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• Czinkota and Ronkainen (2002), International Marketing, Thomson South-Western. • De Mooij (2003), Global Marketing and Advertising, Understanding Global Paradoxes, Sage. • Keegan and Green (2005), Global Marketing, Prentice Hall. • Kotler and Armstrong (2006), Principles of Marketing, Prentice Hall. • Prime et Usunier (2004), Marketing international, Développement des marchés et management interculturel, Vuibert. • Usunier (2000), Marketing across Cultures, Prentice Hall. • Periodicals: MOCI, HBR, JIBS, JM, JMR…
What is international business?
Wide range of activities involved in conducting business transactions across national boundaries Described as being heterogeneous, universal and sequential Comprehensive approach to operations of both large and small firms engaged in business abroad Concerns all activities of the firm (selling, procurement, outsourcing…) About seizing global opportunities (market expansion or diversification) Driving forces (regional economic agreements, converging needs and wants, communication improvements, quality, leverage…) and restraining forces (management myopia, corporate culture, national controls, globaphobia…)
Orientations: Export, Internationalization, Globalization
EPRG Model • Ethnocentric: everything is centered on the domestic market. • Polycentric: several important foreign markets exist. • Regiocentric: the market is composed of several large economic regions. • Geocentric: the world is one large global market.
Characteristics Ethnocentric Polycentric Geocentric Approach International operations are secondary Centered on the domestic market Searching for identical segments in foreign markets Each country is relatively independent Each market is unique Taking into consideration differences in foreign markets Subsidiary in each country Division for each zone The world is one common market Global vision of the world Unifying differences in the world market World headquarters Matrix structure Vision Priority Planning center National headquarters Structure International division .EPRG Model .
licensing Joint-ventures Domestic market Local market share share . Adaptation.EPRG Model . Creation Integrated and interactive Low-cost sources of supply Strategic alliances World market share Citizens from the Citizens from domestic market each market Extension Adaptation Centralized Domestic Decentralized Local Partnerships Performance measures Agent.Characteristics Ethnocentric Staff Marketing strategy Management style Production Polycentric Geocentric Most qualified Extension.
exchange.Introduction • What is marketing? “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating.” (Kotler) Process. value . and exchanging products of value with others. offering.
Marketing process Create value for customers and build customer relationships Capture value from customers in return Understand the marketplace and customer needs and wants Design a customerdriven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer satisfaction Capture value from customers to create profits and customer quality Marketing technology Global markets Ethics and social responsibility .
global and local .It is a tool used to obtain improvement of the firm’s position in the global market .“International marketing focuses its resources on global market opportunities and threats” (Keegan and Green) .“International marketing is the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations” (Czinkota and Ronkainen) .Strategy and action.“International marketing is the motor of the internationalization process of the firm” (Usunier) .Introduction What is international marketing? .
Introduction International Marketing Decisions Deciding whether to go abroad Deciding which markets to enter Deciding how to enter the market Deciding on the marketing program Deciding on the marketing organization .
more complex. information sources. more variables. entry mode choice… . key success factors are the same… – Differences: more strategic. legal constraints. practices and tools are almost identical.Introduction What are the similarities and differences between international marketing and domestic marketing? – Similarities: basic concepts. managing distances. cultural differences.
multi-cultural marketing .Introduction International marketing concept Export marketing Global marketing Inter-cultural.
Course Outline • Culture and international marketing • International marketing research • International marketing strategy and programs .
Chapter 1 Culture and international marketing .
Culture and international marketing • Concepts of culture • Dimensions and models of culture • Examples and international marketing consequences .
it encompasses a number of people who were conditioned by the same education and life experience” (Hofstede) Culture both affects and describes human behavior. it is essential in international marketing .What is culture? • “Culture is the integrated sum total of learned behavioral traits that are shared by members of a society” (Hoebel) • “Culture is the entirety of societal knowledge. Culture is not a characteristic of individuals. norms and values” (Antonides and Van Raaij) • “Culture is the collective mental programming of the people in an environment.
. a society. It depends on environment. – Culture is behavior that is shared by a group of people. not heredity.Fundamentals of culture – Culture is a total pattern of behavior that is consistent and compatible in its components. It is not biologically transmitted. It is a distinctive way of life. It is not a collection of random behaviors… – Culture is a learned behavior.
“It is the glue that binds groups together” (De Mooij) Human nature depends on culture: ideas. .Culture vs. acts. values. personality • Personality is the individual’s unique personal set of mental programs that he/she does not share with any other human being. • Culture is what members of a group have in common. emotions… are cultural products. Cultural patterns help people to live together in a society.
Manifestations of culture
Values and Norms
Expressions of culture
• Symbols are words, gestures, pictures, or objects that carry a particular meaning recognized only by those who share a culture.
• This is the most superficial manifestation of culture. • New symbols are easily developed and old ones quickly disappear. • Symbols from one cultural group are regularly copied by others.
• Heroes are people, alive or dead, real or imaginary, who possess characteristics that are highly prized in a society.
• They serve as role models for behavior. • They can become globally known, but their stories often become local.
• Rituals are the collective activities considered socially essential within a culture.
• They are carried out for their own sake. • They are easily observed, but not always understood.
• Goals are derived from values. • They often have a religious. • Values are stable beliefs regarding desired behavior or end states. they vary across cultures and are not likely to change frequently. .Values • Values are at the core of culture. not consciously but implicitly. • Values are among the first things children learn. ideological or humanistic background. • Core values are resistant to globalization.
• People differ in the extent to which they accept and comply with norms. • They create expectations and criteria regarding the conduct of others. .Norms • Norms and values are part of the “non-material” culture. • Norms are beliefs regarding how to behave and how not to behave (do’s and don’ts).
behavior. beliefs and representations (subconscious) .Explicit vs. implicit culture • Explicit culture: languages. know-how. learning process. institutions (directly observable) • Implicit culture: moral values.
moral and transmissible.According to Hoebel… There are 3 types of cultural norms in terms of behavior: • 10% of norms are technical: – explicit. instinctive and imitated. etc…) • 30% of norms are formal: – explicit. written norms of a society (laws. logical and transferable. cultural perspective on time and space…) How do these cultural norms influence international business and marketing? . sunken part of the iceberg (facial expressions. technical manuals. traditions of a culture. courtesy…) • 60% of norms are informal: – implicit. learned through education (manners. body language. rules.
buyers. partners) • Internal cultural diversity – Observed within all MNCs (identity and corporate culture) – Cultural differences that affect the way subsidiaries work together .Two levels of cultural diversity in international business • External cultural diversity – Cultural determinants influencing purchasing and consumption behaviors (Who buys? What? Where? How? Why?) – Cultural determinants influencing negotiations (relationships with suppliers.
Four levels of culture in marketing DOMINANT CULTURE Non-material consumer culture Material culture of products (market) Non-material culture of the firm (corporate culture) .
ethnic minorities. older generation to younger generation. • Acculturation: transfer of culture to adults who have grown up in different cultures.Transfer of culture Two main cultural transfer processes: • Socialization: transfer of culture to new generations. who have been socialized in different cultures. multicultural societies. . education.
Cultural transfer and change SOCIALIZATION Agents LEARNING BY OBSERVATION CULTURAL TRANSFER AND CHANGE. DYNAMIC PROCESS Agents ACCULTURATION .
social recognition Ambition. social recognition Honesty. forgiveness Ambition. intellect . peace. clubs Mass media 2 6 6 6 12 12 Responsibility. capability. courage Pleasure. logical behavior Courage. honesty Siblings Schools. cleanliness. salvation. teachers Friends Church Sport.Agents involved in cultural transfer Agents Parents Age (years) 0 Most important values Obedience.
democratization and exclusivation. .Processes of cultural change • Socialization and acculturation usually imply a gradual cultural change because transfer agents tend to favor cultural continuity rather than jeopardize their powerful position. • In contrast. 4 processes: cohort effects. age effects. innovative forces are less conservative and may challenge the status quo.
• Implies a slow cultural change. . • These values and behaviors are retained over the years. • They are spread in society because young people grow older and the “old” values gradually disappear with the extinction of the older cohorts.Cohort effects • Acceptance of new values and behaviors begins at a young age.
• Possible reverse socialization. • Behaviors are modified as age groups change. .Age effect • Certain values or behaviors are associated with a particular age group. • Age-bound consumer behavior.
trickle-across. .Democratization • Cultural “leveling” or “spreading” • Cultural differences across social classes decrease. trickle-up. • Mechanisms of democratization: trickle-down. the influence of mass media and the stress on the equality ideal. • Results from an increasing level of general welfare.
. goods and behavior.Exclusivation • Reverse of democratization • Occurs less frequently • Implies limited social spreading of values. “leading edge”). • Cultural change is limited to a certain group (“elite”.
Dimensions of culture • What makes one culture different from another culture? • How can we compare cultures or cluster cultures according to behavioral characteristics? • Stereotypes vs. cultural dimensions • Different cultures have different stereotypes of other cultures. Ethnocentrism and SRC .
Cultural dimension models • Hall – High-context vs. low-context cultures • Kluckhohn – Relationship to nature • Hofstede – Five dimensions of culture .
Hall’s cultural model • Focuses on communication patterns found within cultures • Four essential dimensions in terms of communication patterns: – – – – Context Time Space Information flow High-context vs. low-context cultures .
symbols. basic values of the communicators) – Verbal mode is only one part of communication. direct. data) – Effective verbal communication is expected to be explicit. and unambiguous • High-context – Less information is contained in the verbal part of the message – Much more information resides in the context of communication (background.Low-context and high-context cultures • Low-context – Messages are explicit – Words carry most of the information in communication (facts. associations. nonverbal is often seen as having greater importance Degree of context of cultures: comparison of law (US and France) .
if not perceived as “wasted” – Long-term vs. present or future – Linear or circular (tangible or intangible) – M-time and P-time – Cause and effect – Time as symbol (“time is money”. waiting. discretionary time) . efficiency. • Dimensions of time: – Closure: a task must be completed.Time • Different cultures have different concepts of time. This can explain differences in behavior. short-term thinking – Orientation toward past.
Middle East US. Germany.A few examples… Factors Lawyers High-context Less important Low-context Very important A person’s word Responsibility for error Space Time Negotiations Competitive bidding Examples To be trusted « Get it in writing » Taken by the highest level Pushed to the lowest level People breathe on each other Polychronic. Switzerland . China. linear Proceed quickly Common Japan. circular Are lengthy Infrequent People maintain a bubble of private space Monochronic.
duty. privacy of space.Kluckhohn’s cultural model 3 types of relationships between humanity and nature: – Mastery-over-nature (man is to conquer nature) – Harmony-with-nature (man is to live in harmony with nature) – Subjugation-to-nature (man is dominated by nature) Further developed with: nature of people. temporal orientation… . mode of activity.
South America Harmony-with-nature -No distinction between humanity. exchange. subtle intimacy Subjugation-to-nature -People are dominated by nature -Supernatural forces play a dominant role in religion Use in international marketing? . North America Asia. Japan Africa. nature and supernatural -Communion.Humanity and Nature Mastery-over-nature -Humanity is separate from nature -Nature should be controlled -“To move a mountain” -Identification with nature -Nothing can be done to control nature “Western” world.
comparative data.Hofstede’s cultural model • Hofstede’s 4D or 5D model • Quantitative and longitudinal study of cultural differences between countries • Why some concepts of motivation do not work in all countries in the same way • “Culture’s Consequences” and “Cultures and Organizations: Software of the Mind” • Scores for each country explain why people and organizations in various countries differ. Reference in international business and international marketing .
000 IBM employees .72 countries and 20 languages Original scores for 56 countries.(Long term orientation) .Individualism .National character survey .Uncertainty avoidance .How do we measure cultural distance? Geert Hofstede’s Cultural Index . extended to nearly 90 Five different poles make up the cultural index: .Masculinity .116.Power distance .
5D Model PDI 100 LTO UAI 100 100 0 Work-related values to consumptionrelated values 100 IDV 100 MAS .
Low PDI • “the extent to which less powerful members of a society accept and expect that power is distributed unequally” • Reflected in the values of both the less powerful and more powerful members of society • Influences the way people accept and give authority • Shows class or social structure • Focuses on the degree of equality. or inequality. between people in the country’s society .Power distance (PDI) • High PDI vs.
search for truth and belief in experts • Conflict and competition are threatening • Higher level of anxiety. show of emotions is accepted .Uncertainty avoidance (UAI) • High UAI vs. Low UAI • “ the extent to which people feel threatened by uncertainty and ambiguity and try to avoid these situations” • Strong UAI = need for rules and formality to structure life.
• Individualistic vs. Collectivistic
• “people looking after themselves and their immediate family only, versus people belonging to in-groups that look after them in exchange for loyalty” • “I”-conscious and “we”-conscious • Focuses on the degree the society reinforces individual or collective achievement and interpersonal relationships • Distinguishes between societies where the group and being a member is important (collectiveness) and societies where the group is less important (individualism)
• Masculine vs. Feminine • “the dominant values in a masculine society are achievement and success; the dominant values in a feminine society are caring for others and quality of life” • Focuses on the degree the society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, performance, control and power • Shows the importance of status in societies • Indicates the degree of gender differentiation and the importance of masculine values (assertiveness, money, material goods, success…)
Long-term orientation (LTO)
• Long-term vs. Short-term orientation • Chinese value survey, “Confucian dynamism” • “the extent to which a society exhibits a pragmatic future-oriented perspective rather than a conventional historic or short-term point of view” • High LTO = perseverance, ordering relationships by status, thrift, sense of shame, family ties, long-term thinking, paternalism • Focuses on the degree the society embraces, or does not embrace, longterm devotion to traditional, forward thinking values • Indicates whether the country prescribes to the values of long-term commitments and respect for tradition
Examples of Hofstede’s Dimensions
Some country examples Country Australia Belgium Denmark PDI 36 65 18 UAI 51 94 23 IDV 90 75 74 MAS 61 54 16 LTO 31 France Germany Great Britain India Italy Japan Netherlands Spain USA 68 35 35 77 50 54 38 57 40 86 65 35 40 75 92 53 86 46 71 67 89 48 76 46 80 51 91 43 66 66 56 70 95 14 42 62 29 80 44 31 25 61 World average 57 65 43 49 50 .
Comparison of cultural dimensions More information on www.geert-hofstede.com .
(De Mooij) . innovativeness. linear timepattern. obsession with change (new and better). individualistic.American culture • Classical dimensions: M-time culture. creativity. education teaches students to be critical (ask “why” not “how”). education for competitiveness. independence. low-context. man must conquer nature. private opinions expressed. ethnocentrism. low UAI. credit card culture. short-term orientation • Other dimensions: success. low PDI. strong role differentiation. high MAS.
shame-based society. obsession with cleanliness. education (“how” instead of “why”). thrift and perseverance. cash culture. strong UAI. high-context. strong role differentiation. dependence. private opinions not expressed. circular time concept. education has an intrinsic value. collectivistic. long-term orientation • Other dimensions: pressure to behave like neighbors. avoid jolting social harmony.Japanese culture • Classical dimensions: P-time culture. status is important (success) but avoid standing out in a crowd. masculine. high PDI. harmony with nature… (De Mooij) .
“storytelling”…) • Original objective: how values in the workplace are influenced by culture • Three discrete cultures – Organizational – Occupational – National ? • Questionnaire – quantitative data • Differences in location – intracultural differences.Limits to Hofstede’s model • Generalization. subcultures . simplistic (unproven and unprovable. reductive. flawed assumptions.
religion. language or geographic areas) result in the emergence of distinct subcultures • Existence of cross-cultural and intracultural differences: opportunities and threats . race.Intracultural differences • Few cultures are homogeneous in terms of cultural traits and norms • Consequence of globalization? • Intracultural differences (nationality.
To summarize on culture… • Culture is complex and multi-dimensional. but classification is important in business • Cultural distance is essential in international marketing • Culture influences perceptions and drives how we communicate and what we communicate • SRC and ethnocentrism can explain the failure of many companies in the international arena • Acculturation (adjusting and adapting to a specific culture other than one’s own) is one of the keys to success in international operations .
How does culture affect international marketing? • Languages and the use of language in communicating. negotiating… • Marketing research is much more difficult to conduct from a methodological perspective • Buying patterns and behaviors will vary in different cultural contexts • Marketing mix will be perceived differently from one country to another • Management styles will be directly related to culture… . advertising.
styles… Source: Usunier . local vs. ethics Negotiation strategies. customized strategy Inter-national (regional.Marketing and cultural differences Marketing area Consumer behavior Marketing research Influence of cultural differences Decision-making. corruption. distributor relationships Values. results. PR. symbols. global) vs. cross-cultural attitudes. process. communication styles Advertising messages. influence of price in decision-making Type of channel. global Cross-national equivalences Global marketing strategy Segmentation & targeting Product policy Brand image Global strategy vs. intra-national Adapt or standardize product attributes Brand perception. “made in” Pricing policy Distribution channels Communication Advertising Price-quality ratio. visions of the world. adaptation of strategy Sales Negotiation Sales force management. country of origin.
Culture’s consequences on international marketing • Marketing research (understanding consumers) • Segmentation (classifying consumers) • Product policy (satisfying consumers) • Distribution channels (reaching consumers) • Advertising (communicating with consumers) .
Chapter 2 International Marketing Research .
International marketing research • Review of marketing research techniques • Specific problems in international markets .
Review of marketing research techniques • General principles of marketing research • Qualitative research • Quantitative research .
analyze. sort. evaluate.What is marketing research? Marketing research is the link between the marketer and the market… It is the starting point of marketing… Marketing research is the systematic design. collection. and procedures to gather. timely. analysis. and reporting of data and findings relevant to a specific marketing situation facing the company. . and accurate information to marketing decision makers. and distribute needed. MIS: consists of people. equipment.
Marketing process Create value for customers and build customer relationships Capture value from customers in return Understand the marketplace and customer needs and wants Design a customerdriven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer satisfaction Capture value from customers to create profits and customer quality Marketing technology Global markets Ethics and social responsibility .
Position of marketing research ANALYSIS MARKETING RESEARCH MARKETING STRATEGY IMPLEMENTATION MARKETING RESEARCH PLANNING CONTROL .
consumer. environmental analysis . distributor.Marketing research goals • • • • • • UNDERSTAND DESCRIBE EXPLAIN MEASURE FORECAST VERIFY Product. competitor.
Marketing research process Define problem and research objectives Develop the research plan Analyze the information Collect the information Present the findings .
Research design • The research design formally describes the characteristics of the survey and the procedures used to conduct the study. • It is the methodological framework of the research. • Contents: – Goals – Information sources – Variables – Survey method – Sampling method – Data analysis – Calendar – Budget Internal validity External validity .
Types of marketing research -Documentary EXPLORATORY -Qualitative DESCRIPTIVE -Documentary -Quantitative CAUSAL -Experimentation -Observation .
eye camera… • Experimental research . city tests… • Ad hoc research .Market/store tests: laboratory stores. EDI. focus groups… .Research methods • Observational research . opinion polls… . facing. catalog sales. in-store tests. comparative or not .Mechanical: scanning.Audit: inventories.Product/concept tests: prototype.Quantitative research: surveys. mobile stores.Qualitative research: interviews. pantry check… .
Qualitative and quantitative research • The distinction between qualitative and quantitative research depends on the nature of the research problem. • If “why?” or “how?” QUALITATIVE RESEARCH • If “how many?” or “how much?” QUANTITATIVE RESEARCH .
AD HOC • These sources can be internal or external. resources… . • The choice will depend on the marketing problem.Information Sources • Secondary sources: Existing data. FIELD RESEARCH. All forms of documentary research. objectives. DESK RESEARCH • Primary sources: Data collected for a specific situation at company’s request.
Documentary Research • First step to marketing research • 4 steps – – – – Define the topic (clear. pertinent) Identify key words associated to the topic Search for available sources of information Consult. sort and summarize information • Questions to ask – – – – Does the data correspond to the situation? Is there a risk of obtaining biased information? Was the research design technically coherent? Are the findings clear. precise…? . feasible.
Research and polling institutes • These institutes collect information for resale. longitudinal studies. This is a primary information source. . – On-order studies: reserved solely for one company or omnibus studies. • They can give 2 types of information: – Standardized periodic information: panels. This is a secondary information source. Firms subscribe to this information.
up-to-date Not available to competitors Disadvantages Costly Difficult to collect Time consuming . outdated Inadequate False information Difficult to control Primary Adapted information Recent.Advantages and disadvantages of information sources Secondary Advantages Low in cost Diversity Available Problem definition Familiar with market Incomplete.
Sequence and relationship between different sources of information SECONDARY SOURCES (Desk Research) Internal External PRIMARY SOURCES (Field Research) Qualitative Quantitative .
Qualitative marketing research .
attitudes.What is qualitative marketing research? • Collecting and analyzing psycho-sociological elements which explain facts. motivations and behaviors of all people involved in a given marketing situation • Qualitative research methods are used for in-depth exploratory studies of the decision-making process and psychological mechanisms that affect individual or group behavior . opinions.
• They are often based on analyzing how a product or company is perceived by individuals or consumers.70 . attitudes and opinions. They cannot be considered as being representative of the entire population.Why use qualitative research? • Qualitative research studies lead to understanding the causes or the basis for behaviors. results cannot be extrapolated. Sample size = 10 . • However.
decision-making criteria of consumer behavior • Secondary information is insufficient • Constructing questionnaire for a survey • Explaining surprising results of quantitative research • Promoting creativity .Qualitative research is used in the following cases: • Defining the marketing problem is difficult (explore market) • Finding causes.
Advantages and disadvantages of qualitative research Advantages -Quick and flexible (maximum 70 people) -Less costly -Allows exploration -Attitudes. motivations. opinions are studied -Reveals deep feelings and thoughts Disadvantages -Non-representative sample -Research design is difficult to plan -Quality of the study depends on researcher skills .
Different types of qualitative research • Two ways of classifying qualitative studies: – Degree of induction (level of consciousness) • Unstructured interview (pure exploration) • Centered or focus interview (exploration and in-depth analysis) • Structured interview (identification and verification) – Number of people being interviewed • Individual • Group .
Choosing a Type of Interview Levels of consciousness OPINIONS Structured interview ATTITUDES Centered or Focus interview Unstructured interview or centered with projective tests MOTIVATIONS / BELIEFS .
ambiguous opening • Funnel approach • The respondent is free to express his feelings as wishes and for as long as he wishes • Non-directive.Unstructured interviews • Conducted in a face-to-face situation • Large. but reformulation techniques • Use in marketing .
Unstructured interviewing steps Large opening statement or questions Researcher adopts a non-directive attitude Present research objectives Reformulation techniques (« mirror effect ») Respondent goes further in-depth « auto-exploration » .
different versions allowed) • This is the most popular form of qualitative research .Centered or focus interviews • Same general structure and basic principles as the unstructured interview • However. modifications possible. an interview guide is used • This guide is composed of topics or questions to be addressed during the interview • The interviewer will bring up topic if and only if respondent does not spontaneously address issues • This is NOT a questionnaire (no order.
reluctance. subconscious…) or to go further in-depth • Visual or written stimuli • The respondent will overcome hesitations • Difficult to analyze.Projective techniques • Used to avoid psychological obstacles (taboos. courtesy bias. ambiguous • Different tests – – – – – – Word association Sentence completion Story completion Frustration or cartoon test TAT (Thematic Apperception Test) Haire test .
of carrots Roast beef 1 can of Delmonte corn Heinz ketchup Nescafé instant coffee Tide laundry detergent 3 onions ? ? . of carrots Roast beef 1 can of Delmonte corn Heinz ketchup Folgers ground coffee Tide laundry detergent 3 onions • • • • • • • List 2 1 lb.Example – Nescafé (Haire test) • • • • • • • List 1 1 lb.
Structured interviews • Most directive method in qualitative marketing research • A questionnaire is used • However. the questionnaire is only composed of open-end questions • Questionnaire facilitates the research process as well as analysis • Confusion between qualitative and quantitative research • It is theoretically incorrect to extrapolate or generalize the findings .
etc… • Organization and logistical aspects . group discussion is directed by interviewer) • About 7 to 10 participants per group • The role of the interviewer is very important • Interviewer must manage the group in terms of participation. domination.Focus groups • Nearly always use the centered approach (interview guide. summaries. conflict.
repeats. individual introductions. gift… . anonymous responses… – Exchange: each participant gives his or her opinions. tests… – Summarize: verify all topics of interview guide. thoughts. rules of the game. star technique (circept). group dialogue.Focus group phases • Three phases during the group interview: – Presentation (warming up): explanations.
Comparing different types of interviews • Unstructured : large opening statement and nondirective attitude (≈ 500 to 800 €) • Centered : interview guide to « center » discussion (≈ 250 to 500 €) • Structured : qualitative questionnaire (≈ 150 to 200 €) • Focus group : centered interview. 7 to 10 participants per group (≈ 5000 to 8000 €) .
competitors) Focus -More information during groups discussion -Quicker to conduct -Possible to study interactions and influences during the decision process -Stimulate ideas and creativity -Researcher training -Analyzing findings -Long to conduct -No in-depth motivations -Risk of conformity.Comparing individual interviews and focus groups Advantages Disadvantages Individual -Personal. strong group influence -Organizational and logistic difficulties . in-depth questions interview -Lower cost per respondent -Only solution in some cases (B to B.
but variety of individuals is important • No important profiles should be excluded • Sequential procedure (arborescence) is used: – – – – – List of criteria explaining differences of behavior Rank criteria from most important to least important List possibilities for each criteria Build arborescence Verify coherency of arborescence .Qualitative sampling • No representative sample.
Sampling in focus groups • Same basic principles (arborescence) • All participants must feel “equal” • However. there are two important rules: – Group must be heterogeneous (cover all of the profiles of the populations) – Group must be homogeneous (for criteria that may lead to an unbalanced group) Many groups may be need to be organized in order to avoid unbalanced groups or inter-group pressure .
scientific rigor Time and budget .Qualitative data analysis Two different methods can be used: – Summaries of interviews. “verbatims” – Content analysis • • • • Requires re-transcribing of all interviews Specialized software Quantification.
Quantitative marketing research .
estimate.Differences compared to qualitative research • • • • • • • Associated with descriptive research Objectives are different: verify. Sampling methods are different Large sample size (300 – 1000+) Methods of administration change Precision of an estimation.. measure. margin of error Data analysis is more sophisticated ..
Advantages and disadvantages of quantitative research Advantages -Delivers precise numerical estimations (forecasting. market share. not a discovery tool -Self-report data -Broad but shallow data -Long and costly -Difficult in B to B -Participation is unrewarding (direct marketing) . intentions…) -Extrapolation possible -Representative sample -Superior objectivity -Statistical techniques -Inter-group comparisons -Longitudinal studies Disadvantages -Does not explain why or how -Precision tool.
it is possible to infer something about the larger group – Inference depends on the sampling method .Categories of quantitative research • Census – Collect information from each member of the population – Complete canvass of the population – Depends on the size of the target population • Survey – Most familiar of all market research methodologies – Collect information from a portion of the population – Procedure in which a fixed set of questions is asked of a sample of respondents – On the basis of information collected on the subset.
Census vs. survey rate or sampling rate • Exhaustive or non-exhaustive survey Generalization and extrapolation of findings . Survey • Census: n = N • Survey: n/N = subset of the population.
Validity of quantitative research • Representative sample sampling method and response rate • Precision sample size and margin of error • Quality of questionnaire and administration • Researcher training and experience • Quality of information processing • Quality of data analysis .
.What is sampling? n N 70% 70% + e Sampling is necessary every time the population size is too large to be able to collect information from all elements of the population.
precision (sampling error) cannot be evaluated . non-zero chance of being included in the sample – Final elements are selected objectively by a specific process – Equal probabilities are not necessary – Allow an assessment of the amount of sampling error likely to occur – Requires an exhaustive sample frame • Non-probability – No way of estimating that probability that any population element will be included in the sample – Rely on personal judgment somewhere in the process – Statistically. non-probability sampling • Probability – Each population element has a known.Probability vs.
Quantitative sampling methods PROBABILITY SAMPLES NON-PROBABILITY SAMPLES • • • • • Simple random sample Cluster sample Area sample Level random sample Stratified random sample • Quota sample • Random route sample • Judgment sample (onthe-spot sample) • Convenience sample .
• Cluster and area: first parent population is divided into mutually exclusive and exhaustive subsets. then a random sample of the subset is selected. the sample mean will be normally distributed).Probability sampling • SRS: each population element has a know and equal chance of being selected. • LRS: random sampling occurs at several different levels of the population. • Stratified: population is divided into strata or subpopulations and random sampling occurs in each stratum (proportionate and disproportionate). . central-limit theorem (when n is large.
• Convenience: sometimes called accidental samples because those composing the sample enter by accident (volunteers. radio shows…) .Non-probability sampling • Quotas: attempt to ensure that the sample is representative by selecting sample elements in such a way that the proportion of the sample elements possessing a certain characteristic is approximately the same as the proportion of the elements with the characteristic in the population. leading to the selection of people to interview. • Judgment: sample elements are handpicked because it is expected that they can serve the research purpose and it is believed that they are representative of the population of interest (purposive samples). • Random route: each field worker is given a random route to follow.
Choosing a sampling method Do we have a sample frame? Yes No Is SRS too costly? No Yes Yes Do we have a frame of clusters? No Yes Is the population stratified? No Yes Is it too costly? No Are there frames at different levels? Yes No SRS Stratified sample Cluster or area sample Level random sample .
Do we know the structure of the population for several variables that explain differences in behavior? Yes No Quota sample Is the population widely dispersed? Yes No Are there mandatory passage points? Yes No Random route Judgment or on-the-spot sample Snowball or other convenience sample .
To double precision. but to the square root of the sample size. confidence level. confidence interval and margin of error • Probability sampling methods or Kish coefficient • Precision of an estimation is not proportional to sample size. the sample size must be multiplied by four.Sample size and precision • With probability samples. precision and minimal sample size can be determined • Sample size must be greater than 30 • Estimation. .
Sample size and margin of error n = t pq 2 Non-exhaustive sample e 2 n’ = (n x N) / (n + N) Exhaustive sample Margin of error for probability samples e = t √pq n n = budget – fixed costs direct cost per unit Budget approach .
Procedure for developing a questionnaire • Specify what information will be collected • Determine type of questionnaire and method of administration • Determine content of individual questions • Determine form of response to individual questions • Determine wording of each question • Determine sequence of questions • Determine physical characteristics of questionnaire • Reexamine and revise • Pretest questionnaire and revise if necessary .
questionnaire in magazine. Internet.Type of questionnaire and method of administration • These two decisions are interdependent • The length of the questionnaire will influence the choice of the method of administration • Self-administered questionnaires (mail. phone): longer questionnaire and higher response rate (50%) . etc…): response rate is generally low (< 20%) • Questionnaires completed with researcher (direct personal interviewing.
Form of response • • • • • • Open-ended Dichotomous: 2 possible answers Multiple choice: 3 or more possible answers Likert scale: a statement with which the respondent shows the amount of agreement or disagreement (strongly agree – strongly disagree) Semantic differential scale: a scale connecting two bipolar words. respondent selects the point that represents his/her opinion (enthusiastic – unenthusiastic) Importance scale: rates the importance of some attribute (extremely important – extremely unimportant) Rating scale: rates some attribute from “poor” to “excellent” Intention-to-buy scale: describes respondent’s intention to buy a product or service (definitely buy – definitely not buy) Avoid halo effect (change direction in scales to avoid repetition) • • .
• General rules: – – – – – – Use simple words Avoid technical vocabulary in consumer research Avoid double negations Avoid ambiguous words and questions Avoid leading questions Avoid double-barreled questions • Examples .Question wording • The phrasing of a question can directly affect the responses.
General rules: • Questionnaire should be very logical and easy to respond to. • Use simple, interesting opening question. • Use the funnel approach (start with broad questions and progressively narrow down in scope). • Avoid jumping around from topic to topic. • Use transitions. • Design branching questions with care. • Place difficult or sensitive questions late in the questionnaire. • Ask for classification information last.
Knowledge and awareness questions
Factual behavior questions Attitude questions Intention questions Classification questions
• Data collection should never begin without an adequate pretest of the instrument. • Can be used to assess both individual questions and their sequence. • Small sample of 10 to 30 • Questionnaire followed by interview to identify problems and misunderstandings • Pretest results are not included in the final results of the survey “The pretest is the most inexpensive insurance the marketer can buy to ensure the success of the questionnaire and the entire research project”
Quantitative data analysis
• Univariate analysis descriptive statistics and graphical information
• Multivariate analysis cross-tabulations, Chi square tests, correlation analysis, multiple regression analysis, cluster analysis (perceptual mapping), factor analysis….
Cost factors affecting surveys • • • • Sample size Accessibility Survey length Analysis ≈ 100 € per respondent .
Specific problems in international markets .
tools. comparisons…) • New technologies (CATI. scanners. Internet…) . but change at different rates in different parts of the world • Challenge of conducting high quality research as quick as possible in multiple diverse settings • Research conducted simultaneously in developed and developing world • Unbalanced spread of marketing research expenditures • Multi-faceted issues (where. how. CAPI. who.General context of international marketing research • Globalization.
3 specific problems in international marketing research • Who will conduct the research? degree of research centralization • Is the information comparable? cross-cultural research equivalences • What are the sources of bias? five bias types .
• Problem: exclusive contracts with marketing research firms… • To what degree should international marketing research be centralized? • Three choices: internal marketing department. • The unknown competitive situation and different cultural backgrounds complicate the choice between internal and external research. foreign research firm .Who will conduct international marketing research? • The firm can use internal or external research services. domestic research firm.
Monitoring Cost Excellent. Limited. Low risk of ignoring essential information. The firm may be unknown. Network problem. Easy to clarify if problems. High in cost. . Excellent in foreign market. Excellent. Adaptation to firm’s problem Excellent. Travel expenses and use of staff. Low in cost. Specific project fees. Perhaps limited in foreign market. Risk of nonconformity with initial objectives. Language problems. Limited. but only local.The degree of centralization of international marketing research Access to information Internal marketing department Low access. Domestic research firm Excellent in France. Depends on the informal network. Very good. Risk in terms of analysis. Good if the firm has an important local network. Variable. Foreign research firm Very good. Quality and reliability of information Risk in terms of analysis. Good. Easy to monitor during the research process. Language problems. Information sources Limited knowledge of sources in foreign market. Competitive analysis difficult. Cultural bias.
Is the information comparable? • This question is very important in cross-cultural or comparative studies. • Some words. practices. but not always easy to achieve. ideas. • Equivalences must be verified before conducting research on “foreign” consumer behavior. concepts. etc… will have different meanings in different cultural contexts. . • Research equivalence is necessary.
translation-retranslation • Metric equivalence: scaling. odd/even.International equivalences • Functional equivalence: do products serve the same function? • Conceptual equivalence: do relevant concepts have the same meaning and/or importance? • Category equivalence: does the product belong to the same category or domain? • Translation equivalence: cross-check. do adjectives have the same strength and distances? • Respondent equivalence: who should answer questions? same social role? sampling unit… • Sampling frame equivalence: how will sample be chosen? .
pre-test. incorrect or false compared to reality… • Biased responses are more likely to occur in international marketing research than in domestic research and are harder to avoid • Importance of control.Sources of bias • Bias = distorted results. acculturation… • Research plans must be adapted to reduce the risk of biased responses .
coefficients • Non-response bias: non-response style varies according to country. gender. race… . ranking). the respondent hopes to please the interviewer • Subject bias: concerns the way a society perceives an issue as being more or less sensitive • Cultural-trait bias: a given cultural trait can alter the findings (IDV.5 sources of bias • Courtesy bias: concerns the social desirability of answers. MAS…) • Response style bias: some responses are more or less extreme in some cultures (scaling.
but this is increasing Length of interview and compensation will vary from one market to the other (monochronic and low-context = shorter interviews and larger compensation) Some techniques are unknown or unfeasible (projective techniques. sampling base…) Collecting information is difficult (level of economic development. concepts/rituals…) Recent developments in international marketing research .Practical consequences in international marketing… • • • • • • • • Qualitative research only accounts for less than 20% of research expenditures around the world (emerging markets. CAGI/CATI…) Focus groups are very culture-bound (collectivistic vs. illiteracy. brand renewal…). innovation. social status. local authorizations…) Cross-cultural research is limited (comparison is difficult. disagreement…) Sampling techniques are limited (reliable information is not widely available. on-line surveys. statistics. individualistic societies.
Chapter 3 International Marketing Strategy and Programs .
Expanded marketing process model Create value for customers and build customer relationships Understand the marketplace and customer needs and wants Construct a marketing program that delivers superior value Product and service design: build strong brands Capture value from customers Capture value from customers to create profits and customer quality Design a customer-driven marketing strategy Build profitable relationships and create customer satisfaction Research consumers and market Manage marketing information and customer data Select customers to serve: segmentation and targeting Decide on a value proposition: differentiation and positioning Pricing: create real value Distribution: manage demand and supply chains Promotion: communicate VP CRM and CEM: build strong relationships with chosen customers Partner relationship management: build strong relationships with marketing partners Create satisfied loyal customers Capture customer lifetime value Increase share of market and share of customer Marketing technology Global markets Ethical and social responsibility .
marketing strategy Strategic segmentation Strategic positioning Market segmentation Market targeting SBU SBU Core market S1 S2 S3 SBU Target segment Consumer preferences Competitor positioning Market positioning Firm advantages Positioning Marketing mix -Sales objectives -Budgets -4 Ps .Corporate strategy vs.
opinions… • Why? – Buyers/consumers differ in many ways – They do not respond to the same stimuli in the same way – So. different offers for different types of buyers • Market segmentation represents an effort to increase a company’s targeting precision. needs.Market segmentation • What is it? – Identifying and profiling distinct groups of buyers who might require separate products and/or marketing mixes – Clustering consumers in terms of behavior. attitudes. .
Levels of market segmentation
• Mass marketing
– Mass production, distribution and promotion of one product for all buyers – Largest potential market, “one size fits all” – Lowest costs = lower prices or higher margins
• Segment marketing
– Large identifiable group within a market – Buyers differ in their wants, purchasing power, location, attitudes and habits…but the company is not willing to customize its offer to each individual customer – More appropriate products and services, distribution and communication easier, fewer competitors
• Niche marketing
– More narrowly defined group, a small market whose needs are not being well served – Smaller companies can become more competitive through specialization – Better understanding of customers who willingly pay a price premium
• Individual marketing
– Segments of one, customized marketing, one-to-one marketing… – More frequent in B to B than in B to C – New technologies allow “mass customization” ; ability to prepare on a mass basis individually designed products and communications to meet each customer’s requirements
Market segmentation procedure
Market segments and niches can be identified by applying successive variables to subdivide a market. 3 steps: • Research stage: gain insight into consumer motivations, attitudes and behavior and collect important data (attributes and ratings, brand awareness and rating, product-usage patterns, attitudes toward product category, customer characteristics…). • Analysis stage: factor analysis to remove highly correlated variables and cluster analysis to create a specific number of maximally different segments. • Profiling stage: each cluster is profiled in terms of its distinguishing attitudes, behavior, customer characteristics…
Market segmentation must be redone periodically because market segments change over time, especially in international markets
Geographic -Nations -States -Regions -Cities… Demographic -Age and life-cycle stage - VALS or psychographics -Gender -Income -Generation -Social class…
-Consumer responses to benefits sought, use occasions or brands (consumer-response segments) -Hierarchy of attributes in choosing a brand, shifts in consumer priorities (market partitioning) -Marketing mix variables: product, price, placement, promotion (price-quality-type dominant)
In international marketing, broader market segments compared to domestic segments, transnational segments
Example 1: culture-based segmentation
Cluster 1 Austria, Germany, Switzerland, Italy, GB, Ireland Cluster 2 Belgium, France, Greece, Portugal, Spain, Turkey Cluster 3 Denmark, Sweden, Netherlands, Norway 203
Preference for “high performance” products, use “successful-achiever” them in advertising, desire for novelty, variety and pleasure, fairly risk-averse market. Appeal to consumer’s status and power position, reduce perceived risk in product purchase and use, emphasize product functionality.
Relatively weak resistance to new products, strong consumer desire for novelty and variety, high consumer regard for “environmentally friendly” marketers and socially conscious firms.
competition. freedom of information…) • « Westernization »: – Countries’ proximity to the West – The duration and the extent of their openness to Western influence and culture . increased product availability and variety.Example 2 : segmentation of CEE markets • « Marketization »: – Countries’ exposure to global communications. and overall attempt to close the living standards gap with developed countries – Reflects a set of institutional values and cultural requirements for the operation of effective private markets (materialistic values as a stimulus for greater production.
Manrai and Manrai Clusters are likely to have common characteristics and share similar consumer needs and purchasing behavior .CEE clusters High Marketization Cluster 1 Low Westernization Cluster 3 High Westernization Cluster 4 Cluster 2 Low Marketization Source: Lascu.
Montenegro. Croatia.Central and Eastern European clusters • Cluster 1: High-marketization and high-westernization (Hungary. Serbia. but less than cluster 1 . more urbanized – Cultural: Slavic languages (except Hungary). primarily Catholic religion – Economic: more developed • Cluster 2: Low-marketization and high-westernization (Bosnia. more urbanized – Cultural: Slavic languages. Poland. border developed countries. primarily Eastern Orthodox and Muslim – Economic: more developed. Czech and Slovak Republics. Macedonia) – Geographic: Central Europe. Slovenia) – Geographic: Central Europe.
Eastern Orthodox and Muslim – Economic: formerly “fierce” dictatorships. urbanized to a lesser extent than cluster 2 – Cultural: Latin and Slavic languages.Central and Eastern European clusters • Cluster 3: High-marketization and low-westernization (Bulgaria and Romania) – Geographic: Balkan peninsula. Eastern Orthodox religion – Economic: slower in the development process • Cluster 4: Low-marketization and low-westernization (Albania and Western countries of the former Soviet Union) – Geographic: Less urbanized than cluster 3 – Cultural: Slavic languages (Russian is the primary commercial language). slower development .
the firm must: • Evaluate the various segments • Decide how many and which ones to target .Market targeting After identifying different markets and market segments.
growth. low risk… – How easy is it to persuade buyers to shift their purchases (consumers. absolute non-consumers)? – Brand loyalty vs. relative non-consumers. dissatisfied buyers • Company’s objectives and resources – Do segments correspond to the company’s long-term objectives? – Does company possess the skills and resources needed to succeed in the segment? – The company should only enter market segments in which it can offer superior value . scale economies. profitability.Evaluating the market segments • Overall attractiveness of the segment – Size.
Selecting market segments 5 different target market strategies: • Single-segment concentration – – – – – Concentrated marketing Strong knowledge of segment’s needs Strong market position in segment Economies through specialization = high returns Risks are higher than normal • Selective specialization – Several segments that are objectively attractive – Little or no synergy among segments but each is profitable – Diversification of firm’s risk .
one offer for entire market Differentiated: operate in several segments with different programs for each . channel for all new products – Risk of decreased buying power in the group • Full market coverage – – – – Serve all customer groups with all products they need Limited to very large firms Undifferentiated: ignore segment differences.Selecting market segments • Product specialization – Concentrate on certain product to several segments – Strong reputation in specific product area – Risk of technology • Market specialization – Concentrate on serving many needs of a particular customer group – Strong reputation with group.
Market positioning • Market positioning: act of designing the company’s offering and image so that they occupy a meaningful and distinctive competitive position in the target customer’s mind. international coherency . refers to the consumer’s perception of a product or brand amongst other brands • Objective: attaining a prominent place for company’s brand amongst other brands in the minds of consumers • Positioning mainly results from marketing communication regarding brands. social communication and personal experience • Categorization and positioning within category Product differentiation.
Importance of product differentiation Market segmentation Product differentiation Demand side Heterogeneous markets are divided into homogeneous submarkets Supply side Homogeneous products can be differentiated into products tuned to these homogeneous market segments (market positioning) (market segmentation) .
cultural influence .Differentiation attributes Product Features Performance Conformance Price Quality Durability Reliability Repairability Style Design Services Ordering ease Delivery Installation Customer training Customer consulting Maintenance Warranty Personnel Channel Image Value proposition Emotional power Symbols Media Atmosphere Events Competence Coverage Courtesy Expertise Credibility Performance Reliability Responsiveness Communication Different attributes in different markets.
“most convenient”. “most advanced technology”… • Double-benefit positioning: if two or more firms are claiming to be best on the same attribute. “fastest”. “best value”. “lowest price”. clarity. between markets and between segments . “safest”. search for special niche within the target segment. credibility) • Coherency in international markets is essential. “best service”.Promoting the difference • How many difference should a firm promote? • USP: “best quality”. two benefits must be compatible (“safest” and “most durable”) • The number of differences should be limited (communication.
the firm must communicate the positioning effectively • Mentally distinguish offerings.Communicating the firm’s positioning • Once positioning strategy chosen. enter into the minds of consumers • Communication through physical signs and cues Marketing mix is used to communicate the company’s positioning .
marketing mix. formalized in marketing plan . and resource allocation – Internal cultural diversity – External cultural diversity • Marketing mix allows firm to communicate and implement its strategy.From marketing strategy to marketing programs • Marketing strategy must be implemented through marketing programs • Managers must decide on marketing expenditures.
• 4 Ps (McCarthy): – Product – Price – Promotion 4 Cs (Lauterborn) -Customer needs and wants -Cost to the customer -Communication – Place -Convenience .Marketing mix • Marketing mix is the set of marketing tools that the firm uses to pursue its marketing objectives in the target market.
discounts. direct marketing… Channels (direct. indirect. features. locations.The four P’s of the marketing mix Product Product variety. selective. logistics. coverage. assortments. advertising. inventory. public relations. sales force. design. services. brand name. credit terms… Price Promotion Sales promotion. returns… List price. warranties. packaging. payment period. exclusive. transport… Place . intensive). sizes. quality.
homogeneous cultures” • Factors encouraging adaptation – – – – – Differing use conditions Government and regulatory influences Local competition Differing consumer behavior patterns “True” to marketing concept Degree of standardization. adaptation • Debate in marketing since Buzzell (1968) and Levitt (1983) • Factors encouraging standardization – – – – – – Economies of scale in production Economies in R&D Economies in marketing Global competition “Shrinking” of world market “Converging. global/local paradox .Standardization vs. Degree of adaptation.
High Need for adaptation Degree of cultural grounding Low Industrial/Technology intensive Consumer Nature of product Source: Czinkota and Ronkainen .
Factors affecting adaptation • Consumption patterns • Psychosocial characteristics • Cultural criteria .
Consumption patterns • Pattern of purchase – Is the product purchased by relatively the same consumer income group from one country to the other? – Do the same family members motivate the purchase or dictate brand choice in all target countries? – Do most consumers expect a product to have the same appearance? – Is the purchase rate the same regardless of the country? – Are most purchases made at the same kind of retail outlet? – Do most consumers spend the same amount of time making the purchase? • Pattern of usage – – – – Do most consumers use the product for the same purpose? Is the product used in different amounts from one area to another? Is the method of preparation the same in all target markets? Is the product used along with other products? .
and economic factors motivating the purchase and use of the product the same for all target markets? – Are the advantages/disadvantages of the product in the minds of consumers basically the same from one country to another? – Does the symbolic content of the product differ from one country to another? – Is the psychic cost of purchasing and using the product the same? • Attitudes toward the brand – – – – Is the brand name equally known and accepted in all target countries? Are customer attitudes toward the package basically the same? Are customer attitudes toward pricing basically the same? Is brand loyalty the same throughout target countries for the product? .Psychosocial characteristics • Attitudes toward the product – Are the basic psychological. social.
Cultural criteria • Does society restrict the purchase and/or use of the product to a particular group? • Is there a stigma attached to a product? • Does the usage of the product interfere with tradition in one or more of the targeted markets? • Does the message of the product correspond to core cultural values? • How do the different dimensions of culture influence the purchase and use of the product? .
Product • “A product is anything that can be offered to a market to satisfy a want or need” (Kotler) – – – – – – Physical goods Services Persons Places Organizations Ideas Common product problems: • Developing new products • Managing life-cycle strategies • Managing product lines • Managing brands… Product policy. product mix .
Product mix: product lines and brands • Product lines – Width: how many product lines the firm carries – Length: how many items in each product line – Depth: how many variants are offered of each product in the line – Consistency: how closely related the various product lines are (end use. brand preference. personality and user – Brand awareness. distribution channels. brand acceptability. benefits. values. culture. production. brand loyalty – Global branding and international coherency Degree of adaptation in FMCG . etc…) • Branding – Identifies the company at six different levels: attributes.
Elements of a product Installation Augmented product Tangible product Packaging Brand name Features Core benefit or service Core product Delivery and credit Quality Aftersale service Styling Warranty Global variations. adapt or standardize? .
umbrella) • Brand equity and extension • International standards • Product protection • Product adaptation . made in effect • Preference for national brands • Global branding (mono. line.Specific international product policy problems • Country of origin.
industrial products .International product policy • Existence of global product? International standard? • Three common strategies – Straight extension – Product invention – Product adaptation • Technical adaptation • Commercial adaptation • Consumer products vs.
Pricing Select pricing objective Determine demand Estimate costs Select pricing method Analyze competitors’ costs. prices. and offers Select final price .
not the seller’s cost. is the key to pricing • Value pricing: low price for fairly high-quality (EDLP) • Going-rate pricing: prices are largely based on competitors’ prices.Common pricing methods • Mark-up pricing: add a standard mark-up to the product’s cost • Target-return pricing: determine price that would yield its target rate of return (ROI) • Perceived-value pricing: buyers’ perception of value. rather than on costs or demand • Sealed-bid pricing: competitive-based pricing based on expectations of how competitors will price • Yield pricing: discriminatory pricing depending on customer segment and inventory level .
copies… .International pricing policy • International price escalation problem • Four types of strategies – Uniform price everywhere: different profit rates. too high in some countries – Market-based price: ignores costs. too high in some countries – Identical pricing position: compare to local competition in each market • Transfer prices and dumping • Gray-market problem. parallel importations – Cost-based price: standard markup everywhere.
image analysis… • Determine communication objectives: awareness. sales force and direct marketing… • Measure results: research… . non-personal • Promotion budget: weight of promotion in marketing mix… • Promotion mix: allocation between advertising. sales promotion. conviction. format. appeals. purchase… • Design message: content. knowledge. preference. public relations.Promotion • Identify target audience: research. structure. liking. source… • Select communication channels: personal.
Promotion mix – communication platforms Advertising Print and broadcast ads Packaging Motion pictures Brochures Directories Billboards P-P displays Symbols and logos Sales promotion Contests Sampling Gifts Fairs and trade shows Demonstrations Coupons Rebates Entertainment Loyalty programs Tie-ins Public Relations Press kits Speeches Annual reports Sponsorships Publications Community relations Lobbying Company magazine Special events Sales force Sales presentations Sales meetings Incentive programs Samples Fairs and trade shows Direct marketing Catalogs Websites Mailings Telemarketing On-line sales TV shopping .
etc… Corporate and institutional communication are easily standardized. suppliers. administrations. but brand/product communication is harder to standardize .International promotion policy Three different levels of communication: • Corporate communication: inform firm’s partners (shareholders. performance. technical characteristics. consumer’s desires. etc…) • Institutional communication: communicate the firm’s values to the public and inside the organization • Brand or product communication: image. press.
implicit Direct vs.Communication and advertising • Advertising is a form of communication • A product’s position or difference is transmitted to target segment through communication • Communication styles vary from country to country. they are culture-bound • The role and importance of advertising/media also vary from one country to another • Cultural factors affecting communication: – – – – High-context vs. indirect Informational vs. low-context Explicit vs. emotional .
direct style – LTO: build trust. groups • Masculinity/Femininity – MAS: winning. entertainment. design. persuasion. I…). comparative advertising. technology. we. less role differentiation • Uncertainty avoidance – High: explanations. entertainment . master-learner relationships… – Low: independence. “empowered” consumers • Individualism/Collectivism – IDV: low context. data. subtle • LTO/STO – STO: sense of urgency. direct. facts – COL: high context. symbols. domination.Cultural dimensions and advertising appeals • Power distance – High: status symbols. success. nature. explicit (you. indirect. caring. testing. reverse sexism… – FEM: less endorsement. presence and importance of elders. well-groomed – Low: results are important. structure. change.
Switzerland. “buy now” strategy. persuasive and direct – US. demonstrations. testimonials). IDV. buying intention. UK. and brand preference through providing arguments – “Lecture” form (presenters.Advertising models and culture (1/2) • Sales-response model – Simple stimulus-response model – Very direct. Low UAI (Anglo-Saxon model) • Persuasion model – Short term shift in attitude. short term effect – Low PDI. IDV (Netherlands. MAS. Germany. Austria… • Involvement model – Build relationships between consumers and brands by creating emotional closeness – Brand becomes a “personality”. Scandinavia. indirect style – FEM. France…) .
Asia. China • Symbolism model – Turn the brand into a symbol/code. stability…) – High PDI. indirect – Low IDV (Spain. Low-Mid IDV (Asia.. France.) • Emotions model – Create positive attitude and brand loyalty – Builds connections between brands and emotions. metaphors. Latin America. emotion often linked with product category – Low IDV. High UAI. humor. cohesion to subculture – Very culture specific (symbols of status. low MAS (Spain. Latin America. south of Europe) .Advertising models and culture (2/2) • Awareness model – Create awareness to differentiate brands from similar brands – Associations. Africa) • Likability model – Liking the advertisement will lead to liking the brand – Indirect. build trust.. self-expression. entertaining/story. success. make friends to build trust and dependence – Japan.
SCM.Marketing Channels • What is a marketing channel (or distribution channel)? “Marketing channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user” (Kotler) • What about international marketing channels? These interdependent organizations allow goods and services to cross national boundaries.Place . BtoC and BtoB. IMM .
International channels Seller Channels between countries Channels within foreign countries Final buyers 1. decisions concerning types of retailers (franchising. . Distribution. by its nature. is a marketing activity that is performed close to the market. types of transport. etc…). supermarkets. etc…). decisions concerning types of intermediaries (agents. local channels Channels of distribution vary considerably among countries. financing and risk management… 2. Channels between countries: gets the products to the borders of the foreign market. trading companies. Channels within foreign countries: gets the products from entry point to final buyers and users.
contractual arrangements… • Managing retailing. HMS. number of intermediaries (exclusive. competition) • Channel dynamics: traditional. wholesaling and market logistics… • Selecting. multi-channel marketing systems… • Most difficult part of the mix to standardize . conflict. VMS. motivating and evaluating channel members (cooperation. selective.Channel management • Channel design: types of intermediaries. intensive).
Entry mode choice • Considered by many as the most important aspect of a firm’s internationalization strategy • Entry mode will determine long-term success or withdrawal from foreign markets • Poor decisions can be very costly for the firm .
Factors in the entry mode decision Target country market factors Target country environmental factors Target country production factors Home country factors External factors Internal factors Entry mode decision Company resource and commitment factors Company product factors .
Elements of market entry strategies Entry operation Choice of target product/market Setting objectives and goals Choice of entry mode Design the marketing plan Target market Control systems: monitoring operations / Revising entry strategy .
commercial modes) • Foreign direct investment (industrial strategy. competitive alliances) .Different types of entry modes • Exporting (commercial strategy. integrated modes) • Associated or contractual modes (contractual strategy.
Entry mode continuum Exporting Contractual modes FDI Commitment. risk. control. profit potential + .
Types of exporting • Indirect exporting – Distributor / export merchants – Export agent – EMC • Direct exporting – Export department – Export sales representatives – E-business • Cooperative exporting – Export groups – Piggyback exporting .
manufacturing or sales facilities • The company can buy part or full interest in a local company (M&A) or build its own facilities (GFI.Foreign direct investment (FDI) • The ultimate form of foreign involvement • Direct ownership of foreign-based assembly. ex nihilo) • Considered the “preferred” mode of entry .
etc…) Better image in host country Deeper relationship with government. customers. distributors Better adaptation Full control of investments Long term objectives Disadvantages High initial and operating costs High level of risk .Advantages and disadvantages of FDI Advantages Cost economies (labor. local suppliers. incentives. freight savings. raw materials.
FDI options • Make-or-buy decision – Greenfield investment / Ex nihilo – Mergers and acquisition • Branch or subsidiary? – Structure – Legal status • Analyzing FDI project – Assessing profitability – Discounted cash flow analysis .
most recent forms of international business • Transfer of technology or know-how between two firms • Shared risks • Only option in countries where the government requires foreign firms to use local capital • Better access to local market knowledge .Associated entry modes • Newest.
F.F. Franchising is based on some unique product. – Industrial franchising – Distribution franchising B. separation between ownership and management • International Franchising: contractual association between a franchisor (manufacturer. – Service franchising . patent. wholesaler or service organization) and franchisees (independent business people who buy the right to own and operate units in the franchise system). trademark. trade secret or other item of value for a fee • Management contracts: firm exports management services instead of a product. service or method of doing business.Types of associated entry modes • Joint venture: foreign and local investors share ownership and control of local operations • Licensing: licensor licenses a foreign company to use a manufacturing process.
Example of international franchising entry modes • Direct modes – Direct franchising (16%) – Subsidiary (19%) – Area development agreements (14%) • Indirect modes – Joint venture (16%) – Master franchising (34%) .
International franchising comparative matrix Strong Distance / Adaptation Master franchising Direct franchising Joint venture FDI Area development agreement Direct franchising Weak Weak Commitment / Control Strong .
Hierarchical model of entry mode choice International franchising Environmental factors Level of commitment Equity Organizational factors Non-equity Environmental factors Direct or indirect mode Organizational factors FDI Joint venture Direct franchising or ADA Master franchising .
Determinants of entry mode choice in international franchising Environmental factors Level 1 (commitment) Economic risk Market size Political risk Competitive situation Level of economic development Financial situation of partners Brand protection Local regulations Cultural differences Tax System Geographic distance Franchisor’s national culture Organizational factors Financial and human resources Management attitudes and orientation Recruiting and training franchisees Price-bonding ratio Brand image Experience Need for control Type of product/service Degree of standardization Brand recognition Dispersion of units Level 2 (direct/indirect) .
culturally diverse countries or limited potential markets • Desired degree of control over international operations influences choice of entry mode • Loss of control yields limited returns • No market entry strategy is appropriate in all circumstances • Most firms will have a vast portfolio of entry modes. contribution of know-how…) . risk. control. depending on each specific market situation • Comparative approach to entry mode choice (commitment.Entry mode choice summary • Entry modes vary in terms of resource or equity commitment to foreign markets • Low-commitment modes can allow firm to reduce risk in high-risk countries. adaptation.
Comparing different entry mode options High Franchising Licensing Management contract FDI Wholly owned subsidiary (M&A) Branch office Contribution of know-how AD / Concessionaire EMC Agent Minority shareholding through partial acquisition Piggy back ITC / distributor Low Foreign buying department Majority JV investment (local partner know-how) Low Level of ownership High .
Choosing the right entry mode All entry modes Internal factors External factors Rejected entry modes All feasible entry modes Comparative profit contribution analysis Comparative risk analysis Comparative analysis for nonprofit objectives Ranking by overall comparative assessment Target market The right entry mode Marketing channels within markets .
in combination. perform all the activities required to link producers with users to accomplish the marketing task” (AMA) • They perform functions that add utility to a product or service: – Place utility: availability of a product or service in a location that is convenient to a potential customer – Time utility: availability when desired by a customer – Form utility: availability of the product processed.Local marketing channels (within markets) • What is a marketing channel or channel of distribution? – “an organized network of agencies and institutions which. in proper condition and/or ready to use – Information utility: availability of answers to questions and general communication about useful product features and benefits . prepared.
agents/brokers. sales force. internal sales force. distributors. retailers… • Business-to-business channels – Deliver products to manufacturers that use them as inputs in the production process or in day-to-day operations – Alternatives: internal sales force. franchising.B to C vs. B to B channels • Business-to-consumer channels – Designed to put products in the hands of people for their own use – Alternatives: direct marketing. wholesalers. wholesalers… .
mail order. etc… Companyowned. door-todoor. franchising M Agents. house party.Marketing channel alternatives for consumer goods M M M MSF Internet. brokers M MSF M MSF W W R R R R Consumers .
Problems in international marketing channels • Global retailing – Case of hypermarkets • Multi-channel strategies – Case of franchising-Internet • Market-specific channels – Case of wine distribution .
department stores. but many variations… • Differences in the importance and types of retailing channels: shopping malls. demography… • Global retailing market entry Wal-mart case .Global retailing • Global retailing since 1970s. category killers. market fragmentation. locations. outlet centers. income. discount stores. wholesale clubs. hypermarkets… • Factors affecting the success of hypermarkets: culture. traditional stores.
Global retailing market entry strategy framework Culturally close Organic growth Easy to enter Chain acquisition Difficult to enter Franchising Joint-venture Culturally distant .
Concept of multi-channel strategies – franchising and Internet BRICK AND MORTAR CLICK AND MORTAR Coexistence of traditional and virtual marketing channels “brick and click” Antagonostic or complementary? .
Some practical advice… • Brand structure rather than channel structure (reduce risk of network competition) • Sell all products on-line • Ensure multi-channel coherency • Back-office motivation • Use Internet to increase visits (locations. maps) • Limit use of e-mail… • … But does this apply to franchising? .
franchisors offering on-line sales are limited – 32% in the US – 30% in the UK – Less than 20% in France .Multi-channel strategies in franchising • Franchising firms are « plural form networks » • Internet is another distribution channel • Internet seems to be a priority • Internet is « revolutionizing » franchising … • But.
Opportunities and threats of multi-channel strategies (Franchising-Internet) Opportunities New marketing channel Increased sales Network image Positive internal effects Threats Cannibalism Restriction franchisee sales Non-conformity websites Exclusive territories Definition catchment area Limits some entry modes .
Coexistence of franchise system and internet • • • • • Are « mixed networks » complementary? Opportunities and threats? Consequences? Internet practices? The future of franchising and Internet? .
54% on-line sales . not dissuasive -Promotional tool for services -Recruiting and training franchisees Activities -2005: 80% website.Some results… Major -Better communication with franchisees consequences -Reduces distance -Cost-effectiveness. 23% on-line sales -2010: 98% website.
Click to brick Internet explains evolution of entry modes… .Interpretations • • • • • • • • • Optimistic. franchise-Internet are complementary Opportunities > Risks B to B advantages > B to C advantages Better franchisor-franchisee relationship Service franchising > Distribution franchising Communication strategy > Sales strategy « Internal sale » of website before « external sale » Brick to click vs.
. distribution must be performed “close” to market… • Why?.. Old World vs. complex choice of distributor/broker… . • Tradition. New World • Transportation via freight forwarder or shipping agent. complex regulatory requirements. physical distribution.Market-specific channels – wine distribution • Wine distribution varies enormously from one market to the next.
agent) Export groups Direct sales • End of channel (off-premise. packaging… B to C approach – Unbranded. e-commerce… • Bottle vs. supply chain … B to B approach . bulk – Brand image.Wine distribution choices • Four possibilities for exporting – – – – Import distributor (négociant) Broker (courtier. on-premise) – – – – – Supermarkets/Hypermarkets (FMCG) Specialized wine shops Duty-free HORECA Estate.
Wine distribution systems • Regulatory framework. levels of marketing and market access • Three types of systems around the world: – Regulated open market: normal FMCG – Controlled markets: government intervention in nearly all aspects of wine marketing – Mixed systems: both open and controlled .
21st Amendment (1933 .S. wine distribution system • 18th Amendment (1919 – Prohibition). FAA Act • Aim: separate suppliers and retail outlets (tied-house relationship) • Result: three-tier system of distribution with independent licensed wholesaler in between the retailer and the supplier/exporter • 31 “open” states.U. 19 “control” or “monopoly” states .authority to states).
etc… Tier III State controlled retail stores HORECA. bars. Supplier Distributor / Wholesaler Tier II Control States Supermarkets. etc… Consumers Consumers . transportation. HORECA. clubs. wine shops. Supplier Control States Tier I Winery.Three-tier system Open States Winery.
Comparing wine retail outlets Outlet Supermarket / Hypermarket Characteristics High volume sales. access to a wide range of suppliers “hand selling”. interested in experimental styles or uncommon varieties High volume purchases can be made. if not. convenience of location Disadvantages to producer Lack of freedom. high level of service. small volumes Importance of being stocked. excluded from market State monopoly retailer Hall and Mitchell. low level of interest in experimental styles and varieties Independent / specialist Tends to cater to wine consumers with higher level of knowledge. usually low level of wine knowledge of staff Advantages to producer Quantity purchases. low margins and low retail prices. 2007 . help with mass appeal. high brand awareness. national or regional access to market Each outlet must be serviced and supplied individually. high level of wine knowledge. small producers Overall aim is to promote healthy drinking. strong service focus and CRM.
• Treat local distributors as long-term partners. 2005 . HBR. Don’t let them select you. • Make sure distributors provide you with detailed market and financial performance data. • From the start. managers. rather than those with a few good customer contacts. Arnold. • Support market entry by committing money. Source: D. • Look for distributors capable of developing markets. maintain control over marketing strategy. not temporary market-entry vehicles. and proven marketing ideas. • Build links among national distributors at the earliest opportunity.Conclusion – 7 Rules of International Distribution • Select distributors.
Samli) . it is the most difficult to assess • SRC: the unconscious reference to one’s own cultural values • SRC is the root of many international marketing problems • Recognizing and admitting SRC is quite often difficult Analytical approach to reduce the influence of one’s own cultural values (A.C.Conclusion: SRC and cultural risk • Cultural risk is the most subjective of international business risks.
4. Make no value judgments. Isolate de SRC influence in the problem and examine it carefully to see how it complicates the problem. habits or norms.4 step process to reducing SRC 1. habits or norms. 3. . 2. Redefine the problem without the SRC influence and solve for the optimal goal situation. Define the problem or goal in terms of domestic cultural traits. Define the problem or goal in terms of foreign cultural traits.
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