international marketing

(By Michael R. Czinkota, Georgetown University, LLkka A.

Ronkainen, Georgetown University)

Applied Marketing -Spring 08

1

Imported/Smuggled goods we buy/use/consume every day, every week, every month etc.? goods and services – movies also!

Since times immemorial (ancient) traders (and “carriers) frequently fly off to foreign lands and carry back many items “import” gold, spares, toys, garments etc.

The Importance of international marketing – Chinese goods have taken over the entire planet, it seems.

Applied Marketing -Spring 082

1. Understanding the importance of international marketing.

2. Appreciate the opportunities and challenges offered by international marketing.

3. Recognize the effect of the global environment on international marketing activities.

4. Understand the process of market selection.

5. Recognize the process of internationalization.

Applied Marketing -Spring 08 3

Learning objectives – contd.

6. Appreciate the different forms of market entry.

7. Comprehend the international adjustment of the marketing mix.

8. Understand the steps necessary for implementing

an international marketing strategy.



INTERNATIONAL MARKETING IS ---

“The process of planning & conducting transactions across national borders to create

exchanges that satisfy the objectives of individuals & organizations.”

Its forms range from export-import trade, to licensing, franchising, joint ventures, wholly

owned subsidiaries, & management contracts


Basic principles of marketing strategy still apply, but their implementation, complexity, & intensity may differ substantially.

Quality of Chinese goods may differ in Pakistan & The U.S.

Questions to asked to succeed in an I.M. - next slide.


1. How will my product fit into the international market?

2. What marketing adjustments are or will be necessary?

3. What threats from global and local competition should I expect?

4. How can these threats be turned into opportunities?

Foreign markets prove a source of growth,

profit, and needs satisfaction for the firm & lead to a higher quality of life.

Learning Objective 2: opportunities and challenges in international marketing

In order to exploit opportunities & avoid threats in international markets the firms, individuals, governments, etc. need to act aggressively with innovation, process improvements, and creativity.


Opportunities can be created/exploited in the following ways:

1.Integrate knowledge from around the globe

2.Expand long-run production,

3.Lengthen & rejuvenate product life cycles,

4.Competitive supply chains


Challenges in International marketing

International logistics

Small business mindset – following slide

Political and economic instability

Increased competition


Many believe only MNCs carry out international marketing

Smaller firms can also be major players: 50% of German exports from firms with 19 or fewer employees

Software developers



Learning Objective 3: The international marketing environment

Key international environments are the

1. Cultural 2. Socioeconomic, and 3. Legal/Political environments

Different in different countries & within the same country.


Cultural Environment

Challenge:

how to handle the differences

In languages, values & attitudes, C.B. and how to handle the impact of these differences on the implementation of the Marketing programs in the marketplace.

The international marketer plays the role of a Change agent trying to impress on a local consumer the need to adopt a new product.

Cultural – contd.

Cultural lifestyle has (some believe) four dimensions.

1. Degree of individualism vs. group decision making

2. Level of equality vs. class differences 3. Uncertainty avoidance; follow rules &

regulations. 4. Attitude towards material achievementTo foster cultural sensitivity & acceptance

of newways of doing things within the

organization,management must institute internal

trainingprograms


Figure 3.2 – Making Culture Work for You

Embrace Local Culture Employ Locals to Gain Cultural Knowledge

Build Relationships – visit, invite Adapt Products to Local Markets Help Employees Understand You Coordinate by Region – like holding regions meetings and share insights and strategies.



Aging & Elderly populations in the West and Aging & Elderly populations in the West and Japan – opportunities offered. Economic Japan – opportunities offered. Economic boom changes U.S. market characteristicsboom changes U.S. market characteristics

Huge populations in some countries - prime Huge populations in some countries - prime working age and driving both economic and working age and driving both economic and consumption growth.consumption growth.

Women who work outside create demand of Women who work outside create demand of packaged food, labor-savings devices & packaged food, labor-savings devices & house hold services.house hold services.


LEGAL AND POLITICAL ENVIRONMENT

Intellectual property rights is the protection provided by patents, copyrights, & trademarks.

WTO Common law: based on traditions & customs Code law: based on a comprehensive set of

written statutes. Antidumping laws: protecting domestic industry

from unfair competition from abroad


Learning Objective 4: international market selection

The process of target market selection involves narrowing down potential country markets to a feasible number of countries and market segments within them.


All CountriesAll Countries

Prospective Target Prospective Target CountriesCountries

Preliminary Screen:Preliminary Screen:1. General country factors1. General country factors2. Generic product-specific 2. Generic product-specific factorsfactors

Estimate Market Potential Estimate Market Potential by Product Types:by Product Types:

1. Size of national market1. Size of national market2. Potential of national 2. Potential of national marketmarket

Rejected Rejected CountriesCountries

Rejected Countries

Secondary Data

High Market Potential High Market Potential CountriesCountries

Highest Sales Potential Highest Sales Potential Countries – Target MarketCountries – Target Market

Estimate Sales Potential by Estimate Sales Potential by Company Products:Company Products:

1. Product comparisons1. Product comparisons2. Competition2. Competition3. Market structure3. Market structure4. Channel structure4. Channel structure5. Final consumers5. Final consumers

Rejected Rejected CountriesCountries

Other Target Other Target MarketsMarkets



Primary Data

Identifying Segments in Target Market

Optimal Segment Mix in Target Market

Rejected Segments


MARKET SELECTION

Concentration vs. DiversificationFew markets vs. Many marketsDual Concentration

Focus on a segment in a few countriesSuitable for smaller companies

Dual DiversificationFocus on most segments in most marketsUsed by large consumer-products

companies

Learning Objective 5: the internationalization process

The role of management:Managerial commitment to

international markets is crucialBecome aware of opportunitiesEnter in a limited fashion & evaluate

results Managerial commitment Motivations to go abroad Proactive motivations Reactive motivations


Learning Objective 6: alternative entry strategies Indirect exporting & importing Direct exporting & importing International intermediaries: help direct &

indirect exporter/importers in documentation, financing, and transportation.

Two major types are EMC and trading companies.

Export management companies (EMC) specialize in

performing business services as commissionrepresentatives or as distributors. EMC acts in the following forms:


1. Agent: (EMCs) do not take title to the products but develop marketing strategy and contacts.

2. Distributor: (EMCs) purchase products from the domestic firm an assumes the trading risk.

The second major intermediary is the tradingcompany which undertakes exporting, importing,countertrading, investing, and manufacturing-wider scope then EMC.

Sogoshosha are the trading companies of Japan:can purchase products, act as distributor abroad,or offer services – provide country information etc


Licensing: an arrangement in which one firm permits another to use its intellectual property (patents, trademarks, copyrights, technology etc.) in exchange for compensation, typically a royalty (paid by one firm to another under licensing & franchising agreement)

Benefits of Licensing: does not require hugecapital investment, or detailed involvement,earn income on R&D already conducted, no riskof Expropriation (take away somethingbelonging to somebody): risk of govt. takeover.


Entry strategies – contd.

Franchising is a form of licensing that grants wholesaler or a retailer exclusive rights to see a product or a service in a specified area.


Alternative entry strategies – contd.

Foreign Direct Investment (FDI) Investing abroad (buying firms) to gaincertain benefits – local taxes, marketingconsiderations and desire for expansion, thelocal economy also gains – MNCs also causedisplacement.

- A perspective on foreign direct investors: viewed with a mixture of awe and dismay-bring capital, provide employment etc.


- Types of ownershipfull ownershipjoint ventures – a collaboration of two or more organizations each contributing assets, owns the new subsidiary and share risk. strategic alliances: are informal or formal arrangements between two or more companies with a common business objective – more than vendor-customer relationship but less than an outright acquisition, have ongoing flexibility. They are network of companies that collaborate in the achievement of a given project – Motorway ! Contractual arrangements (manufacturing)


learning Objective 7: a company view of international expansion

The central driver of internationalization is the level of managerial commitment. This commitment will grow gradually from an awareness of international potential to the adaptation of an international strategic direction. It will be influenced by the information, experience, and perception of management, which in turn are shaped by motivation and concerns of the firm.



Figure 3.5 A Comprehensive Model of International Market Entry and Development

Multinational Focus

Domestic Focus

Alternative Strategies

Trading Export/importLicensing/Fr- anchisingLocal Presence alliances

full ownership

Level of Management commitment

Aware Interested Trial Evaluation Adaptation

Motivations Proactive Reactive

Intermediaries Export

Mgmt. Co. Trading Cos Facilitators

Concerns

Information Mechanics Communication Sales Effort Service Regulations


Adjusting the marketing mix:

International markets are approached in one of the three ways:

1. Standardized approach to international marketing in which products are marketed with little or no modification.

2. Multidomestic approach in which local conditions are adapted to in each and every target market.

3. Globalization approach: to international marketing in which differences are incorporated into a regional or global strategy that will allow for differences in implementation.

“think globally and act locally”


Three sets of influences shape the final form of the product and the adjustments to be made in the marketing mix.

Company Decisions: Profitability, marketopportunity, Policies. Macroenvironmental Influences: likeGovernmental regulations, customercharacteristics, expectations, preferences etc.(covered in the first chap.)Product (characteristics) decisions:

productconstituents, brand, positioning, packaging,after-sales service etc.


learning Objective 8: implementing marketing programs worldwide - To keep with the changing conditions actions have to taken with respect to the following:

1. management process: keeping relations with the head office and the local market – flow of information, globalization calls for centralization

2. organization structure: to keep with the change, regional product managers etc. develop long-term strategies, matrix structure etc.


international marketing

Documents

international markets

international marketing

marketing mix

target market

applied marketing

trading companies

georgetown university

rejected countries