23.1.20071jobber, chapter 22 international marketing theory review uli breunig caglar cintuglu deniz...
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23.1.2007 1 Jobber, Chapter 22
International Marketing
Theory ReviewUli Breunig
Caglar CintugluDeniz Yarar
23.1.2007 Jobber, Chapter 22 2
Going International?
How to Enterwhich Markets
MarketingStrategy
Structures ofOrganization
Agenda
• Deciding:– whether to go International– which Markets to enter– how to enter
• Developing International Marketing Strategy
• Organizing for International Operations
23.1.2007 Jobber, Chapter 22 3
Going International?
How to Enterwhich Markets
MarketingStrategy
Structures ofOrganization
Seven triggers forInternational expansion:
• Saturated domestic markets
• Small domestic markets
• Low-growth domestic markets
• Customer drivers
• Competitive forces
• Cost factors
• Portfolio balance
23.1.2007 Jobber, Chapter 22 4
Going International?
Saturated
Small
Low-growth
Cust. drivers
Comp. forces
Cost factors
Portfolio
Seven triggers forInternational expansion:
• Saturated domestic markets
• Small domestic markets
• Low-growth domestic markets
• Customer drivers
• Competitive forces
• Cost factors
• Portfolio balance
23.1.2007 Jobber, Chapter 22 5
Going International?
Saturated
Small
Low-growth
Cust. drivers
Comp. forces
Cost factors
Portfolio
Saturated domestic marketsSmall domestic markets
• Few opportunities to expand in current domestic (saturated) market
• Serving small national markets is not sufficient to compete against other global competitors
23.1.2007 Jobber, Chapter 22 6
Going International?
Saturated
Small
Low-growth
Cust. drivers
Comp. forces
Cost factors
Portfolio
Low-growth domestic marketsCustomer drivers
• Recession at home -> new opportunities overseas
• Suppliers with international presence expected
• Customers expanding abroad
23.1.2007 Jobber, Chapter 22 7
Going International?
Saturated
Small
Low-growth
Cust. drivers
Comp. forces
Cost factors
Portfolio
Competitive forces
• Companies feel obliged to follow others going abroad
• Attacking an overseas competitor, that entered domestic market, in his own home market
23.1.2007 Jobber, Chapter 22 8
Going International?
Saturated
Small
Low-growth
Cust. drivers
Comp. forces
Cost factors
Portfolio
Cost factorsPortfolio balance
• Low-cost areas (labour: Taiwan, Korea…)
• Gaining economies of scale
• Different growth rates in different areas provide portfolio balance
23.1.2007 Jobber, Chapter 22 9
Going International?
How to Enterwhich Markets
MarketingStrategy
Structures ofOrganization
Deciding which markets to enter
• Macroenvironmental issues– Economic influences– Socio-cultural influences– Political-legal influences
• Microenvironmental issues– Market attractiveness– Company Capability Profile
23.1.2007 Jobber, Chapter 22 10
How to Enterwhich Markets
Macroenvironment
Economic
Socio-cultural
Political-legal
Microenvironment
Attractiveness
Capability profile
Deciding which markets to enter
• Macroenvironmental issues– Economic influences– Socio-cultural influences– Political-legal influences
• Microenvironmental issues– Market attractiveness– Company Capability Profile
23.1.2007 Jobber, Chapter 22 11
How to Enterwhich Markets
Macroenvironment
Economic
Socio-cultural
Political-legal
Microenvironment
Attractiveness
Capability profile
Macroenvironmental issues:Economic influences
• Country‘s size
• Per capita income
• Stage of economic development
• Infrastructure
• Exchange rate stability
23.1.2007 Jobber, Chapter 22 12
How to Enterwhich Markets
Macroenvironment
Economic
Socio-cultural
Political-legal
Microenvironment
Attractiveness
Capability profile
Macroenvironmental issues:Socio-cultural influences
• Psychic distance
• Cultural differences– Attitudes– Social Perspectives– Language
23.1.2007 Jobber, Chapter 22 13
How to Enterwhich Markets
Macroenvironment
Economic
Socio-cultural
Political-legal
Microenvironment
Attractiveness
Capability profile
Macroenvironmental issues:Political-legal influences
• Attitude of foreign governments to– Imports– Foreign direct investment
• Political stability
• Trade barriers
23.1.2007 Jobber, Chapter 22 14
How to Enterwhich Markets
Macroenvironment
Economic
Socio-cultural
Political-legal
Microenvironment
Attractiveness
Capability profile
Microenvironmental issues:Market attractiveness
• Size & growth rate
• Competition
• Costs of serving the market– (distribution and control)
• Profit potential
• Market access (informal ties between existing suppliers)
23.1.2007 Jobber, Chapter 22 15
How to Enterwhich Markets
Macroenvironment
Economic
Socio-cultural
Political-legal
Microenvironment
Attractiveness
Capability profile
Microenvironmental issues:Company capability profile
• Skills– Necessary skills to market
abroad?– Compensation of shortfalls?
• Resources– Financial resources for maybe
higher market servicing costs?– Human resources (local)?
23.1.2007 Jobber, Chapter 22 16
How to Enterwhich Markets
Macroenvironment
Economic
Socio-cultural
Political-legal
Microenvironment
Attractiveness
Capability profile
Microenvironmental issues:Company capability profile
• Product adaptation– Product modifications:
• Local preferences/regulations• Motivation/capability for redesign?
• Competitive advantage– Ability to create a competitive
advantage? Study foreign market!
23.1.2007 Jobber, Chapter 22 17
Going International?
How to Enterwhich Markets
MarketingStrategy
Structures ofOrganization
Deciding how to enter a market
• Exporting– Indirect– Direct
• Licensing
• Joint Ventures
• Direct investment
23.1.2007 Jobber, Chapter 22 18
How to Enterwhich Markets
Exporting
Indirect
Direct
Licensing
Joint Ventures
Direct investment
Deciding how to enter a market
• Exporting– Indirect– Direct
• Licensing
• Joint Ventures
• Direct investment
23.1.2007 Jobber, Chapter 22 19
How to Enterwhich Markets
Exporting
Indirect
Direct
Licensing
Joint Ventures
Direct investment
Indirect exporting
• Domestic-based export merchants – who take title to the products &
sell abroad
• Domestic-based export agents– who sell on behalf of the
exporter but do not take title
23.1.2007 Jobber, Chapter 22 20
How to Enterwhich Markets
Exporting
Indirect
Direct
Licensing
Joint Ventures
Direct investment
Indirect exporting
• Piggy-backing– Exporter uses other producer‘s
overseas distribution facilities
• Co-operative organizations– Act on behalf of a number of
producers, partly controlled by them
23.1.2007 Jobber, Chapter 22 21
How to Enterwhich Markets
Exporting
Indirect
Direct
Licensing
Joint Ventures
Direct investment
Direct exporting
• Foreign-based agents or distributors
• Domestic-based sales representatives
• Overseas sales/marketing office or subsidiary
• The internet
23.1.2007 Jobber, Chapter 22 22
How to Enterwhich Markets
Exporting
Indirect
Direct
Licensing
Joint Ventures
Direct investment
Licensing
• Licensing– Foreign Licensor provides a
local licensee with access to technology
• Franchising– Product & trade name
franchising– Business format franchising
23.1.2007 Jobber, Chapter 22 23
How to Enterwhich Markets
Exporting
Indirect
Direct
Licensing
Joint Ventures
Direct investment
Joint Ventures
• Contractual joint-venture– No new enterprise, share cost,
investment, risk and profit
• Equity joint-venture– New company, foreign & local
investors
23.1.2007 Jobber, Chapter 22 24
How to Enterwhich Markets
Exporting
Indirect
Direct
Licensing
Joint Ventures
Direct investment
Joint Ventures
• Joint Ventures are often the only way to enter a market:– Government restrictions to
market entry– Foreign companies lack the
resources to set up production facilities alone
23.1.2007 Jobber, Chapter 22 25
How to Enterwhich Markets
Exporting
Indirect
Direct
Licensing
Joint Ventures
Direct investment
Direct investment
• Acquisition of foreign producer
• Buying-out joint-venture partner
• Building new facilities
Expensive and risky but quick way of entering new market
23.1.2007 Jobber, Chapter 22 26
How to Enterwhich Markets
Exporting
Indirect
Direct
Licensing
Joint Ventures
Direct investment
Selecting an entry modeControl, Resources, Risk
Level
Factor
Risk of losingProprietaryinformation
Resources Control
LicensingJoint Venture
Exporting (own staff)
Exporting (middlemen)
Direct investment
Direct investment
Joint VentureExporting (own staff)
LicensingExporting (middlemen)
Direct investmentExporting (own staff)
Joint VentureLicensing
Exporting (middlemen)
High
Medium
Low
23.1.2007 Jobber, Chapter 22 27
Going International?
How to Enterwhich Markets
MarketingStrategy
Structures ofOrganization
Developing international marketing strategy
• Standardization or adaption
• International marketing mix decisions– Product– Promotion– Price– Place
23.1.2007 Jobber, Chapter 22 28
MarketingStrategy
Standard/adopt
Product
Int. Marketing mix
Promotion
Price
Place
Developing international marketing strategy
• Standardization or adaption
• International marketing mix decisions– Product– Promotion– Price– Place
23.1.2007 Jobber, Chapter 22 29
MarketingStrategy
Standard/adopt
Product
Int. Marketing mix
Promotion
Price
Place
Standardization or adaptation
• Few totally standardized mixes– Coca-Cola differs sweetness &
carbonization– McDonald‘s: meat in
hamburgers, menu with(out) salad
23.1.2007 Jobber, Chapter 22 30
MarketingStrategy
Standard/adopt
Product
Int. Marketing mix
Promotion
Price
Place
International marketing mixProduct
• Global market to justify huge R&D costs – Pharmaceutical industry
• Authentic national heritage:– Scotch whisky, Belgian
chocolate, French wine
23.1.2007 Jobber, Chapter 22 31
MarketingStrategy
Standard/adopt
Product
Int. Marketing mix
Promotion
Price
Place
International marketing mixPromotion
• Standardized advertising for consistent image identity also for international travellers
• Adaptations:– Language, local taboos,
different use of goods, local culture
23.1.2007 Jobber, Chapter 22 32
MarketingStrategy
Standard/adopt
Product
Int. Marketing mix
Promotion
Price
Place
International marketing mixPrice
• Local competition
• Customers
• Transfer pricing
• Taxes, tariffs, exchange rates
• Counter trade
• Parallel importing
23.1.2007 Jobber, Chapter 22 33
MarketingStrategy
Standard/adopt
Product
Int. Marketing mix
Promotion
Price
Place
International marketing mixPlace
• Distribution channels
In Spain yoghurt was sold through pharmacies
Germany, UK etc. sell some pharmaceuticals in grocery outlets
23.1.2007 Jobber, Chapter 22 34
Going International?
How to Enterwhich Markets
MarketingStrategy
Structures ofOrganization
Organizing for international operations
• Organization
• Centralization vs. decentralization
23.1.2007 Jobber, Chapter 22 35
Structures ofOrganization
Organization
Centralization
Decentralization
Organizing for international operations
• Organization
• Centralization vs. decentralization
23.1.2007 Jobber, Chapter 22 36
Structures ofOrganization
Organization
Centralization
Decentralization
Organization
• International– Overseas operations are
appendages to a central domestic operation
• Global– Overseas operations viewed as
„delivery pipelines“ to a unified global market
23.1.2007 Jobber, Chapter 22 37
Structures ofOrganization
Organization
Centralization
Decentralization
Organization
• Multinational– Regard for overseas operations
as portfolio of independent businesses
– Rather decentralized
• Transnational– Coordination & cooperation in
an environment of shared decision-making
23.1.2007 Jobber, Chapter 22 38
Structures ofOrganization
Organization
Centralization
Decentralization
Centralization
• Global integration of international operations
• Reaps economies of scale
• Provides integrated marketing profile
23.1.2007 Jobber, Chapter 22 39
Structures ofOrganization
Organization
Centralization
Decentralization
Decentralization
• Delegation of international operations to individual countries or regions
• „Regional responsiveness“
• Maximizes customization of products to regional preferences