INTERNATIONAL MARKETING

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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. collectively accounting for 42 percent of global trade. and Britain ($260 billion). . Germany ($560 billion). Japan ($390 billion).  The world’s five exporting countries are the United States ($700 billion). France ($320 billion).

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

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

THE NATURE OF INTERNATIONAL MARKETING  What is international marketing? Export marketing Foreign marketing Multinational marketing Global marketing  International marketing .2.

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

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. .S firm markets in Belgium or Brazil. distribution channels. Such marketing is unlike domestic marketing because that firm faces different kinds of competition. consumer behavior. as a U.Foreign marketing The foreign marketing dimension involves marketing within foreign countries.

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. The unique nature of each foreign market fragments the international marketing effort and brings diseconomies of scale.Multinational marketing The multinational marketing dimension emphasizes the coordination and integration of the firm’s marketing in many diverse foreign environments. .

.International Marketing Defined International marketing: the performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit.

All rights .The International Marketing Task 1 Foreign environment (uncontrollable) Political/legal forces Economic forces Domestic environment (uncontrollable) 7 Cultural forces Political/ legal forces 2 Country market C environment (uncontrollable) (controllable) Price Competitive Competitive Forces structure Product 3 6 Geography and Infrastructure Promotion Channels of distribution Country market A environment (uncontrollable) Economic climate Level of Technology 5 4 Structure of distribution Country market B environment (uncontrollable ) Irwin/McGraw-Hill Copyright©2002 by The McGraw-Hill Companies. Inc.

geocentric Domestic export marketing international marketing multinational global .ethnocentric  International Marketing .polycentric or multidomestic  Multinational Marketing.Evolution of Marketing  Domestic Marketing .regiocentric  Global Marketing .ethnocentric  Export Marketing.

 Develop new strategies.  New plans are needed.Meeting International Challenges  Be prepared and develop active responses.  Adaptation to the new environment and markets. .

The main steps in the marketing management process R – STP – MM – I – C R= research STP= Segmentation. Positioning MM= Marketing-mix I= Implementation C=control . Targeting.

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

Distribution of products through channels which provide the services or conveniences demanded by purchases. clearly defined in suitable package. Detailed analysis of current markets and potential markets.The activities in international marketing include: 1. 3. 2. . Planning and development of products that the consumers want.

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

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

Making export strategy operational . Identifying and measuring market opportunity 3.2.1.EXPORT MARKETING PLANNING 3.3.3. Developing an export marketing strategy 3.

1. Identifying and measuring market opportunity a) b) c) d) Preliminary screening Estimating market potentials Estimating sales potentials Segmenting the market .3.

2. . price.3. Developing an export marketing strategy a) b) Setting export objectives Planning the marketing mix Product. promotion. channels.

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. and anticipated changes in organizational structure. and efficiency controls to monitor the plan’s successes and failures. Control: • Use annual planning (sales to forecast). Implementation: • Take actions to put the plan into action.primary and secondary. Planning: • Develop a marketing plan which includes a situation analysis. Screen data for opportunities to employ company resources for competitive advantage. profitability. long-term strategies and short-term tactics. internal and external. cost and profit estimates. Adjust implementation activities to account for environmental changes in market conditions. formal and informal. . goals and objectives.

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. 4. market share.4.1 basis goals Profit or nonprofit( volume of sales. serving customer…).

GOALS OF INDIVIDUAL BUSINESS UNITS 4.2 specific reasons  Unsolicited foreign orders  Small domestic market  Stagnant or declining home market  Resources  Multinational. world companies  Other goals . global.

ECONOMIC AND FINANCIAL FACTORS SOCIO-CULTURAL ENVIRONMENT POLITICAL/LEGAL ENVIRONMENT COMPETITION . 4. THE INTERNATIONAL ENVIRONMENT 1. 3. 2.CHAPTER 2.

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

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

trends. Market prospect + Estimated size. Product and product modification . and potential of market in the country + Export markets and estimated size + Sources of market information + System of distribution of good 12.ECONOMIC AND FINANCIAL FACTORS 11.

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

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

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

Be creative and experimental. The authors of Managing Culture Differences (Philip R. 1987) offer the following ten tips to deflate the stress and tension of cultural shock: Be culturally prepared. Moran.2. Learn local communication complexities Mix with the host and nationals. Harris and Robert T.     .SOCIO-CULTURAL ENVIRONMENT 3.

understanding.SOCIO-CULTURAL ENVIRONMENT  Be culturally sensitive  Recognize complexities in host cultures.  Be most realistic in expectations.2. and accepting of oneself and hosts.  Perceive oneself as a culture bearer.  Be patient.  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 .

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

CHAPTER 3. 2. 4. 3. SOURCES OF INFORMATION THE EXPORT MARKETING RESEARCH PROCESS SEGMENTATION FOREIGN MARKET PORTFOLIOS: TECHNIQUE AND ANALYSIS . RESEARCHING THE WORLD MARKET 1.

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

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

… . IMF. Universities and other educational institutions… Internet CD-ROM The Business International Market Report.1. Secondary data + Internal source Sales and cost records.1. OECD. EU.… + External source UN. IBRD. WB. Consulate. IFC… Embassy. markets. Non -government agencies.

1. reliability and comparability. .Secondary data The major issues are data availability.1.

Primary data Primary data can be collected in four broad ways: + Observation + Focus groups + Surveys + Experiments .2.1.

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

attitudes. In American Airlines example.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. organization. the group interviewer may start with a broad question. The discussion is recorded through note taking or Audio or video tape and is subsequently studied to understand consumer belief. or other marketing entity. service. and behavior. such as “ How do you feel about air travel?” .

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

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

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

1. 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) .2.

.1. Primary data To avoid these translation errors. in which two or more translators translate the questionnaire. 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. the questionnaire is translated from the home language into the language of the country where it will be used. First. The results are compared.2. experts suggest the technique of back-translation. Another translation technique is parallel translation. and differences are discussed and resolved.

Using the internet and e-mail data collection Some problems: + Sampling + Language + Respondent cooperation .

THE EXPORT MARKETING RESEARCH PROCESS  Problem formulation  Research method and design  Data collection techniques  Sample  Data collection  Analysis and interpretation  Reporting results .2.

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

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

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 .1. Foreign consumers and foreign markets 3.3.

Foreign consumers and foreign markets 3.3.2. Foreign industrial markets + What they buy + Why they buy + Who makes the purchase decision .

Foreign consumers and foreign markets 3. 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. .and government in different countries also vary among themselves on these dimensions. how they buy.3 Foreign government + The size of government’s role as customer. however. and why they buy.3.

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 .

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

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) .

+ Invest/grow countries + Harvest/divest/license/combine countries + Dominant/divest countries + selective countries . Foreign market portfolios: technique and analysis Country attractiveness/ competitive strength matrix Using these variables. countries are classified into one of the nine cells depicting relative market investment opportunity. and some scheme for weighting them.4.

entry barriers. import restrictions. etc. non tariff barriers. etc.) Economic and political stability.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.) Market prohibitive conditions ( tariff. .

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.

4. Foreign market portfolios: technique and analysis Invest/grow Invest/grow Dominate/divest Join venture Invest/grow Selectivity strategies Harvest/divest/ License/combine countries .

5. 4. 2. EXPORT MARKET ENTRY STRATEGIES 1.CHAPTER 4. 3. ENTRY AS STRATEGY FACTORS INFLUENCING CHOICE OF ENTRY MODE EXPORT ENTRY MODES NON-EXPORT ENTRY MODES SELECTING THE ENTRY MODE .

+ The choice of entry modes to penetrate the market. + Needed policies and resource allocations.1.ENTRY AS STRATEGY  The elements of entry strategy: + The objectives and goals in target 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 .

EXPORT ENTRY MODES 3. Indirect export + Export merchants + Trading company + Export commission house + Resident buyer + Broker + Export management company + Manufacturer’s export agent + Cooperative organization: Piggyback marketing.3. Exporting combination .1.

2.3.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 . EXPORT ENTRY MODES 3.

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

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.3. Employees of the department must be trained in foreign trade affaires. .2.

. 3. The firm must suffer directly risks may be occurred. 8.3.2. The firm can develop closed relation with foreign partners. The firm can increase net profit because of operating without expenditure for intermediary. But. The firm have to spent time and money to success in foreign market. the firm is responsible for the following aspects: 7.Direct export Direct exporting has several advantages such as: 2. The firm is able to control the whole process of export. 4.

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

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

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

lack of qualified export expert enable to make international business strategy and marketing plan before starting an export business.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. 4.Seeking orders from a lot corners of the world rather than concentrating on one or two main geographical areas. . Inadequate care in selecting overseas sales representatives or distributors. Lack of support by administrative offices to overcome initial difficulties and financial problems of exporting. 3. 2. Lack of full investigation of market.

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

so that lacking of definitiveness in export. Lack of providing after-sale services for the product. 12. 10. Worry about expenditure for investigating new markets. 11. Lack of printing information of sale. guarantee and after-sale service in foreign language. . 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.The most common mistakes made by exporters 9.

NON-EXPORT ENTRY MODES Licensing Franchising Assembly operations Contract manufacturing Joint venture Wholly owned plant Management contracting .4.

5. SELECTING THE ENTRY MODE rule rule  Naive  Pragmatic  The strategy rule .

3. PRODUCT DECISIONS 1. 4. 2. PRODUCT PLANNING AND DEVELOPMENT PACKAGING BRANDING ISSUES PRODUCT MIX DECISIONS STANDARDIZATION VS ADAPTATION . 5.CHAPTER 5.

2. New product development 1. PRODUCT PLANNING AND DEVELOPMENT 1.4. Product elimination .1.1. Finding new uses for existing products 1. Changes in existing products 1.3.

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

and government requirements. differing electrical systems. Mandatory adaptation may be required because of such things as language differences. . Standardization vs. raw materials. adaptation + Standardization is common for certain agricultural products. and processed commodities sold to industry.2. + Adaptation can be mandatory or voluntary. differing measurement systems and product specifications.

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

emotional impact W.PACKAGING VIEW V.3.visibility I.workability .informative E.

a brand name. label. logo. a trademark. slogan  Brand protection  Branding decisions . BRANDING ISSUES A brand.4.

Choosing a brand name It should suggest something about the product’s benefits EX: Beautyrest mattress. and remember. short names help. Firebird automobile (3) It should be easy to pronounce. EX: Sunkist oranges. recognize. Craftsman tools (2) It should suggest product qualities such as action or color. EX: Tide. Crest (1) .

EX: Nova Is a poor name for a car to be sold in Spanish-speaking countries. Exxon.Choosing a brand name (4) It should be distinctive. it “doesn’t go” . (5) It should not carry poor meaning in other countries and language. EX: Kodak.

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

Branding decisions + Selecting a good brand + Determining how many brands should be in the company’s product line .

or family brand Individual (local) brands Multiple brands .Branding decisions (1) (2) (3) A single brand.

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 Word’s Favorite Airline” .

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

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 city’s 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. price controls)  Company policies  Marketing-mix . inflation rates. DETERMINANTS OF AN EXPORT PRICE  Costs  Market conditions (demand)  Competition  Legal/political influence  Environmental factors ( Exchange rate fluctuations.

2. FUNDAMENTAL EXPORT PRICING STRATEGY  Skimming pricing  Penetration pricing  Extinction pricing  Marginal cost pricing .

RELATION OF EXPORT TO DOMESTIC POLICIES  Export  Export  Export prices lower than domestic prices higher than domestic prices on a par with domestic prices .3.

70 8.30  Factory Price Domestic Freight Export Documentation Ocean Freight & Insurance Import Duty (12% of landed cost) Importer/Distributor Markup (22%) Retail Markup 50 % Final consumer Price 4.70 1.72 14.44 13.23 9.EXPORT PRICE ESCALATION Domestic Sale $ 7.30 $20.15 $14.50 .77 20.20 Export sale $ 7.70 8.53 6.50 .50 8.19 11.43 2.90 1.20 9.15 .09 Wholesale Markup (15%) 1.20 .

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 .

the carrier still has the convertibility problem.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  Exporter’s 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. Of course. FOB vessel is often desirable so that the buyer pays freight in his own currency. . unless it is the buyer’s country.  Requirements of the government of the importing nation.

export duties. 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.How does an exporter prepare an accurate quote? Listed below are variables that should be considered while preparing the quote  Packaging. it’s necessary to add while making quotation. . If there still other subsidiary expenditures. a reasonable profit margin may be added to arrive at a final price. warfare and portage  Shipping charges  Commission  Incentive available from government such as duty drawback After calculating to above mentioned expenditures.

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

S dollars.The choice of currency for export price quotes There are two basic alternatives available: The quote in U. . or quote in customers’ currencies.

Product charges and price ($) Product cist: $10 per unitx100 units Target mark-up: 10% of product cost Oversea agent’s commissions: 5% 1000 100 50 ------1150 80 100 50 20 1400 Financing costs on production: 8% Export packing charges Labeling and marketing for 100 units Other direct export costs EXW price (ex factory) .EX: In this example the goods are planned to be moved by sea and shipment is not containerized.

insurance. This shows how important it is to work through these costing carefully. 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. 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. .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.

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 .5.

CHAPTER 7. CHANNEL STRUCTURE MANAGING THE DISTRIBUTION SYSTEM GAINING ACCESS TO DISTRIBUTION CHANNELS GLOBAL TRENDS IN DISTRIBUTION SYSTEM INTERNATIONAL PHYSICAL DITRIBUTION . 5. CHANNELS AND DISTRIBUTION STRATEGIES 1. 2. 4. 3.

CHANNEL STRUCTURE 1. 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 .1.2.1. Indirect export 1.

1.2. Motivating channel participants 2.Controlling channel participants . MANAGING THE DISTRIBUTION SYSTEM 2.2.

1.2. Motivating channel participants  Financial incentives  Annual conferences  Help to the management of distributorship  Special programs .

Controlling channel participants  Spell  The out the specific responsibilities awarding of exclusive distribution rights .2.2.

The “locked-up” channel 3. Alternative entry approaches + Piggybacking + Joint ventures + Original equipment manufacturers (OEMs) + Acquisitions + Starting your ventures .1.3. GAINING ACCESS TO DISTRIBUTION CHANNELS 3.2.

4.GLOBAL TRENDS IN DISTRIBUTION SYSTEM Five major trends seem dominant throughout the world:  Large-scale retailers  International retailers  Direct marketing  Discounting  Information technology .

INTERNATIONAL PHYSICAL DITRIBUTION  Export restrictions  Foreign market import restrictions  Export documentation  The foreign freight forwarder  Export packing .5.

DIRECT MARKETING .CHAPTER 8. SALES PROMOTION 6.INTRODUCTION 2.INTERNATIONAL ADVERTISING 3. PERSONAL SELLING 5. PUBLICITY AND PUBLIC RELATIONS 4. PROMOTION AND MARKETING COMMUNICATIONS 1. PROMOTIONAL PROGRAM AND STRATEGY 7.

Introduction 1. Promotion -mix 1.2. Communication barriers 1. Export marketing promotion and communication decisions .1.3.1.

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

Communication barriers Communication barriers + Language differences + Government regulations + Media availability + Economic differences + Tastes and attitudes + Buying process .2.1.

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. and personal computers + Trade fairs and exhibitions + Point-of-purchase materials + Consumer promotion materials . slides.

3. its people.1.PR PR consists of a set of tools that can be classified under the acronym of PENCILS. annual reports. helpful customers brochures. business cards. etc. namely: + Events (sponsoring athletic or art events or trade shows) + Publication (company magazines. 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) . and products) + Community involvement activities (contributions of time and money to local community needs) + Identity media( stationery. PUBLICITY AND PUBLIC RELATIONS 3.) + News (favorable stories about the company.

PUBLICITY AND PUBLIC RELATIONS 3. Publicity: Any form of nonpaid. . products.2.3. or institution. commercially significant news or editorial comment about ideas.

4.Advertising involves making decisions on the five Ms + + + + + Mission Message Media Money Measurement . INTERNATIONAL ADVERTISING 4.1.

INTERNATIONAL ADVERTISING 4.2.4.International advertising strategies + Uniform approach to advertising + Adapting domestic advertising to foreign markets .

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

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

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

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

thus increasing the likelihood that important customers will be better served and will remain loyal.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.

Promotional program and strategy This involves the following: + Setting promotional objectives. + Deciding on types of advertising and promotional messages. . + Selecting media.6. + determining how much time. effort. and money to spend.

Direct mail. . door-todoor selling and telemarketing are the primary direct marketing tools used in some countries.DIRECT MARKETING Direct marketing includes a number of marketing approaches that involve direct access to the customer.7.

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

Main considerations of being organized internationally Organizational structures .CHAPTER 9. 2. ORGANIZATION OF INTERNATIONAL MARKETING ACTIVITIES 1.

decentralization  Communication and control systems . Main considerations of being organized internationally  Definition of organizational subunits  Centralization vs.1.

5.Functional export department ( built-in or separate export unit ) 2.3. Organizational structures 2.4.2.International mixed structure.International division structure 2.1.International organization structure based on product 2.2. the matrix organization .International organization structure based on geographic area or customer groupings 2.

Questions for discussion .

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