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International Marketing

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.

International marketing
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.

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.

What is international marketing?

- International marketing is the process


of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations (Czinkota and Ronkainen)

- International marketing focuses its resources on global market opportunities and threats (Keegan and Green) -

- It is a tool used to obtain improvement of the firms position in the global market
- Strategy and action, global and local

EPRG Model Ethnocentric: everything is centered on the domestic market. Polycentric: several important foreign markets exist. Regiocentric: the market is composed of several large economic regions. Geocentric: the world is one large global market.

International trade and international business

International business

International business consists of transactions that are devised and carried out across national borders to satisfy the objectives of individuals, companies, and organizations.

International business:
causes

the flow of ideas, services, and capital across the world offers consumers new choices permits the acquisition of a wider variety of products facilitates the mobility of labor, capital, and technology provides challenging employment opportunities reallocates resources, makes preferential choices, and shifts activities to a global level

International trade is the exchange of capital, goods,andservices across international borders or territories. In most countries, such trade represents a significant share of gross domestic product (GDP)

Industrialization,advanced transportation, globalization,multinational corporations, and outsourcing are all having a major impact on the international trade system. Without international trade, nations would be limited to the goods and services produced within their own borders.

International Marketing Planning

The International Marketing Planning Process


Corporate Policy
Business Mission - Purpose - Business Domain - Major Objectives Business Philosophy - Values - Norms - Rules of Behavior

Potential Market Assessment - Market Size and Potential - Market Selection Procedure - Key Success Factors

The International Marketing Planning Process


Basic Strategic Decisions
Determination of Competitive Position - Internal Analysis - Competitor Analysis - Core Competencies / USP
Development Strategy Competitive Strategy - Cost leader - Leader - Differentiation - Challenger - Follower - Concentration - Specialist

Product - Segment Selection


- Target Customer Segments - Product Positioning

The International Marketing Planning Process


Market Entry Strategy :
- Market Entry Mode - Market Entry Timing

Marketing Mix Decisions


Product Price Promotion Placement

The International Marketing Plan Overview

Executive Summary Country Introduction Economic Analysis Market Audit and Competitive Market Analysis Preliminary Marketing Plan Sources of Information Appendixes

The International Marketing Plan Country Introduction

I. Geographical Setting II. Relevant history III. Social Institutions IV. Cultural Aspects V. Living Conditions VI. Language (s)

The International Marketing Plan Economic Analysis

I. Population II. Economic statistics and activity III. Developments in science & technology IV. Channels of distribution (Macro-analysis) V. Media

The International Marketing Plan Market Audit

I. The product

Evaluation of the products USP Major problems of product acceptance Market size and evolution Consumer buying habits Existent competitors products Marketing Mix typically used

II. The market

III. Government intervention in the marketplace

The International Marketing Plan Preliminary Marketing Plan

I. Marketing Plan

1. Marketing objectives 2. Product adaptations/modifications 3. Promotion mix 4. International distribution 5. Local channels of distribution 6. Price determination 7. Terms of sale 8. Methods of payment

The International Marketing Plan Preliminary Marketing Plan

II. Pro forma financial statements and budget


1. Marketing budget 2. Pro forma annual profit & loss statement 1. Financial Resources 2. Human resources 3. Production Capacity

III. Resource Requirements


Researching and Analysing Overseas Markets

Researching and Analysing Overseas Markets


Background information Five rules for international research Entry evaluation procedure
Stage 1 - Country identification Stage 2 - Preliminary screening Stage 3 - In-Depth screening Stage 4 - Final selection

Market information
Market potential Consumer / customer attitudes and behaviour Channels of distribution Communications and media Market sources New products

Competitive information
Competitive business strategy and goals (mission and rationale of the company) Competitive functional strategies and programmes (target markets, marketing mix, etc) Competitive operations (morale, employee transfers, i.e. detail)

Foreign exchange
Balance of payments, interest rates, etc Prescriptive information e.g incentives, controls, regulations. Country monetary and fiscal policy Expectations of bankers, traders, analysts, etc Government policy in relation to its own competitiveness e.g China, USA

Resource information

Human resources Money Raw materials Acquisitions and mergers, joint ventures

General conditions
Economic factors - e.g. growth Social factors e.g. customs, attitudes Political factors e.g investment climate Scientific and technological factors - major developments and trends Management and administrative factors e.g. report procedure

Sources of information
Human sources e.g company executives Documentary sources e.g too much! Perception sources e.g. what we see and hear Information and media
face-to-face conversation telex/fax/e-mail sight, smell, taste

Five rules for international research


One:
what information do I need? Where can I get this information? Why do I need this information? When do I need this information? What is this information worth in ? What is the cost of not obtaining this information?

Two: Start with desk research Three: Identify the type of information that is available from overseas sources Four: Know where to look (or find somebody that does) Five: Do not assume that the information that you gain is comparable or complete.

Entry evaluation procedure

Stage 1 - Country identification Stage 2 - Preliminary screening Stage 3 - In-Depth screening Stage 4 - Final selection

Stage 1 - Country identification


Candidate countries are identified and listed broadly based on general statistical information conduct population comparisons to predict market potential
Indonesia 18 million, Malaysia 17 million Brazil 50 million, Chile 13 million

Stage 2 - Preliminary screening


Rating the identified countries macro level - political stability, geographical distance, economic development Weed out countries from consideration anticipated cost of entry are calculated e.g. warehousing, product support, distribution

Stage 3 - In-Depth screening


Core of attractiveness evaluation data specific to industry/market Market size Market growth - business cycle, computing rates of growth competitive intensity - e.g. US Dept of Commerce Market Shares Report Trade barriers

Stage 4 - Final selection


Objectives brought to bear for a match Revenues and costs are compared for leverage Weights can be added to criteria based on objectives This leads to a final ranking Personal visits are made. Direct experience leads to final decision

Foreign Market entry strategies.

Global Market Entry Strategies

Operational reasons for setting up overseas manufacture Strategic reasons for investing in local operations Methods of overseas production Exporting options Joint Ventures and Strategic Alliances

Operational reasons for setting-up overseas manufacture


reduced costs of transportation reduced barriers/ quota handicap e.g. Nissan some governments demand investment with market entry e.g. China Customers sometimes prefer local manufacture e.g. Heinz British? Government contracts prefer firms contributing to the local economy

Improved local market information local manufacture ensures greater commitment to international markets Faster response and Just-in-time delivery
Doole, Phillips and Lowe (1994)

Strategic reasons for investing in local operations

Gain new business

demonstrates strong commitment persuades customers to change suppliers provides better service and more reliability

Defend existing business

avoid market restrictions as sales increase, particularly in single market

Move with established customer

component suppliers follow customers to compete with local component suppliers labour, raw materials and transport

Save costs

Avoid government restrictions to import certain goods


Doole, Phillips and Lowe (1994)

Exporting

Indirect

export houses UK buying offices of foreign stores or governments complementary exporting


sales to final user overseas agencies distributors and stockists company branch offices abroad

Direct

Degree of involvement v control?

Methods of overseas production

Licensing

Companies with strong brand or know-how e.g. Coca-Cola, Disney more of a whole package e.g.Body Shop, KFC bulk items e.g. Nike components

Franchising

Contract manufacture

Joint ventures

e.g. Burmah Castrol in S.Korea

Wholly owned overseas subsidiaries Organic growth

Strategic Alliances

Strategic alliances can range from loose networking relationships to very tight contractual relationships such as joint ventures. e.g. code share where airlines of a similar type sell each others tickets. There is no co-ownership. Types

technology swaps R&D exchanges distribution relationships insufficient resources High R&D costs Concentration of firms in mature markets Market access

Driving forces

Joint ventures e.g European Airbus.


Orgs can remain separate, but have a tight legal relationship. Reasons for setting up

overcome foreign ownership restrictions increase speed of entry exploit new opportunities, complementary technologies and management skills achieve worldwide presence at lower cost differences in partner aims and objectives equal ownership and different options can slow decision making dominance by one partner can lead to resentment in the other Large time commitment for education, negotiation and agreement with partner

Disadvantages

Mergers

The identity of each of the merging companies is subordinated into the identity of the newly merged organisation, or disappears. Benefits include:

Cutting cost Eliminate competition Synergy augments mutual strengths

Case study Chrysler and Mercedes.