(By Michael R. Czinkota, Georgetown University, LLkka A.

Ronkainen, Georgetown University)

Applied Marketing -Spring 08

Imported/Smuggled goods we buy/use/consume every day, every week, every month etc.? goods and services – movies also! Since times immemorial (ancient) traders (and “carriers) frequently fly off to foreign lands and carry back many items “import” gold, spares, toys, garments etc. The Importance of international marketing – Chinese goods have taken over the entire planet, it seems.

Applied Marketing -Spring 08


Understanding the importance of international marketing. Appreciate the opportunities and challenges offered by international marketing. Recognize the effect of the global environment on international marketing activities. Understand the process of market selection. Recognize the process of internationalization.
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 


Learning objectives – contd. 6. Appreciate the different forms of market entry. 7. Comprehend the international adjustment of the marketing mix. 8. Understand the steps necessary for implementing an international marketing strategy.

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“The process of planning & conducting transactions across national borders to create exchanges that satisfy the objectives of individuals & organizations.” Its forms range from export-import trade, to licensing, franchising, joint ventures, wholly owned subsidiaries, & management contracts

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 Basic

principles of marketing strategy still apply, but their implementation, complexity, & intensity may differ substantially. of Chinese goods may differ in Pakistan & The U.S. to asked to succeed in an I.M. next slide.

 Quality

 Questions

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1. 2. 3. 4.

How will my product fit into the international market? What marketing adjustments are or will be necessary? What threats from global and local competition should I expect? How can these threats be turned into opportunities?

Foreign markets prove a source of growth, profit, and needs satisfaction for the firm & lead to a higher quality of life.
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Learning Objective 2: opportunities and challenges in international marketing

order to exploit opportunities & avoid threats in international markets the firms, individuals, governments, etc. need to act aggressively with innovation, process improvements, and creativity.
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Opportunities can be created/exploited in the following ways:


knowledge from around the


long-run production, & rejuvenate product life supply chains




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Challenges in International marketing
 International  Small


business mindset – following slide and economic instability competition

 Political

 Increased

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believe only MNCs carry out international marketing

firms can also be major players: 50% of German exports from firms with 19 or fewer employees Software developers

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Learning Objective 3: The international marketing environment
 6. 7. 8. 

Key international environments are the Cultural Socioeconomic, and Legal/Political environments Different in different countries & within the same country.

Applied Marketing -Spring 08


Cultural Environment Challenge: how to handle the differences In languages, values & attitudes, C.B. and how to handle the impact of these differences on the implementation of the Marketing programs in the marketplace. The international marketer plays the role of a Change agent trying to impress on a local consumer the need to adopt a new product.
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Cultural – contd.

Cultural lifestyle has (some believe) four dimensions. 4. Degree of individualism vs. group decision making 5. Level of equality vs. class differences 6. Uncertainty avoidance; follow rules & regulations. 7. Attitude towards material achievement To foster cultural sensitivity & acceptance of new ways of doing things within the organization, management must institute internal training
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Figure 3.2 – Making Culture Work for You Embrace Local Culture Employ Locals to Gain Cultural Knowledge Build Relationships – visit, invite Adapt Products to Local Markets Help Employees Understand You Coordinate by Region – like holding regions meetings and share insights and strategies.
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 Aging

& Elderly populations in the West and Japan – opportunities offered. Economic boom changes U.S. market characteristics populations in some countries - prime working age and driving both economic and consumption growth. who work outside create demand of packaged food, labor-savings devices & house hold services.
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 Huge

 Women


 Intellectual

property rights is the protection provided by patents, copyrights, & trademarks.  WTO  Common law: based on traditions & customs  Code law: based on a comprehensive set of written statutes.  Antidumping laws: protecting domestic industry from unfair competition from abroad

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 Learning

Objective 4: international market selection The process of target market selection involves narrowing down potential country markets to a feasible number of countries and market segments within them.

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All Countries Preliminary Screen:
1. General country factors 2. Generic product-specific factors

Secondary Data Rejected Countries

Prospective Target Countries Estimate Market Potential by Product Types:
1. Size of national market 2. Potential of national market

Rejected Countries

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High Market Potential Countries

Estimate Sales Potential by Company Products: Other Target Markets
1. Product comparisons 2. Competition 3. Market structure 4. Channel structure 5. Final consumers

Rejected Countries

Highest Sales Potential Countries – Target Market

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Identifying Segments in Target Market

Rejected Segments

Primary Data

Optimal Segment Mix in Target Market

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vs. Diversification

markets vs. Many markets Dual Concentration
Focus on a segment in a few countries  Suitable for smaller companies


Focus on most segments in most markets  Used by large consumer-products companies

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 Learning

Objective 5: the internationalization process  The role of management:  Managerial commitment to international markets is crucial  Become aware of opportunities  Enter in a limited fashion & evaluate results  Managerial commitment  Motivations to go abroad  Proactive motivations  Reactive motivations
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Learning Objective 6: alternative entry strategies  Indirect exporting & importing  Direct exporting & importing  International intermediaries: help direct & indirect exporter/importers in documentation, financing, and transportation.  Two major types are EMC and trading companies. Export management companies (EMC) specialize in performing business services as 24
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2. 3.

Agent: (EMCs) do not take title to the products but develop marketing strategy and contacts. Distributor: (EMCs) purchase products from the domestic firm an assumes the trading risk.

The second major intermediary is the trading company which undertakes exporting, importing, countertrading, investing, and manufacturingwider scope then EMC. Sogoshosha are the trading companies of Japan: can purchase products, act as distributor abroad, or offer services – provide country information etc

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an arrangement in which one firm permits another to use its intellectual property (patents, trademarks, copyrights, technology etc.) in exchange for compensation, typically a royalty (paid by one firm to another under licensing & franchising agreement)

Benefits of Licensing: does not require huge capital investment, or detailed involvement, earn income on R&D already conducted, no risk
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Entry strategies – contd. Franchising is a form of licensing that grants wholesaler or a retailer exclusive rights to see a product or a service in a specified area.

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Alternative entry strategies – contd.
 Foreign

Direct Investment (FDI) Investing abroad (buying firms) to gain certain benefits – local taxes, marketing considerations and desire for expansion, the local economy also gains – MNCs also cause displacement. - A perspective on foreign direct investors: viewed with a mixture of awe and dismaybring capital, provide employment etc.
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- Types of ownership

full ownership
joint ventures – a collaboration of two or more organizations each contributing assets, owns the new subsidiary and share risk. strategic alliances: are informal or formal arrangements between two or more companies with a common business objective – more than vendorcustomer relationship but less than an outright acquisition, have ongoing flexibility. They are network of companies that collaborate in the achievement of a given project – Motorway ! Contractual arrangements (manufacturing)
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learning Objective 7: a company view of international expansion

The central driver of internationalization is the level of managerial commitment. This commitment will grow gradually from an awareness of international potential to the adaptation of an international strategic direction. It will be influenced by the information, experience, and perception of management, which in turn are shaped by motivation and concerns of the firm.

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Figure 3.5 A Comprehensive Model of International Market Entry and Development Domestic Focus

Multin ational Focus

Alternative Strategies • Trading Export/import • Licensing/Franchising • Local Presence alliances full ownership

Level of Management commitment • Aware • Interested • Trial • Evaluation • Adaptation

Motivations • Proactive • Reactive

Concerns • Information • Mechanics • Communication • Sales Effort • Service • Regulations

Intermediaries • Export Mgmt. Co. • Trading Cos • Facilitators

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Adjusting the marketing mix:

International markets are approached in one of the three ways: Standardized approach to international marketing in which products are marketed with little or no modification. Multidomestic approach in which local conditions are adapted to in each and every target market.

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3. Globalization approach: to international marketing in which differences are incorporated into a regional or global strategy that will allow for differences in implementation. “think globally and act locally”

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Three sets of influences shape the final form of the product and the adjustments to be made in the marketing mix. Company Decisions: Profitability, market opportunity, Policies. Macroenvironmental Influences: like Governmental regulations, customer characteristics, expectations, preferences etc. (covered in the first chap.) Product (characteristics) decisions: product constituents, brand, positioning, packaging, after-sales service etc.
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learning Objective 8: implementing marketing programs worldwide - To keep with the changing conditions actions have to taken with respect to the following: management process: keeping relations with the head office and the local market – flow of information, globalization calls for centralization

2. organization structure: to keep with the change, regional product managers etc. develop long-term strategies, matrix structure etc.
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