Marketing Internationally

Marketing Internationally

McGraw-Hill/IrwinInternational Business, 11/e Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.

chapter eighteen

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Learning Objectives

Understand why there are differences between domestic and international marketing

Explain why international marketing managers may wish to standardize the marketing mix regionally or worldwide

Explain why standardizing the marketing mix globally is often impossible

Appreciate the importance of distinguishing among the total product, the physical product, and the brand name

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Learning Objectives

Explain why consumer products generally require greater modification for international sales than do industrial products or services

Discuss the product strategies that can be formed from three product alternatives and three kinds of promotional messages

Explain “glocal” advertising strategies

Discuss the effect of the Internet on international marketing

Discuss the distribution strategies of international marketers

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International Marketing

• Develop marketing strategies by assessing the firm’s potential foreign markets and analyzing the many alternative marketing mixes– Must plan and control a variety of marketing

strategies• Rather than a single unified and

standardized one• Coordinate and integrate those strategies

into a single marketing program

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Standardize, Adapt, or Formulate Anew?

• Management would prefer global standardization of the marketing mix

• Significant cost savings• Longer production runs• Standardized advertising, promotional materials,

and sales training• Standardized corporate image• Standardized pricing strategies • Easier control and coordination• Reduction of preparation time• Often not possible

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Product Strategies

• Product is central to marketing mix

• Total product includes– Physical product– Brand name– Accessories– After-sales service– Warranty– Instructions for use– Company image– Package

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Total Product

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Types of Products

• Industrial Products– Many can be sold unchanged worldwide

(computer chips)– If changes are required, they may be cosmetic

(printing instructions in another language)– In developing countries problems with

• Overload of equipment• Maintenance

– Local legal requirements

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Types of Products

• Consumer Products– Require greater modification to meet local market

requirements than do industrial products

– Some can be sold unchanged to certain market segments

• Large automobiles, sporting equipment, and perfumes

– Greater dissimilarity as you go down the economic strata

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Types of Products

• Services– Marketing of services similar to that of

industrial products• Services easier to market globally compared to

consumer products• Laws and customs may force changes

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Foreign Environmental Forces

• Sociocultural Forces– Dissimilar cultural patterns generally require

changes in food and other consumer goods– May require

• Redesign of product– Different meanings of colors– Different meanings of brand name

• Translation of instructions or labels

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• Legal Forces– Laws concerning

• Pollution• Consumer protection

• Operator safety – Laws prohibiting classes of imports

• Food and pharmaceuticals influenced by laws concerning purity and labeling

– Legal forces may prevent use of brand name worldwide

• In some countries brand may be registered to someone else

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• Economic Forces– Great disparity in income throughout world

– Obstacle to product standardization

– Many industrialized country products too expensive for developing country consumers

• Must either simplify the product or produce a different, less costly one

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• Physical Forces– Climate and terrain prevent international product

standardization• Heat• High humidity

– Special packaging

• High altitudes– Baking products and motors

• Rough roads

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Promotional Strategies

• Promotion– Any form of communication between a firm

and its publics • To bring about a favorable buying action

and achieve long-lasting confidence in the firm and the product or service it provides

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Promotional Strategies

• Distinct promotional strategies based on combination of three alternatives – Marketing the same physical product everywhere

– Adapting the physical product for foreign markets

– Designing a different physical product with• (a) the same message• (b) adapted message or • (c) different message

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Six Common Promotional Strategies

• Same product-same message– Avon, Maidenform

• Same product-different message– Honda’s campaign in America is different than in Brazil

• Product adaptation-same message– In Japan, Lever Brothers puts Lux soap in fancy boxes to encourage gift

sales

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Six Common Promotional Strategies cont’d.

• Product adaptation-message adaptation– In Latin America, Tang is sweetened and promoted as mealtime drink

• Different product-same message– Product is produced in low cost plastic squeeze bottle for developing

countries, but advertised the same

• Different product for the same use-different message– Welding torches rather than automatic welding machines are sold in

developing countries

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The Promotional Mix

• Advertising

• Personal selling

• Sales promotion

• Public relations

• Publicity

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Advertising

• Paid, nonpersonal presentation of ideas, goods, or services by identified sponsor– Among promotional mix elements,

advertising• Has the greatest similarities worldwide• Is formulated and executed through

global ad agencies that have wholly owned subsidiaries, joint ventures, and working agreements with local agencies

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Global and Regional Brands

• Reasons for increase in global and regional brands– Cost – Better chance of obtaining one regional source

for high-quality work– Belief that single image throughout region is

important– Establishment of regionalized organizations with

many functions centralized– Growth of global and regional satellite and cable

television

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Top Twenty Brands 2006

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Impact of Culture on Advertising

• Directness vs. indirectness• Comparison• Humor• Gender roles• Explicitness• Sophistication• Popular vs. traditional• Information content vs. fluff

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Advertising

• Branding

– Global, regional or national• Managers may convert or use a combination

– Private brands• Serious competitors• Alliances with international retailers• Trend common in Europe

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Advertising

• Media– Satellite TV expands availability of media

– International print media available• Reader’s Digest has 48 foreign editions

– Cinema and billboards used heavily in Europe

– In developing countries, vehicles equipped with loudspeakers

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Advertising

• Internet Advertising• An affluent, reachable audience

• Web contacts feature interactivity, shrinks distance

• Involve customers in determining which messages and information they receive

• For some groups, Internet may be among the best media choices

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Advertising

• Foreign Environmental Forces– Basic cultural decision for marketer: position

the product as foreign or local

– Depends on the country, the product types, and the target market

– Language often an issue• back translation• plenty of illustrations with short copy

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Advertising

• What should be the approach of the international advertising manager?– Think globally, but act locally– Neither global nor local-”glocal”– Pan regional approach

• Latin America• Middle East• Africa• Atlantic

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Personal Selling

• Importance of personal selling compared to advertising depends on– Relative cost– Funds available– Media available– Type of product

• Manufacturers of industrial products rely on personal selling

• Marketers may increase use of personal selling for consumer products in developing countries

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Personal Selling

• Internet– Would seem to eliminate the need for personal

selling, but may not be so

– Successful personal selling depends on establishing trust

• Evolving approaches to trust building in a virtual environment

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Personal Selling

• International Standardization– An overseas sales force is similar to the home

country in• Organization• Sales presentation• Training methods

– Recruitment of salespeople in foreign countries can be difficult

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Sales Promotion

• Any various selling aids, including displays, premiums, contest, and gifts

• Sociocultural and economic constraints make some sales promotions difficult to use– If premium is to fulfill the sales aid objective, it

must be meaningful to the purchaser– Sales promotion is generally less sophisticated

overseas than in U.S.

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Public Relations

• Various methods of communicating with

the firm’s publics to secure a favorable

impression

– Markets firm

– Improves image and overcomes negative

perceptions

– May work through government agencies

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Pricing

• Important and complex consideration in formulating marketing strategy

• One of the marketing mix elements that can be varied to achieve firm’s marketing objectives

• Made more complex by– Interaction with the other functional areas– Environmental forces

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Interaction between Marketing and Other Functional Areas

• The finance people want prices that are profitable and conducive to steady cash flow

• Production supervisors want prices that create large sales volumes, which permit long production runs

• Legal department worries about possible antitrust violations when different prices are set according to type of customer

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Interaction between Marketing and Other Functional Areas

• The tax people are concerned with effects of prices on tax loads

• The domestic sales manager wants export prices to be high enough to avoid parallel importing

• The marketer must address all these concerns and consider– Legal forces– Environmental forces

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Standardizing Prices

• Difficult if desirable– Foreign National Pricing

• Local pricing in another country– International Pricing

• Setting prices for unrelated and related firms– Transfer pricing

• Intracorporate price, price of a good or service sold by one affiliate to another, the home office to an affiliate, or vice versa

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Distribution Strategies

• Distribution Decisions– Often interdependent with other marketing

mix variables

• Standardizing Distribution– Two fundamental constraints

• The variation in availability of channel members

• The environmental forces present in these different markets

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Standardizing Distribution

• Disintermediation– Unraveling of traditional distribution

structures• Most often the result of being able to

combine Internet with fast delivery services

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Channel Selection

• Direct or Indirect Marketing– The first decision: whether to use middlemen– Export sales may be consummated by local

agents if• Management believes this is politically expedient• Country’s laws demand it

• Factors Influencing Channel Selection• Market• Product• Company• Middlemen

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Foreign Environmental Forces and the Marketing Mix Matrix

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Marketing Internationally

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