International Marketing Promotion

1. International Marketing Promotion Pesewa Presentations

2. Key Points • Advertising is a means of selling a product. • Advertising writing is a complex process that sometimes has very little to do with creativity. • Advertising copywriters need to think about four things in formulating copy: product, audience, purpose, medium • Research helps develop key facts, advertising problems and advertising objectives.

3. Criticisms of advertising • Advertising adds to the cost of products. • Part of what we pay for when we buy a bar of soap or a new car is the advertising for that product. What if General Motors stopped spending £2.9 billion a year on advertising and reduced the cost of its vehicles. • Advertising helps sell inferior products. • When you get down to it, this criticism says that advertising lies. It convinces us that products are good when they aren’t. It convinces us to buy an inferior product over a quality product because the inferior product has been advertised more. • Advertising creates needs and desires that we would not have otherwise. • We MUST have certain products that our parents were perfectly happy living without. Advertising, it is argued, often creates these “needs,” which aren’t really needs at all.

5. The Linear Model of Communication • Sender • Encoding • Message • Decoding • Receiver • Linear models of communication conceptualise the relation between advert and individual consumer NOISE Feedback

6. Hedonic-experiential models • Later models (HEM) adapted to include the emotionality and fun (hedonism) of consumption • One popular hierarchy that included emotionality is the cognition-affect-conation model

7. Cognition-Affect-Conation • Or ‘Think-feel-do’ • Cognition: knowledge about the brand • Affect: liking the brand • Conation: behavioural response to the ad exposure

8. Polysemy in advertising • The linear theories assume that there is little room for ambiguity in advertising • In fact, the presence of many potential meanings within a given advertising text (polysemy) permits us to engage intimately and creatively with advertising

9. Ostensive and covert meaning • (or text and sub-text) • Many ads have an ostensive message that has a clear and unequivocal message: buy this brand • Ads also have secondary or covert meaning • These covert meanings hint, suggest and imply; they do not say • Advertising acquires its persuasive power by this characteristic: it is able to use suggestive juxtaposition of text and image to hint at claims that, made ostensively, would be rejected as preposterous or inappropriate

10. ‘Strong’ and ‘weak’ theories • Theories of how ads work tend to focus on sales responses to the neglect of the many other communications and marketing objectives ad campaigns can have • Strong theories • They try to link exposure to an individual ad to behavioural change (e.g. purchase) • They normally measure states that are assumed to be intermediate to purchase such as recall, ‘liking’ (attitude), or physiological response

11. Stages of the Negotiation Process • The offer • assess each parties’ needs and commitment • Informal meetings • trust-building among deal makers • Strategy formulation • review and assess factors to be negotiated • Negotiations • form, informal, short or long • Implementation

12. Marketing Communications Strategy Steps in Formulating Marketing Communications Strategy

13. The Promotional Mix • Advertising • any form of non-personal communication • Personal Selling • the use of person-to-person communication • Publicity • non-paid, commercially significant news • Sales Promotion • Direct inducements of extra value or incentives • Sponsorship • Promoting interests of company by association

14. The Promotional Mix • Push strategies • focus on personal selling, considered essential in international marketing of industrial goods. • Pull strategies • depend on mass communications (advertising of consumer-oriented goods) to reach target audiences over long distribution channels. • Integrated marketing communications • coordinated use of a broad range of promotional tools to reach a target market.

15. Communications Tools • The choice of media is governed by the appropriateness media’s target audience and its efficiency in reaching that audience. • Business and trade journals • Broad-based media • Business Week, The Wall Street Journal • Horizontal media • focus on a particular marketing task(Purchasing World) • Vertical media • focus on a particular market or industry (Trucker World) • Directories and data services

16. Communications Tools • Direct marketing • Is intended to elicit immediate and measurable responses to direct-response advertising, telemarketing, and direct selling. • Direct mail depends on acquiring mailing lists that target the intended audience. • Effective direct mailing require extensive planning of materials, format, and mode of mailing. • The Internet • A presence on the Internet is a necessity that can expand marketing communications world-wide with low costs.

17. Trade Shows and Missions • Types of international trade events • Trade missions • Seminar missions • Solo exhibitions • Video / catalog exhibitions • Magnitude: Over 16,0000 trade shows generate £30 billion in business annually.

18. Trade Show Participation • Reasons for participation • Customer can examine the product. • Goodwill and contact cultivation. • Locating a trade intermediary. • Opportunity to meet government officials and decision makers. • Opportunity for market research and collecting competitive intelligence. • Exporters able to reach sales prospects in brief time period at reasonable cost per contact. • Reasons for not participating • High cost. • Identifying the “right” trade shows to participate in. • Coordination.

19. Personal Selling • The most effective promotional tool. • Costs per contact are high. • Yields immediate customer feedback and sales results. • Keys to personal selling • Salesperson’ has the ability to adapt to the customer and the selling situation. • Salesperson must have athorough knowledge of the product or service.

20. Levels of Exporter Involvement in International Sales SOURCE: Framework adapted from Reijo Luostarinen and Lawrence Welch, International Operations of the Firm (Helsinki, Finland: Helsinki School of Economics, 1990), chapter 1

21. Distribution Management

22. International Distribution • The firm sells to its customers: • directly through its own sales force. • indirectly through independent intermediaries. • indirectly through an outside distribution system with regional or global coverage.

23. Channel Structure • How to structure the distribution channels is the most important long-term marketing mix decision a firm may make. • Channel structures are designed to manage multidirectional (horizontal and vertical) connections in: • physical movement of goods and services • transactional title flows • information communications flows

24. Channel Configurations Manufacturer Manufacturer Originator Agent Agent Agent Agent Wholesaler Wholesaler IndustrialDistributor Agent Retailer Agent Retailer IndustrialDistributor Retailer Retailer Agent Consumer Industrial User Consumer / Industrial User Consumer Products Industrial Products Services

25. Channel Design Considerations • Customer characteristics • What do they need, why, when, and how? • Distribution culture • The structural linkages and functional characteristics of existing channels. • Competition • What channels does the competition use? • Company objectives • Determined by company objectives for market share and profitability.

26. Channel Design Considerations • Character • The nature of the product impacts the design of the channel. The channel must match the positioning of the product in the market. • Capital • ... Describes the financial requirements for setting up a channel system. • Cost • … is the expenditure incurred in maintaining a channel once it is established.

27. Channel Design Considerations • Coverage • The number of areas in which a product is represented and the quality of that representation. • Types of coverage • Intensive • Selective • Exclusive

28. Channel Design Considerations • Control • The use of intermediaries, product type, and the marketer’s use of power will determine the amount of market control. • Continuity • Responsibility of the marketer and is expressed through market commitment. • Communication • Provides the exchange of information that is essential to the functioning of the channel. • Social, cultural, technological, time and geographical distances cause problems.

29. Intermediaries • Types of intermediary relationship • Distributorship • Agency • Type of exporting function • Indirect exporting • Direct exporting • Integrated distribution

30. Agents Foreign (Direct) Brokers Manufacturer’s Reps Factors Managing agents Purchasing Agents Domestic (Indirect) Brokers Export Agents EMCs Webb-Pomerene Commission agents Distributors Foreign (Direct) Distributors/dealers Import jobbers Wholesalers/retailers Domestic (Indirect) Domestic wholesalers EMCs ETCs Complementary marketers Selection of Intermediaries SOURCES: Peter B. Fitzpatrick and Alan S. Zimmerman, Essentials of Export Marketing (New York American Management Association, 1985), 20; and Bruce Seifert and John Ford, “Export Distribution Channels,” Columbia Journal of World Business 24 (Summer 1989): 16; http://www.usatrade.gov.

31. The Distributor Agreement • Typical terms include • Contract duration • Typically short periods initially • Geographic and customer boundaries • Well-defined territories and channels • Compensation • Methods for determining payment amounts and how and in what currency payment is to be made. • Products and conditions of sale • Products to be sold; terms and conditions of sales • Means of communication between parties

32. Arguments for: The right to “free trade.” Consumers benefit from lower prices. Discount distributors have found a profitable market niche. Arguments against: Gray marketers take unfair advantage of trademark owner’s marketing and promotion. Parallel imports deceive consumers by not meeting product standards or expectations of after-sale service. Gray Markets (Parallel Importation)

33. The Solution to the Gray Market Problem? • A contractual relationship that ties businesses together.