4 7 International Marketing 4 8 Ecommerce Chapter

4. 7 International Marketing 4. 8 Ecommerce Chapter 29

International Marketing n International Marketing – Selling products in markets other than the original domestic market. n Why sell in international markets? – Saturated home markets – Increase profits through rapid sales growth and low costs in emerging markets – Spread risks between different markets – Poor trading conditions in home markets may make international markets desirable

Differences in International Markets n Conducting business internationally may be different: – Political differences – Economic and Social differences – Legal differences – Cultural differences – Business practices differences

Political Differences n Problems that occur for “political” reasons – Government structures § Democracy, socialist governments, communism – Political instability § Acts of terrorism, civil violence, drug wars

Economic and Social Differences n Problems that occur due to economic or social reasons – Average living standards around the globe range from $160 (Burundi) to $78, 559 (Luxembourg) GDP per capita – Tax rates, interest rates – Aging population – Role of women and marriage

Legal Differences n Problems that occur due to legal reasons – Some goods illegal to sell in some countries (guns, medications) – It may be illegal to advertise (children, tobacco products, birth control) – Product labeling and safety requirements maybe stricter in some countries

Cultural Differences n Problems that occur due to cultural reasons and can be difficult to measure – Words have different meaning when translated – The use of male/female models may not acceptable – Colors can have different meaning

Business Practices n Problems that occur due to different business practices – Accounting standards may vary – Setting up a company may face different requirements and time frames

Entry into International Markets n Exporting n International Franchising – Selling a product directly to a foreign customer – Selling a product to intermediary based in a foreign country – Using a franchise to operate your firm’s activities in a foreign market § Can be owned by many individuals § Can be owned by 1 company operating many locations

Entry into International Markets n Joint Ventures – Agreements between at least 2 companies to operate a new business venture § Aera Energy operating in Southern California is a joint venture between Exxon. Mobil and Royal Dutch Shell combined efforts to locate oil in Southern California. § Japan Nuclear Company is a joint venture between General Electric, Toshiba Corporation, and Hitachi to manufacture nuclear fuel for Japan’s nuclear energy industry.

Entry into International Markets n Licensing – Allows another firm in a foreign country to produce its branded or patented products under license usually under strictly controlled terms over quality. § Goods do not have to be exported if produced locally § Food products are fresher § No capital costs of setting up production facilities § NEGATIVES: Quality issues and unethical production methods may reflect badly on the company – Recent example: Apple factories in China reports mandatory overtime, factory explosions, crowded dormitories

Entry into International Markets n Direct Investment in Subsidiaries – Company-owned subsidiaries in foreign countries tend to be more successful than merging with locally based companies. – Why: § Culture, organizational structure, and technology differences of locally acquired business can be too different to overcome. – Subsidiaries can: § Be production or retail operations § Management can be decentralized – Local managers make most key decisions § Management can be centralized – Controlled from the head office in the home country – Example: BMW US Manufacturing Company located in Spartanburg, SC

International Marketing Strategies n Globalization is making differences in taste, culture, and fashion less obvious. § If true, companies can take advantage of economies of scale by selling the same product to the entire world. § If not true, there will always be differences at the local level that will prevent the successful global marketing of products.

International Marketing Strategies n Pan-global marketing § Adopting a standard product across the globe as if the whole world were a single market. Selling the same goods in the same way everywhere. n Global localization § Adapting the marketing mix, including different products, to meet national and regional tastes and culture. “Thinking global – acting local”

International Marketing Strategies n Pan-global Marketing – Successful for 2 categories of products § Upmarket brands with international appeal – Rolex watches, Rolls-Royce cars, Versace Dresses § Mass-Appeal brands – Apple products, Levi’s jeans, Nike shoes

International Marketing Strategies n Global localization – Thinking global – acting local § YUM – the world’s largest food organization (KFC and Pizza Hut) use this approach – China: sells products not available in other countries to suit local tastes – Price levels are varied between different countries to reflect differences in income – Advertisements contain local ethnicities

Ecommerce n Ecommerce: The buying and selling of goods and services on the Internet. – B 2 C: Selling of goods and services directly to the final customer through a website. – B 2 B: Selling/buying of goods and services to/from another business – Advertising by using the company’s own website or creating a banner or pop-ad on another firm’s website to reach target market – Sales leads are generated by encouraging customer t leave information – Collecting market research data by encouraging customers to answer questions

Ecommerce Impact n Businesses and Consumers have been impacted § § § Music Film Banking Insurance Travel and Tourism – These were once typical retail stores. The product delivery system has drastically changed due to the Internet.

Ecommerce Impact n Marketing Mix has been impacted – Product § Consumers can be communicated with individually § Custom services can be easily created (Airline tickets, hotel reservations, rental cars) § Custom products can be easily built (build your own car or computer) § Larger stocking options because market potential is greater

Ecommerce Impact n Marketing Mix has been impacted – Price § Prices can be easily compared § Competitive pricing more likely than cost-plus § Consumers have more control

Ecommerce Impact n Marketing Mix has been impacted – Promotion § Banners, pop-ups, text messages, web pages are all NEW ways to promote products § Promotional opportunities are greater § Cost to reach potential customers is lower

Ecommerce Impact n Marketing Mix has been impacted – Place § The Internet is transforming how we buy. § Will there be a need for store-fronts? ?