International Marketing

Group – 8 Mathew P Varghese Balvinder S Chabbra Ranu Srivastava Subhajit Saha Kaushal K Verma 2009SMN6720 2009SMN6722 2009SMN6723 2009SMN6724 2009SMN6734

Introduction
• Marketing: Process by which companies create customer interest in goods or services. It generates the strategy that underlines sales techniques, business communication, and business development. It is an integrated process through which companies build strong customer relationships and create value for their customers and for themselves • International Marketing: Focuses resources on global market opportunities and threats; the main difference is the scope of activities because global marketing occurs in markets outside the organization’s home country.

A powerful force drives the world toward a converging commonality, and that force is technology: Levitt

What is different about IM
• • • • • • Linguistic problems. language >>>culture. translation relatively easy - culture more complex. How does law affect marketing? Prohibition. Restrictions.

• Obligations • Packaging
– contents, languages, child-proof • Environmental standards – emissions, disposal • Ownership and access to market – mandatory joint ventures

Political-Legal environment
• • • • Attitude toward International Buying. Government Bureaucracy. Political Stability. Monetary regulations.

Regiocentric.Ethnocentric .Polycentric .Geocentric . & . • The world view of a company’s personnel can be described as : .Management Orientation • The form and substance of a company’s response to global markets opportunities depends greatly on management’s assumptions and beliefs about the nature of the world.

.Ethnocentric Orientation • A person who assumes his or her home country superior compared to the rest of the world is said to have an Ethnocentric orientation. The ethnocentric orientation means company personnel see only similarities in markets and assume the product and practices that succeed in the home country will. due to their demonstrated superiority. be successful anywhere.

) • At some companies. the ethnocentric orientation means that the opportunity outside the home country is ignored. • Ethnocentric companies that do conduct business outside the home country can be described as international companies..Ethnocentric Orientation( Contd. • In the ethnocentric international company. Such companies are called domestic companies. foreign operations are viewed as being secondary or subordinate to domestic ones. . They adhere to the notion that the products that succeed in the home country are superior and therefore can be sold everywhere without adaptation.

those differences are ignored at headquarters. • For mfg. .) • Valuable managerial knowledge and experience in local markets may go unnoticed. firm.. ethnocentric means foreign markets are viewed as a means of disposing of surplus domestic production. • Even if consumers needs and demands differ from that of home country.Ethnocentric Orientation( Contd.

• The term multinational companies are often used to describe such a company. This assumption lay the ground work for each subsidiary to develop its own unique business and marketing strategies in order to succeed. . The term polycentric describes management’s belief that each country in which a company does business is unique.Polycentric Orientation • The polycentric orientation is the opposite of ethnocentric.

an Indian company that focuses its attention on SAARC countries is regiocentric. with regiocentric orientation. .Regiocentric Orientation • In a company. a US company that focuses on the counties included in the NAFTA is a regiocentric orientation. management views region as unique and seeks to develop an integrated regional strategy. • Similarly. • For example.

• A company who’s management has a regiocentric or geocentric orientation is known as a global or transnational company.Geocentric Orientation • A company with a geocentric orientation views the entire world as potential market and strive to develop integrated world market strategies. .

Examples of Pitfalls • Apocryphal stories of marketing blunders .

Pepsi & KFC • In Taiwan.” . the translation of the Pepsi slogan “Come alive with the Pepsi Generation” came out as “Pepsi will bring your ancestors back from the dead.” • Also in Chinese. the Kentucky Fried Chicken slogan “finger-lickin’ good” came out as “eat your fingers off.

Unfortunately.Coke • The name Coca-Cola in China was first rendered as Ke-kou-ke-la. the Coke company did not discover until after thousands of signs had been printed that the phrase means “bite the wax tadpole” or “female horse stuffed with wax” depending on the dialect. .

which can be loosely translated as “happiness in the mouth”.000 Chinese characters and found a close phonetic equivalent “ko-kouko-le”.Coke get it right • Coke then researched 40. .

• Global competition is intensifying. • International trade is booming and India’s trade accounts for 24% of our GDP( India export 155B in 2009). • Higher risk with Globalization. transportation and financial flows.IM in 21st century • The world is shrinking rapidly with the advent of faster communication. .

Contents • What factors should a company review before deciding to go abroad? • How can companies evaluate and select foreign markets to enter? • What are the major ways of entering a foreign market? • To what extent must the company adapts its product and marketing program to each foreign country? • How should the company manage and organize its international activities? Your company does not belong in markets where it cannot be the best .Philip Kotler .

Competing over a Global basis • Global Industry • Global Firm Fig1: Major decisions in International Marketing .

• The company wants to reduce its dependence on any one market. • Product Life cycle stage. • Follow customers who are expanding. • The company needs a larger customer base to achieve economies of scale. • The company discovers that some foreign markets present higher profit opportunities than the domestic market. .Driving factors to move Global • Global firms offering better products or lower prices can attack the company’s domestic market.

devalue its currency. • The company might underestimate foreign regulations and incur unexpected costs. • The foreign country might change its commercial laws. • The company might realize that it lacks managers with international experience.Risk Factors • The company might not understand foreign customer preferences and fail to offer a competitively attractive product. . or undergo a political revolution and expropriate property. • The company might not understand the foreign country’s business culture or know how to deal effectively with foreign nationals.

• Hallmark cards failed when they were introduced in France. • Kellogg’s Pop-Tarts failed in Britain because the percentage of British homes with toasters was significantly lower than in the United States and the product was too sweet for British tastes. . The French drink little orange juice and almost none at breakfast. • Coca Coca-two Cola had to withdraw its two-liter bottle in Spain after discovering that few Spaniards owned refrigerators with large enough compartments to accommodate it. • General Foods’ Tang initially failed in France because it was positioned as a substitute for orange juice at breakfast. • Philips began to earn a profit in Japan only after its coffeemakers to fit into smaller Japanese kitchens and its shavers to fit smaller Japanese hands.Few examples…. The French dislike syrupy sentiment and prefer writing their own cards.

Product and communication costs are high . I. J. .Market entry and market costs are high . Market expansion strategies in multinational marketing.Population and income size and growth are high in the initial countries chosen . (1979). 84-94.Dominant foreign firms can establish high barriers to entry Ref: Ayal. Spring.Which market to enter… • Ayal and Zif contend that a company should enter fewer countries when: . & Zif. Journal of Marketing.

How to enter the market… • Five models to enter into foreign market .

• Active exporting. • Indirect exporting. • Domestic Domestic-based export merchants.Direct & Indirect Export • Occasional exporting. • Export Export-management companies. • Domestic Domestic-based export agents. . • Cooperative organizations.

• Overseas sales branch or subsidiary.Direct Exports…. . • Domestic-based export department or division. • Foreign-based distributors or agents. • Traveling export sales representatives.

Licensing • Management contracts. • Franchising. • Contract manufacturing. .

Johanson and Wiedersheim-Paul .Export via independent representatives (agents) .Establishment of production facilities abroad Ref: The Role of Knowledge in Firms’ internationalization Process: Wherefrom and Whereto .No regular export activities .Establishment of one or more sales subsidiaries .Contd… • Joint Ventures • Direct Investment • Johanson and Wiedersheim-Paul identified four stages in the internationalization process: .

Marketing Program… • Standardized Marketing Mix: .Sellers adjust the marketing mix elements to each target market. bearing more costs but hoping for a larger market share and return.Selling largely the same products and using the same marketing approaches worldwide. . • Adapted Marketing Mix: .

cheese. lettuce.Marketing Mix adaptation • McDonald’s serve chicken. pickles. fish and vegetable burgers and the Maharaja Mac.to all mutton patties. special sauce. . onions. on a sesame seed bun.

Five Global Product and Promotion Strategies .

Marketing a product in a foreign market without any change. • Product Invention: .Creating a new product or services for foreign markets. • Product Adaptation: .Adapting a product to meet the local conditions or wants in foreign markets. .Global Product Strategies • Straight Product extension: .

Global Promotion Strategies • Use a standardized theme globally. . • Communication Adaptation: . but have to make adjustments for language or cultural differences.Fully adapting an advertising message for local markets. • Changes may have to be made due to media availability.

• Companies that understand cultural nuances can use them to advantage when positioning product internationally. . • Business norms vary from country to country.Cultural Environment • Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program.

it apologized and pulled the shoes from distribution.Cultural differences • When Nike learned that this stylized Air logo resembles Allah in Arabic script. .

• Companies may guilty of dumping. . • Possible approaches include: .charge a uniform price all around the world. • International prices tend to be higher than domestic prices due to Price Escalation.Use a standard markup of costs everywhere.Global Pricing Strategies • Companies face many problems in setting their international prices.charge what consumers of each country will pay.a foreign subsidiary charges less than its cost or less than it charges in its home market. . .

creating “price transparency” and forcing companies to harmonize their prices throughout Europe.International Pricing • Twelve European Union countries have adopted the euro as common currency. .

Whole-channel concept for IM .

Forms of International Enterprise Types Strategic competency Structures Multinational Enterprise Global Enterprise Responsiveness International Enterprise efficiency i. Erricson .e. Nestle IBM. some seen as distribution strategic areas centres. Examples P & G. national multinational and global subsidiaries primarily enterprises. all strategic centralized. some and many operative decentralized decisions centralized lose federations of enterprises. output transfer of learning per unit of input tightly centralized Somewhere in between enterprise. Unilever Exxon. national subsidiaries solve all operative tasks and some strategical.

World product groups .Marketing Organization • Export department.International subsidiaries .Geographical organizations . . • International division.

A global strategy treats the world as a single market.A “global” strategy standardizes certain core elements and localizes other elements.A multinational strategy treats the world as a portfolio of national opportunities.Marketing Organization • Global organization • Bartlett and Ghoshal distinguish three organizational strategies: . . Ref: Managing Across Borders: The Transnational Solution Bartlett & Ghoshal 2002 . .

Thank You .