17

Marketing InternationallyMarketing Internationally

International Businessby Ball, McCulloch, Frantz,

Geringer, and Minor McGraw-Hill/Irwin Copyright © 2006 The McGraw-Hill Companies, Inc. All rights reserved.

This chapter covers:

•Differences between domestic and international marketing

•The marketing mix

•Distinguishing among products

•Product modification

•Product strategies

•Glocal advertising

•The effect of the internet on marketing

•Distribution strategies

Chapter ObjectivesChapter 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 and why it is often impossible to standardize the marketing mix worldwide

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

Explain why consumer products generally require greater modification for international sales than 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 and the effect of the internet

Discuss the distribution strategies of international marketers17-2

MarketingMarketing

Marketers everywhere must Know their markets Develop products or

services to satisfy customers’ needs

Price the products or services so that they are readily available

Make them available to the buyers

Inform potential customers and persuade them to buy

17-3

Standardization, Adaptation,Standardization, Adaptation, or Completely Different? or Completely Different?

Management would prefer global standardization of the marketing mix, but seldom easy 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

17-4

Product StrategiesProduct Strategies

Central focus of marketing mix

The total product includes Physical product Brand name Accessories After-sales service Warranty Instructions for use Company image Package

17-5

Types of ProductsTypes of Products Industrial Products

Many can be sold unchanged worldwide (ie. transistors)

If changes are required, they may be cosmetic (ie. printing instructions in another language)

In developing countries problems with Overload equipment Maintenance

Local legal requirements

17-6

Consumer Products Generally, consumer

products require greater adaptation than do industrial products

However, some can be sold unchanged to certain market segments Large automobiles,

sporting equipment, and perfumes

Greater dissimilarity as you go down the economic strata

Types of ProductsTypes of Products

Services The marketing of

services, is similar to the marketing of industrial products. Services are easier

to market globally compared to consumer products

Laws and customs may force some changes

17-7

Foreign Environmental ForcesForeign Environmental Forces

Sociocultural Forces Dissimilar cultural patterns generally

necessitate changes in food and other consumer goods

May require Redesign of product

Top-load versus front-load washers Change of brand names, labels, or colors

Colors have different meanings Brand name has different meaning

Translation of instructions or labels17-8

Foreign Environmental ForcesForeign Environmental Forces

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 17-9

Foreign Environmental ForcesForeign Environmental Forces

Economic Forces Great disparity in

income throughout the world an obstacle to product standardization.

Many products from the industrialized countries are too expensive for consumers in developing countries Must either simplify the

product or produce a different, less costly one

17-10

Physical Forces Physical forces, such

as climate and terrain, prevent international product standardization

Heat High humidity

Special packaging High altitudes

Baking products and motors

Rough roads

Promotional StrategiesPromotional Strategies

Promotion Is communication

that secures understanding 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 provides17-11

Promotional StrategiesPromotional Strategies

Formulation of distinct promotional strategies is based on the 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, (b) adapted, or (c) different messages

17-12

Six commonly usedSix commonly used promotional strategies 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 because much of it is sold for gifts

17-13

Product adaptation--message adaptation In Latin America, Tang is

sweetened and promoted as a 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

The Promotion MixThe Promotion Mix

Advertising

Personal Selling

Sales Promotion

Public Relations

Publicity

17-14

AdvertisingAdvertising

Paid, nonpersonal presentation of ideas, goods, or services by an identified sponsor Among all the promotional mix elements,

advertising is the one with the greatest similarities worldwide

Today, the major American agencies are all global, with wholly owned subsidiaries, joint ventures, and working agreements with local agencies

17-15

Global and Regional BrandsGlobal and Regional Brands Reasons for increase in use of global or

regional brands Cost is most often cited There is a better chance of obtaining one

regional source to do high-quality work The belief that a single image throughout the

region is important Establishment of regionalized organized

organization where many functions are centralized

Global and regional satellite and cable television are becoming available

17-16

Top Ten Brands 2003Top Ten Brands 2003

Coca-Cola Microsoft IBM GE Intel Nokia Disney McDonald’s Marlboro Mercedes

17-17

AdvertisingAdvertising Branding

Global, regional or national Managers may

convert or use a combination

Private brands Serious competitors Making alliances

with international retailers

Trend very common in Europe

17-18

Media Satellite TV

expanding 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

AdvertisingAdvertising

Internet AdvertisingAppealing factors of online advertising

An affluent, reachable audienceWeb contacts feature interactivity,

which shrinks distanceThe possibility exists of involving

customers in determining which messages and information they receive

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

17-19

AdvertisingAdvertising

Foreign Environmental Forces A basic cultural

decision for the marketer is whether to position the product as foreign or local The preferred

position depends on the country, the product types, and the target market

17-20

AdvertisingAdvertising

Foreign Environmental Forces Unfortunately for the

advertiser, almost every language varies from one country to another

To avoid translation errors, the experienced advertising manager will use a back translation. plenty of illustrations

with short copy17-21

The youth market The young often

prefer American look and American label

American fast-food also influences youth around the world

Very much an international market segment

MTV Europe runs unified English ads

AdvertisingAdvertising

Legal Forces Have pervasive influence on advertising

Affect media availability Restrict kinds of products that can be advertised Some countries illegal to use comparative

advertising Members of advertising industry have established

self-regulatory bodies in many nations Some Middle Eastern countries restrict use of

women in advertising and their style of dress

17-22

AdvertisingAdvertising

What should be the approach of the international advertising manager? Think globally, but

act locally Neither purely global

or purely local Pan regional

approach Latin America Middle East Africa Atlantic17-23

Personal SellingPersonal Selling

The importance of personal selling compared to advertising depends to a great extent on The relative cost The funds available Media availability The type of product sold

Manufacturers of industrial products rely on personal selling

Consumer products overseas may use more personal selling in developing countries

17-24

Personal SellingPersonal Selling

Personal Selling and the Internet The Internet would

seem to eliminate the need for personal selling, but this may not be the case Successful personal

selling depends on establishing trust

Although the Internet makes communication easier, it may make building trust harder

17-25

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

Sales PromotionSales Promotion

Provides the selling aids for the marketing function and includes such activities as the preparation of point-of-purchase displays,

contests, premiums, trade show exhibits, cents-off offers, and coupons

Cultural and economic constraints make some sales promotions difficult to use. If a premium is to fulfill the objective of being a

sales aid for the product, it must be meaningful to the purchaser

Sales promotion is generally not as sophisticated overseas as it is in the U.S.

17-26

Public RelationsPublic Relations

Various methods of communicating with the firm’s publics to secure a favorable impression

Marketing of the firm

Improve image and overcome negative perceptions

Can work through government agencies

17-27

PricingPricing

Important consideration in formulating marketing strategy Major determinant of profit

To obtain the maximum benefit from pricing management must see pricing is one of the marketing mix elements that can be varied to achieve the marketing objectives of the firm

Pricing is made more complex by Interaction with the other functional areas Environmental forces

17-28

Interaction between Marketing Interaction between Marketing and Other Functional Areasand Other Functional Areas

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

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

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

17-29

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

The domestic sales manager wants export prices to be high enough to avoid having to company with parallel importing

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

forces

Standardizing PricesStandardizing Prices

Pricing for overseas markets is more complex because management must be concerned with Foreign national

pricing Domestic pricing in

another country International pricing

Setting prices of goods for export for both unrelated and related firms

DistributionDistribution

In the international arena, marketing managers must concern themselves with two functions rather than oneGetting the products to foreign markets

(exporting)Distributing the products within each market

In making decisions on distribution care must be taken to analyze the interdependence

with other marketing mix variables.

Channel decisions are critical These are long term decisions

17-31

Distribution StrategiesDistribution Strategies

International StandardizationManagement would prefer to standardize

distribution patterns internationallyHowever, two fundamental constraints

existThe variation in the availability of

channel members among the firm’s markets

The inconsistency of the influence of the environmental forces

Economic differences can also make standardization difficult

17-32

Channel SelectionChannel Selection

Direct or Indirect Marketing The first decision that

management must make is whether to use middlemen

Export sales may be consummated by local agents if Management believes

this is politically expedient

The country’s laws demand it

17-33

Factors Influencing Channel Selection Market

Characteristics Best coverage

Product Characteristics

Company Characteristics Financial and

managerial resources Middlemen’s

Characteristics After-sales servicing

Cultural DifferencesCultural Differences Never touch the head of a Thai or pass an object over

it; the head is considered sacred in Thailand. Avoid using triangular shapes in Hong Kong, Korea,

and Taiwan; the triangle is considered a negative shape.

The number 7 is considered bad luck in Kenya and good luck in Czechoslovakia, and it has magical connotations in Benin. The number 10 is bad luck in Korea, and 4 means death in Japan.

Red is a positive color in Denmark, but it represents witchcraft and death in many African countries.

A nod means no in Bulgaria, and shaking the head from side to side means yes.

The "okay" sign commonly used in the United States and the United Kingdom (thumb and index finger forming a circle and the other fingers raised) means zero in France, is a symbol for money in Japan, and carries a vulgar connotation in Brazil.

Honda JapanHonda Japan