International Marketing Strategy Introduction Domestic and international marketing

International Marketing Strategy Introduction Domestic and international marketing principles are similar • Environmental differences often cause managers to apply these principles differently abroad Market Size Analysis Total market potential—estimate of the possible sales of a product for all companies, and the estimate of your own company’s market-share potential Present income and population are the major indicators for potential sales of most products § As incomes change, product demand may change § Other factors affect demand

Gap Analysis Method for estimating a company’s potential sales by identifying market segments it is not serving adequately • Sales potential exists when sales are lower than the estimated market potential • Usage gap • Distribution gap • Product line gap • Competitive gap

Standardization vs. Adaptation Definition • standardisation: use same marketing mix across nations • it is matter of degree Ex: Snapple

Standardization vs. Adaptation (cont’) Standardization is favourable when a. Target country is • Culturally similar eg) Europe • Economically similar b. Products are • Industrial product • High-tech product eg) semiconductor, computers • Core/tangible products are more likely to be standardised than augmented product.

Standardization vs. Adaptation (cont’) c. Target consumers • have similar life style/taste • highly mobile • eg) Urban life style d. Firm wants • close control • consistent brand image (eg. global brands) eg) Levis e. Competitors are marketing • standardised products

International Pricing Price Setting (influencing factors)?

Price Setting (cont’) Relationship between domestic and export price – can be higher (Why? ) – can be lower (Why? )

Price Escalation Price difference b/t the exporting country and the import country. Ex: An American-Built Jeep Cherokee Makes the Trip to Japan

Strategic Options to Deal With Price Escalation – ? ? ? – shorten distribution system – eliminate costly features – assemble in foreign market (eg. free trade area) – eliminate costly features. repackage for low tariff classification – foreign production and sourcing

International Distribution Decisions Distribution is a process in which the ownership of the goods is transferred from the producer to the consumer by means of physical handling and movement. Channel of Distribution is an organized network of agencies and institutions which, in combination, perform all the activities required to link producers with users to accomplish the marketing task.

Channel System 1. Long vs. Short Distribution a. Short: specialised, efficient, large size, large coverage eg) Mfg (Wholesale) Retail consumer eg) direct Marketing; Mfg consumers (Ex? ) b. Long: general, less efficient, small size. limited coverage: fragmented eg) mfg. wholesaler 1 wholesaler 2 retailer 1 retailer 2 consumer eg) Italy, Japan • small (fewer employees), fragmented (complex) channel structure eg) "Mom & Pop" type of stores

Channel System (cont’) 2. Direct vs. Indirect Channel a. Advantages of going direct (? ? ) eg) Toys R Us and Dell in JPN market b. Disadvantages (? ? )

Channel System (cont’) When to go direct? Compare and Justify. • consumer vs. industrial market: industrial: direct/short • manufacturing goods vs. service (direct, short) • concentrated (short, direct) vs. fragmented market

International Marketing Communication Decisions Encoding Message/ Channel Decoding Noise Basic Model of Communication Receiver Response Feedback Source/ Sender

Cultural Context B Cultural Context A Message channel Encoding Message translated into appropriate meaning Noise Competitive activities, other salespeople, confusion and so on Advertising Media and or personal sales force Decoding Encoded message interpreted into meaning Feedback Information source Markerer with a product Evaluation of communications process and measure of action by receiver Receiver Action by consumer responding to decoded message

Globalized vs. Localized Campaigns Globalized campaigns: using the same message and creative execution across all (or most) international markets. Localized campaigns: applying different messages and creative executions for each foreign market a firm has entered. Pattern campaign: designing from the start to accept modification to fit local national market conditions, yet still keeping some common elements across all foreign countries. Qs: what promotes companies to use globalized campaigns? How about localized campaigns?

Coca-Cola: “Pattern Advertising” • Basic approach – Specific communication strategy – Specific Audience • Local adjustments – Words and the lyrics are translated – Basic adjustments made to the copy – Visual adjustments made to the copy

International Advertising Campaigns • Standardization whenever possible When do you know it is possible and how to do it? When your product gets ready for it. When the market gets ready for it. • Adaptation whenever necessary When do you know it is necessary and how to do it? When the cultural taboos tell you so. When the culture perception tells you so.