chap 1 4 international mktg

8/7/2019 Chap 1 4 International Mktg

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International Marketing

Scope of International Marketing

Relevance and significance

Need for International Trade Differences between Domestic and

International

1Botla/Iamee/IM/Chap1


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Coke gets it wrong

The name Coca-Cola in China was first

rendered as Ke-kou-ke-la. Unfortunately, the

Coke company did not discover until after

thousands of signs had been printed that the

phrase means bite the wax tadpole or

female horse stuffed with wax depending on

the dialect.



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Coke gets it right?

Coke then researched 40,000 Chinese

characters and found a close phonetic

equivalent ko-kou-ko-le, which can be

loosely translated as happiness in the

mouth.

(competition in 1930s)



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Pepsi and KFC

In Taiwan, the translation of the Pepsi slogan

Come alive with the Pepsi Generation came

out as Pepsi will bring your ancestors back

from the dead.

Also in Chinese, the Kentucky Fried Chicken

slogan finger-lickin good came out as eat

your fingers off.



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Sex

Ford had a problem in Brazil when the Pinto

flopped. The company found out that Pinto

was Brazilian slang for tiny male genitals.

Ford pried all the name plates off and

substituted Corcel, which means horse.



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Sex, second instalment

When Parker Pen marketed a ballpoint pen in

Mexico, its ads were supposed to say It wont

leak in your pocket and embarrass you.

However, the company mistakenly thought the

Spanish word embararzar meant embarrass.

Instead the ads said that It wont leak in your

pocket and make you pregnant.



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Sex, yet again

Chicken-man Frank Perdues slogan, It takes a

tough man to make a tender chicken, got it

terribly mangled in another Spanish

translation. A photo ofPerdue with one of his

birds appeared on billboards all over Mexico

with a caption that explained It takes a hard

man to make a chicken aroused.



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Divided by a common language

In an effort to boost orange juice sales in

predominantly continental breakfast eating

England, a campaign was devised to extol the

drinks eye-opening, pick-me-up qualities.

Hence the slogan, Orange juice. It gets your

pecker up.



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What is different about IM?

Examples of linguistic problems

How many languages in the world?

C

ountrylanguage USA - growth of Spanish

1/4 population Hispanic in 20 years

language >>>culture

translation relatively easy - culture morecomplex



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More than languages

Law

first aspect

How does law affect marketing? Prohibition

alcohol, tobacco, sex, GM foods

Restrictions children

Obligations



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Obligations

Packaging

contents, languages, child-proof

Environmental standards emissions, disposal

Ownership and access to market

mandatory joint ventures



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Sanitary & Phytosanitary (SPS)

regulations

sanitary (human and animal health) measures and

phytosanitary (plant health)

Often used as non-tariff barrier (NTB) eg fireblight big dispute with Australia

Essential to preserve good reputation of

exports

Eg Listeria in NZ cheese to Holland



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Laws not merely national

many laws are supra-national

European Union

International presumes nations Nation states becoming less relevant

Globalisation



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The end of the nation state?

Market countryculture

Most countries have a number of cultures

Most cultures are found in a number ofcountries

Distinction between IM and Marketingbecoming increasingly blurred

Growth of global products All marketing global marketing?



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What does this mean?

IM is marketing in a more complexenvironment

All aspects of market planning have to be

reexamined

What works in one place MAY not work inanother

Course adds knowledge of internationalbusiness environment to your knowledge ofmarketing



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InsightsIn Hong Kong, a German businessperson is driving

a Lexus; hes wearing Bruno Magli shoes, Irishcashmere socks, Calvin Klein underwear, anArmani suit, with a Gucci belt. He has a MontBlanc pen, in his Italian shirt. Hes going to meet

an American investor at a KFC restaurant, for aCoke. After lunch, they stop for a Baskins-Robbins(actually a foreign firm) ice cream sundae. --- OK, thats a stretch.

When he gets home, sitting on an ottoman, hehas an Absolut vodka nightcap, while listening toAmerican country western music.



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Global Marketing

Marketing has become more complex.

Increases in new products, product extensions, highcost of distribution and shelf space.

Expansion of retailer control and power, changingmedia habits, overload of information, and array ofcommunication choices.

Ultimate goal of programs

Timing goals



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Global Integration Forces

Driving ForcesDriving Forces

Technology

Culture

Market Needs

Costs

Free Markets

Economic Integration

Peace Strategic Intent

Management Vision, Strategy and Action



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Global Integration Forces

Restraining ForcesRestraining Forces

Culture

Market Differences

Costs

National Controls

Nationalism

Peace vs. War/ Stability

Management Myopia Organization History

Domestic Focus



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Challenges

Markets can present higher profitopportunities than present markets.

Markets can offer size but not profits.

Company needs a larger customer base foreconomies of scale.

Present customers are needing service and

products as they go international.



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Major Decisions

Deciding to go abroad

Deciding which markets

Deciding how to enter markets

Deciding on marketing programs

Deciding on marketing organization



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Global Marketing

Denotes the use of advertising and marketing on aglobal basis.

Marketing is at the threshold of a new and exciting

era: e-business, e-commerce and e-marketing Business has two basic functions: marketing and

innovation (Drucker)

New era of competition, demanding customers

More stakeholders (customers, employees, media).



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Global Marketing

Companies need new set of guidelines, values and

insight

Marketing is a Strategic Business Concept

Marketing is too important to be left to the

Marketing Department. (David Packard)

Formulated, integrated, long-term

Hold to the responsibilities of customers, employees,investors



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Objectives of International Marketing To exploit market potential and growth to the

optimum extent To aim at marketing operations that exploit the

advantages of economies of scale

To learn from the leading markets through

technology, innovation and competition

To increase competitive pressure in stronghold

markets to make space for survival and sustenance

To explore the scope of diversification of products,services and markets

To gain comprehensive knowledge on doing overseas

business successfully, especially with regard to cross-

cultural differences Botla/Iamee/IM/Chap1 24


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Domestic VS International Marketing

-- Definition of Domestic Marketing-- Definition of International Marketing

NB: Basic tenets of marketing concepts isapplied whether it is domestic or international

marketing. It revolves around the controllableand uncontrollable factors that governs thepragmatic marketing scenario.

Continued.Botla/Iamee/IM/Chap1 25


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Botla/Iamee/IM/Chap1 26

In Continuance:Uncontrollable Factors:

1. Macro Environment-Uncontrollable Factors are:

-- Economic-- Political-- Logistics (controllable to a

certain extent only, especiallyin the domestic market )

-- Competition

-- Legal Affairs-- Socio-cultural-- Geography


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In Continuance:

Micro Environment-the

Controllable Factors:

-- Product-- Price (subject to certain

limitations, taking competitors

offer prices into consideration)

-- Place

-- Promotion


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Chap 2:

Transition

from Domestic

to International Markets



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Transition from Domestic to

International Markets

4 Approaches

1. Ethnocentric Approach

2. Polycentric Approach3. Regiocentric Approach

4. Geocentric Approach



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Ethnocentric Approach

Exports excessive production to foreign

countries

Foreign country is seen as extension ofdomestic markets

Foreign market is seen like a new region

Export department monitor s the export

operations under the supervision of

marketing personnel of the domestic company



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Polycentric Approach

Establishing a foreign subsidiary company

Separate CEO for foreign subsidiary

Decentralizes all operations, delegatesdecision-making to executives to foreign

subsidiary

Key personnel from home country

Design products based on the host country

environment



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Regiocentric Approach

After successfully operating in foreign country,

thinks of exporting to the neighboring

countries of host

Foreign subsidiary considers the regional

environment

It makes the same products with different

market strategies



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Geocentric Approach

Entire world is treated like a single country

Employees are selected from the entire globe

Operated with a number of subsidiaries Activities of subsidiaries are coordinated by

the headquarter

Each subsidiary acts like an independent andautonomous company for formulating

marketing strategies



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EPRG Model - Characteristics

Ethnocentric Polycentric Geocentric

Approach International

operations are

secondary

Each country is

relatively

independent

The world is one

common market

Vision Centered on the

domestic market

Each market is

unique

Global vision of

the world

Priority Searching for

identical

segments in

foreign markets

Taking into

consideration

differences in

foreign markets

Unifying

differences in the

world market

Planning center National

headquarters

Subsidiary in

each country

World

headquarters

Structure International

division

Division for

each zone

Matrix structure


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EPRG Model - Characteristics

Ethnocentric Polycentric Geocentric

Staff Citizens from the

domestic market

Citizens from

each market

Most qualified

Marketing

strategy

Extension Adaptation Extension,

Adaptation,Creation

Management

style

Centralized Decentralized Integrated and

interactive

Production Domestic Local Low-cost

sources ofsupply

Partnerships Agent, licensing Joint-ventures Strategic

alliances

Performance

measures

Domestic market

share

Local market

share

World market

share


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Chap 3

International Market

Environment



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International Market Environment

Economic environment

Social and Cultural environment

Political and legal environment

Technological environment

Business customs in International markets



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Elements ofCulture

Language

Religion

Values & Attitudes

Manners & Customs

Material Elements

Aesthetics Education

Social Institutions

Cultural universals - Manifestations of the total way of life that are

common to all cultures (elements such as body adornments, courtship,etiquette, family, gestures, joking, mealtimes, music, personal names,status differentiation, and trade etc.)


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International Political Issues.

Nationalism, sovereignty, imperialism, power,

ideologies, national interests, political risk...IK


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Political/Legal Concerns of International

Marketers

Home country political and legal circumstances

Host country political and legal circumstances host country.

Bilateral and multilateral agreements, treaties, and lawsgoverning the relations between host and home countries.

Home country government policies and the legal systems have a major impacton a firms opportunities abroad. Examples:

Minimum wage legislation affects the international competitiveness of a firmusing highly labor intensive production processes.

The cost of domestic environment safety regulations may also significantly

affect the pricing policies of firms in their international marketing efforts


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Consequences OfPolitical Actions.

Indigenization/Domestication

Nationalization (Acceptable according to international law if it satisfies publicpurpose & includes compensation)

Expropriation (prompt, effective, fair compensation)

Confiscation (no compensation)

Local content laws

Local hiring laws Discriminatory taxes

Discriminatory pricing of resources

Joint-venture pressure

Import/Export controls, embargos, sanctions, etc.

Selective boycotts

Price controls

Terrorism, etc.

IK


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Legal Environment

Home country laws

Host country laws

International law

Two major legal systems popular worldwide are:

Common law - Based on tradition and depends less on written

statutes and codes than on precedent and custom.

Code law - Based on a comprehensive set of written statutes

that spell out legal rules explicitly; based on Roman law.


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International Law No enforceable body of international law exists;

Treaties and agreements respected by a number of countriesinfluence international business operations.

Firms are restricted by both home and host country laws.

In case of a conflict in deciding which countrys law to follow,

firms can choose either arbitration or litigation.

Litigation often involves extensive delays and is very costly.

Arbitration procedures should always be included in the

original contract.


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Ethical Issues

The ethical obligations faced by multinational

enterprises include:

Corporate governance and responsibility

Intellectual property rights

Bribery and corruption


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Chap 4:

International Market

Entry Strategies



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Why Firms go International

Proactive Stimuli

Profit advantage

Unique products

Technological advantages

Exclusive information

Economies of scale

Market size

Reactive Stimuli

Competitive pressures

Overproduction

Stable or declining domesticsales

Excess capacity

Saturated domestic markets

Proximity to customers andports


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Foreign Market Entry Strategies 1.

(A) Exporting (Casual, Indirect, Direct)

(B) Contractual Agreements

y Licensing (patents, technology, trade secrets)

y Franchising (brand, managerial know-how)

y Subcontracting (from prime contractors)

y Contract manufacturing (for foreign brands)

y Turnkey Operations

y Co-production Agreements

y Management Contracts(IK)


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Foreign Market Entry Strategies 2.

(C) Joint Ventures (minority/majority equity)(D) Wholly-Owned Subsidiaries

Local Sales only

Local Assembly & Sales

Local Production & Sales

Local Production, Sales & Export

Start-up of new operations

Merger with an existing enterprise Acquisition of an existing enterprise

Greenfield investment


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Exporting

Export management companies (EMCs)

Domestic firms that perform international

marketing services as commission representatives

or distributors for other firms.

Two primary forms of operation

Take title to goods and operate internationally.

Perform services as agents.


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Exporting

Trading companies The most famous trading companies are the sogoshosha of

Japan.

Reasons for the success of the Japanese sogoshosha:

The firms are organized to gather, evaluate, and translatemarket information into business opportunities.

Their vast transaction volume provides them with costadvantages.

They serve large markets around the world and have

transaction advantages. They had access to capital, both within Japan and in the

international capital markets.


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Going International

E-commerce

The ability to offer goods and services over the

Web.

Various methods to market products over the

internet:

Development of corporate websites.

Business-to-consumer and consumer-to-business

forums.


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Going International

E-commerce concerns - Firms must be ready

to:

Provide 24-hour order taking and customer

support service.

Have the regulatory and customs-handling

expertise to deliver internationally.

Have an understanding of global marketingenvironments for further development of business

relationships.


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Licensing and Franchising

Advantages of licensing Capital investment or knowledge or marketing strength is not required.

Additional return on R&U investments already incurred.

Reduces the risk of R&D failures Ongoing licensing cooperation and support enables the Licensee benefits

from new developments.

Allows a firm to test a foreign market without major investment of capitalor management time.

Preempts a market for competition, especially if the licensors resources

permit full-scale involvement only in selected markets. Increases protection of intellectual property rights.


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Licensing and Franchising

Disadvantages of licensing

Licensor gets limited expertise.

Licensor creates its own competitor.

Allows multinational corporations (MNCs) to capitalizeon older technology.


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Foreign Direct Investment

Types of ownership - Joint ventures

Collaborations of two or more organizations for

more than a transitory period.

Partners share assets, risks, and profits, though

equality of partners is not necessary.

Reasons for joint ventures are governmental and

commercial.


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Advantages of joint ventures

Pooling of resources.

Better relationships withlocal organizations.

The partners knowledgeof the local market.

Minimize exposure topolitical risk.

Tap local capital markets.

Disadvantages of jointventures

Different levels of controlare required.

Difficulty in maintainingthe relationship.

Disagreements overbusiness decisions.

Disagreements overprofit accumulation anddistribution (profitrepatriation).


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Firms are categorized as:

Resource seekers - Search for natural and human

resources.

Market seekers - Search for better opportunities toenter and expand within markets.

Efficiency seekers - Attempt to obtain the most

economic sources of production.



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Positive perspectives on foreign direct

investors

Bring in capital, economic activity, and

employment.

Transfer technology and managerial skills.

Encourage competition, market choice, and

competitiveness.



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Negative perspectives on foreign direct

investors

Drain resources from host countries.

Starve smaller capital markets.

Discourage local technology development.

Bring in outmoded technology.

Create new competition for local firms.



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chap 1 4 international mktg

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