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chapter eighteen Marketing Internationally Mc. Graw-Hill/Irwin International Business, 11/e Copyright © 2008 The Mc. chapter eighteen Marketing Internationally Mc. Graw-Hill/Irwin International Business, 11/e Copyright © 2008 The Mc. Graw-Hill Companies, Inc. All rights reserved.

Learning Objectives § Explain why there are differences between domestic and international marketing § 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 3

Learning Objectives § Explain why consumer products generally require greater modification for international sales 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 4

International Marketing • Develop marketing strategies by assessing the firm’s potential foreign markets and 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 5

Standardize, Adapt, or Formulate Anew? • Management would prefer global standardization of the marketing 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 6

Product Strategies • Product is central to marketing mix • Total product includes – 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 7

Total Product 8 Total Product 8

Types of Products • Industrial Products – Many can be sold unchanged worldwide (computer 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 9

Types of Products • Consumer Products – Require greater modification to meet local market 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 10

Types of Products • Services – Marketing of services similar to that of industrial Types of Products • Services – Marketing of services similar to that of industrial products • Services easier to market globally compared to consumer products • Laws and customs may force changes 11

Foreign Environmental Forces • Sociocultural Forces – Dissimilar cultural patterns generally require changes in 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 12

Foreign Environmental Forces • Legal Forces – Laws concerning • Pollution • Consumer protection 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 13

Foreign Environmental Forces • Economic Forces – Great disparity in income throughout world – 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 14

Foreign Environmental Forces • Physical Forces – Climate and terrain prevent international product standardization 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 15

Promotional Strategies • Promotion – Any form of communication between a firm and its 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 16

Promotional Strategies • Distinct promotional strategies based on combination of three alternatives – Marketing 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 17

Six Common Promotional Strategies • Same product-same message – Avon, Maidenform • Same product-different 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

Six Common Promotional Strategies cont’d. • Product adaptation-message adaptation – In Latin America, Tang 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 19

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

Advertising • Paid, nonpersonal presentation of ideas, goods, or services by identified sponsor – 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 21

Global and Regional Brands • Reasons for increase in global and regional brands – 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 22

Top Twenty Brands 2006 23 Top Twenty Brands 2006 23

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

Advertising • Branding – Global, regional or national • Managers may convert or use 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 25

Advertising • Media – Satellite TV expands availability of media – International print media 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 26

Advertising • Internet Advertising • An affluent, reachable audience • Web contacts feature interactivity, 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 27

Advertising • Foreign Environmental Forces – Basic cultural decision for marketer: position the product 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 28

Advertising • What should be the approach of the international advertising manager? – Think 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 29

Personal Selling • Importance of personal selling compared to advertising depends on – – 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 30

Personal Selling • Internet – Would seem to eliminate the need for personal selling, 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 31

Personal Selling • International Standardization – An overseas sales force is similar to the 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 32

Sales Promotion • Any various selling aids, including displays, premiums, contest, and gifts • 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. 33

Public Relations • Various methods of communicating with the firm’s publics to secure a 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 34

Pricing • Important and complex consideration in formulating marketing strategy • One of the 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 35

Interaction between Marketing and Other Functional Areas • The finance people want prices that 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 36

Interaction between Marketing and Other Functional Areas • The tax people are concerned with 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 37

Standardizing Prices • Difficult if desirable – Foreign National Pricing • Local pricing in 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 38

Distribution Strategies • Distribution Decisions – Often interdependent with other marketing mix variables • 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 39

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

Channel Selection • Direct or Indirect Marketing – The first decision: whether to use 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 41

Foreign Environmental Forces and the Marketing Mix Matrix 42 Foreign Environmental Forces and the Marketing Mix Matrix 42

Foreign Environmental Forces and the Marketing Mix Matrix 43 Foreign Environmental Forces and the Marketing Mix Matrix 43

Foreign Environmental Forces and the Marketing Mix Matrix 44 Foreign Environmental Forces and the Marketing Mix Matrix 44

Foreign Environmental Forces and the Marketing Mix Matrix 45 Foreign Environmental Forces and the Marketing Mix Matrix 45