international & strategic marketing for smes

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International and strategic marketing

for SMEsCairo, Egypt

May 21st, 2014

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• These slides support front lessons and are part of a wider teaching program. Without teacher explanation, arguments can be partial and drive to incorrect conclusions. !

• For any further needs or clarifications, please send an email to: alessandro.barulli@gmail.com

Before we start…

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• In the text terms such as client and consumer are considered synonymous, even if the first refers to a B-2-B (Business to Business) relationship and the second to a B-2-C (Business to Consumer) one. !

• Either terms like product and service can be considered synonymous.

Notes

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Acronyms: •Foreign Direct Investments: FDI •Human resources: HR •Joint venture: JV •Marketing: Mktg, mktg •Market: Mkt, mkt •Multi National Companies: MNCs •Research and development: R&D •Small Medium Enterprises: SMEs •Wholly Foreign Owned Enterprises: WFOE

Notes

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Pay attention!!!!

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Internationalization is a strategic choice, not an

opportunity

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What does it mean going international or

global?

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It means you need…

A new business mentality

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It means you need…

To understand the importance of strategy

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It means you need…

To prepare, fix, organize your company

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It means you need…

To deliver a value - not only products - to markets

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It means you need…

To discover what’s new in the world

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Export Readiness

Export Management

Doing business techniques S

T R A T E G Y

Marketing Mix

EXPORT

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What’s new in the World?

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• Events that changed face to the international commerce in the last 15 years:

• Economical and political union within Countries

• New big players (China, India) • New aggressive emerging markets:

– BRICS: Brasile, Russia, India, Cina, Sud Africa – MIST: Messico, Indonesia, South Korea, Turchia

A new World

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• Internet’s diffusion • Globalization of markets, both for selling and

sourcing • €uro zone birth • 2008/2009 global economical and financial

crisis and mkt recession

A new World

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• More information • Increased visibility for companies and products • Search engine • New communication systems (Email, Skype,

WeTransfer, YouTube, etc.) • Social Networks (Facebook, Twitter, Google+,

Linkedin, Pinterest, Instagram, etc.) • Online sales

A new World: the WWW

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• More competition > require the switch from company product oriented to market oriented

• More opportunities > the World is seen a unique potential mkt

• Foreign mkts used for sourcing • More transparency • Impossible to compete without strategies

Mkt globalization

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• Companies are required to become market oriented, instead of being product oriented

• Strategies definition and execution • HR with dedicated skills to drive the

international business

A new World: challenges

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About strategy

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What is your company’s marketing strategy? Do you have a strategy for pricing and distribution? Do you plan to reach customers in a foreign country? Are you scheduling an advertising campaign for a soon-to-be-released new product? !These are important questions because every business needs a marketing strategy

Marketing and strategy

Clients

Prices

Markets

Promotion (& advertising)

ProductsPlace (distribution)

ProcessesHuman Resources

Marketing

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Marketing? Is everything

Strategic MKTG: Analysis and forecast of market needs !

•Needs analysis •Market segmentation and

segment choice •Attractiveness Analysis •Competitiveness Analysis •New products strategy •New markets access strategy !!

Operative MKTG: Ensemble of sale instruments !•MKTG plans •MKTG budget •Plans application & control •Sales tools (catalogs, price

lists) •Web site •Advertising •Promotion •Trade shows

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Marketing

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If you’re mkt oriented you can answer the following questions

(according to P. Drucker)

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•What is our business? •Who is our client? •What is valuable for our client? •How should be our company? •How will be our business in the future? •Who are our competitors?

Are you mkt oriented?

CLIENTS

Distributors Competitors

CompanySocial and Economical

Environment

Access path Knowledge path

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Market structure

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What do you need to write a strategy?

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• Data and market info to build up your Marketing Information System

• Marketing research • Marketing/Business Planning

You need…

Information (M.I.S.)

Clients - Expectations - Purchase intentions - Purchase behaviors - Behaviors after purchase

Competitors - Positioning - Strengths /weaknesses - Mktg strategies & politics

Demand - sector/market - type of client

Market external context - Social elements - Technological elements - Cultural aspects

Company internal environment - Marketing activity - Marketing vs. other activities - Revenues / mark ups - Market share

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Marketing Information System

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• Define the characteristics of a market • Measure the attractiveness of a market • Analyze sector developments • Analyze competitors products/brands • Study the acceptance of new products • Study the price the market wish to pay • Analyze clients/consumers behavior

Marketing research: why?

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• Is the document containing the company’s marketing strategy. It is based on a clear company mission, objectives and goals other than effective controls.

• The marketing plan has to be coherent with segmentation, positioning and marketing mix politics.

Marketing plan

Company’s Mission

Internal environment Analysis

Goals

Strategy

Programs & Schedule

Improvements

Controls

External environment Analysis

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Marketing plan: basic structure

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Do your homework

S !Strengths

W !Weaknesses

O !Opportunities

T !Threats

Internal (the company)

External (the market)

SWOT Analysis

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Do we have to use canvas or business

models to plan?

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Use whatever you prefer, but start planning

asap

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The bases: segmentation and positioning

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• Select product • Select market • Qualify prospective markets • Determine worthwhile target markets • Profile and prioritize segments

Defining Mkt segments

Air

Land

SeaOn wheels

By rail

LocalNational

International

Goods < > People

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Market segmentation: transports

MarketMKTG

Mix

Undifferentiated

MKTG Mix A

MKTG Mix C

MKTG Mix B

Segment A

Segment C

Segment B

Differentiated

MKTG Mix

Segment A

Segment C

Segment B

Concentrated

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Segmentation & Strategies (P. Kotler)

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• States as the product is positioned in consumers’ mind, with reference to all the different choices they feel available to satisfy a need. !

• The company has to offer a product: – Matching the expectations of the target(s) – Different from that of competitors – With a well known and unforgettable brand

Positioning

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What’s the purpose of writing a strategy?

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To reach your customers’ satisfaction, create a

relationship with them and get profits from it

Customer satisfaction

Competitively

Satisfy the clients better and more than the

competitors

Timely

Satisfy the clients when they have a need, not

before (when they don’t feel it), nor after (when the need has been satisfied by a

competitor).

Continuously

Customer satisfaction is a never ending attitude:

Is much better and profitable maintain a client than get

a new one

Knowledge of the Market

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Client satisfaction: the road map

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What about the marketing mix for your international business?

Domestic Market

Global Product

Mercato Straniero 3

Mercato Straniero 2

Foreign Market #1

Domestic Product

Same Product

Adapted Product

Customized Product

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Product to export: strategies

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• Return on sales (ROS) • Return on investments (ROI) • Increase the market share • Maintain the leadership towards other

manufacturers • Sell other products of the range • Survive to possible cash flow crisis

Pricing: objectives

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• To price effectively consider the following issues: – Price should reflect

• Strategic objectives • Customer target • Product positioning

– Price should take costs into account, noting that variable cost is the floor and customer value the ceiling

– Price should take channel considerations into account

Pricing: issues

Internal to the company: - Mktg targets - Mktg strategies - Costs (fixed, variable, manufacturing, packaging, sale, promotion, etc.) - Company organization and structure

External to the company: - Market characteristics (number of clients, purchasing capacity, infrastructures, etc.) - Demand - Competitors - Environmental aspects (custom barriers and duties, exchange rates, economic conditions, restrictive rules and laws, etc.)

Price Decisions

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Export pricing: major elements

cheap poor ripoff

overcharging

superb

average

penetrationpremium

good

Price

Qua

lity

H

M

L

L

M

H

Consumer perceptions of the relationship between product’s quality and its price

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Pricing - quality strategies

Direct Importer Wholesaler Retailer

Product industrial cost 50.000 50.000 50.000 50.000

Mkup (15%) 7.500 7.500 7.500 7.500

EXW price 57.500 57.500 57.500 57.500

40’ container CIF Dubai 1.600 1.600 1.600 1.600

Duties (5%) 2.875 2.875 2.875 2.875

Transport 200 200 200 200

Price @ Importer - 62.175 62.175 62.175

Importer Mkup (50%) - 31.088 31.088 31.088

Transport - 200 200 200

Price @ Wholesaler - - 93.463 93.463

Wholesaler Mkup (20%) - - 18.693 18.693

Transport - - 200 200

Price @ Retailer - - - 112.355

Retailer Mkup (20%) - - - 22.471

Price @ End User 62.175 93.463 112.355 134.826

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Prices & channels

Intensive: Products are

distributed through the highest number

of sale points

Selective: Products are

distributed through selected sale

points (for brand, other products, position

etc.)

Exclusive: Products are

distributed only in selected and qualified sale

points

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Distribution: types

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• Indirect – Big buyers (supermarkets, chain stores, other manufacturers).

Importers. Wholesalers. Trading companies (national & foreign). Commissioned agents (brokers). Cooperatives.

• Direct – Salesmen. Sales Reps. Branch. Subsidiary. Affiliated.

• Integrated – Franchising. Contractual JVs. Piggyback (when a company

allows another one, which has its own export distribution, to sell its products abroad).

Distribution channels

Advantages: ☺ Direct market control ☺ Own people more efficient ☺ Immediate changes on

mktg mix ☺ More info from the market ☺ Sale actions more efficient

and lasting ☺ Presence on markets

without intermediaries ☺ Brand diffusion ☺ Intermediaries mark ups

retention

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Disadvantages: " Very expensive initial

investment and high yearly costs

" Need of highly skilled H.R. " Need of a large market

share to absorb investments and yearly costs

Direct distribution channels

Advantages: ☺ No costs and risks entering

the market ☺ No need to know market

characteristics ☺ No need to know

customers requirements and behaviors

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Disadvantages: " No control on the market " Lack of direct info from the

market " No contact with the

endusers " Risk of substitution from

intermediaries

Indirect distribution channels

ShortManufacturer End user

MediumEnd userRetailerWholesalerManufacturer

Manufacturer Import Wholesaler Retailer End user Long

Consumer goods

Industrial goods

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Distribution channels: types

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Ready for take off?

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• Preparing the company to international trade seeking people speaking foreign languages and possibly experienced of export sales

• Learning transport and logistic techniques in relation with distance, infrastructures and product to ship

• Preparing sales dox (e.g. proforma and/or commercial invoice, packing list, certificate of origin, export license) and defining sales and distribution contracts

Things to do

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• Acquiring info on payment terms used to settle exchanges and guarantees used to protect export sales

• Studying the export strategy and analyzing the most attractive markets

• Studying the product to export, eventually adapting it to markets needs

• Preparing sales tools (catalogues & price lists) in foreign language(s) and measurements

Things to do

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• Training sales reps and seeking locally the intermediaries according to the company strategic plan

• Monitoring the market constantly for a real time control of happenings that could affect the commercial expansion

• Evaluating partnerships/alliances with local partners or the opening of a corporate branch for production and distribution

Things to do

• Claim on goods shipped – Different type – Different size/color – Damage

• Payment – Delayed – Not cashable – Not executed

• Country • Exchange rate

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• Manufacturing • Changes in components

– Type – Price

• Client mistake posting the order

• Transport • Goods uncollected

– From customs – From manufact. whouse

The risks of intl business

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Some tips and tricks about Country analysis

Company Strategy

Market characteristics

Company Size &dimensions

Competitors Strategies

Market selection decisions:

Simultaneously or One-by-One

Concentrate or Diversify

Competitors markets selection

Market 1

Market 2

Market 3

Market 4

Market n

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Country entry strategy

# Custom duties # Government

regulations # Infrastructure and

transports # Financial benefits for

foreign investors # Being part of political

and/or monetary unions

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# GDP # HDI # Unemployment # Inflation # Economic growth # Economic and political

stability # Financial rating # Families and singles

expenditure

Intl marketing: Country Analysis (some factors)

# Tendence to import market/sector

# Number of competitors

# Competitors market share

# Mark ups # Structure of distribution

channels

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# Market size # Market growth # Number of potential

customers (prospects) # Level of development

market/sector # Import volume market/

sector

Intl marketing: Country Analysis (some factors)

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Doing business with Italians

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• Good and polite manners • Formal relationship (at the beginning) • Shake the hands when meet each other • When persons have a friendly relationship they

hug and kiss • When people speak tend to reduce physical

distance (a wider distance means a cold relationship)

Business negotiation

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• Titles count! Use “Signor” (Mr) and “Signora” (Mrs), followed by the second name when speaking to men and women. Use “Dottor” and “Dottoressa” when address to people with a degree.

• Dress to impress! Italians pay attention the way you dress

Business negotiation

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• Establish a meeting writing day and hour you’d like to meet your counterpart.

• Try to be punctual; a delay for is accepted for traffic jam or other reason. In such a case, give a phone call.

• Avoid to arrive late without informing. • Avoid to continuously postpone a meeting.

Business negotiation

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• General meeting business hours: in the morning later that 9.30 am. In the afternoon later than 3.00 pm. Try to avoid setting a meeting on Monday morning and in August.

• Business talks can be long, cause Italians will get as much info they can; sometimes before focusing on the topics of the meeting speeches can be various also on arguments not strictly related.

Business negotiation

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• Exchange business cards right after formal greetings and introduction and before starting talks. Italians pay attention to what is written on biz cards.

• During the negotiation Italians ask for info about the counterpart’s company, turnover and purchasing intentions. Usually they do not ask for plans and strategies: they are mainly interested in sales.

Business negotiation

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• For first orders a guaranteed or in advance payment is often required.

• To avoid misunderstandings write together the main points of the talks at the end of the negotiation.

• Italians love to host people: be prepared to continue the business talks at the restaurant.

Business negotiation

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• The best way to handle a business with Italians is to have an office locally or at least a representative that can be the representative on behalf of the foreign partner.

!• Pay attention to:

– Delivery date – Post sale service – Business planning – Sales literature

Business negotiation

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Thanks for your attention

!For further info:

alessandro.barulli@gmail.com