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Applied Marketing
-Spring 08
1
Imported/Smuggled goods we buy/use/consume every
day, every week, every month etc.? goods and services ²
movies also!

Since times immemorial (ancient) traders (and ´carriers)

frequently fly off to foreign lands and carry back many
items ´importµ gold, spares, toys, garments etc.
The Importance of international marketing ² Chinese
goods have taken over the entire planet, it seems.

Applied Marketing -Spring 08

2
O. Understanding the importance of international
marketing.

2. Appreciate the opportunities and challenges offered by

international marketing.

3. Recognize the effect of the global environment on

international marketing activities.

4. Understand the process of market selection.

5. Recognize the process of internationalization.

Applied Marketing -Spring 08 3

 earning objectives ² contd.

6. Appreciate the different forms of market entry.

7. Comprehend the international adjustment of the

marketing mix.

8. Understand the steps necessary for implementing

an international marketing strategy.

Applied Marketing -Spring 08 4

( INTERNATIONAL MARKETING IS ---

´The process of planning & conducting transactions ‘


‘‘ 


 to create  ‘ that satisfy the
objectives of individuals & organizations.µ

Its forms range from export-import trade, to licensing,

franchising, joint ventures, wholly owned subsidiaries, &
management contracts

Applied Marketing -Spring 08 5

( §asic principles of marketing strategy still apply, but
their implementation, complexity, & intensity may differ
substantially.

( Quality of Chinese goods may differ in Pakistan & The

U.S.

( Questions to asked to succeed in an I.M. - 



Applied Marketing -Spring 08 6

O. How will my product fit into the international
market?
2. What marketing adjustments are or will be
necessary?
3. What threats from global and local competition
should I expect?
4. How can these threats be turned into
opportunities?

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Applied Marketing -Spring 08 7

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Applied Marketing -Spring 08 8

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Applied Marketing -Spring 08 9

Y ‘
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( International logistics

( Small business mindset ² following slide

( Political and economic instability

( Increased competition

Applied Marketing -Spring 08 10

( Manybelieve only MNCs carry out international
marketing

Smaller firms can also be major players: 50% of

German exports from firms with O or fewer
employees
Software developers

Applied Marketing -Spring 08 11

Learning Objective 3:
The international marketing environment

( Key international environments are the

O. Cultural
2. Socioeconomic, and
3. Legal/Political environments

( Different in different countries & within the same

country.

Applied Marketing -Spring 08 12

 Cultural Environment

Y ‘

how to handle the differences

In languages, values & attitudes, C.§. and

how to handle the impact of these
differences on the implementation of the
Marketing programs in the marketplace.
(The international marketer plays the role
of a Change agent trying to impress on a
local consumer the need to adopt a new
product.

Applied Marketing -Spring 08 13

 Cultural ² contd.

Cultural lifestyle has (some believe) four

dimensions.
O. Degree of individualism vs. group decision
making
2. Level of equality vs. class differences
3. Uncertainty avoidance; follow rules &
regulations.
4. Attitude towards material achievement
To foster cultural sensitivity & acceptance of
new
ways of doing things within the organization,
management must institute internal training
programs
Applied Marketing -Spring 08 14
‰igure 3.2 ² Making Culture Work for You
(Embrace Local Culture
(Employ Locals to Gain Cultural Knowledge
(§uild Relationships ² visit, invite
(Adapt Products to Local Markets
(Help Employees Understand You
(Coordinate by Region ² like holding regions
meetings and share insights and strategies.

Applied Marketing -Spring 08 15

( Aging
& Elderly populations in the West and Japan ²
opportunities offered. Economic boom changes U.S.
market characteristics

( Hugepopulations in some countries - prime working

age and driving both economic and consumption
growth.

( Women who work outside create demand of packaged

food, labor-
labor-savings devices & house hold services.

Applied Marketing -Spring 08 16

 LEGAL AND POLITICAL ENVIRONMENT

( Intellectual
property rights is the protection provided by
patents, copyrights, & trademarks.
( WTO
( Common law: based on traditions & customs
( Code law: based on a comprehensive set of written statutes.
( Antidumping laws: protecting domestic industry from unfair
competition from abroad

Applied Marketing -Spring 08 17

( Learning Objective 4: international market selection

The process of target market selection involves

narrowing down potential country markets to a feasible
number of countries and market segments within them.

Applied Marketing -Spring 08 18

 All Countries Secondary
Data
Preliminary Screen:
1. General country factors Rejected
2. Generic product-
product-specific Countries
factors

Prospective Target
Countries

Estimate Market Potential

by Product Types: Rejected
1. Size of national market Countries
2. Potential of national
market

Applied Marketing -Spring 08 19

 Digh Market Potential
Countries

Estimate Sales Potential by

Company Products:
1. Product comparisons
Other Target ejected
2. Competition
Markets 3. Market structure Countries
4. Channel structure
5. Final consumers

Dighest Sales Potential

Countries ± Target Market

Applied Marketing -Spring 08 20

Identifying Segments in Target Primary
Rejected
Market Data
Segments

ptimal Segment Mix in Target

Market

Applied Marketing -Spring 08 21

 MARKET SELECTION
(Concentration vs. Diversification
‰ew markets vs. Many markets
Dual Concentration
† ‰ocus on a segment in a few countries
† Suitable for smaller companies

Dual Diversification
† ‰ocus on most segments in most markets
† Used by large consumer-products companies

Applied Marketing -Spring 08 22

( Learning Objective 5: the internationalization
process
( The role of management:
Managerial commitment to international
markets is crucial
§ecome aware of opportunities
Enter in a limited fashion & evaluate results
( Managerial commitment
( Motivations to go abroad
( Proactive motivations
( Reactive motivations

Applied Marketing -Spring 08 23

Learning Objective 6: alternative entry strategies
( Indirect exporting & importing
( Direct exporting & importing
( International intermediaries: help direct & indirect
exporter/importers in documentation, financing,
and transportation.
( Two major types are EMC and trading companies.

Export management companies (EMC) specialize in

performing business services as commission
representatives or as distributors.
Ñ Y‘  

Applied Marketing -Spring 08 24
O. Agent: (EMCs) do not take title to the products but
develop marketing strategy and contacts.
2. Distributor: (EMCs) purchase products from the
domestic firm an assumes the trading risk.

The second major intermediary is the trading

company which undertakes exporting, importing,
countertrading, investing, and manufacturing-
wider scope then EMC.

Sogoshosha are the trading companies of Japan:

can purchase products, act as distributor abroad,
or offer services ² provide country information etc

Applied Marketing -Spring 08 25

( Licensing: an arrangement in which one firm
permits another to use its intellectual property
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  in exchange for compensation, typically a
royalty (paid by one firm to another under
licensing & franchising agreement)
  does not require huge
capital investment, or detailed involvement,
earn income on R&D already conducted, no risk
of Expropriation (take away something
belonging to somebody): risk of govt. takeover.

Applied Marketing -Spring 08 26

Entry strategies ² contd.

‰ranchising is a form of licensing that grants wholesaler or

a retailer exclusive rights to see a product or a service in a
specified area.

Applied Marketing -Spring 08 27

Alternative entry strategies ² contd.

( ‰oreign Direct Investment (‰DI)

Investing abroad (buying firms) to gain
certain benefits ² local taxes, marketing
considerations and desire for expansion, the
local economy also gains ² MNCs also cause
displacement.
- A perspective on foreign direct investors: viewed
with a mixture of awe and dismay-bring capital,
provide employment etc.

Applied Marketing -Spring 08 28

- Types of ownership

 

 ² a collaboration of two or more organizations
each contributing assets, owns the new subsidiary and share
risk.

‘ ‘‘ : are informal or formal arrangements
between two or more companies with a common business
objective ² more than vendor-customer relationship but less
than an outright acquisition, have ongoing flexibility.
They are network of companies that collaborate in the
achievement of a given project ² Motorway ! Contractual
arrangements (manufacturing)

Applied Marketing -Spring 08 29

learning Objective 7: a company view of international expansion
The central driver of internationalization is the level of managerial commitment.
This commitment will grow gradually from an awareness of international potential to the adaptation of an international strategic direction.
It will be influenced by the information, experience, and perception of management, which in turn are shaped by motivation and concerns of the firm.

Applied Marketing -Spring 08 30

Figure 3.5 A Y
 
 

 




  


Domestic
Focus

Alternative Level of Motivations Concerns

Strategies Management Õ Proactive
Multin commitment Õ Information
ational Õ Trading Õ Reactive Õ Mechanics
Focus
Export/import Õ Aware Õ Communication
Õ Licensing/Fr- Õ Interested Õ Sales Effort
anchising Õ Trial Intermediaries Õ Service
Õ Local Presence Õ Evaluation Õ Export
alliances Õ Adaptation Õ Regulations
Mgmt. Co.
full ownership Õ Trading Cos
Õ Facilitators

Applied Marketing -Spring 08 31

 Adjusting the marketing mix:

( International markets are approached in one of the three

ways:

O. Standardized approach to international marketing in

which products are marketed with little or no
modification.

2. Multidomestic approach in which local conditions are

adapted to in each and every target market.

Applied Marketing -Spring 08 32

3. Globalization approach: to international
marketing in which differences are
incorporated into a regional or global strategy
that will allow for differences in
implementation.
´think globally and act locallyµ

Applied Marketing -Spring 08 33

Three sets of influences shape the final form of the
product and the adjustments to be made in the
marketing mix.
Y‘!  Profitability, market
opportunity, Policies.
‘

‘  : like
Governmental regulations, customer
characteristics, expectations, preferences etc.
(covered in the first chap.)
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  product
constituents, brand, positioning, packaging,
after-sales service etc.

Applied Marketing -Spring 08 34

( learning Objective 8: implementing marketing
programs worldwide - To keep with the changing
conditions actions have to taken with respect to
the following:
O. management process: keeping relations with the
head office and the local market ² flow of
information, globalization calls for centralization
2. organization structure: to keep with the change,
regional product managers etc. develop long-
term strategies, matrix structure etc.

Applied Marketing -Spring 08 35