Chapter Seventeen Chapter Seventeen

Marketing Internationally

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

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Learning ObjectivesLearning Objectives

Explain why there are differences between domestic and international marketing

Discuss why international marketing managers may wish to standardize the marketing mix

Explain why standardizing the marketing mix globally is often impossible

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

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Learning ObjectivesLearning 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 MarketingInternational Marketing

To develop marketing strategies the international marketing manager assesses the firm’s foreign markets and analyzes the many alternative marketing mixes Plans and controls a variety of marketing

strategies rather than a single unified and standardized one

Coordinates and integrates multiple strategies into a single marketing program

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Standardize, Adapt, Standardize, Adapt, or Formulate Anew?or Formulate Anew?

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 StrategiesProduct Strategies

Product is central to marketing mix The total product includes the

physical product brand name accessories after-sales service warranty instructions for use company image packaging

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Types of ProductsTypes of Products

Industrial Products Many can be sold unchanged worldwide If changes are required, they may be cosmetic

(language of instructions) In developing countries problems with

overload of equipment maintenance

Local legal requirements limit standardization

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Types of ProductsTypes of Products

Consumer Products Require greater modification to meet local

market requirements 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 ProductsTypes of Products

Services Marketing 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 Foreign Environmental Forces SocioculturalSociocultural

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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Foreign Environmental Forces Foreign Environmental Forces LegalLegal

Laws concerning pollution consumer protection operator safety

Laws prohibiting classes of imports Food and pharmaceuticals are affected by laws

concerning purity and labeling Laws may prevent use of brand name worldwide

In some countries a brand may be registered to someone else

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Foreign Environmental Forces Foreign Environmental Forces EconomicEconomic

Disparity in income throughout world Obstacle to product standardization Many industrialized country products are too

expensive for developing country consumers Need to simplify the product or produce a

different, less costly one

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Foreign Environmental Forces Foreign Environmental Forces PhysicalPhysical

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 StrategiesPromotional Strategies

Promotion refers to any form of communication between a firm and its publics Brings about a favorable buying action Achieves long-lasting confidence in the firm and

the product or service it provides

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Promotional StrategiesPromotional Strategies

Distinct promotional strategies based on combination of three alternatives

1. Marketing the same physical product everywhere Same message

2. Adapting the physical product for foreign markets Adapted message or

3. Designing a different physical product Different message

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Six Common Six Common Promotional StrategiesPromotional Strategies

1. Same product-same message Avon, Maidenform

2. Same product-different message Honda’s campaign in America is different

than in Brazil

3. Product adaptation-same message In Japan, Lever Brothers puts Lux soap in

fancy boxes to encourage gift sales

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Six Common Six Common Promotional StrategiesPromotional Strategies

4. Product adaptation-message adaptation In Latin America, Tang is sweetened and

promoted as mealtime drink

5. Different product-same message Customers can’t afford product in a market Companies produce distinct product Message similar

6. 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 The Promotional Mix AdvertisingAdvertising

Advertising refers to the paid, non- personal presentation of ideas, goods, services

Cultural dimensions Directness vs. indirectness Humor Gender roles Explicitness Sophistication Popular vs. traditional culture Information content vs. fluff

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AdvertisingAdvertising

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 BrandsGlobal and Regional Brands

Global, regional brands Higher cost Allow one regional source for quality work Suggest that a single image in the region is

important Allow for regionalized organizations with

centralized functions Are facilitated through the growth of global and

regional satellite and cable television

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Global Brand ValuesGlobal Brand Values

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AdvertisingAdvertising

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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AdvertisingAdvertising

Media Satellite TV expands the availability of media International print media available

Reader’s Digest has 48 foreign editions Cinema and billboards are used heavily in Europe In developing countries, vehicles equipped with

loudspeakers may be used

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AdvertisingAdvertising

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, the Internet may be among the

best media choices

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AdvertisingAdvertising

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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AdvertisingAdvertising

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 SellingPersonal Selling

Firms may choose personal selling instead of advertising because of relative cost funds available media availability type of product

Manufacturers of industrial products rely on personal selling

Firms may increase personal selling for consumer products in developing countries

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Personal SellingPersonal Selling

The Internet would seem to eliminate the need for

personal selling, but perhaps not Successful personal selling depends on

establishing trust Evolving approaches to trust building in a

virtual environment

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Selling Selling International StandardizationInternational 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 PromotionSales Promotion

Sales promotion includes any selling aids including displays, premiums, contest, and gifts

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

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

overseas than in the U.S.

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Public RelationsPublic Relations

Public relations includes various methods of communicating with the firm’s publics to secure a favorable impression

Public relations markets the firm improves the firm’s image and overcomes negative

perceptions may work through government agencies

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PricingPricing

Pricing is important in formulating marketing strategy It is the only element in the marketing mix 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 Interaction Between Marketing and Other Functional Areasand Other Functional Areas

Managers must consider how the marketing function interacts with other functional areas

Finance wants prices that are profitable and produce 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

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

The tax department is concerned with the effects of prices on tax loads

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

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Standardizing Prices Is DifficultStandardizing Prices Is Difficult

Foreign national pricing Local pricing in another country

International pricing Setting prices for unrelated and related firms

Transfer pricing Intracorporate price -the 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 StrategiesDistribution Strategies

Distribution decisions are often interdependent with other marketing mix variables

Standardizing distribution is not always possible The availability of channel members varies

in each market Environmental forces present in different

markets can influence distribution choices

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Standardizing DistributionStandardizing Distribution

Disintermediation refers to the unraveling of traditional distribution structures Most often the result of being able to

combine Internet with fast delivery services

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Channel SelectionChannel Selection

Direct or indirect marketing The first decision: use middlemen or not? Export sales may be done by local agents if

management believes this is politically expedient

a country’s laws demand it Factors influencing channel selection

Market Product Company Middlemen