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Chapter 16:InternationalMarketing

International Business, 4th Edition

Griffin & Pustay

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Chapter Objectives_1

Characterize the nature of marketing management in international business

Discuss the basic kin of product policies and decisions made in international business

Identify pricing issues and evaluate pricing decisions in international business

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Chapter Objectives_2

Identify promotion issues and evaluate promotion decisions in international business

Discuss the basic kinds of distribution issues and decisions in international business

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Marketing

Process of planning and executing the conception, pricing, promotion,

and distribution of ideas, goods,and services to create exchanges that satisfy

individuals and organizational objectives

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Figure 16.1 International Marketing as an Integrated Functional Area

OperationsManagement

FinanceHuman

ResourceManagement

Accounting

Marketing

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Marketing Mix

How to develop the firm’s product(s) How to price those products How to sell those products How to distribute those products to the

firm’s customers

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Figure 16.2 The Elements of the Marketing Mix for International Firms

Product PlacePromotionPricing

Marketing Mix

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Key Decision-Making Factors

Standardization versus customization Legal forces Economic factors Changing exchange rates Target customers Cultural influences Competition

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Standardization versus Customization

Should the firm adopt an ethnocentric approach?

Should it adopt a polycentric approach?

Should it adopt a geocentric approach?

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Table 16.1 Standardized International Marketing

Advantages Reduces marketing costs Facilitates centralized

control of marketing Promotes efficiency in

R&D Results in economies of

scale in production Reflects the trend toward

a single global marketplace

Disadvantages Ignores different

conditions of product use Ignores local legal

differences Ignores differences in

buyer behavior patterns Inhibits local marketing

initiatives Ignores other differences

in individual markets

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Table 16.1 Customized International Marketing

Advantages Reflects different

conditions of product use Acknowledges local

legal differences Accounts for differences

in buyer behavior patterns

Promotes local marketing initiatives

Accounts for other differences in individual markets

Disadvantages Increases marketing costs Inhibits centralized

control of marketing Creates inefficiency in

R&D Reduces economies of

scale in production Ignores the trend toward a

single global marketplace

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Prices of these t-shirts in Rome converted from several hundred lira to less than 13 Euro

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Pricing Policies

Standard price policy Two-tiered pricing Market pricing

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Figure 16.3a Determining the Profit-Maximizing Price

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Figure 16.3b Determining the Profit-Maximizing Price

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Conditions for Market Pricing

Firm must face different demand and/or cost conditions in the countries in which it sells its products

Firm must be able to prevent arbitrage

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Risks to Market Pricing

Complaints about dumping Damage to its brand name Development of a gray market for its

products Consumer resentment against

discriminatory prices

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Promotion Mix

Advertising Personal Selling Sales Promotion Public Relations

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Factors affecting Advertising Strategy

The message it wants to convey The media available for conveying the

message The extent to which the firm wants to

globalize its advertising effort

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A customer entering this domino parlor in Egypt encounters no language barriers in

knowing that the establishment serves

Coke

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Advantages of Personal Selling for International Firms

Local sales representatives understand local culture, norms, and customs

Personal selling promotes close, personal contact with customers

Personal selling makes it easier for firm to adopt valuable market information

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Distribution Issues

Physically transporting its goods and services from where they are created to the various markets in which they are to be sold

Selecting the means by which to merchandise its good in the markets it wants to serve

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Table 16.2 Advantages and Disadvantages of Different Modes of Transportation for Exports

Mode Advantages Disadvantages Sample Products

Train Safe, reliable, inexpensive

Limited to rail routes, slow

Automobiles, grains

Airplane Safe, reliable, fast

Expensive, limited access

Jewelry, medicine

Truck Versatile, inexpensive

Small size Consumer goods

Ship Inexpensive, good for larger products

Slow, indirect Automobiles, furniture

Electronic Media

Fast Unusable for many products

Information

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Basic Parts of a Distribution Channel

The manufacturer A wholesaler The retailer The actual customer

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Figure 16.4 Distribution Channel Options