International Business Environments Operations Chapter 16 Marketing Globally

International Business Environments & Operations Chapter 16 Marketing Globally Daniels ● Radebaugh ● Sullivan 16 -1

Introduction p Any marketing approach should be compatible with its overall aims and strategies p It is not necessary to follow the same strategy for every one of your products and for every country (e. g. , can have mass market orientation and a focused strategy in another) p Degree of global standardization versus local responsiveness may vary 15 -2

Marketing Strategies Overall international marketing strategies should depend on the company’s: n Marketing orientation (e. g. , companies using a sales orientation find their greatest ability to sell the same product in more than one country when consumer characteristics are similar) n Target market (e. g. , Identify the personality traits that specifically affect international marketing, such as materialism, ethnocentrism, cosmopolitianism) n The most common way of identifying a market segment within a country is- Demographics 16 -3

Marketing Mix p Marketing Mix: product, pricing, promotion, branding, distribution n n E. g. , a production facility in an area with poorly maintained roads would affect the distribution part of a company’s marketing mix A company should handle its own distribution when dealing with global customers and high technology 15 -4

Market Orientation p Production Orientation: Focus on production- efficiency or high quality and no emphasis on marketing p Sales Orientation: company tries to sell abroad what it can sell domestically, assuming that consumers all similar globally n p It actively promotes sales (differs from production orientation) Customer Orientation: company figures out what and how to sell to a country- by varying the product and the marketing method p Strategic Marketing Orientation: The strategy combines production, sales, and customer orientations p Social Marketing Orientation: consider potential political and safety dimensions of its producers (e. g. , environmental, health, social and work-related problems that may arise when selling or making their 16 -5 products abroad (social responsibility)

Segmenting and Targeting Markets Based on the marketing orientation, companies segment markets for their products and services and then decide which segment(s) to target and how n Target single or multiple segments n Use the same marketing mix to sell to all segments n Tailor the products separately to each segment n Vary the promotion and distribution separately for the segments 16 -6

Segmenting Markets p Three Approaches n n n By Country (e. g. , population size and purchasing power) p When segmenting by country, the business may overlook similarities between different countries By Global Segment (e. g, segments based on income) By Multiple Criteria p First look at countries as segments, identify segments within each country, compare within-country segments with other 15 -7

Why Firms Alter Products p p Legal Considerations: explicit legal requirements usually meant to protect consumers (purity, testing, labeling) Packaging Requirements: different laws such as warning labels (EU requires label for 0. 9% or more of bioengineered ingredients) p p p Environmental Protection Regulations: laws that protect the environment (prohibit certain type of containers, volume of container) Cultural Considerations: religious and cultural differences affect product demand (fat, sodium, sugar to fit local tastes) Economic Considerations: cheaper model or inexpensive for developing countries 16 -8

Issues of Standardization p IB needs to arrive at international product standards and eliminate some wasteful product requirements for alterations among countries. A global standard has usually resulted from companies’ wanting to copy a dominant producer (e. g. , making personal computers that are IBM compatible) p Advantages of globally standardized prorgams: p n n n Cost savings Improvement of local-level quality Faster entry into different markets 15 -9

Alteration Costs p Some product alteration are cheap to make yet have an important influence on demand (e. g. , packaging because of legal and climatic requirement) p Must compare the cost of an alteration with the cost of lost sales from no alterations. n Cost saving strategy: standardize a great deal while altering some end characteristics. 15 -10

Pricing Strategies Price must be low enough to gain sales but high enough to guarantee the flow of funds required to carry on other activities such as R&D, production, and distribution 15 -11

Potential Obstacles in International Pricing Government intervention p Market diversity p Pricing Tactics p Export price escalation p Fluctuations in currency value p 16 -12

Pricing Tactics p p p Skimming Strategy: charging a high price for a new product first aiming at consumers willing to pay the price, and then progressively lowering the price Penetration Strategy: introducing a product at a low price to induce a maximum number of consumers to try it Cost-plus strategy: pricing at a desired margin over cost THE GRAY MARKET p The selling and handling of goods through unofficial distributors 15 -13

Pricing Obstacles p Export Pricing Escalation: Price escalation in exporting most likely occur when there are greater distances, lengthy channels, transport, and more intermediaries increase the distribution costs n p Rules against increasing export prices would least likely be caused by a high inflation rate Fluctuation in Currency Value n n Receipt of funds in a foreign currency that, when converted, buy less of the company’s own currency than had been expected Frequent readjustment of prices necessary to compensate for continual cost increase 15 -14

Promotion Strategies p The Push-Pull Mix n n p Push uses direct selling techniques by increased supply Pull relies on mass media to attract customers Factors in Push-Pull Decisions n n Type of distribution system Cost and availability of media to reach target markets Consumer attitudes towards sources of information Price of the product compared to income (The push strategy is preferable to a pull strategy when the price of the 16 -15 product is high relative to incomes)

Branding Strategies p Brand n p The importance of using a brand to convey the perception of whether a firm will deliver what it promises is more critical in countries with strong cultural characteristics of uncertainty avoidance World Wide Brand versus Local Brand n Problems with Uniform Brands p Language p Brand Acquisition p Country-of-Origin Image p Generic and Near Generic Names 16 -16

Distribution Strategies Distribution reflects different country environments: p It may vary substantially among countries. p It is difficult to change. 16 -17

E-Commerce and the Internet p Evidence suggests online shoppers universally have some similar characteristics: n n n Desire convenience Are heavy users of e-mail and the Internet Have favorable attitudes toward direct marketing and advertising 16 -18

Managing the Marketing Mix p The difference between total markets potential and companies’ sales is due to gaps p Gap Analysis: method to estimate a company’s potential sales by identifying potential customers it is not serving adequately. n A company would most likely use gap analysis to compare consumption potential within its own sales p When sales are lower than the estimated market potential for a given type of product, the company has potential for increased sales 16 -19

Types of Gaps Usage Gap: less product sold by all competitors than potential p Product Line Gap: company lacks some product variation p Distribution Gap: company misses geographic or intensity coverage p Competitive Gap: competitor’s sales not explained by product line and distribution gaps p 15 -20