chapter eighteen Marketing Internationally Mc GrawHillIrwin International Business

Learning Objectives § Explain why there are differences between domestic and international marketing § Explain why international marketing managers may wish to standardize the marketing mix regionally or worldwide § Explain why standardizing the marketing mix globally is often impossible § Discuss the importance of distinguishing among the total product, the physical product, and the brand name 18 -3

Learning Objectives § Explain why consumer products generally require greater modification for international sales than do industrial products or services § Discuss the product strategies that can be formed from three product alternatives and three kinds of promotional messages § Explain “glocal” advertising strategies § Discuss some of the effects the Internet may have on international marketing § Discuss the distribution strategies of international marketers 18 -4

International Marketing • Develop marketing strategies by assessing the firm’s potential foreign markets and analyzing the many alternative marketing mixes – Must plan and control a variety of marketing strategies • Rather than a single unified and standardized one • Coordinate and integrate those strategies into a single marketing program 18 -5

Standardize, Adapt, or Formulate Anew? • Management would prefer global standardization of the marketing mix • Significant cost savings • Longer production runs • Standardized advertising, promotional materials, and sales training • Standardized corporate image • Standardized pricing strategies • Easier control and coordination • Reduction of preparation time • Often not possible 18 -6

Product Strategies • Product is central to marketing mix • Total product includes – – – – Physical product Brand name Accessories After-sales service Warranty Instructions for use Company image Package 18 -7

Total Product 18 -8

Types of Products • Industrial Products – Many can be sold unchanged worldwide (computer chips) – If changes are required, they may be cosmetic (printing instructions in another language) – In developing countries problems with • Overload of equipment • Maintenance – Local legal requirements (e. g. noise, safety, gas emission) 18 -9

Types of Products • Consumer Products – Require greater modification to meet local market requirements than do industrial products – Some can be sold unchanged to certain market segments • Large automobiles, sporting equipment, and perfumes – Greater dissimilarity as you go down the economic strata 18 -10

Types of Products • Services – Marketing of services similar to that of industrial products • Services easier to market globally compared to consumer products (e. g. educations, public accounting firms) • Laws and customs may force changes 18 -11

Foreign Environmental Forces • Sociocultural Forces – Dissimilar cultural patterns generally require changes in food and other consumer goods – May require • Redesign of product – Different meanings of colors – Different meanings of brand name • Translation of instructions or labels 18 -12

Foreign Environmental Forces • Legal Forces – Laws concerning • Pollution • Consumer protection • Operator safety – Laws prohibiting classes of imports • Food and pharmaceuticals influenced by laws concerning purity and labeling – Legal forces may prevent use of brand name worldwide • In some countries brand may be registered to someone else 18 -13

Foreign Environmental Forces • Economic Forces – Great disparity in income throughout world – Obstacle to product standardization – Many industrialized country products too expensive for developing country consumers • Must either simplify the product or produce a different, less costly one 18 -14

Foreign Environmental Forces • Physical Forces – Climate and terrain prevent international product standardization • Heat • High humidity – Special packaging • High altitudes – Baking products and motors • Rough roads 18 -15

Promotional Strategies • Promotion – Any form of communication between a firm and its publics • To bring about a favorable buying action and achieve long-lasting confidence in the firm and the product or service it provides 18 -16

Promotional Strategies • Distinct promotional strategies based on combination of three alternatives – Marketing the same physical product everywhere – Adapting the physical product foreign markets – Designing a different physical product with • (a) the same message • (b) adapted message or • (c) different message 18 -17

Six Common Promotional Strategies • Same product-same message – Avon, Maidenform • Same product-different message – Honda’s campaign in America is different than in Brazil • Product adaptation-same message – In Japan, Lever Brothers puts Lux soap in fancy boxes to encourage gift sales 18 -18

Six Common Promotional Strategies cont’d. • Product adaptation-message adaptation – In Latin America, Tang is sweetened and promoted as mealtime drink • Different product-same message – Product is produced in low cost plastic squeeze bottle for developing countries, but advertised the same • Different product for the same use-different message – Welding torches rather than automatic welding machines are sold in developing countries 18 -19

The Promotional Mix • Advertising • Personal selling • Sales promotion • Public relations • Publicity 18 -20

Advertising • Paid, nonpersonal presentation of ideas, goods, or services by identified sponsor – Among promotional mix elements, advertising • Has the greatest similarities worldwide • Is formulated and executed through global ad agencies that have wholly owned subsidiaries, joint ventures, and working agreements with local agencies 18 -21

Global and Regional Brands • Reasons for increase in global and regional brands – Cost – Better chance of obtaining one regional source for high-quality work – Belief that single image throughout region is important – Establishment of regionalized organizations with many functions centralized – Growth of global and regional satellite and cable television 18 -22

Top Twenty Brands 2006 18 -23

Impact of Culture on Advertising • • Directness vs. indirectness Comparison Humor Gender roles Explicitness Sophistication Popular vs. traditional Information content vs. fluff 18 -24

Advertising • Branding – Global, regional or national • Managers may convert or use a combination – Private brands • Serious competitors • Alliances with international retailers • Trend common in Europe 18 -25

Advertising • Media – Satellite TV expands availability of media – International print media available • Reader’s Digest has 48 foreign editions – Cinema and billboards used heavily in Europe – In developing countries, vehicles equipped with loudspeakers 18 -26

Advertising • Internet Advertising • An affluent, reachable audience • Web contacts feature interactivity, shrinks distance • Involve customers in determining which messages and information they receive • For some groups, Internet may be among the best media choices 18 -27

Advertising • Foreign Environmental Forces – Basic cultural decision for marketer: position the product as foreign or local – Depends on the country, the product types, and the target market – Language often an issue • back translation • plenty of illustrations with short copy 18 -28

Advertising • What should be the approach of the international advertising manager? – Think globally, but act locally – Neither global nor local-”glocal” – Pan regional approach • Latin America • Middle East • Africa • Atlantic 18 -29

Personal Selling • Importance of personal selling compared to advertising depends on – – Relative cost Funds available Media available Type of product • Manufacturers of industrial products rely on personal selling • Marketers may increase use of personal selling for consumer products in developing countries 18 -30

Personal Selling • Internet – Would seem to eliminate the need for personal selling, but may not be so – Successful personal selling depends on establishing trust • Evolving approaches to trust building in a virtual environment 18 -31

Personal Selling • International Standardization – An overseas sales force is similar to the home country in • Organization • Sales presentation • Training methods – Recruitment of salespeople in foreign countries can be difficult 18 -32

Sales Promotion • Any various selling aids, including displays, premiums, contest, and gifts • Sociocultural and economic constraints make some sales promotions difficult to use – If premium is to fulfill the sales aid objective, it must be meaningful to the purchaser – Sales promotion is generally less sophisticated overseas than in U. S. 18 -33

Public Relations • Various methods of communicating with the firm’s publics to secure a favorable impression – Markets firm – Improves image and overcomes negative perceptions – May work through government agencies 18 -34

Pricing • Important and complex consideration in formulating marketing strategy • One of the marketing mix elements that can be varied to achieve firm’s marketing objectives • Made more complex by – Interaction with the other functional areas – Environmental forces 18 -35

Interaction between Marketing and Other Functional Areas • The finance people want prices that are profitable and conducive to steady cash flow • Production supervisors want prices that create large sales volumes, which permit long production runs • Legal department worries about possible antitrust violations when different prices are set according to type of customer 18 -36

Interaction between Marketing and Other Functional Areas • The tax people are concerned with effects of prices on tax loads • The domestic sales manager wants export prices to be high enough to avoid parallel importing • The marketer must address all these concerns and consider – Legal forces – Environmental forces 18 -37

Standardizing Prices • Difficult if desirable – Foreign National Pricing • Local pricing in another country – International Pricing • Setting prices for unrelated and related firms – Transfer pricing • Intracorporate price, price of a good or service sold by one affiliate to another, the home office to an affiliate, or vice versa 18 -38

Distribution Strategies • Distribution Decisions – Often interdependent with other marketing mix variables • Standardizing Distribution – Two fundamental constraints • The variation in availability of channel members • The environmental forces present in these different markets 18 -39

Standardizing Distribution • Disintermediation – Unraveling of traditional distribution structures • Most often the result of being able to combine Internet with fast delivery services 18 -40

Channel Selection • Direct or Indirect Marketing – The first decision: whether to use middlemen – Export sales may be consummated by local agents if • Management believes this is politically expedient • Country’s laws demand it • Factors Influencing Channel Selection • • Market Product Company Middlemen 18 -41

Foreign Environmental Forces and the Marketing Mix Matrix 18 -42

Foreign Environmental Forces and the Marketing Mix Matrix 18 -43

Foreign Environmental Forces and the Marketing Mix Matrix 18 -44

Foreign Environmental Forces and the Marketing Mix Matrix 18 -45