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Prof. Dr. Silvia Zaharia

International MarketingInternational MarketingWS 2009/2010

Prof Dr Silvia ZahariaProf. Dr. Silvia [email protected]

[email protected] International Marketing1


COURSE OBJECTIVS / LEARNING OUTCOMES

to become functionally competent in all areas of international marketing gto become competent in the analysis of business organizations and their international business environmentto be able to make recommendation regarding the implementationto be able to make recommendation regarding the implementation of appropriate (international) strategiesto be able to distinguish alternate foreign market entry strategies g g y gto be able to select and specify appropriate foreign marketing policies and programmesto train group work & presentation skillsto train group work & presentation skills



COURSE STRUCTURECombination of lectures, case analysis and class discussion

All in-class case analyses will be conducted by student groups

Each group will be made up of 4 students, and will work as a unit throughout the semester

You'll find my presentations on the Marketing Chair's homepage

- Kennwort: student-nutzer

- Passwort: mh



Performance Evaluation

CLASS ATTENDANCEYou are expected to attend all classes. You must be present when your group is giving the presentation.

PERFORMANCE EVALUATION:In-Class Case Presentations 50%Final Examination 50%Final Examination 50%

TIMINGPresentations: 23.01.2010Final Examination: t.b.d.



GroupsStudents E-Mail

Case 1 Engler, Mirja [email protected]

Heimeier, Marc [email protected]

Paraganlija, Minela minela‐[email protected]

Niestroj Kathrin kathrin niestroj@stud uni due deNiestroj, Kathrin [email protected]‐due.deCase 2 Reichert, Andre [email protected]‐due.de

Ingenhoff, Alexander [email protected]‐due.de

Kirchmeyer, Henrike [email protected]

Kass, Kathrin kathrin‐[email protected] 3 Horstmann, Felix [email protected]‐due.de

Kamali‐Novin, Omid [email protected]

Hildebrandt, Helge Hans Christian [email protected]

Jirnova, Xenia Piotr [email protected] 4 Cardos, Anita [email protected]

Kaapke, Paula [email protected]

Popova, Krassimira kp [email protected], Krassimira [email protected]

Zeuzem, Theresa [email protected] 5 Odukwe, Jessica [email protected]

Grafenhorst, Ann‐Kathrin [email protected]

Weyer Daniela daniela weyer@stud uni‐due de


Weyer, Daniela [email protected]‐due.de

Stuhlemmer, Stefanie [email protected]


In-class Presentation of Assigned CasesEach group is required to lead a class discussion of the pre-assigned case.Each group will present its case study to the class, and then encourage the class members to participate in critical discussion and debate on the topic(s)and debate on the topic(s). The group may use PowerPoint, transparencies, handouts, and/or any other presentation materials that will facilitate understanding of the topic. You have to turn in a hard copy of your presentation material to me at the beginning of the classat the beginning of the class. The group presenting will be evaluated based on

1) its presentation of the case and


2) its ability to lead class discussions.


Reading

REQUIRED READING:Keegan, W. / Green, M. (2005): Global Marketing, 4th ed. (Pearson Ed ti )Education)

RECOMMENDED READING:Kotabe, M. / Helsen, K. (2004): Global Marketing Management, 3rd ed. (Wiley) K tl P (2003) M k ti M t 11th d i t t ditiKotler, P. (2003): Marketing Management, 11th ed., internat. edition (Prentice Hall)Kotler, P. et al. (2004): Principles of Marketing: European Edition,Kotler, P. et al. (2004): Principles of Marketing: European Edition, 4/E (Pearson Education)



In what country is the parent company located?

1. Rama2 J2. Jaguar3. IBM ThinkPad4 Zara4. Zara5. Bugatti6. H&M7. Firestone Tire & Rubber8. Burger King9 Mini9. Mini10.Puma



AGENDA

1 Introduction to international marketing1 Introduction to international marketing

2 International marketing environment2

International marketing strategy3

International marketing environment

4 International marketing-mix

g gy




AGENDA

1 Introduction to international marketing

1.1 What is international marketing?

1.2 Why international marketing is an imperative?



Introduction

What is international marketing?

H i it diff t f lHow is it different from regular marketing?



Definitions

Marketingis the process of planning

International Marketingis the process of planning and p p g

and executing the conception, pricing, promotion and

conducting transactions across national borders to create exchangespromotion, and

distribution of ideas, goods, and services to

create exchanges …Source: Czinkota/Ronkainen 2004

the main difference is thecreate exchanges that satisfies customers` current and future needs

the main difference is the scope of activities because international marketing occurs current and future needs

at a profit.Source: Kotabe/Helsen 2004

gin markets outside the organization’s home country



Marketing is an activity of the Value Chain

Source: Porter 1998

Marketing is a “management philosophy” and should be


g g p p yinvolved in all value-related decisions.


Deciding on the International Marketing MixProduct

Place PriceStandardisation

orAdaptation?p

Promotion


Promotion


Standardization versus Adaptation

StandardizationDeveloping standardized products marketed worldwide with a

standardized marketing mixEssence of mass marketing

Adaptation (Global localization)Mixing standardization and customization in a way that minimizes g y

costs while maximizing satisfactionThink globally, act locally!



Standardization versus Adaptation


Source: Keegen/Green 2005


Management Orientations

Polycentric:

Ethnocentric:Home country is

yEach host country is

unique, sees differences in

Home country is superior, sees

similarities in foreigncountries

foreign countries

countries

Regiocentric:Sees similarities in a world

Geocentric:World view, sees

region; is ethnocentric orpolycentric in its view of

the rest of the world

similarities anddifferences in homeand host countries




Evolution of International Marketing

1. Domestic Marketing (ethnocentric orientation)

2. Export Marketing (ethnocentric orientation)

3 I t ti l M k ti ( l t i i t ti )3. International Marketing (polycentric orientation)

4. Multinational Marketing (regiocentric orientation)g ( g )

5. Global Marketing (geocentric orientation)

[email protected] International [email protected] International Marketing


1. Domestic Marketing

Marketers are ethnocentric and pay little attention to what is going on in the international market place.

Companies focus on domestic sales and markets.

This strategy is based on domestic needs and domestic competition only.



2. Export Marketing

Companies tend to take an ethnocentric view toward strategy formulation.

Product development is determined primarily by the needs of h t thome country customers.

Businesses may experience many difficulties:Businesses may experience many difficulties:- Import/export restrictions- Cost and availability of shipping

E h t fl t ti- Exchange rate fluctuations



3. International Marketing

Polycentric orientation with marketing decisions made in each country

Local product development/adaptation based on local needs

The extreme of this phase is to establish an independent foreign subsidiary in each and every foreign country (multi-domestic marketing).



4. Multinational Marketing

The company markets its products in many countries around the world and has a regiocentric orientation.

The company consolidates on a regional basis:- Product planning may be standardized within a region but not

across regions.- Regional advertising might be accomplished.g g g p- Regional brands might be developed.



5. Global Marketing

Geocentric orientation focusing resources on global market opportunities and threats.

The marketing activities emphasize:St d di ti ff t- Standardization efforts

- Coordination across markets - Global integrationGlobal integration



Global Marketing: What it isn’t and What it is

Global marketing does not Global marketing does mean id i b i h i tmean doing business in all

country markets widening business horizons to encompass the world in scanning for opportunities and threats

Global marketing does not necessaril mean that

The economic geography, necessarily mean that products can be developed anywhere on a global scale.

climate, and culture affect how companies develop certain products.



AGENDA

1 Introduction to international marketing

1.1 What is international marketing?

1.2 Why international marketing is an imperative?



Why global marketing is imperative?

Saturation of domestic markets in the industrialized parts of the world

Global competition around the world is on the riseGlobal competition around the world is on the rise

Marketing opportunities abroad Big Emerging Markets(BEMs)

Internet revolution



Importance of International Marketing

For German companies, 94% of potential is outside Germany.

For Japanese companies, 85% of potential is outside Japan.

For US-based companies, 75% of sales potential is outside the US.



Driving forces affecting global integration

Regional economic agreements (e.g. NAFTA, EU)Regional economic agreements (e.g. NAFTA, EU)

Converging market needs and wants

Technology (e g satellite dishes TV channels Internet)Technology (e.g. satellite dishes, TV channels, Internet)

Transportation and communication improvement

Product development costs (e.g. up to $359 million per drug)

Price pressure => Need for cost efficiencies (e.g. automotive)

World economic trends (e.g. economic growth, free markets)

Leverage


g


LeverageLeverage refers to the advantage that a global company enjoys through its experience in more than one country. oug s e pe e ce o e a o e cou y

Four types of leverage include: y g- experience transfers- economies of scale- resource utilization- global strategy



Restraining forces affecting global integration

Organizational cultureOrganizational culture

National controls

Opposition to globalization



AGENDA

1 Introduction To International Marketing

2 International Marketing Environment

International Marketing Strategy3

4 International Marketing-Mix

5 Managing International Operation



Stages in the International Marketing Process

Planning Implemen-A l i ControlPlanning ptation Analysis Control

Deciding on the int. Marketing Strategy

Implementing the int.Marketing Mix

Company situationenvironmental

l i

Measurement and evaluation of plans and

Deciding on the int. Marketing Mix

Marketing MixPlans actioned

analysisSWOT

of plans and activitiesCorrective action where necessary



Analysis

GLOBAL ENVIRONMENT

INDUSTRY ENVIRONMENTDistributors Customers

onm

ent

ronm

ent

MarketingGoals & Strategiesm

ic E

nviro

egal

Env

ir

CompetitorsSupplier

Goals & Strategies

Econ

om

cal a

nd L

e

p

Polit

ic


Social & Cultural Environment


AGENDA


2.1 The Cultural Environment & Buying Behavior

2.2

2.1

The Economic & Financial Environment

The Political & Legal Environment2.1 The Political & Legal Environment



Defining Culture

Culture (in a business setting) is defined as being a learned, shared, compelling, interrelated set of symbols whose meanings provide a set of orientations for members of society. Source: Kotabe/Helsen 2004

Cultures may be defined by national borders especiallyCultures may be defined by national borders, especially when countries are isolated by natural barriers.Cultures can contain subcultures that have little in common

ith thwith one another.Buyer behavior and consumer needs are largely driven by cultural norms.International business means dealing with customers, strategic partners, distributors, and competitors with different cultural mindsets


cultural mindsets.


Elements of Culture

Language: the spoken and the silent language

Social Interaction: social interactions among people; social gratification; kinship relationships (nuclear family, extended family); reference groups

Aesthetics: ideas and perceptions that a cultureAesthetics: ideas and perceptions that a culture upholds in terms of beauty and good taste

Education: One of the major vehicles to channel fromEducation: One of the major vehicles to channel from one generation to the next

Value System: values shape people’s norms and standards

Material life: technologies that are used to produce, di t ib t d d d


distribute, and consume goods and services


Never underestimate the cultural aspect!



Elements of Culture: Religion

Religion = community’s set of beliefs that relate to a reality that ycannot be verified empirically- is one important source of society’s beliefs attitudes andsociety s beliefs, attitudes, and values.



High- and Low-Context Cultures

Cultures differ from one another, but usually share certain aspects.

HIGH CONTEXTInformation resides in context

LOW CONTEXTMessages are explicit andInformation resides in context

Emphasis on background, basic values

Messages are explicit and specificWords carry all information

Less emphasis on legal paperwork

yReliance on legal paperworkFocus on non-personal

Focus on personal reputationSaudi Arabia, Japan, China

documentation of credibilitySwitzerland, US, Germany



Contextual Background of Various Countries

High context Japanese

ArabianIMPLICIT

Latin American

Spanish

ItalianEnglish (UK)

FrenchFrench

English (US)

Low context

Scandinavian

German

S i EXPLICIT


Swiss EXPLICIT


Gerd Hofsstede´s Cultural Classification S hScheme

Power distance: The degree of inequality among people that is viewed as being fairUncertainty avoidance: The extent to which people in a given culture prefer structured situations with clear rules overculture prefer structured situations with clear rules over unstructured onesIndividualism: The degree to which people prefer to act as individuals rather than group membersMasculinity: The importance of “male” values (assertiveness, success competitive drive achievement) versus “female” valuessuccess, competitive drive, achievement) versus female values (solidarity, quality of life)Long-term orientation (versus short-term focus): Future versus


past and present orientations


Gerd Hofstede´s Cultural Classification Scheme - Examples

PDI Power Distance IndexIDV Individualism

MAS MasculinityUAI Uncertainty Avoidance

LTO Long-Term Orientation


Quelle: http://www.geert-hofstede.com/hofstede_dimensions.php


Adapting to Cultures

International marketers need to become sensitive to cultural biases that influence their thinking, behavior, and decision b ases a ue ce e g, be a o , a d dec s omaking.Self-reference criterion (SRC): Refers to the people’s unconscious tendency to resort to their own cultural experience and value systems to interpret a given business situation.situation.Ethnocentrism refers to the feeling of one’s own cultural superiority.



Euro Disney: Example of cultural mistakes

- Different eating and drinking habits

- Management assumed that parents would take their kids on short journey to Disneyland during their mid semester break

- Dress code employees („ appropriate undergarments“)

- Language barriers: Management was seen as arrogant

=> Le Figaro „ Euro Disney is the very symbol of the process by which people´s cultural standards are lowered and money becomes all conquering“


conquering


AGENDA



2.2

2.3

The Economic Environment




Market Characteristics

Economic freedom- Ranges from “free” to “repressed”- Ranges from free to repressed- Variables considered include such things as: Trade policy,

Taxation policy, Wage and price controls, Property rights

Stages of Market Development- Based upon Gross National Product (GNP)- Ranges from high-income to low-income countries



Stages of Market Development




Market Characteristics (ctd.)

Foreign involvement in the economy Degree of foreign investment in country or in a specific- Degree of foreign investment in country or in a specific industry

- Rules governing foreign investment

Availability and quality of infrastructure- Rail traffic networks for distribution capabilitiesp- Communication systems for marketing- Energy (electrical & fuel)

Financial market- Currency's stability


- Credit availability


Market Characteristics (ctd.)

Population demographics- Age distribution, life expectancy, household size, urbanisation,Age distribution, life expectancy, household size, urbanisation, literacy rates …

IIncome- Distribution of low, medium & high incomes- Gross domestic product per capita- Gross domestic product per capita- Purchasing power parity

Consumption patterns- Income spent on necessities and luxuries

P d t t ti l l


- Product saturation level


Marketing Opportunities in Low Developed Countries (LDCs)

Characterized by a shortage of goods and services

L t t iti t b t d i th t iLong-term opportunities must be nurtured in these countries- Look beyond per capita GNP- Consider first mover advantageConsider first mover advantage- Set realistic deadlines- Consider the LDCs collectively rather than individually



Th l b l T d E i t T fThe global Trade Environment: Types of Regional Economic Arrangements


Source: Lascu 2004


Types of Regional Economic Arrangements

I. Free Trade Areas:- Two or more countries agree to abolish all internal barriers to tradeTwo or more countries agree to abolish all internal barriers to trade

amongst themselves.- Countries continue independent trade policies with countries outside

agreementagreement- Examples: NAFTA

II. Customs Union:- Evolution of free trade area- Includes the elimination of internal barriers to trade (as in FTA) AND - Establishes common external barriers to trade

Example: ASEAN


- Example: ASEAN.


III. Common Market

- eliminates all tariffs and other barriers (as in free trade area) AND,AND,

- adopts a common set of external tariffs on nonmembers (as in customs union) AND

- allows for the free movement of factors of production, such as labor, capital, and informationE l EU i th t (EC)- Example: EU in the past (EC)



IV. Economic Union

- Includes the elimination of internal barriers to trade (as in freeIncludes the elimination of internal barriers to trade (as in free trade area) AND

- Establishes common external barriers to trade (as in customs union) AND

- Allows for the free movement of factors of production, such as labor capital and information (as in common market) ANDlabor, capital, and information (as in common market) AND

- Coordinates and harmonizes economic and social policy within the uniont e u o



Marketing in Euro-Land

The European Union (EU) consists of 27 countries. Of those 27 16 countries form the “Euro-zone”27, 16 countries form the Euro-zone .

The Maastricht Treaty which was signed on February 7, 1992The Maastricht Treaty which was signed on February 7, 1992 spelled out the guidelines toward European Monetary Union (EMU).

On January 1, 2002, the Euro notes and coins were introducedintroduced.

The European Central Bank is headquartered in Frankfurt


The European Central Bank is headquartered in Frankfurt, Germany.


Ramifications of the Euro for Marketers

Price transparencyPrice transparencyIntensified competitive pressureStreamlined supply chainsStreamlined supply chainsNew opportunities for small and medium-sized companiesAdaptation of internal organizational structuresp gEU regulations crossing national boundaries



AGENDA



2.2

2.3

The Economic Environment




Introduction

International marketers should be aware that the economic interests of their companies can differ widely from those of theinterests of their companies can differ widely from those of the countries in which they do business.

International marketers must abide by various international agreements, treaties and laws.

National politics (at home as well as in the host country) affect business environment directly through changes in policiesbusiness environment directly, through changes in policies, regulations, and laws.



Government Policies and Regulations

Government affects almost every aspect of business life in a country (at home as well as in the host country)country (at home as well as in the host country).

Incentives and Government Programs:Incentives and Government Programs:- Investment Regulations (ownership & financial controls) - Macroeconomic Policies (governments’ monetary & fiscal policies)(g y p )- Trade Laws- Embargoes and Sanctions- Export Controls (e.g. for “dual-use items”) - Import Controls (Tariff and Nontariff Barriers)



Marketing Barriers: Tariff and Nontariff

[email protected] International [email protected] International Marketing



Political Risk= risk of change in political environment or government policy that would adversely affect a company’s ability to

t ff ti l d fit bloperate effectively and profitably

Categories of political riskCategories of political risk- War- Social unrest- Orderly political transfer- Politically motivated violence

Types of political risk- Ownership risk (e.g. seizure of assets)

Operating Risk (ongoing operating interference)


- Operating Risk (ongoing operating interference)- Transfer risk (in shifting funds between countries)


2005 Corruption Rankings

7 ‘cleanest’ countries 7 most corrupt countries

1. Iceland2. Finland

Chad Bangladesh

3. New Zealand4. Denmark

Turkmenistan Myanmar

5. Singapore6. Sweden

HaitiNigeria

7. Switzerland …16 G

Equatorial Guinea


16. Germany Source: www.transparency.org


International Law

The rules and principles that nation-states consider binding among themselvesamong themselvesDisputes between nations are issues of public international law

- Judicial arm of the United Nations- World Court or International Court of Justice (ICJ)

International Law (the law of nations) comes from three main sources:

- CustomsInternational treaties- International treaties

- Court decisionsCompanies are subject to home and host-country laws (local


Companies are subject to home and host country laws (local legal systems and laws)


Intellectual Property

Intellectual property must be registered in each country where business is conducted

Patent – gives an inventor exclusive right to make, use, and sell an invention for a specified period of timesell an invention for a specified period of timeTrademark – distinctive mark used to distinguish it from competing products Copyright – establishes ownership of a written, recorded, performed, or filmed creative work



Infringement of Intellectual Property

Counterfeiting – unauthorized copying and production of a productproduct

Associative Counterfeit/Imitation product name differsAssociative Counterfeit/Imitation – product name differs slightly from a well-known brand

Piracy – unauthorized publication or reproduction of copyrighted work



Example Counterfeit/Imitation


Source: Backhaus; Büschken; Voeth (2003)


Protecting Intellectual Property

International Convention for the Protection of Industrial Property

- Honored by 100 countries- Facilitates multi-country patent registration, ensures that once a

company files, it has a “right of priority” in other countries for 1company files, it has a right of priority in other countries for 1 year from that date

Patent Cooperation TreatyPatent Cooperation Treaty

European Patent ConventionEuropean Patent Convention



AGENDA

1 Introduction to international marketing1 Introduction to international marketing

2 International marketing environment2

International marketing strategy3

International marketing environment


g gy




AGENDA

3 Developing International Marketing Strategies

3.1 International Marketing Research

3.2

3.3

Segmentation and Positioning

International Market-Entry Strategies3.3 International Market-Entry Strategies



Defining Marketing Research

= systematic and objective= systematic and objective identification, collection, ,analysis, anddissemination of information

for the purpose of improving decision making related to the identification and solution of problems and opportunities inidentification and solution of problems and opportunities in marketing.

Source: Malhotra 2003


Source: Malhotra 2003


International vs. Domestic Marketing ResearchSimilar

- International research involves the use of similar tools and techniques as in domestic research but the marketingtechniques as in domestic research, but the marketing environments differ

… but different: major challenges faced by global marketing researchers

- Complexity of research design due to environmental differences- Lack and inaccuracy of secondary data- Time and cost requirements to collect primary data- Time and cost requirements to collect primary data- Coordination of multicountry research efforts- Difficulty in establishing comparability across multicountry


studies


Steps in conducting global market research

1. Define the research problem(s) & determine information needsneeds

2. Develop a research design2. Develop a research design

3. Collect the data (secondary and primary)( y p y)

4. Analyze the data and interpret the results

5. Report and present the findings of the study



Step1: Defining the research problem and objectivesobjectives

A major difficulty in formulating the research problem isA major difficulty in formulating the research problem is unfamiliarity with the foreign environment.

In an international context, the marketing research problem formulation is hindered by the self-reference criterion (SRC)criterion (SRC).



Determining information needs

What information do I need?Existing Markets – customer needs already being servedExisting Markets – customer needs already being served by one or more companies; information may be readily availablePotential Markets (e.g. “latent market” – an undiscovered market; demand would be there if product was there)

Why do I need this information?



Step 2: Developing a Research Plan

Do we need quantitative or qualitative data?q q

What is the information worth (versus what will it cost to collect)?

What will it cost if we don’t get the information?

Wh t b i d f th i f ti ?What can be gained from the information?



Make or buy decision in market research

Own marketing research department (“in house” research)- most large companies have their own research- most large companies have their own research department

Using a marketing research agency. The following considerations should be taken into account while choosing agency:

- Level of expertise in the host countryQualifications- Qualifications

- Track record/Client record- Credibility and experience


Credibility and experience


Top 10 global research organizations

Source: www.marketingpower.com/content/AUGAHONO25.pdf



Step 3: Collect the data

Secondary data: - information that already exists, having been collected for another purposeanother purpose.

Primary data:Primary data: - information collected for the specific purpose at hand - when the information is not useful or simply does notwhen the information is not useful, or simply does not exist



Secondary Data

- Statistical Abstract of the EU, the United States, OECDSt ti ti l Y b k f th U it d N ti- Statistical Yearbook of the United Nations

- World FactbookThe Economist- The Economist

- The Financial Times- Syndicated studies- Syndicated studies- …



Problems with Secondary Data Research

- Accuracy of DataA f D t- Age of Data

- Reliability over Time- Comparability of DataComparability of Data- Lumping of Data



Primary data ("Field Research")

Primary Data Collection MethodsPrimary Data Collection Methods

ObservationSurvey Experiment



Survey methods

Personal interview

Telephone int

Written survey

Telephone int.

Computer aided interview

Online-survey



Special Considerations for Surveys

Benefits:- Data collection from a large sampleg p- Both quantitative and qualitative data possible- Can be self-administered

Issues:Subjects may respond with social desirability (courtesy &- Subjects may respond with social desirability (courtesy & social desirability bias)

- Issues of non-response- Translation may be difficult => Use back and parallel

translations to ensure accuracy and validity



Primary data ("Field Research")

Primary Data Collection MethodsPrimary Data Collection Methods

ObservationSurvey Experiment



Examples of device-controlled observation

Point of sale (POS) store scanner data- Point of sale (POS) store scanner data- Consumer panel data

Single source data- Single source data- Customer / Loyalty Cards- Videotaping of shoppers in shopsVideotaping of shoppers in shops- Tracking of eye movements



Examples of device-controlled observation

Videotaping of shoppers in shops, using a structured checklist to record behaviour such as directions that a shopper takes browsing behaviour attention to Point of Saleshopper takes, browsing behaviour, attention to Point of Sale (POS) promotions etc.

The tracking of eye movements by computer software as aThe tracking of eye movements by computer software as a subject browses a newspaper or screen of information.

Checkout scanners in retail stores record consumerCheckout scanners in retail stores record consumer purchases in detail.

Customer / loyalty cards (e g Payback HappyDigits etc )Customer / loyalty cards (e.g. Payback, HappyDigits, etc.) help retailers to track the frequency of customer visits and the items bought through customer loyalty programs.


Prof. Dr. Silvia ZahariaProf. Dr. Silvia Zaharia

Example of device-controlleddevice controlled

observation

[email protected] International Marketing91 International Marketing


Overcoming the SRC

Self-Reference Criterion occurs when a person’s values and beliefs intrude on the assessment of a foreign culturebeliefs intrude on the assessment of a foreign culture

International marketing researcher must be aware of SRC’s:International marketing researcher must be aware of SRC s:- Enhances management’s willingness to conduct market

research- Ensures that research design has minimal home-country

bias- Increases management’s receptiveness to findings



Coordination of Multi-Country Research

The emic school focuses on the peculiarities of each country.p y

The etic approach emphasizes universal behavioral and attitudinal traitstraits.

In cross-cultural market research, the need for comparability favors th ti di ith h i th b d i il itithe etic paradigm with an emphasis on the cross-border similarities and parallels.

Several approaches may be used to balance these conflicting demands.



Global Issues in Marketing Research

Many country markets must be included

Markets with low profit potential justifies limited research expenditures

Data in developing countries may be inflated or deflated

Comparability of international statistics varies greatly

Limits created by cultural differences



AGENDA



3.2

3.3

Segmentation and Positioning

International Market-Entry Strategies3.3 International Market-Entry Strategies



Market segmentation

Market segmentation is the process that marketers use to divide th k t i t ll t th t b ffi i tlup the market into smaller segments that can be efficiently

addressed.

Global market segmentation is the process of identifying specific segments (country groups or individual consumer groups) of potential customers,

- with homogeneous attributes

- who are likely to exhibit similar responses to a company’s marketing mixmix.



Market segmentation, targeting and positioning


Source: Kotler et al. (2005)


Segmentation, targeting, and positioning

Market segmentation gIdentifies markets with common traits.

Market targetingMarket targeting Process of evaluation of the selected segments and then deciding which market segments to operate within.

Market positioning Process whereby marketers position the product to occupy a clearProcess whereby marketers position the product to occupy a clear and distinctive position relative to other competing products.



A. Market segmentationThere is no single way of segmenting a market. Different market segmentation variables to develop the most effective segmentation method.

Major variables used areMajor variables used are geographic, demographic, g p ,psychographic and behavioural.



Segmentation variables for consumer k t (1)markets(1)




Segmentation variables for consumer k t (2)markets (2)




Psychographic Segmentation

Grouping people according to attitudes, value, motives, and lifestyles.

Lifestyle is a person's pattern of living as expressed in his/her activities, interests and opinions (AIO). It profiles a person's whole

tt f ti d i t ti i th ldpattern of acting and interacting in the world.



SINUS Typology of social milieus in Europe


Source: http://www.sinus-sociovision.com/


SINUS Typology of social milieus in Europe


Sourcce: http://www.sinus-sociovision.de/


Behavior Segmentation

Categorizes people in terms of usage rates and user status:How much and how often they use it (heavy, medium, light, non-user)Whether or not people buy or use a product (potential users non-Whether or not people buy or use a product (potential users, nonusers, regulars, first-timers, users of competitors’ products)



Benefit Segmentation

Is based on understanding the problem a product solves, the benefit it offers, or the issue it addressesthe issue it addresses

Examples: ptoothpaste as “cavity fighters”food as source of health (“functional food”)



Six steps in market segmentation, targeting and positioning




Assessing Market Potential

Three basic criteria:Three basic criteria:1. Current size of the segment and anticipated growth potential2. Competition3. Feasibility and compatibility with the company's overall

objectives



Target Market StrategyStandardized global marketing

Mass marketing on a global scaleMass marketing on a global scaleUndifferentiated target marketing

C t t d l b l k tiConcentrated global marketingNiche marketingSingle segment of global marketg g g

Differentiated global marketingMulti segment targetingMulti-segment targetingTwo or more distinct markets



Positioning

Locating a brand in consumers’ minds over and against competitors in terms of attributes and benefits that the brand doescompetitors in terms of attributes and benefits that the brand does and does not offer.




The formulation of a positioning strategy

1. Identify the relevant set of competing products or brands.

2. Determine current perceptions held by consumers about your product/brand and the competition.

3 D l ibl iti i th3. Develop possible positioning themes.

4. Screen the positioning alternatives and select the most liappealing one.

5. Develop a marketing mix strategy.

6. Over time, monitor the effectiveness of your positioning strategy and if needed, conduct an audit.



Positioning themesSpecific product features/attributes:

e.g. “the ultimate driving machine” (BMW = performance)g g ( p )Product benefit, solutions for problems:

e.g. “CRYSTAL is more effective in preventing tooth decay than g p g yother toothpastes.”

Quality and Price: e.g. “Reassuring expensive” (Stella Artois)

User application:“th k th t k ti t ” (M F t )e.g. “the makeup that makeup artists use” (Max Factor)

Lifestyles



iPod´s Lifestyle Positioning




Global Positioning StrategiesGlobal consumer culture positioning (GCGP)

Identifies the brand as a symbol of a particular global culture or y p gsegment (e.g. Nokia, Motorola, Apple)

Local consumer culture positioning (LCCP)Local consumer culture positioning (LCCP)Brand as an intrinsic part of the local culturee.g. Baileys (Irish)

Foreign consumer culture positioning (FCCP)Associates the brand’s users, use occasions, or product originsAssociates the brand s users, use occasions, or product origins with a foreign country or culturee.g. Häagen-Dazs (really launched by an American company)



AGENDA



3.2 Segmentation and Positioning

3.3 International Market-Entry Strategies



IntroductionThe need for a solid market entry decision is an integral part of a global market entry strategy. Entry decisions will heavily influence g y gy y ythe firm’s other marketing-mix decisions.

Global marketers ha e to make a m ltit de of decisions regardingGlobal marketers have to make a multitude of decisions regarding the entry mode which may include: (1) the target market( ) g(2) the mode of entry(3) the time of entry



Target Market SelectionA crucial step in developing a global expansion strategy is the selection of potential target markets.

A four-step procedure for the initial screening process:1 Select indicators and collect data1. Select indicators and collect data2. Determine importance of country indicators3. Rate the countries in the pool on each indicator4. Compute overall score for each country



Which entry strategy should be used?

It depends on:VisionAttitude toward riskHow much investment capital is availableHow much investment capital is availableHow much control is desired



International Market-Entry Strategies� Exporting

Indirect Exporting (Export management companies)Indirect Exporting (Export management companies)Direct Exporting (Firms set up their own exporting departments)

� Licensing / Franchising

� Foreign Direct Investment

Joint Ventures

Wholly Owned Subsidiaries




www.starbucks.com


Licensing

� A contractual agreement whereby one company (the licensor) makes an asset available to another company (the licensee) inmakes an asset available to another company (the licensee) in exchange for royalties, license fees, or some other form of compensation

� Types of licensed assets:PatentPatentTrade secretBrand nameProduct formulations



Franchising

Contract between a parent company (franchisor) and a franchisee that allows the franchisee to operate a business developed by the franchisor in return for a fee and adherence to franchise-wide policies.p

Sometimes seen as a special form of Licensing.



Foreign Direct Investment� Partial or full ownership of operations outside of home country.

� Forms:Joint ventures: Entry strategy for a single target country in which the partners share ownership of a newly-created business entity.

Wholly owned subsidiariesWholly owned subsidiaries



Wholly owned subsidiaries

� Acquisitions and MergersQuick access to the local marketQuick access to the local marketGood way to get access to the local brands

� Greenfield Operations



Advantages & disadvantages to Export

+

-



Advantages & disadvantages to Licensing

+

-



Advantages & disadvantages to Joint Ventures

++

-



Advantages & disadvantages to Wholly Owned Subsidiaries

+Subsidiaries

+

-



Timing of entry / exitInternational market entry decisions should also cover the following timing-of-entry issues:

When should the firm enter a foreign market?

When should the firm exit a foreign market?



Reasons for exit

� Sustained losses� Volatility� Premature entry� Ethical reasons� Ethical reasons� Intense competition� Resource reallocation



AGENDA


4.1 International Product Policy

4.2

4 3 International Promotion Policy

International Distribution Policy

4.3 International Promotion Policy

4.4 International Pricing Policy



Product policy decisionsWhat new products should be developed for what markets?

What products should be added removed or modified for theWhat products should be added, removed, or modified for the product line in each of the countries in which the company operates?

What brand names should be used?

How should the product be packaged and serviced?



Examples of improper product policy decisions

Ik i th U it d St tIkea in the United States

Ford Taurus in JapanFord Taurus in Japan

Ford Pinto in Brazil



Levels of a product


Standardization or adaptation?


Brand= “a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competitors.” Kotler et al. 2004



hi l t b l i f b d

Logo= a graphic element, symbol, or icon of a brandLogotype / Wordmark

Icon: symbol / brandmark

Icon & Wordmark



Brand Image & Brand Equity

Brand Image = the sum of impressions about a brand

Brand Equity = the value of a brand and includes:Brand name awarenessBrand name awarenessPerceived qualityAny other associations invoked by the brand name in the y ycustomer’s mind



Brand Equity (2009)


http://media.ft.com/cms/e5a01ad8-30d5-11de-bc38-00144feabdc0.pdf


P d t

International „Product-Branding-Strategies“Product

ADAPTATION= different products for different

STANDARDISATION= same product for different= different products for different

countries= same product for different

countries

OADAPTATION= different brands

for different countries

Kuschelweich / Snuggle / Mimosin

Thums up/ Coca Cola

Bra

nd

STANDARDI-

Snuggle / Mimosin

B SATION= same brand for

different countries

Philips Gilette



AdaptationMandatory Adaptation:

Adapting products to local requirements so that they can legally and physically operate in the respective countriesand physically operate in the respective countries. Examples:

Left-hand driving in the United KingdomLeft hand driving in the United Kingdom220 volt appliances in Europe, 110 volt appliances in the U.S.

Non-Mandatory Adaptation: Adapting a product to better meet the needs of the local market, or developing new brands for individual local markets evenor developing new brands for individual local markets, even though such adaptation is not required.Examples: MacDonald's selling vegetarian burgers in India



Global Standardization= Standardization of products across markets and of the marketing

mix worldwide.

Advantages:Allows for economies of scaleAllows for economies of scaleEncourages global brandingEffective in meeting the needs of global consumersg gEffective in meeting consumer needs of higher quality and lower price.

Disadvantage: Cannot perfectly meet the needs of all target consumers.



Regional Standardization

= Standardization of products across regions and of the marketing Standardization of products across regions and of the marketing mix within the region.

Advantages:Allows for economies of scaleAddresses consumer preferencesAddresses consumer preferences

Disadvantage: Cannot perfectly meet the needs of all target consumers in the region.



Local Product & Branding StrategiesLocal Branding

Interbrew has a portfolio of 200 local and regional brands across the globe; Coca Cola in India: Thums Up

Reasons for local brandsAcquisition of established local brands (Chinese brands account for q (80% of Danone's sales in China)Name already used (Merck Germany vs. USA)N ti i f h t (M C l i F )Negative image of home country (Mecca Cola in France)Cultural barriers



Global BrandsA truly global brand is one that has a consistent identity with consumers across the world.

Advantages:

The development costs for products launched under the global brand name can be spread over large volumes.

A global brand has much more visibility than a local brand.

The fact of being global adds to the image of a brand country.

Global brands are also able to leverage the country association for the productthe product.



Examples of global brands P&GPanteneAlwaysPringles

Coca ColaFantaC C lCoca Cola

MarsSnickersTwix



Brand Architecture



Desirable qualities for a product brand name

Should suggest something about the product’s features and benefitsE t i d bEasy to pronounce, recognise and rememberBrand name must be distinctiveMust translate easily and accurately into other major languagesy y j g gMust be capable of registration and legal protection.

Once selected the brand name needs to be legally protectedOnce selected, the brand name needs to be legally protected and registered with the appropriate Trade Marks Register.



[email protected] International Marketing1489/[email protected] Marketing


Multinational brand structure

Solo brandingE h b d t d it ( P&G U il )Each brand stands on its own (e.g. P&G, Unilever)

Umbrella BrandingUmbrella Branding A system where a single banner brand is used worldwide, often with a sub-brand name, for almost the entire product mix of the company.



Unilever´s “cooking & eating” brands g g



Unilever´s “Ice Cream” sub brands

iced-lollyice cream y



Umbrella Branding

Hallmark (Corporate) brandingTh fi t (C t ) b d t ll d t d iThe firm tags one (Corporate) brand to all products and services (e.g. Disney, IBM, Coca-Cola, Virgin, Nokia)

Family brandinginvolves selling several related products under one brand name ( Ni Vi & B té)(e.g. Nivea Visage & Beauté)



Example Heinz´ corporate branding



PackagingIn many instances, packaging is an integral element of product-related decisions: Packaging offers communication cues that provide consumers with a basis for making a purchase decision.Packaging is an important consideration for products that are shipped long distances to markets in all parts of the world (when the packaging is designed to protect or contain the product during p g g g p p gshipping).Eco-Packaging important because package designers must address

i t l ienvironmental issues.



LabelingProvides consumers with various types of information

Regulations differ by country regarding various productsHealth warnings on tobacco productsEuropean Union requires labels on all food products that include ingredients from genetically modified cropsAmerican Automobile Labeling Act clarifies the country of originAmerican Automobile Labeling Act clarifies the country of origin, and final assembly point



Managing multinational product linesWhat product assortment should the company launch when it first enters a new market?

How should the firm expand its multinational product line over time?

What product lines should be added or dropped?



Product line considerationsThe product line is comprised of a group of products that are closely related because:

th f ti i i ilthey function in a similar manner are sold to the same groups are marketed through the same types of outletg yp

The product assortment is usually described on two dimensions: the width and the lengththe width and the length.

Width refers to the collection of different product lines marketed by the firm.Length refers to the n mber of different items that the companLength refers to the number of different items that the company sells within a given product line.



VW´s German productproduct lines



New Product Development (NPD) Process

1. Identifying New Product Ideas (4 C´s)1. Identifying New Product Ideas (4 C s)

2. Screening the Ideas (e.g. scoring model)

3. Concept Testing (e.g. focus groups)

4. Test Market (field vs. “lab”)

5. Market Entry



1. Identifying New Product Ideas (4 C’s)

CompanyCustomersCustomersCompetitionCollaborators

Wh i P d ?What is a new Product?- New to those who use it or buy it- New to the organizationNew to the organization- New to a market



Timing of Entry

Waterfall Strategy: Global phased rollout where new products trickle down in a cascade-like manner (e.g. 22 years for McDonald's,trickle down in a cascade like manner (e.g. 22 years for McDonald s, and 20 years for Coca Cola)

Sprinkler Strategy: Simultaneous worldwide entry (e.g. Nokia, Sony)



IntroductionWaterfall Strategy

Country A

Country B

Country C

Country D

Time Y

Country E

Country FTime Years

0 1 2 3 4 5 6


Source: Backhaus; Büschken; Voeth (2003)


Sprinkler Strategy

Introduction

C t A C t B C t C C t D C t E C t FCountry A Country B Country C Country D Country E Country F

Time Years


0 1Source: Backhaus; Büschken; Voeth (2003)


AGENDA



4.2







Distribution channels

Distribution is the physical flow of goods through channels

Distribution channels are made up of a coordinated group of individuals or firms that perform functions that add utility to a productindividuals or firms that perform functions that add utility to a product or service



Channel objectivesMarketing channels exist to create utility for customers

Place utility

Time utilityTime utility

Form utility

Information utility



Establishing channels

Direct involvement – the company establishes its own sales force t it t il tor operates its own retail stores

Indirect involvement – the company utilizes independent agentsIndirect involvement the company utilizes independent agents, distributors, and/or wholesalers



Industrial Products




Example B2B

Dutch manufacturer of printers and copy machines p py

25.000 people worldwide (>2.000 in Germany)One of the largest R&D programmes in the industry

Active in more than 100 countries

Annual revenue 2006: 3.1 billion €

Wide Format Printing Systems

Digital Document Systems



Examples Océ Products


Quelle: Océ N.V.


“Direct Sales” and services in 30 countriesand more than 100 Sales Partners worldwideand more than 100 Sales Partners worldwide


Quelle: Océ N.V.


Channel Structure in South Africa

CUSTODealer

AgentOMER

Dealer

R


Quelle: Océ N.V.


Channel Structure in USA

CUSTOcé USA TOME

Océ USA

(Own Sales Force)

RDealer

Internet


Quelle: Océ N.V.


Consumer Products




B2C E lB2C-Example

NONFOOD KAFFEE COFFEE SERVICE



Distribution Channels in GermanyBranches Shop-in-Shop in BakeriesShop-in-Shop in Superm.

Coffee ServiceCatalogueInternet-Shop



Distribution Channels in Germany

C

I. BranchesCONS

PR

II.Catalogue, Telephone

UMER

InternetODUC

III.

IV. RSupermarkets

Bakeries

CER

IV.

V.Bakeries

Compa-nies

Coffee ServiceVI.


nies


Distribution Channels in Poland

C

I. BranchesCONS

PR

UMER

InternetODUC

II.

R

Supermarkets

CER III.

Compa-nies

Coffee ServiceIV.


nies


Distribution Channels in UK

C

I. BranchesCONS

PR II.

Catalogue, TelephoneUMER

Internet

ODUC

Cata ogue, e ep o e

III.

RCER

SupermarketsIV.

Compa-nies

Coffee ServiceV.


nies


Examples of Multi-Channel Companies

Retailing:Otto, Tchibo, Tesco, Yves Rocher, Tengelmann, ...

Banking:PostBank Deutsche Bank Dresdner BankPostBank, Deutsche Bank, Dresdner Bank, ...

Airlines:Lufthansa, KPN, Air France, …

Manufacturers:HP, Xerox, Sony ...



Multi channellingg

Multi-Channel = Form of distribution that occurs when a singleMulti Channel Form of distribution, that occurs, when a single firm sets up two or more distribution channels to reach one or more customer segments



C t l T l h

Different channels for different segments

Customer Segment 1

Catalogues, Telephone

Customer Segment 2

Internet

Customer Segment 3RetailersSupplier

Customer Segment 4

g

DealersDistributors Segment 4

Customer Segment 5


Segment 5Direct Sales Force


International retailinggAll the activities involved in selling products and services to final international consumers for their personal consumptionfinal international consumers for their personal consumption.



Internationalization of retailing

Retailers are rapidly expanding internationally in order to:eta e s a e ap d y e pa d g te at o a y o de toGain competitive advantage Increase salesIncrease profitsImprove overall firm performance



Global expansion retailing strategies




Global expansion retailing strategiesOrganicOrganic

Company uses its own resources to open a store on a green field site or acquire one or more existing retail facilities

FranchiseAppropriate strategy when barriers to entry are low yet the market is culturally distant in terms of consumer behavior or retailing structures

Chain AcquisitionA market entry strategy that entails purchasing a company withA market entry strategy that entails purchasing a company with multiple existing outlets in a foreign country

Joint VentureJoint VentureThis strategy is advisable when culturally distant, difficult-to-enter markets are targeted



Top 10 Global Retailer


http://www.deloitte.com/


Retail Formats



Forms of international retailing

I. Non-Food retailing II. Food retailing1. Specialty stores2. Department stores3 Supercenters

1. Supermarkets2. Hypermarkets 3 Warehouse clubs3. Supercenters

4. Category killers5. Discount stores

3. Warehouse clubs4. Convenience stores 5. Discount stores

6. Outlet stores

III. Non-store retailing



I. International non-food retailers

1. Specialty Stores: Retailers offering a narrow product line and wide assortment:assortment:

Virgin Records (music products)Mango (youth fashion)Zara (cloth)

2. Department Stores: Offer a broad variety of goods and wide assortments:

U.S. and Canada: recent substantial lossesEurope: expansion of national chains throughout the European UnionAsia: on the declineAsia: on the decline



I. International non-food retailers (ctd.)

3. Discount StoresSell high volumes of merchandiseSell high volumes of merchandiseOffer limited serviceCharge lower pricesg pTypes:− All-purpose: offer wide variety of merchandise and limited

depthdepth− Category specialists (category killers): carry a narrow variety of

merchandise and offer a wide assortment.



II. International Food Retailers

Supermarkets: Self-service retailers with less than 20,000 square feet of store space.

Hypermarkets: combine the discounter, supermarket, and warehouse club approaches under a single roof. pp g

Warehouse Clubs (Wholesale Clubs): Require members to pay an annual feeRequire members to pay an annual fee.Operate in low-overhead, warehouse-type facilities. Offer limited lines of brand-name and dealer-brand merchandise at a substantial discount.



II. International food retailers (contd.)Convenience Store•Small residential retailers or retail chains consisting of smallchains consisting of small neighborhood stores. •Open long hours.C li it d li f hi h•Carry limited lines of higher-

turnover necessities.


Source: Lascu 2005


Issues in international retailing

Legislation and regulationTaxation and cross border shoppingTaxation and cross border shoppingVariations in retailing practice and customsChallenges in developing countries:− Deficient telephone service− Unreliable mail service− Low incomeLow income− Unavailability of credit cards



AGENDA



4.2







Forms of marketing communications

1. International Corporate Identity

2 Advertising 6 Product Placement

3. Sales Promotions

2. Advertising

7. Sponsoring

6. Product Placement

3. Sales Promotions

4. Public Relations 8. Event-Marketing

p g

5. Direct Marketing 9. Trade Shows




Corporate MissionCorporate Mission

Corporate Design

Corporate Behavior

Corporate Communications



2. Global AdvertisingAdvertising is any sponsored, paid message that is communicated in a non-personal way

Single countryRegionalGGlobal

Global advertising is the use of the same advertising appealsGlobal advertising is the use of the same advertising appeals, messages, art, copy, photographs, stories, and video segments in multiple country markets.



“Standardization” versus “Adaptation”

Merits of Standardization:Scale EconomiesC i t t IConsistent ImageGlobal Consumer SegmentsCreative TalentCross-Fertilization

Barriers to Standardization:Barriers to Standardization:Cultural DifferencesAdvertising RegulationsMarket Maturity“Not-Invented-Here” (NIH) Syndrome



Cultural Considerations




[email protected] International Marketing9/204


Global advertising copy decisions

Prepare new copy for foreign markets in host country’s language?

Translate the original copy into target language?

Leave some or all copy elements in home country language?



Global Media Decisions

Media infrastructure: Media infrastructure differs from country to countrycountry

Media Limitations: The major limitation in many markets is media availabilitymedia availability.



Recent Developments in the Global Media Landscape

Growing commercialization and deregulation of mass media

Shift from radio and print to TV advertising

Rise of global and regional media

Growing spread of interactive marketingGrowing spread of interactive marketing

Growing popularity of text messaging

Improved monitoring

Improved TV-viewership measurement



Advertising Regulations

The major types of advertising regulations include:Advertising of “vice products” and pharmaceuticalsAdvertising of vice products and pharmaceuticalsComparative advertisingContent of advertising messagesAdvertising targeting childrenOther advertising regulations: issues of local languages, tax issues and advertising ratesissues, and advertising rates.



Coordinating International Advertising

Global or pan-regional advertising approaches require a great deal of coordination. The following mechanisms can help:

Monetary incentives (cooperative advertising)Advertising manuals (brand book)Advertising manuals (brand book)Lead-country conceptGlobal or pan-regional meetingsp g g



3. Sales PromotionSales promotion refers to any paid consumer or trade communication program of limited duration that adds tangible value p g gto a product or brand

Price vs. non-price promotionsCons mer s trade promotionsConsumer vs. trade promotions

Provide a tangible incentive to buyersReduce the perceived risk associated with purchasing a productReduce the perceived risk associated with purchasing a productProvide accountability for communications activityProvide method of collecting additional data for database



Example Sales Promotion



Example Sales Promotion


Quelle: Foscht/Swoboda 2005.


Sales Promotion: Global or Local?

In countries with low levels of economic development, low incomes limit the range of promotional tools availablelimit the range of promotional tools available

Market maturity can also be different from country to country

Local perceptions of a particular promotional tool or program can varyLocal perceptions of a particular promotional tool or program can vary

Local regulations may rule out use of a particular promotion in certain countriescountries

Trade structure in the retailing industry can affect the use of sales promotions.



Forms of Sales PromotionSampling

Provides consumer with opportunity to try product at no costpp y y pMay be distributed in stores, in the mail, through print media, at events, or door-to-door

CouponingPrinted certificates entitle the bearer to a price reduction or some other special consideration for purchasing a particular productother special consideration for purchasing a particular product Couponing accounts for 70% of consumer promotion spending in the US



Couponing




Sales Promotion: Issues and Problems

Fraud (e.g. Pepsi promotion with Apple)

R l ti b tRegulations vary by country

Cultural dispositions to coupons and other sales promotions

M l i b iMalaysians see coupon usage as embarrassing

Islam frowns on gambling so sweepstakes may not work



4. Public Relations and PublicityFosters goodwill and understandingGenerates favorable publicityGenerates favorable publicityTools

News releasesMedia kitsPress conferencesToursToursArticles in trade and professional journalsTV and radio talk show appearancesTV and radio talk show appearancesSpecial events



5. Direct MarketingAny communication with a consumer or business recipient that is designed to generate a response in the form of:

An orderRequest for further informationA visit to a store or other place of businessA visit to a store or other place of business

Forms of Direct MarketingDirect mailCatalogsInfomercialsInfomercialsTeleshoping



Forms of marketing communications


2 Advertising 6 Product Placement

3. Sales Promotions

2. Advertising

7. Sponsoring

6. Product Placement

3. Sales Promotions

4. Public Relations 8. Event-Marketing

p g

5. Direct Marketing 9. Trade Shows



Globally Integrated Marketing Communications (GIMC)Communications (GIMC)

Integrated Marketing Communications (IMC):IMC coordinates different communication vehicles – massIMC coordinates different communication vehicles mass advertising, sponsorships, sales promotion, packaging, point-of-purchase displays, so forth.

Globally Integrated Marketing Communications (GIMC):GIMC is a system of active promotional management thatGIMC is a system of active promotional management that strategically coordinates global communications in all of its component parts. Both horizontally (country level) and vertically (promotion tools) areBoth horizontally (country-level) and vertically (promotion tools) are used in GIMC.



AGENDA



4.2







Introduction

Price is one of the most important and far-reaching of the variables

that marketing managers control. Price is the only element of the

marketing mix that produces revenues.

Price is equated to the sum of the values that consumers exchange

for the benefits of having or using the product or service.

The Global Manager must develop systems and policies that address

Price FloorsPrice FloorsPrice CeilingsOptimum Prices


Optimum Prices


Primary considerations in price settingsCOSTS

PRICE

COMPETITORSCONSUMERS



1. Cost-based pricingPrice is calculated by adding a standard mark-up to the cost of the

product.

5 5

25 EUR27,5 EUR

6 6 6

04

64

55,5

Mark-up (20%)Shipping chargesFixed costs

20 EUR

10 10 10

6 6 6 Fixed costsVariable costs


Home Country Country 1 Country 2


1. Cost-based pricing (ctd.)

Ri id t l i i th t i t i ith tRigid cost-plus pricing means that companies set prices without regard to the particular market environment.

Flexible cost-plus pricing ensures that prices are competitive in the contest of the particular market environment.



2. Competition based pricingSetting price based largely on following competitors’ prices rather than on company costs or demandprices rather than on company costs or demand.



3. Value based pricingSetting price based on the buyers’ perceptions of product values rather than on the cost.

Source: Nagle and Holden (2002)



4. Marketoriented Pricing

COSTSCOSTS

PRICE

COMPETITORSCONSUMERS



International pricing – 8 Questions1. Does the price reflect the product’s quality?2. Is the price competitive given local market conditions?3. Should the firm pursue market penetration, market skimming, or

some other pricing objective?4. What type of discount (trade, cash, quantity) and allowance

(advertising trade off) should the firm offer its international(advertising, trade-off) should the firm offer its international customers?

5. Should prices differ with market segment?6 What pricing options are available if the firm’s costs increase or6. What pricing options are available if the firm’s costs increase or

decrease? Is demand in the international market elastic or inelastic?

7 Are the firm’s prices likely to be viewed by the host-country7. Are the firm s prices likely to be viewed by the host-country government as reasonable or exploitative?

8. Do the foreign country’s dumping laws pose a problem?



Basic pricing concepts, when entering new markets

Managers must determine the objectives for the pricing objectivesg j p g jUnit SalesMarket ShareReturn on Investment (ROI)

They must then develop strategies to achieve those objectivesThey must then develop strategies to achieve those objectivesPenetration PricingMarket Skimmingg



Market Skimming vs Penetration PricingMarket Skimming vs. Penetration Pricing

MARKET SKIMMINGCharging a premium priceM t th i t d ti t f d t lif lMay occur at the introduction stage of product life cycle

PENETRATION PRICINGCharging a low price in order to penetrate market quicklyAppropriate to saturate market prior to imitation by competitors



Incoterms ("International Commercial Terms" )

I t t d d t d d fi iti t l d iIncoterms are standard trade definitions most commonly used in international sales contracts (devised and published by the International Chamber of Commerce).

EXW (Ex-works) – seller places goods at the disposal of the buyer at the time specified in the contract; buyer takes delivery at the premises of the seller and bears all risks and expenses from that point on.

DDP (Delivery duty paid) – seller agrees to deliver the goods to the buyer at ( y y p ) g g ythe place he or she names in the country of import with all costs, including duties, paid.



INCOTERMS im internationalen Warenverkehr


http://www.iccwbo.org/incoterms/preambles.asp


Incoterms (ctd.)

FAS (free alongside ship) named port of destination – seller places goods ( g p) p p galongside the vessel or other mode of transport and pays all charges up to that point

FOB (free on board) seller’s responsibility does not end until goods haveFOB (free on board) – seller’s responsibility does not end until goods have actually been placed aboard ship

CIF (cost, insurance, freight) named port of destination – risk of loss or ( , , g ) pdamage of goods is transferred to buyer once goods have passed the ship’s rail

CFR (cost and freight) seller is not responsible at any point outside ofCFR (cost and freight) – seller is not responsible at any point outside of factory



DumpingSale of an imported product at a price lower than that normally charged in a domestic market or country of origin.g y g

US-Law: Damping occurs when imports sold in the US market are priced eitherpriced either− at levels that represent less than the cost of production plus an 8%

profit margin or t l l b l th ili i th d i t i− at levels below those prevailing in the producing countries.

To prove, both price discrimination and injury must be shown.p p j y



Transfer pricing

Pricing of goods, services, and intangible property bought and ld b i i di i i f d i b isold by operating units or divisions of a company doing business

with an affiliate in another jurisdiction.

Intra-corporate exchanges−Cost-based transfer pricing

Market based transfer pricing−Market-based transfer pricing−Negotiated transfer pricing



Global pricing: three policy alternatives

1. Standardization (extention)

2. Adaptation

3. Geocentric



Gray market goodsTrademarked products are exported from one country to another where they are sold by unauthorized persons or organizations.

Occurs when −product is in short supplyproduct is in short supply−producers use skimming strategies in some markets −goods are subject to substantial mark-ups (e.g. Louis Vuitton bags,

Dior perfumes, Gucci sun glasses).


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