Understand the importance of international marketing Appreciate the opportunities and challenges offered by international marketing Recognize the effect of the global environment on international marketing activities Understand the process of market selection
Recognize the process of internationalization. Appreciate the different forms of market entry Comprehend the international adjustment of the marketing mix Understand the steps necessary for the implementation of an international marketing strategy
WHAT INTERNATIONAL MARKETING IS: • International marketing is the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations.
PLANNING FOR INTERNATIONAL MARKETING • How will my product fit into the international market? • What marketing adjustments are or will be necessary? • What threats from global competition should I expect? • How can these threats be turned into opportunities?
Top 25 Multinational Firms • TABLE 3.1
Opportunities • Integrate global knowledge • Expand long-run production • Lengthen and rejuvenate product life cycles • TABLE 3.1
THE INTERNATIONAL MARKETING ENVIRONMENT • Cultural Environment • Socioeconomic Environment • Legal and Political Environment
THE INTERNATIONAL MARKETING ENVIRONMENT Cultural Environment • International marketer surveys: • Depth of traditional beliefs and attitudes and dominant cultural elements • Power of opinion leaders and change agents • Communication from different media Socioeconomic Environment Political/Legal
Cultural Environment • Four Dimensions of Culture • Degree of Individualism • Level of Equality • Uncertainty Avoidance • Material Achievement
Four Dimensions of Culture Cultural Environment
Socioeconomic Environment • Population • Age Distribution • Income • Infrastructure
Socioeconomic Environment Cultural Environment • Population and its characteristics • Aging of world populations for example • Economic Integration • NAFTA, EU, MERCOSUR Socioeconomic Environment Political/Legal
Socioeconomic Environment Cultural Environment • Elderly population boom changes U.S. market characteristics Socioeconomic Environment Growth Rate Political/Legal Decades Source: http://www.census.gov/
Legal and Political Environment • Legal and Political Issues Facing Marketers • Intellectual Property Rights • World Trade Organization (WTO) • Common Law • Code Law • Antidumping Laws
Legal and Political Environment Cultural Environment • Host country • Minimum wage legislation • Regulatory measures • Lack of enforcement • Home country • Import/Export restrictions, etc. Socio-Economic Environment Political/Legal
Legal and Political Environment Cultural Environment • Intellectual property rights • Common law Vs Code law • Tradition/ precedence vs comprehensive written statutes • Often a mixture of two systems Socio-Economic Environment Political/Legal
Legal and Political Environment Cultural Environment • International Law • World Trade Organization • Defines economically acceptable practices for its member nations • Intent is to provide stable markets Socio-Economic Environment Political/Legal
INTERNATIONAL MARKET SELECTION • Identification of Potential Markets • Selectively expanding
Screening Process in Target Market Choice • Figure 3.3
Market potential Level of sales that might be available to all marketers in an industry in a given market.
Sales potential Share of the market potential that a particular marketer may hope to gain over the long run.
Expansion – Concentration versus Diversification • Concentration – market development strategy that involves focusing on a smaller number of markets • Diversification – marketing development strategy that involves expansion to a relatively large number of markets.
THE INTERNATIONALIZATION PROCESS Major Motivations to Internationalize Profit advantage Unique products Technological advantage Exclusive information Tax benefit Economies of scale Proactive
THE INTERNATIONALIZATION PROCESS Major Motivations to Internationalize Competitive pressures Overproduction Declining domestic sales Excess capacity Saturated domestic markets Proximity to customers/ports Reactive
ALTERNATIVE ENTRY STRATEGIES • Indirect Exporting and Importing • Direct Exporting and Importing • Licensing (Franchising) • Foreign Direct Investment
ALTERNATIVE ENTRY STRATEGIES • First Tier • Direct exporting/importing • Indirect exporting/importing • Licensing and franchising • Second Tier • Foreign Direct Investment • Joint ventures • Contract manufacturing
ALTERNATIVE ENTRY STRATEGIES • Indirect Exporting and Importing • Intermediary used to deal with foreign customers or firms • Low management commitment • Often unintended or unaware
ALTERNATIVE ENTRY STRATEGIES • Direct Exporting and Importing • Control international activities better • Can lead to further growth with trading partners • Must find customers, markets
ALTERNATIVE ENTRY STRATEGIES • Intermediaries • Importers/Exporters frequently use them • Export Management Companies (EMC) • Trading Company
ALTERNATIVE ENTRY STRATEGIES • Licensing • Use of intellectual property for compensation • Low capital investment and involvement • Capitalize on R&D • Can create competition
ALTERNATIVE ENTRY STRATEGIES • Franchising • Grant by parent company to independent entity to do business in a prescribed manner • Sell franchiser’s products using name and marketing techniques or business approach • Franchise must offer high uniqueness with high standardization
ALTERNATIVE ENTRY STRATEGIES • Foreign Direct Investment • Generally large MNC due to capital and risk factors • Need for wide market access remedied by acquisition • Circumvent barriers to trade • Government incentives
ALTERNATIVE ENTRY STRATEGIES • Full Ownership - often desirable and often impossible • Joint Venture - collaboration between 2+ organizations • Share assets, risks, profits • Partner brings local expertise, influence
ALTERNATIVE ENTRY STRATEGIES • Strategic Alliances - Informal or formal arrangements between 2+ companies with common objective • Flexible to environmental conditions • Pooling of expertise
ALTERNATIVE ENTRY STRATEGIES • Contractual Arrangements • Cross-marketing • Outsourcing • Contract manufacturing
Complementary Strengths Create Value • Figure 3.4
COMPREHENSIVE VIEW OF INTERNATIONAL EXPANSION • Figure 3.5
International Expansion Market Characteristics Government regulations Customer characteristics, expectations, and preferences Purchase patterns State of economic development Competitive offerings Climate andgeography • 3 Factors to Market Approach
International Expansion Market Characteristics Product Characteristics Product constituents Brand Positioning Packaging Country of origin Government regulations Customer characteristics, expectations, and preferences Purchase patterns State of economic development Competitive offerings Climate andgeography • 3 Factors to Market Approach
International Expansion Market Characteristics Product Characteristics Company Considerations Product constituents Brand Positioning Packaging Country of origin Government regulations Customer characteristics, expectations, and preferences Purchase patterns State of economic development Competitive offerings Climate andgeography • 3 Factors to Market Approach Profitability Market opportunity Policies
International Expansion • Mandates most marketing-mix adjustments • Government regulations are most prevalent • Standards (language, ISO 9000, etc.) • Product positioning changes
International Expansion • Global products • Only changes possible are to positioning • Product timing based on economic growth • Price competition • Foreign exchange factor • Extra costs incurred (shipping, etc.)
International Expansion • Climate and geography • Food product distribution is different in many countries
International Expansion • Cannot contain features/ingredients in violation of law/custom • Standardization applied most successfully in culturally similar markets • Promotional features and packaging often varied
International Expansion • “Is it worth it?” • Can the company justify internationalization?
Adjusting the Marketing Mix • Standardized Approach • Multi-domestic Approach • Globalization Approach
Factors Affecting Marketing-Mix Adjustments • Figure 3.6
Product Decisions • Design • Branding • Packaging • Labeling