INTERNATIONAL MARKETING

CHAPTER 1.MARKETING AND INTERNATIONAL

MARKETING
CHAPTER 2. THE INTERNATIONAL ENVIRONMENT
CHAPTER 3. RESEARCHING THE WORLD MARKET
CHAPTER 4. EXPORT MARKET ENTRY STRATEGIES
CHAPTER 5. PRODUCT DECISIONS
CHAPTER 6. PRICING DECISIONS
CHAPTER 7. CHANNELS AND DISTRIBUTION STRATEGIES
CHAPTER 8. PROMOTION AND MARKETING
COMMUNICATIONS
CHAPTER 9. MARKETING ORGANIZATION,
IMPLEMENTATION, AND CONTROL

CHAPTER 1.MARKETING AND

INTERNATIONAL MARKETING
1.
2.
3.
4.

INTRODUCTION
THE NATURE OF INTERNATIONAL
MARKETING
EXPORT MARKETING PLANNING
GOALS OF INDIVIDUAL BUSINESS
UNITS

1. INTRODUCTION
Internationalization

and global marketer

Global Marketing Integration

International Marketing
Total

world trade volume in goods and

services is around $8 trillion.
The worlds five exporting countries are the
United States ($700 billion), Germany ($560
billion), Japan ($390 billion), France ($320
billion), and Britain ($260 billion), collectively
accounting for 42 percent of global trade.

Global Marketing Integration

Fords made in Mexico with Japanese parts,
Honda, Toyota, BMW, and Mercedes Benz
open USA plants, and Isuzu of America makes
Troopers and Rodeos with GM engines via
joint venture.
Honda manufacturing cars in USA, TI
manufacturing semiconductors in Japan.
Macintoshs PowerBook 100 designed and
manufactured by Sony.

International Marketing - Intro

The Triad Regions (North America, Western Europe,

and Japan) of the world collectively produce more
than 80% of world GDP.
In the next ten to twenty years, Emerging Markets
the Chinese Economic Area (CEA: including China,
Hong Kong, region, and Taiwan), India, South Korea,
Mexico, Brazil, Argentina, South Africa, Poland,
Turkey, and the Association of Southeast Asian
Nations (ASEAN: including Indonesia, Brunei,
Malaysia, Singapore, Thailand, and the Philippines,
and Vietnam) will provide many opportunities in
global business.

2.THE NATURE OF INTERNATIONAL

MARKETING
What

is international marketing?
Export marketing
Foreign marketing
Multinational marketing
Global marketing
International marketing

Export marketing
The international marketing dimension involves
marketing across national borders. This is different
from domestic marketing because the mere fact of
crossing the border confronts with new economic,
political, and legal constraints, such as floating
exchange rates, boycotts, and international law.
These constraints will usually force modification of
the firms marketing program as it crosses national
boundaries.

Foreign marketing
The foreign marketing dimension involves marketing
within foreign countries, as a U.S firm markets in
Belgium or Brazil. Such marketing is unlike domestic
marketing because that firm faces different kinds of
competition, consumer behavior, distribution
channels, and promotional possibilities in Belgium or
Brazil from what it is familiar with at home. The tasks
is further complicated because each country has an
individual idiosyncratic marketing environment.

Multinational marketing
The multinational marketing dimension emphasizes the
coordination and integration of the firms marketing
in many diverse foreign environments. The unique
nature of each foreign market fragments the
international marketing effort and brings
diseconomies of scale. The international marketer
must plan and control carefully to maximize the
integration and synergy in the global marketing
program while minimizing the costs of adapting to
each foreign market.

International Marketing Defined

International marketing: the performance of

business activities that direct the flow of a
companys goods and services to consumers
or users in more than one nation for a profit.

The International Marketing

Task
1
Foreign environment
(uncontrollable)

Economic
forces

Political/legal
forces

Domestic environment
(uncontrollable)

7
Cultural
forces

Political/
legal
forces

(controllable)
Price

Competitive Competitive
Forces
structure

Product

3
6
Geography
and
Infrastructure

Country market
C
environment
(uncontrollable)

Country market A
environment
(uncontrollable)

Promotion Channels of
distribution

Level of
Technology

Economic climate

Country market
B
environment
(uncontrollable
)

Structure of
distribution

Irwin/McGraw-Hill
Copyright2002 by The McGraw-Hill Companies, Inc. All rights

Evolution of Marketing
Domestic

Marketing - ethnocentric
Export Marketing- ethnocentric
International Marketing - polycentric or
multidomestic
Multinational Marketing- regiocentric
Global Marketing - geocentric
Domestic

export
marketing

international
marketing

multinational

global

Meeting International Challenges

Be

prepared and develop active

responses.
Develop new strategies.
New plans are needed.
Adaptation to the new
environment and markets.

The main steps in the marketing

management process
R STP MM I C
R= research
STP= Segmentation, Targeting, Positioning
MM= Marketing-mix
I= Implementation
C=control

MARKETING-MIX
4 Ps
4Cs
1.Product
Customer value
2. Price
Cost to the customer
3. Place
Convenience
4. Promotion
Communication
------------------------------------------------------------5. Probe
Customer, consumer
6. Phacilitate (Facilitate)
Consumption
services
7. Plan
Curve
8. People
Count

The activities in international

marketing include:
1.
2.

3.

Detailed analysis of current markets and

potential markets;
Planning and development of products that
the consumers want, clearly defined in
suitable package;
Distribution of products through channels
which provide the services or conveniences
demanded by purchases;

The activities in international

marketing include:
4. Promotion of products to inform and educate
consumers about products or services;
5. Setting of prices which reflect both a
reasonable value (or utility ) of product to
consumers; and
6. Technical and non-technical services given
to the consumers-both before and after a
sale is made.

Questions
1.How can international marketing be said to
differ domestic marketing?
2. Identify and discuss the different ways firms
can reach foreign markets.

3.EXPORT MARKETING PLANNING

3.1. Identifying and measuring market
opportunity
3.2. Developing an export marketing strategy
3.3. Making export strategy operational

3.1. Identifying and measuring market

opportunity
a)
b)
c)
d)

Preliminary screening
Estimating market potentials
Estimating sales potentials
Segmenting the market

3.2. Developing an export marketing

strategy

a)
b)

Setting export objectives

Planning the marketing mix
Product, price, channels, promotion.

3.3. Making export strategy operational

a)
b)
c)
d)
e)
f)
g)
h)
i)

Sales forecasts
Sales budget
Sales quotas
Production schedules
Inventory control
Labor requirements
Promotional budgets
Financial budget
Profit budget

Stages in the Marketing Process

The Process
Analysis:

Collect data from sources- primary and secondary, internal and external,
formal and informal. Screen data for opportunities to employ company
resources for competitive advantage.

Planning:
Develop a marketing plan which includes a situation analysis, goals and
objectives, long-term strategies and short-term tactics, cost and profit
estimates, and anticipated changes in organizational structure.

Implementation:
Take actions to put the plan into action. Adjust implementation activities
to account for environmental changes in market conditions.

Control:
Use annual planning (sales to forecast), profitability, and efficiency
controls to monitor the plans successes and failures.

4. GOALS OF INDIVIDUAL BUSINESS

UNITS

4.1 basis goals

Profit or nonprofit( volume of sales, market share, serving customer).
4.2 specific reasons
Managerial urge
Unique product/technology competence
Risk diversification
Foreign market opportunities
Change agents
Economics of scale
Foreign marketing advantages
Extend sales of seasonal product
Excess capacity of resources

GOALS OF INDIVIDUAL BUSINESS

UNITS

4.2 specific reasons

Unsolicited foreign orders
Small domestic market
Stagnant or declining home market
Resources
Multinational, global, world companies
Other goals

CHAPTER 2.
THE INTERNATIONAL ENVIRONMENT
1.
2.
3.
4.

ECONOMIC AND FINANCIAL FACTORS

SOCIO-CULTURAL ENVIRONMENT
POLITICAL/LEGAL ENVIRONMENT
COMPETITION

ECONOMIC AND FINANCIAL

FACTORS
Population, Income (Per capita income, GNP)
2.
Convertibility or possibility of effective utilization of
resources; financial stability.
3. Banking facilities available and nature of credit
facilities offered, short medium and long-term
(conditions, terms, interest rates. etc.)
a) Domestic
b) foreign
c) Governmental or other lending institutions and
facilities.
1.

ECONOMIC AND FINANCIAL

FACTORS
4. Availability of local and accounting services.
5. Currency, exchange rates and controls
6. Capital repatriation and remittance of profits,
licensing and other payments.
7. Availabilities of insurance
8. Situation of the Balance of Payments
9. Communications and transports
10. Urbanization

ECONOMIC AND FINANCIAL

FACTORS

11. Market prospect

+ Estimated size, trends, and potential of
market in the country
+ Export markets and estimated size
+ Sources of market information
+ System of distribution of good
12. Product and product modification

2.SOCIO-CULTURAL ENVIRONMENT
1. The elements of culture
Language
Nonverbal language
Religion
Values and attitudes
Manners and customs
Material elements
Aesthetics
Education
Social institutions
Family

2.SOCIO-CULTURAL ENVIRONMENT
2. Adapting to cultural differences
Some companies have made special efforts
to adapt their products or services to various
cultural environments.

Cultural factors
+ Never touch the head of a Thai or pass and object over it. The
head is considered sacred in Thailand
+ Avoid using triangular shapes in Hong Kong, Korea, and
Taiwan.
+ The number 7 is considered bad luck in Kenya and good luck in
the Czech republic and Magical connotation in Benin, Africa.
+ The number 10 is bad luck in Korea
+ The number 4 means death in China
+ Red represents death in many African countries.
+ Red is a positive color in Denmark

Cultural factors
+ In Canada information on products is often provided
in English and French.
+ Swiss chocolate manufactures know that US
customers believe Swiss chocolate product are of
high quality (value), so that companies emphasize
their Swiss origin and thus generate high sales.
(attitude)
In short, by being aware of the value and attitudes of
the people in the culture, a business firm effectively
position its product.

Cultural factors
Education influences many aspects of culture.
Education also helps to provide infrastructure
needed for developing managerial talent.
For example, educationally advanced countries
like England, France are more likely to be
markets for computers and other high tech
equipment than poor countries.

2.SOCIO-CULTURAL ENVIRONMENT

3. The authors of Managing Culture Differences

(Philip R. Harris and Robert T. Moran, 1987) offer
the following ten tips to deflate the stress and tension
of cultural shock:
Be culturally prepared.
Learn local communication complexities
Mix with the host and nationals.
Be creative and experimental.

2.SOCIO-CULTURAL ENVIRONMENT
Be

culturally sensitive
Recognize complexities in host cultures.
Perceive oneself as a culture bearer.
Be patient, understanding, and accepting of
oneself and hosts.
Be most realistic in expectations.
Accept the challenge of intercultural
experiences

3. POLITICAL/LEGAL ENVIRONMENT

Role of government
Government controls
+ License requirements
+ Tariffs
+ Quotas
+ Extra taxes
+ Qualitative controls
+ Exchange controls
Promotional activities
Financial activities
Information services
Export facilitating activities
Promotion by private organizations

4. COMPETITION

4.1.Nature of competition
+ The structure of competition: the number and types of
competitors;
+ The action of competitors: the competitive tools available to
marketing executives in the decision areas of product, channel,
price, and promotion
+ Competition in international markets
4.2. Factors influencing competition
(1) General business, cultural. Economics, and social
conditions; (2) costs; (3) laws and regulations; and (4) The
activities and policies of competitors themselves affect
competition.

CHAPTER 3. RESEARCHING THE

WORLD MARKET
1.
2.
3.
4.

SOURCES OF INFORMATION
THE EXPORT MARKETING RESEARCH
PROCESS
SEGMENTATION
FOREIGN MARKET PORTFOLIOS:
TECHNIQUE AND ANALYSIS

INTERNATIONAL MARKETING
RESEARCH
The scope of research:
+ Market measurement studies
+ Competitive studies
+ Environmental studies
International marketing research is used to
make strategies and tactical decisions.

International marketing research

The importance of International marketing
research:
Before making market entry, product position,
or marketing mix decision, a marketer must
have accurate information about the market
size, market needs, competition, and so on.
Marketing research provides the necessary
information avoid the costly mistakes of poor
strategies or lost opportunities.

1.SOURCES OF INFORMATION
1.1. Secondary data
+ Internal source
+ External source
1.2. Primary data

1.1. Secondary data

+ Internal source
Sales and cost records, markets,
+ External source
UN, OECD, EU, IMF, WB, IBRD, IFC
Embassy, Consulate;
Non -government agencies;
Universities and other educational institutions
Internet
CD-ROM
The Business International Market Report.

1.1.Secondary data

The major issues are data

availability, reliability and
comparability.

1.2. Primary data

Primary data can be collected in four broad

ways:
+ Observation
+ Focus groups
+ Surveys
+ Experiments

Primary data
Observation research: Fresh data can be gathered
by observing the relevant actors and settings.
EX; The American Airlines researchers might hang
around airports, airline offices, and travel agencies to
hear travelers talk about the different carriers and
how agents handle the flight arrangement process.
The researchers can fly on American and
competitors planes to observe the quality of in-flight
service and hear consumer reactions. This
exploratory research might yield some useful
hypotheses about how travelers choose their air
carriers.

Primary data
Focus groups research: A focus group is a
gathering of six to ten persons who spend a few
hours with a skilled interviewer to discuss a project,
service, organization, or other marketing entity. The
discussion is recorded through note taking or Audio
or video tape and is subsequently studied to
understand consumer belief, attitudes, and behavior.
In American Airlines example, the group interviewer
may start with a broad question, such as How do
you feel about air travel?

Primary data
Survey research: Survey research stands
midway between observational and focus
group research, on the one hand. And
experimental research on the other hand.
Companies undertake surveys to learn about
peoples knowledge, beliefs, preferences,
satisfaction, and so on, and to measure
these magnitudes in the population.

Primary data
Experiments research: the most scientifically valid
research is experimental research.
Experimental research calls for selecting matched
group of subjects, subjecting them to different
treatments, controlling extraneous variable, and
checking whether observed response differences are
statistically significant. The purpose of experimental
research is to capture cause-and- effect relationships
by eliminating explanations of the observed findings.

Primary data
Research instrument: Questionnaires
Contact methods:
+ The mail questionnaire
+ Telephone interviewing
+ Personal interviewing

1.2. Primary data

The challenges:
+ Comparability of data
+ Willingness of potential respondent
+ Ability of the respondent to understand and
communicate.
( Challenge in survey research involves
translation from one language to another)

1.2. Primary data

To avoid these translation errors, experts suggest the
technique of back-translation. First, the questionnaire
is translated from the home language into the
language of the country where it will be used, by a
bilingual who is a native speaker of the foreign
country. Then this version is translated back to the
home language by bilingual who is native speaker of
the home language. Another translation technique is
parallel translation, in which two or more translators
translate the questionnaire. The results are
compared, and differences are discussed and
resolved.

Using the internet and e-mail data

collection
Some problems:
+ Sampling
+ Language
+ Respondent cooperation

2.THE EXPORT MARKETING

RESEARCH PROCESS
Problem

formulation
Research method and design
Data collection techniques
Sample
Data collection
Analysis and interpretation
Reporting results

Research study report

+ Cover: topic, organization, name of author, time
+ Abstract
+ Table of contents
+ List of figures
+ List of tables
+ Chapter1. Introduction
Problem statement
Objectives of study
Scope and research method
Structure of study

Research study report

+ Chapter 2. Literature review
+ Chapter 3. Introduction of the company or Sector of
+ Chapter 4. Research design
+ Chapter 5. Presentation and critical discussion of
results
+ Chapter 6. Conclusions and recommendations,
further research
+ References
+ Appendix

3. Foreign consumers and foreign

markets
3.1. Foreign consumers
+ How foreign consumers differ
+ What they buy
+ Why they buy
+ Who makes the purchase decision
+ How they buy
+ when they buy
+ Where they buy

3. Foreign consumers and foreign

markets
3.2. Foreign industrial markets
+ What they buy
+ Why they buy
+ Who makes the purchase decision

3. Foreign consumers and foreign

markets
3.3 Foreign government
+ The size of governments role as customer, however,
varies from country to country
+ Another variable in the economic role of government
is the kind of economic activity undertaken.
+ Government markets differ from consumer and
industrial markets in what they buy, how they buy,
and why they buy- and government in different
countries also vary among themselves on these
dimensions.

Export market segmentation

1) It is important to note that any decision to

segment on particular basis should be
evaluated in term of the following:
+ Measurability
+ Accessibility
+ Profitability
+ Actionability

Export market segmentation

2) Base of segmentation
+ Country market level; demographic and population
characteristics ; socio-economic characteristics;
political characteristics; cultural characteristics.
+ Customer market level: Demographic
characteristics: age, gender, life cycle, religion,
nationality, etc;
socio-economic characteristics : income, occupation,
education, etc.
Psychographic characteristics: personality

Export market segmentation

The four strategies:
+ Increase penetration (existing product and
markets)
+ Develop products (new products in existing
markets)
+ Extend markets (existing products in new
markets)
+ Widen activities (new products and markets)

4. Foreign market portfolios: technique

and analysis
Country attractiveness/ competitive strength matrix
Using these variables, and some scheme for
weighting them, countries are classified into one of
the nine cells depicting relative market investment
opportunity.
+ Invest/grow countries
+ Harvest/divest/license/combine countries
+ Dominant/divest countries
+ selective countries

4. Foreign market portfolios: technique

and analysis
Country attractiveness
Market size (total and segments)
Market growth (total and segments)
Market seasons and fluctuations
Competitive conditions (concentration, intensity, entry
barriers, etc.)
Market prohibitive conditions ( tariff, non tariff barriers,
import restrictions, etc.)
Economic and political stability.

4. Foreign market portfolios: technique

and analysis
Competitive strength
Market share
Marketing ability and capacity
Product fit
Contribution margin
Image
Technology position
Product quality
Market support
Quality of distributions and service

4. Foreign market portfolios: technique

and analysis
Invest/grow

Invest/grow

Invest/grow

Selectivity
strategies

Dominate/divest
Join venture

Harvest/divest/
License/combine
countries

CHAPTER 4. EXPORT MARKET ENTRY

STRATEGIES
1.
2.
3.
4.
5.

ENTRY AS STRATEGY
FACTORS INFLUENCING CHOICE OF
ENTRY MODE
EXPORT ENTRY MODES
NON-EXPORT ENTRY MODES
SELECTING THE ENTRY MODE

1.ENTRY AS STRATEGY
The

elements of entry strategy:

+ The objectives and goals in target market;
+ Needed policies and resource allocations;
+ The choice of entry modes to penetrate the
market;
+ The control system to monitor
performance in the market
+ A time schedule

2. FACTORS INFLUENCING CHOICE

OF ENTRY MODE
Target

market
Product
Availability of marketing organization
Company considerations
Government policies

3. EXPORT ENTRY MODES

3.1. Indirect export
+ Export merchants
+ Trading company
+ Export commission house
+ Resident buyer
+ Broker
+ Export management company
+ Manufacturers export agent
+ Cooperative organization:
Piggyback marketing; Exporting combination

3. EXPORT ENTRY MODES

3.2.Direct export
+ Home country based department:
1) Built-in department
2) Separate export department
3) Export sales subsidiary
+ Foreign sales branch
+ Storage or warehousing facilities
+ Traveling salesperson
+Foreign based distributors and agents

3.2.Direct export
With direct export, manufacturer of
exportable goods undertakes the entire
export process without any intermediaries.
By becoming a direct export exporter, the
firm takes responsibility for the entire range
of export activities starting with identifying
customers through to collecting payment.

3.2.Direct export
In order to export directly, the firm may have
to establish an export department from
domestic sale division which could be funded
on the basis its requirements. Employees of
the department must be trained in foreign
trade affaires.

3.2.Direct export
Direct exporting has several advantages such as:
2.
The firm is able to control the whole process of export.
3.
The firm can increase net profit because of operating without
expenditure for intermediary.
4.
The firm can develop closed relation with foreign partners.
But, the firm is responsible for the following aspects:
7.
The firm have to spent time and money to success in foreign
market.
8.
The firm must suffer directly risks may be occurred.

What is involved in a typical export

process?
An export process involves three main functions: feasibility
analysis, planning foreign market entry, and implementation.
These functions involve 20 steps.
FEASIBILITY
3.
Analyze domestic performance of the business
4.
Assess the firms capability.
5.
Research various factors of population, economy, politic and
society of target markets.
6.
Confer with experts of international trade concerning
marketing, financial, legal problems and delivery term of
goods and services.
7.
Select target market

What is involved in a typical export

process?
PLANNING FOREIGN MARKET ENTRY
6. Conduct market research concerning section of good and
specific products to be exported.
7.Make plan, strategy or entering target markets.
8. Collect knowledge about countrys requirements concerning
certificates, standards and licenses of target countries.
9. Collect necessary documents concerning license, trade.
Copyright protection of target countries.
10. Identify internal: import taxes, quotes or other non-tariff trade
barriers of the target countries.
11. Establish pricing schedule.

What is involved in a typical export

process?
IMPLEMENTATION
12. Determine method of sale.
13. Establish marketing methods.
14.Choose sale representatives or sales methods.
15. Negotiate financial problems.
16. Obtain insurance of good
17. Complete the required paper work.
18. Package and label products.
19. Ship products
20. Get payment.

The most common mistakes made by

exporters
The following are twelve most common mistakes often made by
small firm as they begin to export or expand business on
foreign markets:
1. Lack of full investigation of market, lack of qualified export
expert enable to make international business strategy and
marketing plan before starting an export business;
2. Lack of support by administrative offices to overcome initial
difficulties and financial problems of exporting;
3. Inadequate care in selecting overseas sales representatives or
distributors.
4.Seeking orders from a lot corners of the world rather than
concentrating on one or two main geographical areas;

The most common mistakes made by

exporters
5.Neglecting export to foreign markets when domestic
markets booms;
6. Lack of treating international distributors and
customers on an equal basis with domestic
counterparts;
7. Assuming that a particular trade technique and
product will automatically be successful in many
countries;
8. Unwillingness in modifying products in order to meet
regulations or cultural preferences of foreign
countries

The most common mistakes made by

exporters
9. Lack of printing information of sale, guarantee and
after-sale service in foreign language;
10. Lack of considering the use of an export
development company if the firm cannot afford its
own export department because of lacking financial
or other conditions;
11. Worry about expenditure for investigating new
markets, so that lacking of definitiveness in export;
12. Lack of providing after-sale services for the product.

4. NON-EXPORT ENTRY MODES

Licensing
Franchising
Assembly operations
Contract manufacturing
Joint venture
Wholly owned plant
Management contracting

5.

SELECTING THE ENTRY MODE

Naive

rule

Pragmatic
The

rule

strategy rule

CHAPTER 5. PRODUCT DECISIONS

1.
2.
3.
4.
5.

PRODUCT PLANNING AND

DEVELOPMENT
PACKAGING
BRANDING ISSUES
PRODUCT MIX DECISIONS
STANDARDIZATION VS ADAPTATION

1. PRODUCT PLANNING AND

DEVELOPMENT
1.1. New product development
1.2. Changes in existing products
1.3. Finding new uses for existing products
1.4. Product elimination

1.1.New product development

New product decision process:
Idea generation
Initial screening
Business analysis
Develop the product
Market testing
Commercialization

2. Standardization vs. adaptation

+ Standardization is common for certain agricultural
products, raw materials, and processed commodities
sold to industry.
+ Adaptation can be mandatory or voluntary.
Mandatory adaptation may be required because of
such things as language differences, differing
electrical systems, differing measurement systems
and product specifications, and government
requirements.

2. Standardization vs. adaptation

In general, however, some type of mandatory
adaptation may have to be made or a voluntary
change (minor or major) may be beneficial.
EX: Product
Adaptation
+ Sony TV
Voltage, broadcast standard
+ McDonalds
Menu, decor of restaurant
+ Levi jeans
Size mix, fabric, cut
+ Coca-cola
Brand name (China), package

3.PACKAGING

VIEW
V- visibility
I- informative
E- emotional impact
W- workability

4. BRANDING ISSUES
A

brand; a brand name; a trademark; label;

logo; slogan
Brand protection
Branding decisions

Choosing a brand name

It should suggest something about the products

benefits
EX: Beautyrest mattress, Craftsman tools
(2) It should suggest product qualities such as action or
color.
EX: Sunkist oranges, Firebird automobile
(3) It should be easy to pronounce, recognize, and
remember, short names help.
EX: Tide, Crest
(1)

Choosing a brand name

(4) It should be distinctive.

EX: Kodak, Exxon.
(5) It should not carry poor meaning in other
countries and language.
EX: Nova Is a poor name for a car to be sold in
Spanish-speaking countries; it doesnt go

Brand protection
+ The international Convention for the
protection of Industrial Property (Paris
Union).
+ The Madrid Agreement for International
Registration of Trademarks.

Branding decisions
+ Selecting a good brand
+ Determining how many brands should be in
the companys product line

Branding decisions
(1)
(2)
(3)

A single brand, or family brand

Individual (local) brands
Multiple brands

Tools for building the brand identity

Owned word
EX: Company
Volvo
BMW
Federal Express
Apple computer
Kodak
(1)

Word
Safety
Driving performance
Overnight
graphics
Film

Tools for building the brand identity

(2) Slogan
EX: AT&T: The Right choice
Budweiser: The King of Beers
Fort: Quality is Our Number One job
General Electric: We bring Good Things
to life
British Airways: The Words Favorite
Airline

Tools for building the brand identity

(3) Colors
EX: Yellow is also the corporate color of Kodak firm.
IBM uses blue in its publications
(4) Symbols and logos
Chanel No.5 used Catherine Deneuve, One of the words most
beautiful women, as its symbol,
(5) A set of stories
Some brands will be associated with stories, which are benefit if
favorable and interesting, about the company or brand. The
stories might relate to the founder (s) and the struggle to create
the company.

4. Positioning
In searching for a specific positioning, the business unit
should consider the following possible sources:
+ Attribute positioning:
EX: A hotel describes itself as the citys tallest hotel
+ Benefit positioning:
EX: Volvo claims that its cars are safer
+ Use/application positioning:
EX: Nike might describe one of its shoes as the best to
wear for racing and another as the best to wear for
playing basketball

4. positioning
+ User positioning
EX: Apple Computer describes its computers and
software as the best for graphic designers
+ Competitor positioning
EX: 7 UP called itself the Uncola
+ Category positioning
EX: Kodak means film; Xerox means copy machines
+ Quality/price positioning
EX: Chanel No 5 is positioned as a very high-quality,
high-price perfume.

Choosing a specific positioning

Companies need to go beyond a broad positioning to
express a more concrete benefit and reason to buy:
Best quality
Best performance
Most reliable
Most durable
Safest
Fastest
Best value of the money

Choosing a specific positioning

Least

expensive
Most prestigious
Best designed or style
Easiest to use
Most convenient.

CHAPTER 6. PRICING DECISIONS

1.
2.
3.
4.
5.
6.

DETERMINANTS OF AN EXPORT PRICE

FUNDAMENTAL EXPORT PRICING
STRATEGY
RELATION OF EXPORT TO DOMESTIC
POLICIES
CURRENCY ISSUES
SETTING UP EXPORT PRICE?
TRANFER PRICING

1. DETERMINANTS OF AN EXPORT
PRICE
Costs
Market

conditions (demand)
Competition
Legal/political influence
Environmental factors ( Exchange rate
fluctuations, inflation rates, price controls)
Company policies
Marketing-mix

2. FUNDAMENTAL EXPORT PRICING

STRATEGY
Skimming

pricing
Penetration pricing
Extinction pricing
Marginal cost pricing

3.RELATION OF EXPORT TO
DOMESTIC POLICIES
Export

prices lower than domestic

Export

prices higher than domestic

Export

prices on a par with domestic prices

EXPORT PRICE ESCALATION

Factory Price
Domestic Freight

Domestic Sale
$ 7.50
.70
8.20

Export Documentation

Export sale
$ 7.50
.70
8.20
.50
8.70
1.20
9.90

Ocean Freight & Insurance

Import Duty (12% of landed cost)

1.19
11.09

Wholesale Markup (15%)

1.23
9.43

Importer/Distributor Markup (22%)

Retail Markup 50 %

4.72
14.15

Final consumer Price

$14.15

2.44
13.53
6.77
20.30
$20.30

4. The price quotation

There are two systems of definition that are
used by exporters throughout the world:
+ INCOTERMS 2000
+ The revised American Foreign Trade
definitions -1941

Selection of trade terms

In deciding when to use each term exporters should consider the
following factors:
Whether shipment will be made on domestic or foreign carries.
Availability of insurance coverage
Availability of information on costs
Exporters need for cash ( reason against C&F and CFR/CPT)
Needs of importers to have quotes from several suppliers that
can be readily compared ( reason for CIF and CIP)
Currency convertibility problems. FOB vessel is often desirable
so that the buyer pays freight in his own currency. Of course,
the carrier still has the convertibility problem, unless it is the
buyers country.
Requirements of the government of the importing nation.

How does an exporter prepare an

accurate quote?
Listed below are variables that should be considered while preparing the quote
Packaging, marking and labeling costs
Rates of interest at which export finance has been availed
Costs of direct materials and labor for the production of the goods
Factory overhead expenses
Clearing and forwarding charges
Port trust charges
Insurance premium, export duties, warfare and portage
Shipping charges
Commission
Incentive available from government such as duty drawback
After calculating to above mentioned expenditures, a reasonable profit margin may
be added to arrive at a final price. If there still other subsidiary expenditures, its
necessary to add while making quotation.

STRUCTURE OF EXPORT PRICE

Base cost per unit
2.
Export packing, labeling, marking
3.
Product inspections charges
4.
Profit or mark-up
5.
Inland freight to
6.
Unloading at port/air port
7.
Terminal charges
8.
Export duty (if any)
9.
Loading charges
----------------------------------1-9 FOB
10. Ocean/air freight to destination
------------------------------------------1-10 CFR
11. Insurance
-------------------------------------------1-11 CIF
1.

The choice of currency for export price

quotes
There are two basic alternatives available:
The quote in U.S dollars, or quote in
customers currencies.

EX: In this example the goods are

planned to be moved by sea and
shipment is not containerized.
Product charges and price ($)
Product cist: $10 per unitx100 units
Target mark-up: 10% of product cost
Oversea agents commissions: 5%

Financing costs on production: 8%

Export packing charges
Labeling and marketing for 100 units
Other direct export costs
EXW price (ex factory)

1000
100
50
------1150
80
100
50
20
1400

EX: In this example the goods are planned to be

moved by sea and shipment is not containerized.

Inland freight to port of shipment

Unloading, other charges at port of
shipment
FAS price (port of shipment)
Loading charges on ship
Export documentation, clearance for export
FOB Price (port of shipment)
Ocean freight to port of destination
CFR price (product costs and freight/port of destination
Insurance coverage
CIF Price (product costs, insurance, freight/port of destination) 2000

100
100
1600
50
30
1680
300
1980
20

Notice how the CIF price is double the initial product cost. This shows how
important it is to work through these costing carefully.

5. TRANFER PRICING

Decentralization

and profit centers

Transfer pricing to wholly-owned foreign
subsidiaries:
+ The factor: Competitive market price
Cost
Legal restrictions
+Transfer pricing to partially-owned foreign
enterprises

CHAPTER 7. CHANNELS AND

DISTRIBUTION STRATEGIES
1.
2.
3.
4.
5.

CHANNEL STRUCTURE
MANAGING THE DISTRIBUTION SYSTEM
GAINING ACCESS TO DISTRIBUTION
CHANNELS
GLOBAL TRENDS IN DISTRIBUTION
SYSTEM
INTERNATIONAL PHYSICAL
DITRIBUTION

1. CHANNEL STRUCTURE
1.1. Indirect export
1.2. Direct export
+ Home country based department:
1) Built-in department
2) separate export department
3) Export sales subsidiary
+ Foreign sales branch
+ Storage or warehousing facilities
+ Traveling salesperson
+Foreign based distributors and agents

2. MANAGING THE DISTRIBUTION

SYSTEM
2.1. Motivating channel participants
2.2.Controlling channel participants

2.1. Motivating channel participants

Financial

incentives
Annual conferences
Help to the management of distributorship
Special programs

2.2.Controlling channel participants

Spell
The

out the specific responsibilities

awarding of exclusive distribution rights

3. GAINING ACCESS TO
DISTRIBUTION CHANNELS

3.1. The locked-up channel

3.2. Alternative entry approaches
+ Piggybacking
+ Joint ventures
+ Original equipment manufacturers (OEMs)
+ Acquisitions
+ Starting your ventures

4.GLOBAL TRENDS IN DISTRIBUTION

SYSTEM

Five major trends seem dominant throughout

the world:
Large-scale retailers
International retailers
Direct marketing
Discounting
Information technology

5. INTERNATIONAL PHYSICAL
DITRIBUTION

Export

restrictions
Foreign market import restrictions
Export documentation
The foreign freight forwarder
Export packing

CHAPTER 8. PROMOTION AND

MARKETING COMMUNICATIONS
1.INTRODUCTION
2.INTERNATIONAL ADVERTISING
3. PUBLICITY AND PUBLIC RELATIONS
4. PERSONAL SELLING
5. SALES PROMOTION
6. PROMOTIONAL PROGRAM AND
STRATEGY
7. DIRECT MARKETING

1.Introduction
1.1. Promotion -mix
1.2. Communication barriers
1.3. Export marketing promotion and
communication decisions

1.Introduction
1.1. PROMOTION-MIX
Advertising
Sales promotion
Publicity
Personal selling

1.2. Communication barriers

Communication barriers
+ Language differences
+ Government regulations
+ Media availability
+ Economic differences
+ Tastes and attitudes
+ Buying process

1.3. Export marketing promotion and

communication decisions
What message?
What communications media?
How much effort or money to spend?

2.SALES PROMOTION
+ Foreign catalogs
+ Samples
+ House organ and company-published
magazines
+ Films, slides, and personal computers
+ Trade fairs and exhibitions
+ Point-of-purchase materials
+ Consumer promotion materials

3. PUBLICITY AND PUBLIC

RELATIONS
3.1.PR
PR consists of a set of tools that can be classified under the
acronym of PENCILS, namely:
+ Events (sponsoring athletic or art events or trade shows)
+ Publication (company magazines, annual reports, helpful
customers brochures, etc.)
+ News (favorable stories about the company, its people, and
products)
+ Community involvement activities (contributions of time and
money to local community needs)
+ Identity media( stationery, business cards, corporate dress
codes)
+ Lobbying activity (efforts to influence favorable or dissuade
unfavorable legislation and ruling)
+ Social responsibility (building a good reputation for corporate
social responsibility)

3. PUBLICITY AND PUBLIC

RELATIONS
3.2. Publicity: Any form of nonpaid,
commercially significant news or
editorial comment about ideas,
products, or institution.

4. INTERNATIONAL
ADVERTISING

4.1.Advertising involves making decisions on

the five Ms

+
+
+
+
+

Mission
Message
Media
Money
Measurement

4. INTERNATIONAL
ADVERTISING

4.2.International advertising strategies

+ Uniform approach to advertising
+ Adapting domestic advertising to foreign
markets

Uniform approach to advertising

+ There are no notable differences on customers product
awareness.
+ Buying motives, purchase behaviour, and product usage are
identical or nearly so.
+ Copy translation does not lead to obvious misunderstanding,
negative connotations or undesirable associations.
+ Product quality, design and package variations between markets
are non-existent or insignificant.
+ In general, it appears that successful standardization is
dependent on a similarly of the motivations for purchase and a
similarity of use conditions

Adapting domestic advertising to

foreign markets
Modification may be requires a company to
adapt adverting strategy to current culture
variations and trends.
Literacy rates and standards of education will
have a direct bearing on the amount of
adaptation needed in advertising methods.

5. PERSONAL SELLING
One of the most expensive marketing
communication tools is the companys sales force,
especially when out in the field, traveling a lot, and
spending considerable time hunting for prospects
and keeping existing customers satisfied.
The salesperson sees the customer and can take
him to lunch, gauge his interest, answer questions
and objections, and close the sale. The more
complex the product or service, the more necessary
it is to use salespeople.

PERSONAL SELLING
Todays salespeople needs a laptop
computer, printer, copy machine, fax
machine, cellular phone, electronic mail,
software, and so on.
With their laptop, they can access industry,
product, and customer data, download
brochures, and print contracts.

PERSONAL SELLING
KEY ACCOUNT MANAGEMENT SYSTEM
An increasing number of company are setting up key
account management system. Companies know that
a few customers account for large share of their
sales and profits. The company appoints key
account managers to manage their more important
accounts, thus increasing the likelihood that
important customers will be better served and will
remain loyal.

6. Promotional program and strategy

This involves the following:
+ Setting promotional objectives;
+ Deciding on types of advertising and
promotional messages;
+ Selecting media;
+ determining how much time, effort, and
money to spend.

7.DIRECT MARKETING

Direct marketing includes a number of

marketing approaches that involve direct
access to the customer. Direct mail, door-todoor selling and telemarketing are the
primary direct marketing tools used in some
countries.

7.DIRECT MARKETING
Many companies posses proprietary databases
comprising profiles on thousands or millions of
customers and prospects. Consider the following:
+ General Motors has a database of 12,000,000 names
showing everything that these customers charged to
their GM credit cards.
+ Lands End has a database of more than2,000,000
names of people who bought one or more clothing
items from Lands End.

CHAPTER 9. ORGANIZATION OF
INTERNATIONAL MARKETING
ACTIVITIES
1.
2.

Main considerations of being organized

internationally
Organizational structures

1. Main considerations of being

organized internationally
Definition

of organizational subunits
Centralization vs. decentralization
Communication and control systems

2. Organizational structures

2.1.Functional export department ( built-in or separate

export unit )
2.2.International division structure
2.3.International organization structure based on
product
2.4.International organization structure based on
geographic area or customer groupings
2.5.International mixed structure; the matrix
organization

Questions for discussion