international marketing

INTERNATIONAL MARKETING

CHAPTER 1.MARKETING AND INTERNATIONAL MARKETING

CHAPTER 2. THE INTERNATIONAL ENVIRONMENT CHAPTER 3. RESEARCHING THE WORLD MARKET CHAPTER 4. EXPORT MARKET ENTRY STRATEGIES CHAPTER 5. PRODUCT DECISIONS CHAPTER 6. PRICING DECISIONS CHAPTER 7. CHANNELS AND DISTRIBUTION STRATEGIES CHAPTER 8. PROMOTION AND MARKETING

COMMUNICATIONS CHAPTER 9. MARKETING ORGANIZATION,

IMPLEMENTATION, AND CONTROL

CHAPTER 1.MARKETING AND INTERNATIONAL MARKETING

1. INTRODUCTION

2. THE NATURE OF INTERNATIONAL MARKETING

3. EXPORT MARKETING PLANNING

4. GOALS OF INDIVIDUAL BUSINESS UNITS

1. INTRODUCTION

Internationalization and global marketer

Global Marketing IntegrationGlobal Marketing Integration

International Marketing

Total world trade volume in goods and services is around $8 trillion.

The world’s five exporting countries are the United States ($700 billion), Germany ($560 billion), Japan ($390 billion), France ($320 billion), and Britain ($260 billion), collectively accounting for 42 percent of global trade.

Global Marketing IntegrationGlobal Marketing Integration

Fords made in Mexico with Japanese parts, Fords made in Mexico with Japanese parts, Honda, Toyota, BMW, and Mercedes Benz Honda, Toyota, BMW, and Mercedes Benz open USA plants, and Isuzu of America makes open USA plants, and Isuzu of America makes Troopers and Rodeos with GM engines via Troopers and Rodeos with GM engines via joint venture.joint venture.

Honda manufacturing cars in USA, TI Honda manufacturing cars in USA, TI manufacturing semiconductors in Japan.manufacturing semiconductors in Japan.

Macintosh’s PowerBook 100 designed and Macintosh’s PowerBook 100 designed and manufactured by Sony.manufactured by Sony.

International Marketing - Intro

The Triad Regions (North America, Western Europe, and Japan) of the world collectively produce more than 80% of world GDP.

In the next ten to twenty years, Emerging Markets – the Chinese Economic Area (CEA: including China, Hong Kong, region, and Taiwan), India, South Korea, Mexico, Brazil, Argentina, South Africa, Poland, Turkey, and the Association of Southeast Asian Nations (ASEAN: including Indonesia, Brunei, Malaysia, Singapore, Thailand, and the Philippines, and Vietnam) will provide many opportunities in global business.

2.THE NATURE OF INTERNATIONAL MARKETING

What is international marketing?

Export marketing

Foreign marketing

Multinational marketing

Global marketing International marketing

Export marketing

The international marketing dimension involves marketing across national borders. This is different from domestic marketing because the mere fact of crossing the border confronts with new economic, political, and legal constraints, such as floating exchange rates, boycotts, and international law. These constraints will usually force modification of the firm’s marketing program as it crosses national boundaries.

Foreign marketing

The foreign marketing dimension involves marketing within foreign countries, as a U.S firm markets in Belgium or Brazil. Such marketing is unlike domestic marketing because that firm faces different kinds of competition, consumer behavior, distribution channels, and promotional possibilities in Belgium or Brazil from what it is familiar with at home. The tasks is further complicated because each country has an individual idiosyncratic marketing environment.

Multinational marketing

The multinational marketing dimension emphasizes the coordination and integration of the firm’s marketing in many diverse foreign environments. The unique nature of each foreign market fragments the international marketing effort and brings diseconomies of scale. The international marketer must plan and control carefully to maximize the integration and synergy in the global marketing program while minimizing the costs of adapting to each foreign market.

International Marketing DefinedInternational Marketing Defined

International marketing: the performance of International marketing: the performance of business activities that direct the flow of a business activities that direct the flow of a company’s goods and services to consumers company’s goods and services to consumers or users in more than one nation for a profit.or users in more than one nation for a profit.

Country market C

environment(uncontrollable)

Country market B

environment(uncontrollable

)

Country market Aenvironment

(uncontrollable)

The International Marketing Task

Political/legalforces

Economicforces

1

2

Competitivestructure

CompetitiveForces

Level of Technology

Price Product

Promotion Channels of distribution

Geography and

Infrastructure

Foreign environment(uncontrollable)

Structure ofdistribution

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.

Evolution of Marketing

Domestic Marketing - ethnocentric Export Marketing- ethnocentric International Marketing - polycentric or

multidomestic Multinational Marketing- regiocentric Global Marketing - geocentric

DomesticDomestic exportexport internationalinternational multinationalmultinational globalglobalmarketingmarketing marketing marketing

Meeting International Challenges

Be prepared and develop active responses.

Develop new strategies. New plans are needed. Adaptation to the new environment and

markets.

The main steps in the marketing management process

R – STP – MM – I – C

R= research

STP= Segmentation, Targeting, Positioning

MM= Marketing-mix

I= Implementation

C=control

MARKETING-MIX

4 Ps 4Cs1.Product Customer value2. Price Cost to the customer3. Place Convenience4. Promotion Communication------------------------------------------------------------- 5. Probe Customer, consumer6. Phacilitate (Facilitate) Consumption services7. Plan Curve8. People Count

The activities in international marketing include:

1. Detailed analysis of current markets and potential markets;

2. Planning and development of products that the consumers want, clearly defined in suitable package;

3. Distribution of products through channels which provide the services or conveniences demanded by purchases;

The activities in international marketing include:

4. Promotion of products to inform and educate consumers about products or services;

5. Setting of prices which reflect both a reasonable value (or utility ) of product to consumers; and

6. Technical and non-technical services given to the consumers-both before and after a sale is made.

Questions

1.How can international marketing be said to differ domestic marketing?

2. Identify and discuss the different ways firms can reach foreign markets.

3.EXPORT MARKETING PLANNING

3.1. Identifying and measuring market opportunity

3.2. Developing an export marketing strategy

3.3. Making export strategy operational

3.1. Identifying and measuring market opportunity

a) Preliminary screening

b) Estimating market potentials

c) Estimating sales potentials

d) Segmenting the market

3.2. Developing an export marketing strategy

a) Setting export objectives

b) Planning the marketing mix

Product, price, channels, promotion.

3.3. Making export strategy operational

a) Sales forecastsb) Sales budgetc) Sales quotasd) Production schedulese) Inventory controlf) Labor requirementsg) Promotional budgetsh) Financial budgeti) Profit budget

The ProcessStages in the Marketing ProcessStages in the Marketing Process

Analysis:• Collect data from sources- primary and secondary, internal and external,

formal and informal. Screen data for opportunities to employ company resources for competitive advantage.

Analysis:• 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.

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 activities

to account for environmental changes in market conditions.

Implementation:• Take actions to put the plan into action. Adjust implementation activities

to 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.

Control:• Use annual planning (sales to forecast), profitability, and efficiency

controls to monitor the plan’s successes and failures.

4. GOALS OF INDIVIDUAL BUSINESS UNITS

4.1 basis goalsProfit or nonprofit( volume of sales, market share, serving customer…).4.2 specific reasons Managerial urge Unique product/technology competence Risk diversification Foreign market opportunities Change agents Economics of scale Foreign marketing advantages Extend sales of seasonal product Excess capacity of resources

GOALS OF INDIVIDUAL BUSINESS UNITS

4.2 specific reasons Unsolicited foreign orders Small domestic market Stagnant or declining home market Resources Multinational, global, world companies Other goals

CHAPTER 2.THE INTERNATIONAL ENVIRONMENT

1. ECONOMIC AND FINANCIAL FACTORS

2. SOCIO-CULTURAL ENVIRONMENT

3. POLITICAL/LEGAL ENVIRONMENT

4. COMPETITION

ECONOMIC AND FINANCIAL FACTORS

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) Domesticb) foreignc) Governmental or other lending institutions and facilities.


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 insurance8. Situation of the Balance of Payments9. Communications and transports10. Urbanization


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

2.SOCIO-CULTURAL ENVIRONMENT

1. The elements of cultureLanguageNonverbal languageReligionValues and attitudesManners and customsMaterial elementsAestheticsEducationSocial institutionsFamily


2. Adapting to cultural differences

Some companies have made special efforts to adapt their products or services to various cultural environments.

Cultural factors

+ Never touch the head of a Thai or pass and object over it. The head 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

Cultural factors

+ In Canada information on products is often provided in English and French.

+ Swiss chocolate manufactures know that US customers believe Swiss chocolate product are of high quality (value), so that companies emphasize their Swiss origin and thus generate high sales. (attitude)In short, by being aware of the value and attitudes of the people in the culture, a business firm effectively position its product.

Cultural factors

Education influences many aspects of culture. Education also helps to provide infrastructure needed for developing managerial talent.

For example, educationally advanced countries like England, France… are more likely to be markets for computers and other high –tech equipment than poor countries.


3. The authors of Managing Culture Differences (Philip R. Harris and Robert T. Moran, 1987) offer the following ten tips to deflate the stress and tension of cultural shock:

Be culturally prepared. Learn local communication complexities Mix with the host and nationals. Be creative and experimental.


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

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

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 social conditions; (2) costs; (3) laws and regulations; and (4) The activities and policies of competitors themselves affect competition.

CHAPTER 3. RESEARCHING THE WORLD MARKET

1. SOURCES OF INFORMATION

2. THE EXPORT MARKETING RESEARCH PROCESS

3. SEGMENTATION

4. FOREIGN MARKET PORTFOLIOS: TECHNIQUE AND ANALYSIS

INTERNATIONAL MARKETING RESEARCH

The scope of research:

+ Market measurement studies

+ Competitive studies

+ Environmental studies

International marketing research is used to make strategies and tactical decisions.

International marketing research

The importance of International marketing research:

Before making market entry, product position, or marketing mix decision, a marketer must have accurate information about the market size, market needs, competition, and so on. Marketing research provides the necessary information avoid the costly mistakes of poor strategies or lost opportunities.

1.SOURCES OF INFORMATION

1.1. Secondary data

+ Internal source

+ External source

1.2. Primary data

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…InternetCD-ROMThe Business International Market Report.…

1.1.Secondary data

The major issues are data availability, reliability and comparability.

1.2. Primary data

Primary data can be collected in four broad ways:

+ Observation

+ Focus groups

+ Surveys

+ Experiments

Primary data

Observation research: Fresh data can be gathered by observing the relevant actors and settings.

EX; The American Airlines researchers might hang around airports, airline offices, and travel agencies to hear travelers talk about the different carriers and how agents handle the flight arrangement process. The researchers can fly on American and competitors’ planes to observe the quality of in-flight service and hear consumer reactions. This exploratory research might yield some useful hypotheses about how travelers choose their air carriers.

Primary data

Focus groups research: A focus group is a gathering of six to ten persons who spend a few hours with a skilled interviewer to discuss a project, service, organization, or other marketing entity. The discussion is recorded through note taking or Audio or video tape and is subsequently studied to understand consumer belief, attitudes, and behavior.

In American Airlines example, the group interviewer may start with a broad question, such as “ How do you feel about air travel?”

Primary data

Survey research: Survey research stands midway between observational and focus group research, on the one hand. And experimental research on the other hand.

Companies undertake surveys to learn about people’s knowledge, beliefs, preferences, satisfaction, and so on, and to measure these magnitudes in the population.

Primary data

Experiments research: the most scientifically valid research is experimental research. Experimental research calls for selecting matched group of subjects, subjecting them to different treatments, controlling extraneous variable, and checking whether observed response differences are statistically significant. The purpose of experimental research is to capture cause-and- effect relationships by eliminating explanations of the observed findings.

Primary data

Research instrument: Questionnaires

Contact methods:

+ The mail questionnaire

+ Telephone interviewing

+ Personal interviewing

1.2. Primary data

The challenges:

+ Comparability of data

+ Willingness of potential respondent

+ Ability of the respondent to understand and communicate.

( Challenge in survey research involves translation from one language to another)

1.2. Primary data

To avoid these translation errors, experts suggest the technique of back-translation. First, the questionnaire is translated from the home language into the language of the country where it will be used, by a bilingual who is a native speaker of the foreign country. Then this version is translated back to the home language by bilingual who is native speaker of the home language. Another translation technique is parallel translation, in which two or more translators translate the questionnaire. The results are compared, and differences are discussed and resolved.

Using the internet and e-mail data collection

Some problems:

+ Sampling

+ Language

+ Respondent cooperation

2.THE EXPORT MARKETING RESEARCH PROCESS

Problem formulation Research method and design Data collection techniques Sample Data collection Analysis and interpretation Reporting results

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

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

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


3.2. Foreign industrial markets

+ What they buy

+ Why they buy

+ Who makes the purchase decision


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 different countries also vary among themselves on these dimensions.

Export market segmentation

1) It is important to note that any decision to segment on particular basis should be evaluated in term of the following:

+ Measurability

+ Accessibility

+ Profitability

+ Actionability


2) Base of segmentation+ Country market level; demographic and population characteristics ; socio-economic characteristics; political characteristics; cultural characteristics.+ Customer market level: Demographic characteristics: age, gender, life cycle, religion, nationality, etc; socio-economic characteristics : income, occupation, education, etc.Psychographic characteristics: personality


The four strategies:+ Increase penetration (existing product and

markets)+ Develop products (new products in existing

markets)+ Extend markets (existing products in new

markets) + Widen activities (new products and markets)

4. Foreign market portfolios: technique and analysis

Country attractiveness/ competitive strength matrixUsing these variables, and some scheme for weighting them, countries are classified into one of the nine cells depicting relative market investment opportunity.+ Invest/grow countries+ Harvest/divest/license/combine countries+ Dominant/divest countries+ selective countries


Country attractivenessMarket size (total and segments)Market growth (total and segments)Market seasons and fluctuationsCompetitive conditions (concentration, intensity, entry

barriers, etc.)Market prohibitive conditions ( tariff, non tariff barriers,

import restrictions, etc.)Economic and political stability.


Competitive strengthMarket shareMarketing ability and capacityProduct fitContribution marginImageTechnology positionProduct qualityMarket supportQuality of distributions and service


Invest/grow Invest/grow Dominate/divest

Join venture

Invest/grow Selectivity strategies

Harvest/divest/

License/combine countries

CHAPTER 4. EXPORT MARKET ENTRY STRATEGIES

1. ENTRY AS STRATEGY

2. FACTORS INFLUENCING CHOICE OF ENTRY MODE

3. EXPORT ENTRY MODES

4. NON-EXPORT ENTRY MODES

5. SELECTING THE ENTRY MODE

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 the market; + The control system to monitor performance in the market+ A time schedule

2. FACTORS INFLUENCING CHOICE OF ENTRY MODE

Target market Product Availability of marketing organization Company considerations Government policies


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


3.2.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

3.2.Direct export

With direct export, manufacturer of exportable goods undertakes the entire export process without any intermediaries.

By becoming a direct export exporter, the firm takes responsibility for the entire range of export activities starting with identifying customers through to collecting payment.

3.2.Direct export

In order to export directly, the firm may have to establish an export department from domestic sale division which could be funded on the basis its requirements. Employees of the department must be trained in foreign trade affaires.

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 without

expenditure 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 foreign

market.2. The firm must suffer directly risks may be occurred.

What is involved in a typical export process?

An export process involves three main functions: feasibility analysis, 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


PLANNING FOREIGN MARKET ENTRY6. Conduct market research concerning section of good and

specific products to be exported.7.Make plan, strategy or entering target markets.8. Collect knowledge about country’s requirements concerning

certificates, 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 trade

barriers of the target countries.11. Establish pricing schedule.


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.

The most common mistakes made by exporters

The following are twelve most common mistakes often made by small firm as they begin to export or expand business on foreign markets:

1. Lack of full investigation of market, lack of qualified export expert enable to make international business strategy and marketing plan before starting an export business;

2. Lack of support by administrative offices to overcome initial difficulties 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 than concentrating on one or two main geographical areas;


5.Neglecting export to foreign markets when domestic markets booms;

6. Lack of treating international distributors and customers on an equal basis with domestic counterparts;

7. Assuming that a particular trade technique and product will automatically be successful in many countries;

8. Unwillingness in modifying products in order to meet regulations or cultural preferences of foreign countries


9. Lack of printing information of sale, guarantee and after-sale service in foreign language;

10. Lack of considering the use of an export development company if the firm cannot afford its own export department because of lacking financial or 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.

4. NON-EXPORT ENTRY MODES

Licensing

Franchising

Assembly operations

Contract manufacturing

Joint venture

Wholly owned plant

Management contracting

5.

Naive rule

Pragmatic rule

The strategy rule

SELECTING THE ENTRY MODE

CHAPTER 5. PRODUCT DECISIONS

1. PRODUCT PLANNING AND DEVELOPMENT

2. PACKAGING

3. BRANDING ISSUES

4. PRODUCT MIX DECISIONS

5. STANDARDIZATION VS ADAPTATION

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

1.1.New product development

New product decision process: Idea generation Initial screening Business analysis Develop the product Market testing Commercialization

2. Standardization vs. adaptation

+ Standardization is common for certain agricultural products, 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 systems and product specifications, and government requirements.

2. Standardization vs. adaptation

In general, however, some type of mandatory adaptation 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

3.PACKAGING

VIEW

V- visibility

I- informative

E- emotional impact

W- workability

4. BRANDING ISSUES

A brand; a brand name; a trademark; label; logo; slogan

Brand protection Branding decisions

Choosing a brand name

(1) It should suggest something about the product’s benefits

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, and

remember, short names help.EX: Tide, Crest

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”

Brand protection

+ The international Convention for the protection of Industrial Property (Paris Union).

+ The Madrid Agreement for International Registration of Trademarks.

Branding decisions

+ Selecting a good brand

+ Determining how many brands should be in the company’s product line

Branding decisions

(1) A single brand, or family brand

(2) Individual (local) brands

(3) Multiple brands

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”


(2) SloganEX: 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”


(3) Colors EX: Yellow is also the corporate color of Kodak firm. IBM uses blue in its publications(4) Symbols and logosChanel No.5 used Catherine Deneuve, One of the word’s most

beautiful women, as its symbol,(5) A set of storiesSome brands will be associated with stories, which are benefit if

favorable and interesting, about the company or brand. The stories might relate to the founder (s) and the struggle to create the company.

4. Positioning

In 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 to

wear for racing and another as the best to wear for playing basketball

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.

Choosing a specific positioning

Companies need to go beyond a broad positioning to express a more concrete benefit and reason to buy:

Best quality Best performance Most reliable Most durable Safest Fastest Best value of the money

Choosing a specific positioning

Least expensive Most prestigious Best designed or style Easiest to use Most convenient.

CHAPTER 6. PRICING DECISIONS

1. DETERMINANTS OF AN EXPORT PRICE2. FUNDAMENTAL EXPORT PRICING

STRATEGY3. RELATION OF EXPORT TO DOMESTIC

POLICIES4. CURRENCY ISSUES5. SETTING UP EXPORT PRICE?6. TRANFER PRICING

1. DETERMINANTS OF AN EXPORT PRICE

Costs Market conditions (demand) Competition Legal/political influence Environmental factors ( Exchange rate

fluctuations, inflation rates, price controls) Company policies Marketing-mix

2. FUNDAMENTAL EXPORT PRICING STRATEGY

Skimming pricing Penetration pricing Extinction pricing Marginal cost pricing

3.RELATION OF EXPORT TO DOMESTIC POLICIES

Export prices lower than domestic

Export prices higher than domestic

Export prices on a par with domestic prices

EXPORT PRICE ESCALATION

Domestic Sale Export sale

Factory Price $ 7.50 $ 7.50 Domestic Freight .70 .70

8.20 8.20 Export Documentation .50

8.70 Ocean Freight & Insurance 1.20 9.90 Import Duty (12% of landed cost) 1.19

11.09 Wholesale Markup (15%) 1.23

9.43

Importer/Distributor Markup (22%) 2.44 13.53

Retail Markup 50 % 4.72 6.77 14.15 20.30

Final consumer Price $14.15 $20.30

4. The price quotation

There are two systems of definition that are used by exporters throughout the world:

+ INCOTERMS 2000

+ The revised American Foreign Trade definitions -1941

Selection of trade terms

In deciding when to use each term exporters should consider the following 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 the buyer’s country.

Requirements of the government of the importing nation.

How does an exporter prepare an accurate 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 drawbackAfter calculating to above mentioned expenditures, a reasonable profit margin may

be added to arrive at a final price. If there still other subsidiary expenditures, it’s necessary to add while making quotation.

STRUCTURE OF EXPORT PRICE

1. Base cost per unit2. Export packing, labeling, marking3. Product inspections charges4. Profit or mark-up5. 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 CFR11. Insurance-------------------------------------------- 1-11 CIF

The choice of currency for export price quotes

There are two basic alternatives available: The quote in U.S dollars, or quote in customers’ currencies.

EX: In this example the goods are planned to be moved by sea and shipment is not containerized.

Product charges and price ($)Product cist: $10 per unitx100 units 1000Target mark-up: 10% of product cost 100Oversea agent’s commissions: 5% 50

-------1150

Financing costs on production: 8% 80Export packing charges 100Labeling and marketing for 100 units 50Other direct export costs 20EXW price (ex factory) 1400

EX: In this example the goods are planned to be 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) 1600Loading charges on ship 50Export documentation, clearance for export 30FOB Price (port of shipment) 1680Ocean freight to port of destination 300

CFR price (product costs and freight/port of destination 1980Insurance coverage 20CIF Price (product costs, insurance, freight/port of destination) 2000

Notice how the CIF price is double the initial product cost. This shows how important it is to work through these costing carefully.

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 foreign enterprises

CHAPTER 7. CHANNELS AND DISTRIBUTION STRATEGIES

1. CHANNEL STRUCTURE2. MANAGING THE DISTRIBUTION SYSTEM3. GAINING ACCESS TO DISTRIBUTION

CHANNELS4. GLOBAL TRENDS IN DISTRIBUTION

SYSTEM5. INTERNATIONAL PHYSICAL

DITRIBUTION

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

2. MANAGING THE DISTRIBUTION SYSTEM

2.1. Motivating channel participants

2.2.Controlling channel participants

2.1. Motivating channel participants

Financial incentives Annual conferences Help to the management of distributorship Special programs

2.2.Controlling channel participants

Spell out the specific responsibilities

The awarding of exclusive distribution rights

3. GAINING ACCESS TO 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 SYSTEM

Five major trends seem dominant throughout the world:

Large-scale retailers International retailers Direct marketing Discounting Information technology

5. INTERNATIONAL PHYSICAL DITRIBUTION

Export restrictions Foreign market import restrictions Export documentation The foreign freight forwarder Export packing

CHAPTER 8. PROMOTION AND MARKETING COMMUNICATIONS

1.INTRODUCTION2.INTERNATIONAL ADVERTISING3. PUBLICITY AND PUBLIC RELATIONS4. PERSONAL SELLING5. SALES PROMOTION6. PROMOTIONAL PROGRAM AND

STRATEGY7. DIRECT MARKETING

1.Introduction

1.1. Promotion -mix

1.2. Communication barriers

1.3. Export marketing promotion and communication decisions

1.Introduction

1.1. PROMOTION-MIX

Advertising

Sales promotion

Publicity

Personal selling

1.2. Communication barriers

Communication barriers

+ Language differences

+ Government regulations

+ Media availability

+ Economic differences

+ Tastes and attitudes

+ Buying process

1.3. Export marketing promotion and communication decisions

What message?

What communications media?

How much effort or money to spend?

2.SALES PROMOTION

+ Foreign catalogs+ Samples+ House organ and company-published

magazines+ Films, slides, and personal computers+ Trade fairs and exhibitions+ Point-of-purchase materials+ Consumer promotion materials

3. PUBLICITY AND PUBLIC RELATIONS

3.1.PRPR consists of a set of tools that can be classified under the

acronym of PENCILS, namely:+ Events (sponsoring athletic or art events or trade shows) + Publication (company magazines, annual reports, helpful

customers brochures, etc.)+ News (favorable stories about the company, its people, and

products) + Community involvement activities (contributions of time and

money to local community needs)+ Identity media( stationery, business cards, corporate dress

codes)+ Lobbying activity (efforts to influence favorable or dissuade

unfavorable legislation and ruling)+ Social responsibility (building a good reputation for corporate

social responsibility)

3. PUBLICITY AND PUBLIC RELATIONS

3.2. Publicity: Any form of nonpaid, commercially significant news or editorial comment about ideas, products, or institution.

4. INTERNATIONAL ADVERTISING

4.1.Advertising involves making decisions on the five Ms

+ Mission+ Message+ Media+ Money+ Measurement

4. INTERNATIONAL ADVERTISING

4.2.International advertising strategies

+ Uniform approach to advertising

+ Adapting domestic advertising to foreign markets

Uniform approach to advertising

+ There are no notable differences on customer’s product awareness.

+ 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 markets are non-existent or insignificant.

+ In general, it appears that successful standardization is dependent on a similarly of the motivations for purchase and a similarity of use conditions

Adapting domestic advertising to foreign markets

Modification may be requires a company to adapt adverting strategy to current culture variations and trends.

Literacy rates and standards of education will have a direct bearing on the amount of adaptation needed in advertising methods.

5. PERSONAL SELLING

One of the most expensive marketing communication tools is the company’s sales force, especially when out in the field, traveling a lot, and spending considerable time hunting for prospects and keeping existing customers satisfied.The salesperson sees the customer and can take him to lunch, gauge his interest, answer questions and objections, and close the sale. The more complex the product or service, the more necessary it is to use salespeople.

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, download brochures, and print contracts.

PERSONAL SELLING

KEY ACCOUNT MANAGEMENT SYSTEM

An increasing number of company are setting up key account management system. Companies know that a few customers account for large share of their sales and profits. The company appoints key account managers to manage their more important accounts, thus increasing the likelihood that important customers will be better served and will remain loyal.

6. Promotional program and strategy

This involves the following:

+ Setting promotional objectives;

+ Deciding on types of advertising and promotional messages;

+ Selecting media;

+ determining how much time, effort, and money to spend.

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 the primary direct marketing tools used in some countries.

7.DIRECT MARKETING

Many companies posses proprietary databases comprising 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 to their GM credit cards.

+ Land’s End has a database of more than2,000,000 names of people who bought one or more clothing items from Land’s End.

CHAPTER 9. ORGANIZATION OF INTERNATIONAL MARKETING ACTIVITIES

1. Main considerations of being organized internationally

2. Organizational structures

1. Main considerations of being organized internationally

Definition of organizational subunits Centralization vs. decentralization Communication and control systems

2. Organizational structures

2.1.Functional export department ( built-in or separate export unit )

2.2.International division structure

2.3.International organization structure based on product

2.4.International organization structure based on geographic area or customer groupings

2.5.International mixed structure; the matrix organization

Questions for discussion

international marketing

Documents

domestic marketing

marketing organization

firms marketing program

international law

international marketing1

world market chapter

control chapter

product decisions chapter