Ch 14 - International

Marketing

➲Domestic Market
Extension
➲Multi-domestic
➲Global Marketing
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Domestic Market
Extension

➲ Sales of domestic products in int. markets.

➲ Domestic orientation
➲ International Market secondary
➲ Firm seeks markets similar to domestic.
➲ Little adaptation of product or marketing
mix.
➲ Usually produced domestically
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Multi-Domestic Orientation

➲ Separate operations in each country

- production, marketing etc.
➲ Different strategies and marketing
mixes
➲ Very little interaction
➲ Markets could be very different.
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Global-Marketing
Orientation

➲ Views the world as one market.

➲ Develop product and marketing strategies
for world markets.
➲ Standardize as far as possible, adapt where
necessary.
➲ Economies of scale, transfer of knowledge
and technology, global image, and better
competitive position.
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International vs. Domestic
- Marketing Mix.

➲ Standardization/Differentiation mainly in
terms of Product and Promotions.
➲ Product and Promotion Extension
(Standardization)
➲ Product Extension/Promotion Adaptation
➲ Product Adaptation/Promotion Extension
➲ Dual Adaptation (Differentiated)
➲ Product Invention

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 Five International Product
and Promotion Strategies

Product
Do not change Adapt Develop new
product product product
Do not change
Promotion

promotion
Straight Product
extension adaptation
Product
invention
Communi- Dual
Adapt cation adaptation
promotion adaptation

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Three components which
could be changed.

❚ Core component; packaging component; and

support services component.
❚ Core component - Physical product, design
features, functional features.
❚ Culture and use; standards or regulations;
minor changes easier; major changes costly;
functional features easy to adapt.
Three components which
could be changed.

❚ Packaging component - Price, quality,

styling, color, trademark, brand
name, etc (psychological features).
❚ Economic or environmental
requirements;Govt. regulations;
Distribution requirements;
consumer/cultural requirements.
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Three components which
could be changed.

➲ Support services component -

deliveries, warranty, repair and
maintenance, spare parts etc.
➲ Market characteristics, size,
competition, level of development etc.
Country of origin effects.

➲ Stereotypes about products and countries.

➲ English Tea, French Perfume, Chinese Silk, Italian
leather, Japanese cars and electronics.
➲ Usually product specific.
➲ Stereotypes based on level of industrialization.
➲ Can be overcome with good marketing.
Pricing.
➲ Objectives depend upon company orientation
➲ Standard worldwide Pricing – Based on average unit costs of fixed,
variable and export related costs.
➲ Dual Pricing – Domestic and export prices are differentiated.
Cost-plus pricing and marginal cost method.
Cost-plus – full allocation of domestic and foreign
costs.
Marginal cost – Fixed costs for plants, R&D, Domestic
overhead, and domestic marketing are disregarded.
➲ Market-differentiated pricing – demand–oriented. Marginal costs
and export-related costs considered.
Variables that influence
international pricing
➲ Taxes and tariffs - Specific duty, Ad Valorem(based on
value), Combination.
➲ Inflation - Time, Payment terms, possible price control.
➲ Exchange rate Fluctuation - Prices of products and
profits.
➲ Middlemen and transportation costs - Longer, diverse,
underdeveloped, smaller order quantities, could all
increase costs.(slotting effect)
➲ Parallel Imports.
Parallel Imports/ Gray
Markets.

❚ Value of currencies.
❚ Pricing policies.
❚ Costs of transportation less than price
differential.
❚ Price controls or quotas.
❚ Exclusive distribution agreements.
❚ In the US – Gray market for Cars, Watches,
cameras etc. – valued at $6-10 billion.
Global Advertising and
Promotion Effort.

➲ Global or standardized advertising strategy.

➲ Pattern Advertising (similar basic message with
some local variation)
➲ Customized.
➲ Marketing strategy; Cultural differences; Behavior
in terms of the product; Media availability.
Global advertising
strategy.

❚ Developed on a global basis not

exported.
❚ Most large firms do not use, only 8%
of U.S. multi-national firms.
Pattern advertising.

❚ Plan globally act locally.

❚ Broad outlines or basic positioning
given but details can be adapted.
❚ Assuming that there are some
differences in culture and consumer
behavior even if primary function is
the same.
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Creative challenges.
➲ Media Regulations –
comparative advertising – e.g., Germany prohibits
use of superlatives.
time allocations – e.g., In Italy 12% ads per hour.,
special taxes – e.g., Japan,
type of product, type of copy and illustration, etc.
➲ Language limitations - translating ad slogans, literacy
levels, use of different languages.
Creative challenges.

➲Cultural diversity - Symbols, colors, tastes,

values and beliefs etc. - subcultures.
➲Production and cost limitations - Poor
quality printing, lack of high grade paper,
film editing and processing facilities, high
comparative cost for quality.
➲Media - Availability, Audience data,
international media.
Advertising agencies.
➲ Local agency.
➲ Company owned agency.
➲ Multinational Agency with local branches.
Survey says -
32.5% using single agency worldwide.
20% two agencies.
5% using three.
10% using four.
32.5% using more than four.