating activities Promotion by private organizations
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4. COMPETITION
4.1.Nature of competition+ The structure of competition: the number and types of
competitors;+ The action of competitors: the competitive tools available to
marketing executives in the decision areas of product, channel,price, and promotion
+ Competition in international markets4.2. Factors influencing competition
(1) General business, cultural. Economics, and socialconditions; (2) costs; (3) laws and regulations; and (4) Theactivities and policies of competitors themselves affectcompetition.
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CHAPTER 3. RESEARCHING THE
WORLD MARKET
1. SOURCES OF INFORMATION
2. THE EXPORT MARKETING RESEARCHPROCESS
3. SEGMENTATION
4. FOREIGN MARKET PORTFOLIOS:TECHNIQUE AND ANALYSIS
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INTERNATIONAL MARKETING
RESEARCH
The scope of research:
+ Market measurement studies+ Competitive studies
+ Environmental studies
International marketing research is used tomake strategies and tactical decisions.
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International marketing research
The importance of International marketingresearch:
Before making market entry, product position,or marketing mix decision, a marketer musthave accurate information about the marketsize, market needs, competition, and so on.Marketing research provides the necessaryinformation avoid the costly mistakes of poor strategies or lost opportunities.
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1.SOURCES OF INFORMATION
1.1. Secondary data
+ Internal source+ External source
1.2. Primary data
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1.1. Secondary data
+ Internal sourceSales and cost records, markets,… + External sourceUN, OECD, EU, IMF, WB, IBRD, IFC… Embassy, Consulate;Non -government agencies;Universities and other educational institutions… Internet
CD-ROMThe Business International Market Report.…
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1.1.Secondary data
The major issues are data
availability, reliability andcomparability.
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1.2. Primary data
Primary data can be collected in four broadways:
+ Observation
+ Focus groups
+ Surveys
+ Experiments
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Primary data
Observation research: Fresh data can be gatheredby observing the relevant actors and settings.
EX; The American Airlines researchers might hangaround airports, airline offices, and travel agencies tohear travelers talk about the different carriers andhow agents handle the flight arrangement process.The researchers can fly on American andcompetitors’ planes to observe the quality of in-flightservice and hear consumer reactions. Thisexploratory research might yield some usefulhypotheses about how travelers choose their air carriers.
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Primary data
Focus groups research: A focus group is agathering of six to ten persons who spend a few
hours with a skilled interviewer to discuss a project,service, organization, or other marketing entity. Thediscussion is recorded through note taking or Audioor video tape and is subsequently studied tounderstand consumer belief, attitudes, and behavior.
In American Airlines example, the group interviewer may start with a broad question, such as “ How doyou feel about air travel?”
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Primary data
Survey research: Survey research standsmidway between observational and focusgroup research, on the one hand. Andexperimental research on the other hand.
Companies undertake surveys to learn about
people’s knowledge, beliefs, preferences,satisfaction, and so on, and to measurethese magnitudes in the population.
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Primary data
Experiments research: the most scientifically validresearch is experimental research.
Experimental research calls for selecting matchedgroup of subjects, subjecting them to differenttreatments, controlling extraneous variable, andchecking whether observed response differences arestatistically significant. The purpose of experimental
research is to capture cause-and- effectrelationships by eliminating explanations of theobserved findings.
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Primary data
Research instrument: Questionnaires
Contact methods:+ The mail questionnaire
+ Telephone interviewing
+ Personal interviewing
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1.2. Primary data
The challenges:
+ Comparability of data+ Willingness of potential respondent
+ Ability of the respondent to understand andcommunicate.
( Challenge in survey research involvestranslation from one language to another)
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1.2. Primary data
To avoid these translation errors, experts suggest thetechnique of back-translation. First, thequestionnaire is translated from the home languageinto the language of the country where it will beused, by a bilingual who is a native speaker of theforeign country. Then this version is translated backto the home language by bilingual who is nativespeaker of the home language. Another translation
technique is parallel translation, in which two or moretranslators translate the questionnaire. The resultsare compared, and differences are discussed andresolved.
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Using the internet and e-mail data
collection
Some problems:
+ Sampling+ Language
+ Respondent cooperation
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2.THE EXPORT MARKETING
RESEARCH PROCESS
Problem formulation
Research method and design Data collection techniques
Sample
Data collection
Analysis and interpretation
Reporting results
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Research study report
+ Cover: topic, organization, name of author, time… + Abstract
+ Table of contents+ List of figures+ List of tables+ Chapter1. Introduction
Problem statementObjectives of studyScope and research methodStructure of study
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Research study report
+ Chapter 2. Literature review
+ Chapter 3. Introduction of the company or Sector of…
+ Chapter 4. Research design+ Chapter 5. Presentation and critical discussion of
results
+ Chapter 6. Conclusions and recommendations,
further research+ References
+ Appendix
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3. Foreign consumers and foreign
markets
3.1. Foreign consumers
+ How foreign consumers differ
+ What they buy
+ Why they buy
+ Who makes the purchase decision
+ How they buy+ when they buy
+ Where they buy
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3. Foreign consumers and foreign
markets
3.2. Foreign industrial markets
+ What they buy+ Why they buy
+ Who makes the purchase decision
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3. Foreign consumers and foreign
markets
3.3 Foreign government
+ The size of government’s role as customer, however,
varies from country to country+ Another variable in the economic role of government
is the kind of economic activity undertaken.
+ Government markets differ from consumer and
industrial markets in what they buy, how they buy,and why they buy- and government in differentcountries also vary among themselves on thesedimensions.
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Export market segmentation
1) It is important to note that any decision tosegment on particular basis should beevaluated in term of the following:
+ Measurability
+ Accessibility
+ Profitability
+ Actionability
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Export market segmentation
2) Base of segmentation
+ Country market level; demographic and population
characteristics ; socio-economic characteristics;political characteristics; cultural characteristics.+ Customer market level: Demographiccharacteristics: age, gender, life cycle, religion,nationality, etc;
socio-economic characteristics : income, occupation,education, etc.
Psychographic characteristics: personality
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Export market segmentation
The four strategies:
+ Increase penetration (existing product andmarkets)
+ Develop products (new products in existingmarkets)
+ Extend markets (existing products in newmarkets)
+ Widen activities (new products and markets)
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4. Foreign market portfolios: technique
and analysis
Country attractiveness/ competitive strength matrix
Using these variables, and some scheme for
weighting them, countries are classified into one of the nine cells depicting relative market investmentopportunity.
+ Invest/grow countries
+ Harvest/divest/license/combine countries+ Dominant/divest countries
+ selective countries
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4. Foreign market portfolios: technique
and analysis
Country attractiveness
Market size (total and segments)
Market growth (total and segments)Market seasons and fluctuations
Competitive conditions (concentration, intensity, entrybarriers, etc.)
Market prohibitive conditions ( tariff, non tariff barriers,import restrictions, etc.)
Economic and political stability.
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4. Foreign market portfolios: technique
and analysis
Competitive strength
Market share
Marketing ability and capacityProduct fitContribution marginImageTechnology positionProduct qualityMarket supportQuality of distributions and service
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4. Foreign market portfolios: technique
and analysis
Invest/grow Invest/grow Dominate/divest
Join venture
Invest/grow Selectivitystrategies
Harvest/divest/
License/combinecountries
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CHAPTER 4. EXPORT MARKET ENTRYSTRATEGIES
1. ENTRY AS STRATEGY
2. FACTORS INFLUENCING CHOICE OFENTRY MODE
3. EXPORT ENTRY MODES
4. NON-EXPORT ENTRY MODES
5. SELECTING THE ENTRY MODE
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1.ENTRY AS STRATEGY
The elements of entry strategy:
+ The objectives and goals in target market;
+ Needed policies and resource allocations;
+ The choice of entry modes to penetrate themarket;
+ The control system to monitor performance in the market
+ A time schedule
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2. FACTORS INFLUENCING CHOICE
OF ENTRY MODE
Target market
Product Availability of marketing organization
Company considerations
Government policies
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3. EXPORT ENTRY MODES
3.1. Indirect export+ Export merchants
+ Trading company+ Export commission house+ Resident buyer + Broker + Export management company+ Manufacturer’s export agent + Cooperative organization:
Piggyback marketing; Exporting combination
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3. EXPORT ENTRY MODES
3.2.Direct export
+ Home country based department:
1) Built-in department2) Separate export department
3) Export sales subsidiary
+ Foreign sales branch
+ Storage or warehousing facilities+ Traveling salesperson
+Foreign based distributors and agents
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3.2.Direct export
With direct export, manufacturer of exportable goods undertakes the entireexport process without any intermediaries.
By becoming a direct export exporter, thefirm takes responsibility for the entire range
of export activities starting with identifyingcustomers through to collecting payment.
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3.2.Direct export
In order to export directly, the firm may haveto establish an export department fromdomestic sale division which could be fundedon the basis its requirements. Employees of the department must be trained in foreign
trade affaires.
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3.2.Direct export
Direct exporting has several advantages such as:
1. The firm is able to control the whole process of export.
2. The firm can increase net profit because of operating withoutexpenditure for intermediary.
3. The firm can develop closed relation with foreign partners.
But, the firm is responsible for the following aspects:
1. The firm have to spent time and money to success in foreignmarket.
2. The firm must suffer directly risks may be occurred.
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What is involved in a typical export
process?
An export process involves three main functions: feasibilityanalysis, planning foreign market entry, and implementation.These functions involve 20 steps.
FEASIBILITY1. Analyze domestic performance of the business2. Assess the firm’s capability. 3. Research various factors of population, economy, politic and
society of target markets.4. Confer with experts of international trade concerning
marketing, financial, legal problems and delivery term of goods and services.
5. Select target market
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What is involved in a typical export
process?
PLANNING FOREIGN MARKET ENTRY
6. Conduct market research concerning section of good andspecific products to be exported.
7.Make plan, strategy or entering target markets.
8. Collect knowledge about country’s requirements concerningcertificates, standards and licenses of target countries.
9. Collect necessary documents concerning license, trade.Copyright protection of target countries.
10. Identify internal: import taxes, quotes or other non-tariff tradebarriers of the target countries.
11. Establish pricing schedule.
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What is involved in a typical export
process?
IMPLEMENTATION12. Determine method of sale.
13. Establish marketing methods.14.Choose sale representatives or sales methods.15. Negotiate financial problems.16. Obtain insurance of good17. Complete the required paper work.18. Package and label products.19. Ship products20. Get payment.
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The most common mistakes made by
exporters
The following are twelve most common mistakes often made bysmall firm as they begin to export or expand business onforeign markets:
1. Lack of full investigation of market, lack of qualified exportexpert enable to make international business strategy andmarketing plan before starting an export business;
2. Lack of support by administrative offices to overcome initialdifficulties and financial problems of exporting;
3. Inadequate care in selecting overseas sales representatives or distributors.
4.Seeking orders from a lot corners of the world rather thanconcentrating on one or two main geographical areas;
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The most common mistakes made by
exporters
5.Neglecting export to foreign markets when domesticmarkets booms;
6. Lack of treating international distributors andcustomers on an equal basis with domesticcounterparts;
7. Assuming that a particular trade technique andproduct will automatically be successful in manycountries;
8. Unwillingness in modifying products in order to meetregulations or cultural preferences of foreigncountries
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The most common mistakes made by
exporters
9. Lack of printing information of sale, guarantee andafter-sale service in foreign language;
10. Lack of considering the use of an exportdevelopment company if the firm cannot afford itsown export department because of lacking financialor other conditions;
11. Worry about expenditure for investigating new
markets, so that lacking of definitiveness in export;12. Lack of providing after-sale services for the product.
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4. NON-EXPORT ENTRY MODES
Licensing
Franchising
Assembly operations
Contract manufacturing
Joint venture
Wholly owned plant
Management contracting
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5.
Naive rule
Pragmatic rule
The strategy rule
SELECTING THE ENTRY MODE
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CHAPTER 5. PRODUCT DECISIONS
1. PRODUCT PLANNING ANDDEVELOPMENT
2. PACKAGING
3. BRANDING ISSUES
4. PRODUCT MIX DECISIONS
5. STANDARDIZATION VS ADAPTATION
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1. PRODUCT PLANNING AND
DEVELOPMENT
1.1. New product development
1.2. Changes in existing products
1.3. Finding new uses for existing products
1.4. Product elimination
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1.1.New product development
New product decision process:
Idea generation
Initial screening
Business analysis
Develop the product
Market testing
Commercialization
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2. Standardization vs. adaptation
+ Standardization is common for certain agriculturalproducts, raw materials, and processed commodities
sold to industry.+ Adaptation can be mandatory or voluntary.
Mandatory adaptation may be required because of such things as language differences, differing
electrical systems, differing measurement systemsand product specifications, and governmentrequirements.
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2. Standardization vs. adaptation
In general, however, some type of mandatoryadaptation may have to be made or a voluntary
change (minor or major) may be beneficial.EX: Product Adaptation
+ Sony TV Voltage, broadcast standard
+ McDonald’s Menu, decor of restaurant
+ Levi jeans Size mix, fabric, cut+ Coca-cola Brand name (China), package
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3.PACKAGING
VIEW
V- visibility
I- informative
E- emotional impact
W- workability
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4. BRANDING ISSUES
A brand; a brand name; a trademark; label;logo; slogan
Brand protection
Branding decisions
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Choosing a brand name
(1) It should suggest something about the product’sbenefits
EX: Beautyrest mattress, Craftsman tools(2) It should suggest product qualities such as action or
color.
EX: Sunkist oranges, Firebird automobile
(3) It should be easy to pronounce, recognize, andremember, short names help.
EX: Tide, Crest
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Choosing a brand name
(4) It should be distinctive.
EX: Kodak, Exxon.
(5) It should not carry poor meaning in other countries and language.
EX: Nova Is a poor name for a car to be sold in
Spanish-speaking countries; it “doesn’t go”
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Brand protection
+ The international Convention for theprotection of Industrial Property (Paris
Union).
+ The Madrid Agreement for InternationalRegistration of Trademarks.
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Branding decisions
+ Selecting a good brand
+ Determining how many brands should be inthe company’s product line
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Branding decisions
(1) A single brand, or family brand
(2) Individual (local) brands
(3) Multiple brands
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Tools for building the brand identity
(1) Owned word
EX: Company Word
Volvo “Safety”
BMW “Driving performance”
Federal Express “Overnight”
Apple computer “graphics”
Kodak “Film”
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Tools for building the brand identity
(2) Slogan
EX: AT&T: “The Right choice”
Budweiser: “The King of Beers”
Fort: “ Quality is Our Number One job”
General Electric: “ We bring Good Things
to life” British Airways: “The Word’s Favorite
Airline”
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Tools for building the brand identity
(3) Colors
EX: Yellow is also the corporate color of Kodak firm.
IBM uses blue in its publications
(4) Symbols and logos
Chanel No.5 used Catherine Deneuve, One of the word’s mostbeautiful women, as its symbol,
(5) A set of stories
Some brands will be associated with stories, which are benefit if favorable and interesting, about the company or brand. Thestories might relate to the founder (s) and the struggle to createthe company.
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4. PositioningIn searching for a specific positioning, the business unit
should consider the following possible sources:+ Attribute positioning:EX: A hotel describes itself as the city’s tallest hotel + Benefit positioning:EX: Volvo claims that its cars are safer + Use/application positioning:
EX: Nike might describe one of its shoes as the best towear for racing and another as the best to wear for playing basketball
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4. positioning+ User positioningEX: Apple Computer describes its computers and
software as the best for graphic designers+ Competitor positioningEX: 7 UP called itself the Uncola+ Category positioningEX: Kodak means film; Xerox means copy machines
+ Quality/price positioningEX: Chanel No 5 is positioned as a very high-quality,
high-price perfume.
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Choosing a specific positioning
Companies need to go beyond a broad positioning toexpress a more concrete benefit and reason to buy:
Best quality Best performance
Most reliable
Most durable
Safest Fastest
Best value of the money
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Choosing a specific positioning
Least expensive
Most prestigious
Best designed or style
Easiest to use
Most convenient.
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CHAPTER 6. PRICING DECISIONS
1. DETERMINANTS OF AN EXPORT PRICE
2. FUNDAMENTAL EXPORT PRICING
STRATEGY3. RELATION OF EXPORT TO DOMESTIC
POLICIES
4. CURRENCY ISSUES
5. SETTING UP EXPORT PRICE?
6. TRANFER PRICING
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1. DETERMINANTS OF AN EXPORTPRICE
Costs
Market conditions (demand)
Competition
Legal/political influence
Environmental factors ( Exchange rate
fluctuations, inflation rates, price controls) Company policies
Marketing-mix
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2. FUNDAMENTAL EXPORT PRICINGSTRATEGY
Skimming pricing
Penetration pricing
Extinction pricing
Marginal cost pricing
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3.RELATION OF EXPORT TODOMESTIC POLICIES
Export prices lower than domestic
Export prices higher than domestic
Export prices on a par with domestic prices
EXPORT PRICE ESCALATION
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EXPORT PRICE ESCALATION
Domestic Sale Export saleFactory Price $ 7.50 $ 7.50Domestic Freight .70 .70
8.20 8.20Export Documentation .50
8.70Ocean Freight & Insurance 1.20
9.90Import Duty (12% of landed cost) 1.19
11.09Wholesale Markup (15%) 1.23
9.43
Importer/Distributor Markup (22%) 2.4413.53
Retail Markup 50 % 4.72 6.7714.15 20.30
Final consumer Price $14.15 $20.30
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4. The price quotation
There are two systems of definition that areused by exporters throughout the world:
+ INCOTERMS 2000
+ The revised American Foreign Trade
definitions -1941
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Selection of trade terms
In deciding when to use each term exporters should consider thefollowing factors:
Whether shipment will be made on domestic or foreign carries.
Availability of insurance coverage Availability of information on costs Exporter’s need for cash ( reason against C&F and CFR/CPT) Needs of importers to have quotes from several suppliers that
can be readily compared ( reason for CIF and CIP) Currency convertibility problems. FOB vessel is often desirable
so that the buyer pays freight in his own currency. Of course,the carrier still has the convertibility problem, unless it is thebuyer’s country.
Requirements of the government of the importing nation.
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How does an exporter prepare anaccurate quote?
Listed below are variables that should be considered while preparing the quote Packaging, marking and labeling costs Rates of interest at which export finance has been availed Costs of direct materials and labor for the production of the goods Factory overhead expenses Clearing and forwarding charges Port trust charges Insurance premium, export duties, warfare and portage Shipping charges Commission
Incentive available from government such as duty drawback After calculating to above mentioned expenditures, a reasonable profit margin maybe added to arrive at a final price. If there still other subsidiary expenditures, it’snecessary to add while making quotation.
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STRUCTURE OF EXPORT PRICE
1. Base cost per unit2. Export packing, labeling, marking3. Product inspections charges4. Profit or mark-up
5. Inland freight to6. Unloading at port/air port7. Terminal charges8. Export duty (if any)9. Loading charges-----------------------------------
1-9 FOB10. Ocean/air freight to destination
-------------------------------------------1-10 CFR
11. Insurance--------------------------------------------
1-11 CIF
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The choice of currency for export pricequotes
There are two basic alternatives available:The quote in U.S dollars, or quote in
customers’ currencies.
EX I thi l th d
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EX: In this example the goods areplanned to be moved by sea and
shipment is not containerized.
Product charges and price ($)
Product cist: $10 per unitx100 units 1000
Target mark-up: 10% of product cost 100Oversea agent’s commissions: 5% 50
-------
1150
Financing costs on production: 8% 80
Export packing charges 100Labeling and marketing for 100 units 50
Other direct export costs 20
EXW price (ex factory) 1400
EX: In this example the goods are planned to bemoved by sea and shipment is not containerized.
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moved by sea and shipment is not containerized.
Inland freight to port of shipment 100Unloading, other charges at port of shipment 100FAS price (port of shipment) 1600
Loading charges on ship 50Export documentation, clearance for export 30FOB Price (port of shipment) 1680Ocean freight to port of destination 300CFR price (product costs and freight/port of destination 1980Insurance coverage 20
CIF Price (product costs, insurance, freight/port of destination) 2000
Notice how the CIF price is double the initial product cost. This shows howimportant it is to work through these costing carefully.
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5. TRANFER PRICING
Decentralization and profit centers
Transfer pricing to wholly-owned foreign
subsidiaries:+ The factor: Competitive market price
Cost
Legal restrictions+Transfer pricing to partially-owned foreignenterprises
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CHAPTER 7. CHANNELS ANDDISTRIBUTION STRATEGIES
1. CHANNEL STRUCTURE
2. MANAGING THE DISTRIBUTION SYSTEM
3. GAINING ACCESS TO DISTRIBUTIONCHANNELS
4. GLOBAL TRENDS IN DISTRIBUTIONSYSTEM
5. INTERNATIONAL PHYSICALDITRIBUTION
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1. CHANNEL STRUCTURE
1.1. Indirect export1.2. Direct export
+ Home country based department:1) Built-in department2) separate export department3) Export sales subsidiary
+ Foreign sales branch
+ Storage or warehousing facilities+ Traveling salesperson+Foreign based distributors and agents
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2. MANAGING THE DISTRIBUTIONSYSTEM
2.1. Motivating channel participants
2.2.Controlling channel participants
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2.1. Motivating channel participants
Financial incentives
Annual conferences
Help to the management of distributorship
Special programs
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2.2.Controlling channel participants
Spell out the specific responsibilities
The awarding of exclusive distribution rights
3. GAINING ACCESS TO
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DISTRIBUTION CHANNELS
3.1. The “locked-up” channel
3.2. Alternative entry approaches
+ Piggybacking
+ Joint ventures
+ Original equipment manufacturers (OEMs)
+ Acquisitions
+ Starting your ventures
4.GLOBAL TRENDS IN DISTRIBUTION
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SYSTEM
Five major trends seem dominant throughoutthe world:
Large-scale retailers
International retailers
Direct marketing
Discounting Information technology
5. INTERNATIONAL PHYSICAL
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DITRIBUTION
Export restrictions
Foreign market import restrictions
Export documentation
The foreign freight forwarder
Export packing
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CHAPTER 8. PROMOTION ANDMARKETING COMMUNICATIONS
1.INTRODUCTION
2.INTERNATIONAL ADVERTISING
3. PUBLICITY AND PUBLIC RELATIONS4. PERSONAL SELLING
5. SALES PROMOTION
6. PROMOTIONAL PROGRAM ANDSTRATEGY
7. DIRECT MARKETING
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1.Introduction
1.1. Promotion -mix
1.2. Communication barriers
1.3. Export marketing promotion andcommunication decisions
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1.Introduction
1.1. PROMOTION-MIX
Advertising
Sales promotion
Publicity
Personal selling
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1.2. Communication barriers
Communication barriers
+ Language differences
+ Government regulations
+ Media availability
+ Economic differences
+ Tastes and attitudes
+ Buying process
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1.3. Export marketing promotion andcommunication decisions
What message?
What communications media?
How much effort or money to spend?
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2.SALES PROMOTION
+ Foreign catalogs
+ Samples
+ House organ and company-publishedmagazines
+ Films, slides, and personal computers
+ Trade fairs and exhibitions+ Point-of-purchase materials
+ Consumer promotion materials
3 PUBLICITY AND PUBLIC
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3. PUBLICITY AND PUBLICRELATIONS
3.2. Publicity: Any form of nonpaid,commercially significant news or editorial comment about ideas,products, or institution.
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Uniform approach to advertising
+ There are no notable differences on customer’s productawareness.
+ Buying motives, purchase behaviour, and product usage are
identical or nearly so.+ Copy translation does not lead to obvious misunderstanding,
negative connotations or undesirable associations.
+ Product quality, design and package variations between marketsare non-existent or insignificant.
+ In general, it appears that successful standardization isdependent on a similarly of the motivations for purchase and asimilarity of use conditions
Ad ti d ti d ti i t
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Adapting domestic advertising toforeign markets
Modification may be requires a company toadapt adverting strategy to current culture
variations and trends.Literacy rates and standards of education willhave a direct bearing on the amount of adaptation needed in advertising methods.
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5. PERSONAL SELLING
One of the most expensive marketingcommunication tools is the company’s sales force,especially when out in the field, traveling a lot, andspending considerable time hunting for prospectsand keeping existing customers satisfied.
The salesperson sees the customer and can takehim to lunch, gauge his interest, answer questions
and objections, and close the sale. The morecomplex the product or service, the more necessaryit is to use salespeople.
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PERSONAL SELLING
Today’s salespeople needs a laptop
computer, printer, copy machine, fax
machine, cellular phone, electronic mail,software, and so on.
With their laptop, they can access industry,product, and customer data, downloadbrochures, and print contracts.
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PERSONAL SELLING
KEY ACCOUNT MANAGEMENT SYSTEM
An increasing number of company are setting up key
account management system. Companies know thata few customers account for large share of their sales and profits. The company appoints keyaccount managers to manage their more importantaccounts, thus increasing the likelihood thatimportant customers will be better served and willremain loyal.
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6. Promotional program and strategy
This involves the following:
+ Setting promotional objectives;
+ Deciding on types of advertising andpromotional messages;
+ Selecting media;
+ determining how much time, effort, andmoney to spend.
7 DIRECT MARKETING
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7.DIRECT MARKETING
Direct marketing includes a number of marketing approaches that involve direct
access to the customer. Direct mail, door-to-door selling and telemarketing are theprimary direct marketing tools used in somecountries.
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7.DIRECT MARKETING
Many companies posses proprietary databasescomprising profiles on thousands or millions of
customers and prospects. Consider the following:+ General Motors has a database of 12,000,000 names
showing everything that these customers charged totheir GM credit cards.
+ Land’s End has a database of more than2,000,000names of people who bought one or more clothingitems from Land’s End.
CHAPTER 9. ORGANIZATION OFINTERNATIONAL MARKETING
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INTERNATIONAL MARKETING
ACTIVITIES
1. Main considerations of being organizedinternationally
2. Organizational structures
1 Main considerations of being
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1. Main considerations of beingorganized internationally
Definition of organizational subunits
Centralization vs. decentralization
Communication and control systems
2 Organizational structures
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2. Organizational structures
2.1.Functional export department ( built-in or separateexport unit )
2.2.International division structure2.3.International organization structure based on
product
2.4.International organization structure based on
geographic area or customer groupings2.5.International mixed structure; the matrix
organization