analysis of risk in international marketing david kilburn bournemouth university euncet – spain...
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Analysis of risk in international marketing
David Kilburn
Bournemouth University
EUNCET – Spain
March 21/04
INTRODUCTION TO INTERNATIONAL MARKETING
WHAT IS MARKETING?WHAT IS MARKETING?
Marketing Involves:Marketing Involves:• Focusing on the needs and wants of Focusing on the needs and wants of
customerscustomers• Identifying the best method of Identifying the best method of
satisfying those needs and wantssatisfying those needs and wants• Orienting the company towards the Orienting the company towards the
process of providing that satisfactionprocess of providing that satisfaction• Meeting organisational objectivesMeeting organisational objectives
WHAT IS INTERNATIONAL WHAT IS INTERNATIONAL MARKETING?MARKETING?
Different Levels of International Different Levels of International
MarketingMarketing
• Export marketingExport marketing
• International marketingInternational marketing
• Global marketing managementGlobal marketing management
ENVIRONMENTAL INFLUENCES ONENVIRONMENTAL INFLUENCES ONINTERNATIONAL MARKETINGINTERNATIONAL MARKETING
Socio/CulturalLanguageReligionAestheticsValues and attributesSocial organisationMaterial culture
PoliticalOperational restrictionsDiscriminatory restrictionsPhysical actions
EnvironmentalInfluences on InternationalMarketing
LegalLocal domestic lawsInternational lawHome domestic law
TechnologicalSatellite CommunicationsISDNInternetWWWThe Electronic Superhighway
EconomicDeveloped economiesEmerging economiesLess developed economiesCurrency movements
SOCIAL / CULTURAL INFLUENCESSOCIAL / CULTURAL INFLUENCES
Coca-Cola:Coca-Cola: 2 Litre bottles too big for Spanish fridges2 Litre bottles too big for Spanish fridges Pronunciation in China – Kooke KoulaPronunciation in China – Kooke Koula
‘‘A thirsty mouthful of candle wax’A thirsty mouthful of candle wax’ Johnson’s Floor Wax:Johnson’s Floor Wax:
Made Japanese floors slipperyMade Japanese floors slippery The Japanese do not wear shoes indoorsThe Japanese do not wear shoes indoors
McDonald’s:McDonald’s: The white face of ‘Ronald McDonald’The white face of ‘Ronald McDonald’
A white face is seen as a death mask in JapanA white face is seen as a death mask in Japan
REGIONAL BREAKDOWN OF GLOBAL REGIONAL BREAKDOWN OF GLOBAL POPULATIONPOPULATION
Other Asia
Africa
India
China
Latin America
Europe
North America
0 0.5 1.0 1.5 2.0 2.5
Source: United Nations (1998)
1995
2050
THE LEGAL ENVIRONMENTTHE LEGAL ENVIRONMENT
3 dimensions in the legal environment:3 dimensions in the legal environment:
local domestic law:local domestic law: different in every countrydifferent in every country
international law:international law: issues include piracy, treaties, patents etcissues include piracy, treaties, patents etc
domestic laws in the home country:domestic laws in the home country: export controls, plus duty to abide by export controls, plus duty to abide by
national laws in all activitiesnational laws in all activities
WORKING TIME REQUIRED TO BUY A BIG MACWORKING TIME REQUIRED TO BUY A BIG MAC
00 2020 4040 6060 8080 100100 2020
CaracasMoscow
ManilaShanghai
Mexico CityBogota
WarsawBangkok
Sao PaoloJohannesburg
SingaporeParis
Kuala LumpurLondon
FrankfurtNew York
Tokyo
Source: Economist: Jan 1998
Minutes 1997
ECONOMIC ENVIRONMENTECONOMIC ENVIRONMENT
Developed triad EconomiesDeveloped triad Economies account for 80% of world tradeaccount for 80% of world trade
Emerging EconomiesEmerging Economies huge and growing consumer demandhuge and growing consumer demand government directed economic reformsgovernment directed economic reforms ‘‘dual economy’dual economy’
Less Developed Countries (LDCs)Less Developed Countries (LDCs) low GDP, limited manufacturing baselow GDP, limited manufacturing base infrastructure weaknessesinfrastructure weaknesses heavy reliance on one product/one trading heavy reliance on one product/one trading
partnerpartner
POLITICAL ENVIRONMENTPOLITICAL ENVIRONMENT
‘‘A risk due to a A risk due to a sudden or gradual sudden or gradual change in a local change in a local political political environment that is environment that is disadvantageous or disadvantageous or counter productive counter productive to foreign firms and to foreign firms and markets’markets’
Government actions Government actions which may constitute which may constitute potential risk for the firm:potential risk for the firm:
Operational restrictions Operational restrictions eg. exchange controls or eg. exchange controls or employment policiesemployment policies
Discriminatory restrictions Discriminatory restrictions eg. special taxes and tariffseg. special taxes and tariffs
Physical actions eg Physical actions eg nationalisation, riots and nationalisation, riots and warwar
TECHNOLOGICAL CONSIDERATIONSTECHNOLOGICAL CONSIDERATIONS
Increased ease and speed of Increased ease and speed of communicationcommunication
High rate of technological changeHigh rate of technological change Global access to the World Wide WebGlobal access to the World Wide Web
Projected 765 million users by end 2005Projected 765 million users by end 2005 Importance of English language for web Importance of English language for web
usersusers
THE CHALLENGES OF THE INTERNATIONAL THE CHALLENGES OF THE INTERNATIONAL MARKETING ENVIRONMENT #1MARKETING ENVIRONMENT #1
CultureCulture Often diverse and multiculturalOften diverse and multicultural
MarketsMarkets Widespread and sometimes fragmentedWidespread and sometimes fragmented
DataData Difficult to obtain and sometimes expensiveDifficult to obtain and sometimes expensive
PoliticsPolitics Regimes vary in stability, political risk Regimes vary in stability, political risk
becomes an important variablebecomes an important variable
THE CHALLENGES OF THE INTERNATIONAL THE CHALLENGES OF THE INTERNATIONAL MARKETING ENVIRONMENT #2MARKETING ENVIRONMENT #2
GovernmentsGovernments Can be a strong influence in regulating Can be a strong influence in regulating
importers and foreign business venturesimporters and foreign business ventures CompetitionCompetition
Multinationals can distort competitive Multinationals can distort competitive structure of marketsstructure of markets
EconomiesEconomies Varying levels of developmentVarying levels of development
THE CHALLENGES OF THE INTERNATIONAL THE CHALLENGES OF THE INTERNATIONAL MARKETING ENVIRONMENT #3MARKETING ENVIRONMENT #3
Finance Many differing finance systems and regulatory bodies
Currency Varying and unstable, strong likelihood of transaction
risk Business
Diverse rules, culturally influenced Control
Difficult to control and co-ordinate across markets
INTERNATIONAL MARKETING INTERNATIONAL MARKETING STRATEGIESSTRATEGIES
Success and FailureSuccess and Failure
Failure arises from:Failure arises from: inability to find right market nicheinability to find right market niche unwilling to adapt productsunwilling to adapt products products not perceived as sufficiently products not perceived as sufficiently
uniqueunique vacillating commitmentvacillating commitment assigning the wrong peopleassigning the wrong people picking the wrong partnerspicking the wrong partners inability to manage local stakeholdersinability to manage local stakeholders mutual distrust/lack of respect between HQ mutual distrust/lack of respect between HQ
& management& management inability to leverage ideas to all countriesinability to leverage ideas to all countries
THE INTERNATIONALTHE INTERNATIONALMARKETING STRATEGY PROCESSMARKETING STRATEGY PROCESS
Understand the environmental influences on a firm’s international markets
Segment international markets, identify &analyse opportunities
Develop appropriate international marketingstrategies, planning & processes
Decide marketing entry strategies
Build added value through effectivemarketing mix strategies
Feedback & reassess
continually
:Analysis
StrategyDevelopment
Implementation
THE INTERNATIONAL TRADINGENVIRONMENT
REGIONAL COMPOSITION OF WORLD REGIONAL COMPOSITION OF WORLD GDP & POPULATIONGDP & POPULATION
Source: EIU National Westminster Bank 19981010 2020 3030 4040 5050 606000
00
55
1010
1515
2020
2525
Sub-Saharan AfricaOther
Eastern Europe & FSU
Middle East & North Africa
Latin America
Japan
NorthAmerica
WesternEurope
Equi
tabl
e Di
strib
utio
n
AsiaDeveloping
Proportion of World GDP
(PPP terms, %)
Proportion of World Population
PERCENTAGE OF THE TOTAL OF WORLD PERCENTAGE OF THE TOTAL OF WORLD EXPORTS IN MERCHANDISE (2000)EXPORTS IN MERCHANDISE (2000)
Country
United States
Germany
Japan
France
Britain
Italy
Canada
Netherlands
Hong Kong
China
Percentage %
12.6
9.6
7.5
5.3
4.8
4.1
4.2
3.6
3.1
3.5Source: WTO.org/english/res.e/statis_e/stat_toc_e.htm
FORECASTS IN % CHANGES IN CONSUMER FORECASTS IN % CHANGES IN CONSUMER PRICES AND REAL GDP/GNP 1999-2003PRICES AND REAL GDP/GNP 1999-2003
Country
AustraliaBelgiumBrazilCanadaChinaFranceGermanyHong KongIndiaIrelandItalyJapanMalaysiaMexico
% inflation rate2.72.46.02.46.82.32.35.89.02.82.71.83.912.2
% growth rate2.92.24.22.67.62.22.24.45.55.52.22.25.45.1
Source: Marketing Intelligence Department, Nat West Bank (1998)
Country
NetherlandsSingaporeSouth KoreaSpainTaiwanThailandUKUSAdv economiesEUEastern EuropeFSUAsia DevelopingLatin America
% inflation rate2.42.64.72.73.55.82.52.52.42.511.810.67.19.5
% growth rate2.56.14.92.65.84.42.52.62.52.34.44.36.24.6
BALANCE OF PAYMENTS CURRENT BALANCE OF PAYMENTS CURRENT ACCOUNTSACCOUNTS
Australia
Brazil
China
Germany
Japan
Mexico
Malaysia
Netherlands
Saudi Arabia
Singapore
UK
USA
EU
-17.0
-33.8
+29.3
13.4
+120.6
-15.9
-4.8
+19.9
-12.8
+17.6
-0.3
-220.5
+78.2Source: World Bank: World
Development Indicators 2000
Country
US
$ B
illi
on
REGIONAL TRADING AREAS OF THE REGIONAL TRADING AREAS OF THE WORLD 1998WORLD 1998
An agreement to create a free-tradearea among 34 countries in North and South America
FTAA
Mercosur
ArgentinaBrazilParaguayUruguay
EU
Austria
Belgium
Britain
Denmark
Finland
France
Germany
Greece
Ireland
Italy
Netherlands
Portugal
Spain
Sweden
ASEAN
Brunei
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
APEC
Australia
Brunei
Canada
Chile
China
Hong Kong
Indonesia
Japan
Malaysia
Mexico
New Zealand
P.N.G.
Philippines
Singapore
South Korea
Taiwan
Thailand
United States
NAFTA
Canada
Mexico
United States
MAJOR CHANGES IN THE SINGLE MAJOR CHANGES IN THE SINGLE EUROPEAN MARKETEUROPEAN MARKET
Removal of tariff Removal of tariff barriersbarriers
Removal of technical Removal of technical barriersbarriers
Public procurementPublic procurement Free movement of Free movement of
labour and workers’ labour and workers’ rightsrights
Opening up of Opening up of professionsprofessions
Financial servicesFinancial services
Transport, haulage Transport, haulage and coastal carriageand coastal carriage
Capital movementsCapital movements Company lawCompany law Fiscal barriersFiscal barriers The environmentThe environment
FOUR TESTS FOR A SUCCESSFUL FOUR TESTS FOR A SUCCESSFUL TRADING BLOCTRADING BLOC
Similar per capita incomeSimilar per capita income Geographical proximityGeographical proximity Compatible trading regimesCompatible trading regimes Political commitmentPolitical commitment
CONVERGENCE CRITERIACONVERGENCE CRITERIA
PRICE STABILITYPRICE STABILITY
EXCHANGE RATE STABILITYEXCHANGE RATE STABILITY
LONG TERM INTEREST RATESLONG TERM INTEREST RATES
GOVERNMENT DEFICITGOVERNMENT DEFICIT
PUBLIC DEBTPUBLIC DEBT
SINGLE CURRRENCYSINGLE CURRRENCYSTRATEGIC IMPLICATIONSSTRATEGIC IMPLICATIONS
NON UNIFORMITY OF PRICINGNON UNIFORMITY OF PRICING
PRICE TRANSPARENCYPRICE TRANSPARENCY
GREY MARKETINGGREY MARKETING
EURO SOURCINGEURO SOURCING
FEWER TRANSACTION CHARGESFEWER TRANSACTION CHARGES
NEW PRICING POINTSNEW PRICING POINTS
SOCIAL AND CULTURAL CONSIDERATIONS
CULTURE DEFINEDCULTURE DEFINED
The sum total of The sum total of learned beliefs, values learned beliefs, values
and customsand customs that serve to direct that serve to direct
customer behaviour in a particular customer behaviour in a particular
country marketcountry market
COMPONENTS OF CULTURE #1COMPONENTS OF CULTURE #1
Beliefs:
A large number of mental and verbal processes which reflect our knowledge and assessment of products and services
COMPONENTS OF CULTURE #2COMPONENTS OF CULTURE #2
Values:
The indicators consumers use to serve as guides for what is appropriate behaviour, they tend to be relatively enduring and stable over time and widely accepted by members of a particular market
CULTURAL VALUES AND THEIR CULTURAL VALUES AND THEIR RELEVANCE TO CONSUMER BEHAVIOURRELEVANCE TO CONSUMER BEHAVIOUR
Value
Achievement & success
Efficiency & practicality
Progress
Material comfort
Individualism
External conformity
Youthfulness
Features
Success flows from hard work
Admiration of things that solve problemsPeople can improve themselves
The ‘good life’
Being oneself
Uniformity of observable behaviour
State of mind that stresses being young at heart
Relevance to behaviour
Justification for acquisition of goods
Stimulates purchase of well functioning productsReady acceptance of ‘new’/‘improved’ products
Fosters acceptance of convenience/luxury productsStimulates acceptance of customised or unique products
Stimulates interest in products used by others
Stimulates acceptance of products that promote youthfulness
Source: Schiffman, L.G. & Kanuk, L. L. (2000)
COMPONENTS OF CULTURE #3COMPONENTS OF CULTURE #3
Customs:
Overt modes of behaviour that constitute culturally approved or acceptable ways of behaving in specific situations. Customs are evident at major events in ones life eg birth, marriage, death and at key events in the year e.g. Christmas, Easter, Ramadan, etc.
CULTURAL INFLUENCES ON BUYER CULTURAL INFLUENCES ON BUYER BEHAVIOURBEHAVIOUR
Adapted from: Jeannet and Hennesey (1998)
A CULTURAL FRAMEWORKA CULTURAL FRAMEWORK
Religion
Values & AttitudesLanguage
EducationAesthetics
SocialOrganisations
Law & Politics
Technology &Material Culture
Cultures
Adapted from Terpstra & Sarathy (1999)
OFFICIAL LANGUAGES AND SPOKEN OFFICIAL LANGUAGES AND SPOKEN LANGUAGESLANGUAGES
SOURCE: Guardian (1992)
THE MAIN SILENT LANGUAGES IN THE MAIN SILENT LANGUAGES IN OVERSEAS BUSINESS #1OVERSEAS BUSINESS #1
Source: Hall & Hall (1987)
Silent Language Implications For Marketing & Business
- Appointment scheduling- The importance of being ‘on time’-The importance of deadlines
- Sizes of offices-Conversational differences between people
- The relevance of material possessions- The interest in the latest technology
Time
Space
Things
THE MAIN SILENT LANGUAGES IN THE MAIN SILENT LANGUAGES IN OVERSEAS BUSINESS #2OVERSEAS BUSINESS #2
Silent Language Implications For Marketing & Business
- The significance of trusted friends as social insurance in times of stress and emergency
- Rules of negotiations based on laws, moral practices or informal customs
Friendship
Agreements
Assumptions to Be Questioned by Assumptions to Be Questioned by International Marketing ManagersInternational Marketing Managers
1. That Maslow’s Hierarchy of Needs is consistent across cultures
2. That the buying process in all countries is an individualistic activity
3. That social institutions and local conventions are similar across
cultures
4. The consumer buying process is consistent across cultures
- consumer involvement
- perceived risk
- cognitive style
5. Self reference criterion
MODEL OF CONSUMER BEHAVIOUR IN MODEL OF CONSUMER BEHAVIOUR IN INTERNATIONAL MARKETSINTERNATIONAL MARKETS
ConsumerLifestyles
AttitudesFamily
Values
LearningSocial Status
ReferenceGroups
Motives
Problem RecognitionProblem RecognitionInformation SearchInformation Search
PurchasePurchase
Post Purchase EvaluationPost Purchase Evaluation
- Opportunity cost of time- Opportunity cost of time in seeking informationin seeking information- Delay costs- Delay costs- Psychological costs- Psychological costs
- Degree of involvement- Degree of involvement
- Actual product against expectations- Actual product against expectations
ConsumerExperience
CulturalIdentity
CulturalIdentity
ValuesAttitudesBeliefs
Evaluation of AlternativesEvaluation of Alternatives- Evoked set- Evoked set
INTERNATIONAL MARKETING RESEARCH AND OPPORTUNITY
ANALYSIS
3 AREAS OF INTERNATIONAL 3 AREAS OF INTERNATIONAL MARKET ANALYSISMARKET ANALYSIS
Scanning international markets to Scanning international markets to identify and segment marketsidentify and segment markets
Building marketing information Building marketing information systems to monitor environmental systems to monitor environmental trendstrends
Carrying out primary marketing for Carrying out primary marketing for input into the development of input into the development of marketing strategiesmarketing strategies
PRODUCT/MARKET COMBINATIONS AND PRODUCT/MARKET COMBINATIONS AND THE SCOPE FOR COMPETITIVE ADVANTAGE THE SCOPE FOR COMPETITIVE ADVANTAGE
ON MARKET ENTRYON MARKET ENTRYSource: Gilligan and Hird (1985)
Existing brands fordeveloping needs; nodirect competition. Needto find and educateconsumers. Risk andcost of failure may be high
Breakthrough product offers significantadvantages but markets need to be identified.Few competitors, but high consumer resistance
Breakthrough productoffers self evident superiority and competitiveAdvantage is high
Superior productoffers high competitiveAdvantage and eases market entry
Advanced profile offersgreater benefits to themarket; no directcompetition
Typeof
Cost & Risk of Opening Up MarketCost & Risk of Opening Up Market
Cost & Risk Cost & Risk of launchingof launchingthe Productthe Product
Existing Latent Incipient
Competitive
Improved
Breakthrough
ProductProduct
LowLow
LowLow
HighHigh
HighHigh
Market
THE FOUR RISK MATRIXTHE FOUR RISK MATRIX
BUSINESS PORTFOLIO MATRIXBUSINESS PORTFOLIO MATRIXSource: Harrell G D and Kiefer R O (1993) Multinational
market portfolios in global strategy development, International Marketing Review, Vol 1- No 1
Country Attractiveness
HighHigh
HighHigh
MediumMedium LowLow
MediumMedium
LowLow
Company’sCompatibility
With EachCountry
WHY NEW APPROACH NEEDEDWHY NEW APPROACH NEEDED
MACRO vs MICRO
TRADE BARRIERS DOWN
GLOBAL NICHES
GREY MARKETS
NET ETC.
TRANSNATIONAL TRANSNATIONAL SEGMENTATION & METHODSSEGMENTATION & METHODS
Demographic: sex, age, income level, social class and educational achievement
Psychographic: lifestyle factors - activities, interests and opinions
Behavioural: patterns of consumption, loyalty to product category and brand
BEHAVIOURAL SEGMENTATIONBEHAVIOURAL SEGMENTATION
NEEDS
BENEFITS
OCCASION
USAGE
HIERARCHICAL COUNTRY HIERARCHICAL COUNTRY CUSTOMER SEGMENTATION #1CUSTOMER SEGMENTATION #1
Stages of Segmentation• Identify the countries that have the infrastructure to
support the product and which are easily accessible to the company
• Select from these, countries that meet certain qualifying criteria
• Develop micro-segments within these countries e.g. examine information search behaviour or product characteristics required
Source: Kale & Sudarsen (1987)Source: Kale & Sudarsen (1987)
HIERARCHICAL COUNTRY HIERARCHICAL COUNTRY CUSTOMER SEGMENTATION #2CUSTOMER SEGMENTATION #2
Stages of Segmentation
• Look for similarities across segments to identify characteristics of demand of each segment. They can then be rated in terms of potential response
• Cluster analysis is used to identify meaningful cross-national segments which it is thought would evoke a similar response to a marketing mix strategy
Source: Kale & Sudarsen (1987)Source: Kale & Sudarsen (1987)
2ND AREA OF INTERNATIONAL 2ND AREA OF INTERNATIONAL MARKET ANALYSISMARKET ANALYSIS
Building marketing information systems to monitor environmental
trend
12C FRAMEWORK12C FRAMEWORK
Country
Culture/consumer Behaviour
Concentration
Channels
Commitment
Choices
Caveats
Consumption Communication
Currency
Contractual Obligations
Capacity to Pay
12c
MARKET PROFILE ANALYSISMARKET PROFILE ANALYSIS
Source: Majaro (1992)
Mar
ket
Entr
yLegalFactorsEconomicFactorsPoliticalFactorsTechnologicalFactorsCompetition
TradingPracticesTariffBarriers
Financial
Prod
uct
Mix
Prom
otio
nM
ix
Dis
trib
utio
nM
ix
Pric
ing
Mix
SocialCultural
SOURCES OF INFORMATIONSOURCES OF INFORMATION
Business librariesBusiness libraries University librariesUniversity libraries International chambers International chambers
of commerceof commerce International Market International Market
Intelligence Centre (DTI)Intelligence Centre (DTI) Business LinksBusiness Links EmbassiesEmbassies BanksBanks Trade associationsTrade associations
Export councilsExport councils Overseas distributorsOverseas distributors Overseas sales Overseas sales
subsidiariessubsidiaries Foreign brokerage Foreign brokerage
houseshouses Foreign trade Foreign trade
organisations such as organisations such as JETRO JETRO (Japanese Export Trade (Japanese Export Trade
and Research and Research Organisation)Organisation)
3RD AREA OF INTERNATIONAL 3RD AREA OF INTERNATIONAL MARKET ANALYSISMARKET ANALYSIS
Carrying out primary marketing for Carrying out primary marketing for input into the development of input into the development of
marketing strategiesmarketing strategies
ORGANISING THE RESEARCHORGANISING THE RESEARCHSTUDY #1STUDY #1
Questions the International Questions the International Marketing Manager should address:Marketing Manager should address: Should the research be carried out by Should the research be carried out by
foreign local subsidiaries or should all foreign local subsidiaries or should all marketing research be centralised at marketing research be centralised at headquarters?headquarters?
Should the fieldwork be carried out in Should the fieldwork be carried out in house or by an agency?house or by an agency?
ORGANISING THE RESEARCHORGANISING THE RESEARCHSTUDY #2STUDY #2
Options when choosing an agency:Options when choosing an agency: Local agency in the market under investigationLocal agency in the market under investigation Domestic agency with offices overseasDomestic agency with offices overseas Domestic agency with overseas associate Domestic agency with overseas associate
companiescompanies Domestic agency which subcontracts fieldwork Domestic agency which subcontracts fieldwork
to an agency in the market under investigationto an agency in the market under investigation Domestic agency with competent foreign staffDomestic agency with competent foreign staff Global agency with offices around the worldGlobal agency with offices around the world
MULTI-COUNTRY STUDIESMULTI-COUNTRY STUDIES
The project is discussed at The project is discussed at length with the clientlength with the client
The fieldwork agencies in each The fieldwork agencies in each country are selectedcountry are selected
The questionnaire is designed The questionnaire is designed centrallycentrally
It is translated locally and the It is translated locally and the translation is checked translation is checked centrallycentrally
It is piloted locallyIt is piloted locally It is finalised centrallyIt is finalised centrally
The interviewers are briefed The interviewers are briefed locally by an executive of the locally by an executive of the central companycentral company
The fieldwork is carried out The fieldwork is carried out locallylocally
The coding and editing plan is The coding and editing plan is provided for the local agenciesprovided for the local agencies
The edited and coded The edited and coded questionnaires are returned to questionnaires are returned to head officehead office
A coding and editing check is A coding and editing check is carried out centrallycarried out centrally
Computing and analysis are Computing and analysis are carried out centrallycarried out centrally
Hibbert (1993)
EVALUATION OF SURVEY METHODSEVALUATION OF SURVEY METHODS
+ = advantage- = disadvantage
Malhotra et al (1997)
INTERNATIONAL MARKETING PLANNING AND ORGANISATION
THE BENEFITS OF PLANNINGTHE BENEFITS OF PLANNING
Planning encourages:Planning encourages: proactivity in new and old marketsproactivity in new and old markets a systematic process of analysisa systematic process of analysis clear statement of objectives and policiesclear statement of objectives and policies more focused thinkingmore focused thinking quick and decisive reaction to environmental changesquick and decisive reaction to environmental changes co-ordination of strategiesco-ordination of strategies familiar product or service ‘offers’ in each marketfamiliar product or service ‘offers’ in each market company-wide performance and quality standardscompany-wide performance and quality standards increased managerial ownership and loyalty increased managerial ownership and loyalty reduced internal company conflictreduced internal company conflict standardised information transfer systemsstandardised information transfer systems integrated short-term action and controlintegrated short-term action and control
INTERNATIONAL PLANNING PROBLEMSINTERNATIONAL PLANNING PROBLEMSHeadquartersHeadquarters
ManagementManagement Unclear allocation of Unclear allocation of
responsibilities & responsibilities & authorityauthority
Lack of multinational Lack of multinational orientationorientation
Unrealistic Unrealistic expectationsexpectations
Lack of awareness of Lack of awareness of foreign marketsforeign markets
Unclear guidelinesUnclear guidelines Insensitivity to local Insensitivity to local
decisionsdecisions Insufficient provision Insufficient provision
of useful informationof useful information
ProcessesProcesses Lack of standardised bases for Lack of standardised bases for
evaluationevaluation Poor IT systems & supportPoor IT systems & support Poor feedback & control systemsPoor feedback & control systems Excessive bureaucratic control Excessive bureaucratic control
proceduresprocedures Excessive marketing & financial Excessive marketing & financial
constraintsconstraints Insufficient participation of Insufficient participation of
subsidiaries in processsubsidiaries in process
INTERNATIONAL PLANNING PROBLEMSINTERNATIONAL PLANNING PROBLEMSOverseas SubsidiaryOverseas Subsidiary
ManagementManagement Resistance to planningResistance to planning Lack of qualified Lack of qualified
personnelpersonnel Inadequate abilitiesInadequate abilities Misinterpretation of Misinterpretation of
informationinformation Misunderstanding Misunderstanding
requirements & objectivesrequirements & objectives Resentment of HQ Resentment of HQ
involvementinvolvement Lack of strategic thinkingLack of strategic thinking Lack of marketing Lack of marketing
expertiseexpertise
ProcessesProcesses Lack of control by HQLack of control by HQ Incomplete or outdated Incomplete or outdated
internal & market informationinternal & market information Poorly developed proceduresPoorly developed procedures Too little communication with Too little communication with
HQHQ Inaccurate data returnsInaccurate data returns Insufficient use of multi-Insufficient use of multi-
national marketing expertisenational marketing expertise Excessive financial & Excessive financial &
marketing constraintsmarketing constraints
THE CONCEPTUAL FRAMEWORK OF A THE CONCEPTUAL FRAMEWORK OF A FIRMFIRM
Strategic level
Management level
Operational level
MarketingProduction R&DPersonnel
FUNCTIONS OF DIFFERENT MANAGEMENT LEVELSFUNCTIONS OF DIFFERENT MANAGEMENT LEVELS
Strategic• Identify the stakeholder requirements• Define the corporate aims and objectives• Evaluate global opportunities• Organise the business structure• Control the corporate performance
Management• Set the SBU objectives and allocate resources• Control the SBU programme• Organise opportunity analysis and research• Control international marketing planning
Implementation• Set and achieve the budgets• Manage the functions (marketing, production, R&D, logistics)• Carry out marketing campaigns, manage advertising agents and distributors
Feedback
ASPECTS OF THE INTERNATIONAL ASPECTS OF THE INTERNATIONAL MARKETING PLANMARKETING PLANStakeholder Expectations
Shareholders, customers, host government, employeesin each country, pressure groups
Situation AnalysisEvaluation of the environment & individual markets
Resource & CapabilitiesIndividual SBU strengths & weaknesses analysisCapability to deal with threats and opportunities
Corporate Aims & ObjectivesFinancial, market, area, brand & mix objectives
Marketing StrategiesGrowth strategies
Standardisation & adaptationImplementation of the Plan
Individual SBU & marketing mix plansRegional, global or multidomestic integration
Control & FeedbackSetting standards, measuring performance, correcting deviations
SOME TYPICAL STAKEHOLDERS OF SOME TYPICAL STAKEHOLDERS OF MULTINATIONAL ENTERPRISESMULTINATIONAL ENTERPRISES
Shareholders Home country government
Individual politicians and civil servants
Host country government
Local workers and their organisations
Expatriate staff
Suppliers
Distributors & retailers
Customers
Local competitorsCompetitor MNEs
Pressure groups
The Firm
INTERNATIONAL NICHE MARKETING STRATEGIES FOR SMEs
STRATEGIES FOR SME STRATEGIES FOR SME INTERNATIONALISATIONINTERNATIONALISATION
ExportingExporting International niche marketingInternational niche marketing Domestically delivered or developed niche Domestically delivered or developed niche
servicesservices Direct marketing including electronic Direct marketing including electronic
commercecommerce Participation in the international supply Participation in the international supply
chainchain
KEY MOTIVATORS TO INTERNATIONAL KEY MOTIVATORS TO INTERNATIONAL MARKETINGMARKETING
Reactive stimuli:Reactive stimuli: adverse domestic adverse domestic
market conditionsmarket conditions opportunity to reduce opportunity to reduce
inventoriesinventories availability of production availability of production
capacitycapacity favourable currency favourable currency
movements movements opportunity to increase opportunity to increase
the number of country the number of country markets and reduce markets and reduce market related riskmarket related risk
unsolicited orders from unsolicited orders from overseas customersoverseas customers
Proactive stimuli:Proactive stimuli: attractive profit and growth attractive profit and growth
opportunitiesopportunities ability to easily modify products ability to easily modify products
for export marketsfor export markets public policy programmes for public policy programmes for
export promotionexport promotion foreign country regulationsforeign country regulations possession of unique productspossession of unique products economies resulting from economies resulting from
additional ordersadditional orders Managerial elements:Managerial elements:
presence of export minded presence of export minded managermanager
opportunity to better utilise opportunity to better utilise management talent and skills management talent and skills
management believes about the management believes about the value of exportingvalue of exporting
Source: Katsikeas (1996)
BARRIERS TO INTERNATIONALISATIONBARRIERS TO INTERNATIONALISATION
Too much red tapeToo much red tape Trade barriersTrade barriers Transportation difficultiesTransportation difficulties Lack of trained personnelLack of trained personnel Lack of export incentivesLack of export incentives Lack of coordinated assistanceLack of coordinated assistance Unfavourable conditions Unfavourable conditions
overseasoverseas Slow payments by buyersSlow payments by buyers Lack of competitive productsLack of competitive products Payment defaultsPayment defaults Language barriersLanguage barriers
SUSTAINING AND DEVELOPING THE NICHESUSTAINING AND DEVELOPING THE NICHE
The firm must:The firm must: have good information about the segment needshave good information about the segment needs have a clear understanding of the important segmentation have a clear understanding of the important segmentation
criteriacriteria understand the value of the product niche to the targeted understand the value of the product niche to the targeted
segmentsegment provide high levels of serviceprovide high levels of service carry out small scale innovationscarry out small scale innovations seek cost efficiency in the supply chainseek cost efficiency in the supply chain maintain a separate focus maintain a separate focus (eg by being content to remain (eg by being content to remain
relatively small)relatively small) concentrate on profit rather than market shareconcentrate on profit rather than market share evaluate and apply appropriate market entry and marketing mix evaluate and apply appropriate market entry and marketing mix
strategies to build market share in each country they wish to strategies to build market share in each country they wish to become involved in become involved in
THE DIFFERENCE BETWEEN EXPORTING & THE DIFFERENCE BETWEEN EXPORTING & INTERNATIONAL NICHE MARKETINGINTERNATIONAL NICHE MARKETING
Marketing strategy
Financial objective
Segmentation
Pricing
Management focus
Distribution
Market information
Customerrelationship
Selling production capacity
To amortise overheads
Usually by country and customer characteristics
Cost based
Efficiency in operations
Using existing agents or distributors
Relying on agent or distributor feedback
Working through intermediary
Meeting customer needs
To add value
By identifying common international customer benefit
Market or customer based
Meeting market requirements
Managing the supply chain
Analysing the market situation and customer needs
Building multiple level relationships
Exporting International Marketing
FACTORS AFFECTING SME FACTORS AFFECTING SME INTERNATIONALISATIONINTERNATIONALISATION
GenericGenericStrategyStrategy
SMESMEInternationalisationInternationalisation
StrategyStrategy
CountryCountrySelectionSelection
MarketMarketFactorsFactors
CompanyCompanyFactorsFactors
Segmentation, Targeting, Positioning
MotivationsMotivationsBarriersBarriers
Support NetworkSupport Network
CustomerCustomerSegmentSegment
Owner’s ambition,Owner’s ambition,capabilities andcapabilities andattitude to riskattitude to risk
IndustryIndustryCompetitiveCompetitive
StructureStructure
Stage ofStage ofInternationalisationInternationalisation
LEVELS OF INTERNATIONALISATIONLEVELS OF INTERNATIONALISATION
CHARACTERISTICS OF SUCCESSFUL CHARACTERISTICS OF SUCCESSFUL INTERNATIONAL BUSINESS-TO-BUSINESS INTERNATIONAL BUSINESS-TO-BUSINESS
MARKETERSMARKETERS
Successful international business-to-business marketers Successful international business-to-business marketers havehave::
a clear competitive focus in international markets place and a specific directional a clear competitive focus in international markets place and a specific directional policy as to where the top management intended taking the firm.policy as to where the top management intended taking the firm.
high levels of repeat business and operate tight financial controls in export markets.high levels of repeat business and operate tight financial controls in export markets. the tenacity and the resilience to face challenges and drive through change.the tenacity and the resilience to face challenges and drive through change. a perception that risk indicates a problem to be solved, not an insurmountable a perception that risk indicates a problem to be solved, not an insurmountable
barrier; andbarrier; and View themselves as international niche marketers, not necessarily as good exportersView themselves as international niche marketers, not necessarily as good exporters Fully invest in ensuring they have a thorough knowledge of the international Fully invest in ensuring they have a thorough knowledge of the international
markets in which they operate.markets in which they operate. Are able to exploit distinctive product advantages in international markets.Are able to exploit distinctive product advantages in international markets. Are strongly committed to supplying quality products and services to all their Are strongly committed to supplying quality products and services to all their
customers wherever they were in the world.customers wherever they were in the world. Build close relationships throughout the supply chain and invest in maintaining Build close relationships throughout the supply chain and invest in maintaining
regular communications with their overseas partners.regular communications with their overseas partners. Have a well defined communications strategy and invested in good quality Have a well defined communications strategy and invested in good quality
promotional materials.promotional materials.
MULTILATERAL ASPECTS OF THE MULTILATERAL ASPECTS OF THE INTERNATIONALISATION PROCESSINTERNATIONALISATION PROCESS
Johannson and Vahline (1992)
GEOGRAPHIC DEVELOPMENT OF SMEsGEOGRAPHIC DEVELOPMENT OF SMEs
Birth
Domestic
SupplyChain
Concentration
NetworkExpansion
Global Regional
Piggybacking on OEMinternationalisation
High tech firms,born globals,
direct marketing,eCommerce
Home marketis trading bloc
Contracts throughfamily, friends,
business &supply chains
MNE OUTSOURCINGMNE OUTSOURCING
Reasons for outsourcingReasons for outsourcing reducing capital requirements of reducing capital requirements of
businessbusiness Managing difficulty of Managing difficulty of
developing quicklydeveloping quickly improving flexibilityimproving flexibility firms reluctant to take risks in firms reluctant to take risks in
non-core areasnon-core areas economies of scale of supplierseconomies of scale of suppliers expertise of business support expertise of business support
service providersservice providers downsizing may leave downsizing may leave
management resources management resources stretched and unfocusedstretched and unfocused
DisadvantagesDisadvantages loss of know-howloss of know-how costs of managing costs of managing
outsourced outsourced suppliessupplies
OUTSOURCING FOR SMESOUTSOURCING FOR SMES
Advantages Advantages opportunities for opportunities for
learning from OEM learning from OEM (Original Equipment (Original Equipment Manufacturer)Manufacturer)
security of reliable security of reliable and predictable and predictable orderingordering
able to focus on able to focus on production and production and technical issuestechnical issues
DisadvantagesDisadvantages need for dependence need for dependence
on one/two major on one/two major customerscustomers
internationalisation internationalisation driven by demands of driven by demands of OEMOEM
continual pressure to continual pressure to improve product and improve product and operationsoperations
weakening external weakening external marketingmarketing
GLOBALISATION
MEANING OF ‘GLOBALISATION’MEANING OF ‘GLOBALISATION’
Market accessMarket access Market opportunitiesMarket opportunities Industry standardsIndustry standards SourcingSourcing Products & servicesProducts & services TechnologyTechnology Customer Customer
requirementsrequirements
CompetitionCompetition Co-operationCo-operation DistributionDistribution CommunicationCommunication The company’s The company’s
strategy, business strategy, business programmes & programmes & processesprocesses
TOP15 TRANSNATIONAL COMPANIESTOP15 TRANSNATIONAL COMPANIESBY FOREIGN ASSETSBY FOREIGN ASSETS
SOURCE: ‘At a location near you’ (1997) The Economist
TRANSNATIONAL COMPANIESTRANSNATIONAL COMPANIES
SOURCE: UNCTAD (1997)
BENEFITS OF GLOBAL SOURCINGBENEFITS OF GLOBAL SOURCING
Cheaper labour ratesCheaper labour rates Better or more uniform qualityBetter or more uniform quality Better access to the best technology, Better access to the best technology,
innovation and ideasinnovation and ideas Access to local marketsAccess to local markets Economies of scale advantagesEconomies of scale advantages Lower taxes and dutiesLower taxes and duties Potentially lower logistics costsPotentially lower logistics costs More consistent supplyMore consistent supply
THE INTERNATIONALTHE INTERNATIONALCOMPETITIVE POSTURE MATRIXCOMPETITIVE POSTURE MATRIX
BaronsBarons KingsKings
CommonersCommoners CrusadersCrusaders
Product Strength
Geographic CoverageSource: Gogel, R and Larreche, JC (1989)
ALTERNATIVE WORLD WIDE STRATEGIESALTERNATIVE WORLD WIDE STRATEGIES
Multi-Domestic Regional Global
One GlobalSegment
Region is OneMarket
IndividualCountryStrategy
TransnationalStrategy
Standardised Identity & ValuesWith Composite Strategies
CONTINUUM OF STANDARDISATIONCONTINUUM OF STANDARDISATION
Pricing
Distribution
Sales Force
Sales Promotion
Product
Image
Objectives
Strategy
Differentiation
Standardisation
GLOBALISATION PUSH & PULL FACTORSGLOBALISATION PUSH & PULL FACTORS
Source: Meffet and Bolz (1993) in Hallibuton and Hunerberg (eds) European Marketing Readings and Cases Addison Wesley 1993
‘Globalisation Pull’
‘Globalisation Push’
Globalisation of MarketsGlobalisation of MarketsHomogenisation of demandHomogenisation of demand
Global market segmentsGlobal market segmentsGlobally active customersGlobally active customers
Marketing StandardisationMarketing StandardisationProgramme standardisationProgramme standardisation
Process standardisationProcess standardisation
Globalisation of IndustriesGlobalisation of IndustriesR&D expensesR&D expenses
Reduced pay back cyclesReduced pay back cyclesExperience curve effectsExperience curve effects
Globalisation of CompetitorsGlobalisation of CompetitorsMarket interdependenceMarket interdependence
Global competitorsGlobal competitorsCross subsidisationCross subsidisation
FORCES DRIVINGFORCES DRIVINGA MULTI-DOMESTIC APPROACHA MULTI-DOMESTIC APPROACH
Industry standards remain diverseIndustry standards remain diverse Customers continue to demand locallyCustomers continue to demand locally Being an insider remains critically Being an insider remains critically
importantimportant Global organisations are difficult to Global organisations are difficult to
managemanage Management myopiaManagement myopia
TRANSNATIONAL STRATEGIES #1TRANSNATIONAL STRATEGIES #1
Transnational companies aim to Transnational companies aim to build three strategic capabilities:build three strategic capabilities: Global scale efficiency and Global scale efficiency and
competitivenesscompetitiveness National level responsiveness and National level responsiveness and
flexibilityflexibility Cross market capacity to leverage Cross market capacity to leverage
learning on a world wide basislearning on a world wide basis
TRANSNATIONAL STRATEGIES #2TRANSNATIONAL STRATEGIES #2
Challenges for firms wishing to build global Challenges for firms wishing to build global presence:presence: Achieving truly global reachAchieving truly global reach Building global appeal and responding to the Building global appeal and responding to the
changing basis of competitive advantagechanging basis of competitive advantage Managing the firm’s marketing strategy in less Managing the firm’s marketing strategy in less
developed countriesdeveloped countries Building the global brandBuilding the global brand Customising the standardised product and Customising the standardised product and
service offer to individual customer tastes service offer to individual customer tastes sometimes called ‘global one-to-one marketing’sometimes called ‘global one-to-one marketing’
For service firms, globalising presents additional For service firms, globalising presents additional and specific implementation challengesand specific implementation challenges
DEMAND FOR CUSTOMISED SOLUTIONSDEMAND FOR CUSTOMISED SOLUTIONS
customers cannot be classified into simple, customers cannot be classified into simple, stable segmentsstable segments
the customer in not monodimensional the customer in not monodimensional desires guide consumptiondesires guide consumption functional and technological attributes of functional and technological attributes of
products or services are balanced by its products or services are balanced by its aesthetics and cultural attributesaesthetics and cultural attributes
quality is now more subjectivequality is now more subjective a wide permanent variety of products is requireda wide permanent variety of products is required the quest for authenticity orientates the quest for authenticity orientates
consumptionconsumption
Source: Halliburton (1994)
GLOBAL ONE TO-ONE MARKETINGGLOBAL ONE TO-ONE MARKETING
Source: Halliburton (1994)
UNSEEN DANGERS IN FOREIGN UNSEEN DANGERS IN FOREIGN INVESTMENTINVESTMENT
SOURCE: Report by Export Today (1997)
DRIVING FORCES OF RETAIL DRIVING FORCES OF RETAIL INTERNATIONALISATIONINTERNATIONALISATION
SOURCE: McGoldrich and Davies (1995)
MARKET ENTRY STRATEGIES
MARKET ENTRY METHODS & THE LEVELS OF MARKET ENTRY METHODS & THE LEVELS OF INVOLVEMENT IN INTERNATIONAL MARKETSINVOLVEMENT IN INTERNATIONAL MARKETS
Wholly-owned subsidiary
Company acquisition
Assembly operations
Joint venture
Strategic alliance
Licensing
Contract manufacture
Direct marketing
Franchising
Distributors and agents
Sales force
Trading companies
Export management companies
Piggyback operations
Domestic purchasing
Levels of
involvement
SUCCESSFUL MARKET ENTRY #1SUCCESSFUL MARKET ENTRY #1
Criteria for Selecting Appropriate Market Criteria for Selecting Appropriate Market Entry MethodEntry Method The company objectives and expectations The company objectives and expectations
relating to the size and value of anticipated relating to the size and value of anticipated businessbusiness
The size and financial resources of the The size and financial resources of the companycompany
Existing foreign market involvementExisting foreign market involvement The skills, abilities and attitudes of the The skills, abilities and attitudes of the
company management towards international company management towards international marketingmarketing
The nature and power of the competition with The nature and power of the competition with the marketthe market
SUCCESSFUL MARKET ENTRY #2SUCCESSFUL MARKET ENTRY #2
Criteria for Selecting Appropriate Market Criteria for Selecting Appropriate Market Entry MethodEntry Method The nature of existing and anticipated tariff The nature of existing and anticipated tariff
and non-tariff barriersand non-tariff barriers The nature of the product itself, particularly The nature of the product itself, particularly
any areas of competitive advantage, such any areas of competitive advantage, such as trademark or patent protectionas trademark or patent protection
The timing of the move in relation to the The timing of the move in relation to the market and competitive situationmarket and competitive situation
RISK & CONTROL IN MARKET ENTRYRISK & CONTROL IN MARKET ENTRY
Indirect ExportingPiggybacking
Trading companiesExport management companies
Domestic purchasing
Co-operationStrategies
Joint venturesStrategic alliances
Direct ExportingDistributors
AgentsDirect marketing
FranchisingManagement contracts
ManufacturingOwn subsidiary
AcquisitionAssembly
Control
Risk
INDIRECT EXPORTING #1INDIRECT EXPORTING #1
Domestic PurchasingDomestic Purchasing Foreign organisation purchases the product for export Foreign organisation purchases the product for export
to another countryto another country Gives access to and limited knowledge of the Gives access to and limited knowledge of the
international marketinternational market Little control over choice of markets enteredLittle control over choice of markets entered For longer term, need a more proactive approachFor longer term, need a more proactive approach
Export Management Companies (EMCs)Export Management Companies (EMCs) Specialist companies act as the export department for Specialist companies act as the export department for
a range of companiesa range of companies Help SMEs to initiate/develop/maintain international Help SMEs to initiate/develop/maintain international
salessales Deal with documentation, government regulationDeal with documentation, government regulation
INDIRECT EXPORTING #2INDIRECT EXPORTING #2
Trading HousesTrading Houses Their extensive operations and controls Their extensive operations and controls
enable operation in more difficult trading enable operation in more difficult trading areasareas
Manage countertrade activitiesManage countertrade activities Piggy BackingPiggy Backing
An established international distribution An established international distribution network of one manufacturer used to carry network of one manufacturer used to carry products of a secondproducts of a second
Particularly good for firms from developing Particularly good for firms from developing countriescountries
Often poorly considered terms and conditionsOften poorly considered terms and conditions
THE COMPONENTS OF THE EXPORT THE COMPONENTS OF THE EXPORT MARKETING MIXMARKETING MIX
EXPORT MARKETING
MIX
Product:Selection, development &
sourcing
Pricing:Policy, strategies, discount structures & trading terms
Promotion:Corporate promotions & local
selling, trade shows & literature
Distribution:Sales force management,
agents, distributors & logistics
Services:Market research, training &
sales servicing
Finance & Administration:Budgets, order processing, insurance & credit
control
Technical:Specifications, testing &
product quality
INITIATION AND DEVELOPMENT OF EXPORT INITIATION AND DEVELOPMENT OF EXPORT PRODUCT POTFOLIOSPRODUCT POTFOLIOS
IMPORTANT FACTORS FOR IMPORTANT FACTORS FOR SUCCESSFUL EXPORTINGSUCCESSFUL EXPORTING
commitment of the firm’s managementcommitment of the firm’s management exporting approach reliant on strong skills exporting approach reliant on strong skills
basebase good marketing and information good marketing and information
communication systemcommunication system production capacity & capability, product production capacity & capability, product
superiority, competitive pricingsuperiority, competitive pricing effective market research effective market research effective national export policyeffective national export policy
Source: Katsikeas et al (1996)
AGENTS #1AGENTS #1
Selection Criteria for Finding a Selection Criteria for Finding a Suitable AgentSuitable Agent Financial strength of the agentFinancial strength of the agent Their contacts with potential customersTheir contacts with potential customers The nature and extent of their The nature and extent of their
responsibilities to other organisationsresponsibilities to other organisations Their premises, equipment and Their premises, equipment and
resources (including sales resources (including sales representatives)representatives)
AGENTS # 2AGENTS # 2
Achieving Satisfactory Manufacturer-Achieving Satisfactory Manufacturer-agent Relationshipagent Relationship Allocate time and resources to find a suitable Allocate time and resources to find a suitable
agentagent Ensure that both understand what each Ensure that both understand what each
expects of the otherexpects of the other Ensure that the agent is motivated to Ensure that the agent is motivated to
improve performanceimprove performance Provide adequate support on a continuing Provide adequate support on a continuing
basisbasis Ensure that there is sufficient advice and Ensure that there is sufficient advice and
information transfer in both directionsinformation transfer in both directions
REASONS FOR SETTING UP OVERSEAS REASONS FOR SETTING UP OVERSEAS MANUFACTUREMANUFACTURE
Nature of product e.g. perishableNature of product e.g. perishable Costs of transporting and warehousingCosts of transporting and warehousing Barriers to trade e.g. tariffs and quotasBarriers to trade e.g. tariffs and quotas Government regulations e.g. local investmentGovernment regulations e.g. local investment Local manufacture viewed favourable by marketLocal manufacture viewed favourable by market Contributions to local economyContributions to local economy Market information feedbackMarket information feedback International culture in firmInternational culture in firm Faster response and just-in-time deliveryFaster response and just-in-time delivery Lower labour costLower labour cost
LICENSING # 1LICENSING # 1
Techniques to Minimise the Potential Techniques to Minimise the Potential Problems of LicensingProblems of Licensing Develop a clear policy and planDevelop a clear policy and plan Allocate licensing responsibility to a senior Allocate licensing responsibility to a senior
managermanager Select licences carefullySelect licences carefully Draft the agreement carefully to include Draft the agreement carefully to include
duration, royalties, trade secrets, quality duration, royalties, trade secrets, quality control and performance measurescontrol and performance measures
LICENSING # 2LICENSING # 2
Techniques to Minimise the Potential Techniques to Minimise the Potential Problems of LicensingProblems of Licensing Supply the critical ingredientsSupply the critical ingredients Obtain equity in the licenseeObtain equity in the licensee Limit the product and territorial Limit the product and territorial
coveragecoverage Retain patents, trademarks, copyrightsRetain patents, trademarks, copyrights Be an important part of the licences Be an important part of the licences
businessbusiness
FOREIGN MANUFACTURING STRATEGIES FOREIGN MANUFACTURING STRATEGIES WITH DIRECT INVESTMENTWITH DIRECT INVESTMENT
Reasons for investment in local Reasons for investment in local operationsoperations To gain new business: local production To gain new business: local production
demonstrates strong commitmentdemonstrates strong commitment To defend existing businessTo defend existing business To move with an established customerTo move with an established customer To save costs: e.g. labour, raw materials To save costs: e.g. labour, raw materials
and transportand transport To avoid government restrictionsTo avoid government restrictions
WHO PROVIDES WHAT IN EAST-WEST WHO PROVIDES WHAT IN EAST-WEST PARTNERSHIPSPARTNERSHIPS
SOURCE: Florescu and Scibor-Rylski (1993)
DRIVING FORCES FOR THE FORMATION & DRIVING FORCES FOR THE FORMATION & OPERATION OF STRATEGIC ALLIANCESOPERATION OF STRATEGIC ALLIANCES
Insufficient resourcesInsufficient resources Pace of innovation and market diffusionPace of innovation and market diffusion High research and development costsHigh research and development costs Concentration of firms in mature Concentration of firms in mature
industriesindustries Government co-operationGovernment co-operation Self protectionSelf protection Market accessMarket access
INTERNATIONAL PRODUCT MANAGEMENT
THE 3 ELEMENTS OF THE PRODUCT OR THE 3 ELEMENTS OF THE PRODUCT OR SERVICESERVICE
The core product benefit or service
BENEFITSImage PerceivedValue
Performance
Quality
ATTRIBUTESBrand name Features
Size & colour variants
After-sales service
MARKETINGSUPPORTSERVICES
Guarantees Installation
Delivery
Design Packaging
StandardisationAdaptation
Adaptation
EVALUATING THE PRODUCTEVALUATING THE PRODUCT
For what purpose has the product been developed For what purpose has the product been developed and how would it be used in that country?and how would it be used in that country?
What distinctive properties does it have?What distinctive properties does it have? What benefits is the consumer expected to gain?What benefits is the consumer expected to gain? How is it positioned and what image do consumers How is it positioned and what image do consumers
perceive it to have?perceive it to have? Which consumer segments are expected to buy it, Which consumer segments are expected to buy it,
on what occasions and for what purpose?on what occasions and for what purpose? How does it fit into the total market?How does it fit into the total market?
REASONS FOR ADAPTATION REASONS FOR ADAPTATION OF THE PRODUCTOF THE PRODUCT
Long term aims, objectives and strategiesLong term aims, objectives and strategies
One-year marketing objectives and One-year marketing objectives and individual SBU strategiesindividual SBU strategies
Country-by-country forecasts and targetsCountry-by-country forecasts and targets
Country-by country marketing plans for all Country-by country marketing plans for all activitiesactivities
Plan for regional and global integrationPlan for regional and global integration
Determining the Product Determining the Product RangeRange
Overall growth/profit objectivesOverall growth/profit objectives Experience, philosophies and attitude of the Experience, philosophies and attitude of the
company to international developmentcompany to international development Characteristics of the marketCharacteristics of the market Requirements, expectations and attitudes of the Requirements, expectations and attitudes of the
consumers in the marketconsumers in the market The products and services themselvesThe products and services themselves Ease of distributionEase of distribution Support required from other elements of the Support required from other elements of the
marketing mixmarketing mix Environmental constraintsEnvironmental constraints Level of risk that the company is prepared to takeLevel of risk that the company is prepared to take
THE INTERNATIONALTHE INTERNATIONALPRODUCT LIFE CYCLEPRODUCT LIFE CYCLE
Market A
Market B
Market C
Market D DomesticMarket
Time
Sales
THE PORTFOLIO APPROACH TO STRATEGIC THE PORTFOLIO APPROACH TO STRATEGIC ANALYSISANALYSIS
Stars
Cash Cows Dogs
Question Marks
US
FrI
SpS
G Ne J
High
High
Low
Low
MarketGrowth
Relative Market ShareKey: Ne - Netherlands G - Germany S - Sweden US - United States F - France I - Italy Sp - Spain J - Japan
THE BRAND VALUE EQUATIONTHE BRAND VALUE EQUATION
Tangible & Intangible Benefits
Benefits Received by Customers
Costs to the Customer of Brand Purchase
Total Cost of Ownership
BRANDVALUE =
WORLD’S MOST VALUABLE BRANDS WORLD’S MOST VALUABLE BRANDS (2000)(2000)
BRAND VALUATIONBRAND VALUATION
The most basic criteria for brand The most basic criteria for brand evaluation include:evaluation include:
title to the brand has to be clear and title to the brand has to be clear and separately disposable from the rest of the separately disposable from the rest of the businessbusiness
the value has to be substantial and long the value has to be substantial and long term, based on separately identifiable term, based on separately identifiable earnings that have to be in excess of those earnings that have to be in excess of those achieved by unbranded productsachieved by unbranded products
INTERNATIONAL BRANDING MODELINTERNATIONAL BRANDING MODEL
NEW PRODUCT CATEGORIESNEW PRODUCT CATEGORIES
NEW PRODUCT DEVELOPMENT PROCESSNEW PRODUCT DEVELOPMENT PROCESS
Idea generationIdea generation Initial screeningInitial screening Business analysisBusiness analysis DevelopmentDevelopment Market testingMarket testing Commercialisation and launchCommercialisation and launch
RESEARCH & DEVELOPMENTRESEARCH & DEVELOPMENTSTRATEGIESSTRATEGIES
International companies must take decisions International companies must take decisions on:on: Location of their own internal R&D facilitiesLocation of their own internal R&D facilities Extent to which they contract out certain parts of Extent to which they contract out certain parts of
their R&D programmetheir R&D programme Whether or not they might acquire a company Whether or not they might acquire a company
which can provide either the required new which can provide either the required new technology or a new producttechnology or a new product
Licensing the technology and process from Licensing the technology and process from another companyanother company
Funding joint ventures or strategic alliances with Funding joint ventures or strategic alliances with companies that have complementary technologycompanies that have complementary technology
THE ARGUMENTS FOR & AGAINST THE ARGUMENTS FOR & AGAINST CENTRALISATION OF R&DCENTRALISATION OF R&D
ARGUMENTS FOR CENTRALISATION
• economies of scale
• easier and faster communication
• better co-ordination
• greater control over outflow of
information with implications for secrecy
• greater synergy
• avoiding duplication
• overcoming problems of ownership
ARGUMENTS AGAINST CENTRALISATION
• pressure from subsidiaries
• pressure from governments
• benefits of public relations
• use of a wider range of skills and abilities
• financial savings
• benefits from comparative advantage
• greater sensitivity to local tastes
• better monitoring of local competitive activity
• closeness to possible acquisitions
• access to new technology wherever located
FAILURE OF NEW PRODUCT FAILURE OF NEW PRODUCT DEVELOPMENTDEVELOPMENT
Tariff and non-tariff barriersTariff and non-tariff barriers Local competitor subsidiariesLocal competitor subsidiaries Cultural insensitivityCultural insensitivity Poor planningPoor planning Lack of unique selling propositionLack of unique selling proposition Product deficienciesProduct deficiencies Misguided enthusiasm of top Misguided enthusiasm of top
managementmanagement
INTERNATIONAL COMMUNICATIONS AND INTERNET MARKETING
EXTERNAL, INTERNAL AND INTERACTIVE EXTERNAL, INTERNAL AND INTERACTIVE MARKETINGMARKETING
THE DIMENSIONS OF EXTERNAL MARKETING COMMUNICATIONS
EXTERNALSTAKEHOLDERS
UsingCommunications
To BuildRelationships
CommunicatingThe Product,
ServiceDifferentiation
CommunicatingThe
CorporateIdentity
Communication withexisting and potentialcustomers regularly &systematically to buildclose relationships,supported by databasemanagement & IT
Communication of adistinctive brand image,the unique positioningof the product and thereasons to buy, supportedby advertising, personalselling and sales promotion
Communication to allstakeholders of a clearand distinctive corporateidentity for the firmsupported by sponsorship& public relations
FAILURE IN INTERNATIONAL MARKETING COMMUNICATIONS #1
Internal Factors: Inconsistency of messages conveyed to
customers Different styles of presentation of
corporate identity, brand and product image
Lack of co-ordination of messages eg press releases, advertising campaigns
Differences in fields of perception of sender and receiver
FAILURE IN INTERNATIONAL MARKETING COMMUNICATIONS #2
The Effects of External Factors: Counterfeiting Parallel importing Competitors, governments or pressure
groups
PROMOTIONAL OBJECTIVES #1PROMOTIONAL OBJECTIVES #1
Sales Related:Sales Related: Increasing market share at the expense Increasing market share at the expense
of local/international competitorsof local/international competitors identifying new potential customers or identifying new potential customers or
obtaining a specific number of obtaining a specific number of responses to a promotional campaignresponses to a promotional campaign
Reducing the impact of competitors in Reducing the impact of competitors in the marketthe market
Source: Wilson R & Gilligan C (1997)
Source: Wilson R & Gilligan C (1997)
PROMOTIONAL OBJECTIVES #2PROMOTIONAL OBJECTIVES #2
Brand/Product Communications Related:Brand/Product Communications Related: Increasing the value of the corporate brand Increasing the value of the corporate brand
and the product imageand the product image Helping to establish the position or re-Helping to establish the position or re-
position the product or brandposition the product or brand Increasing awareness levels especially in Increasing awareness levels especially in
new country marketsnew country markets Changing consumers’ perceptions or Changing consumers’ perceptions or
products, brands or the firmproducts, brands or the firm
PUSH AND PULL STRATEGIESPUSH AND PULL STRATEGIES
INTERNAL & EXTERNAL INTERNATIONAL INTERNAL & EXTERNAL INTERNATIONAL COMMUNICATION PROGRAMME #1COMMUNICATION PROGRAMME #1
Internally Focused ProgrammesInternally Focused Programmes Corporate identityCorporate identity Internal marketing communicationsInternal marketing communications Salesforce, dealer and distributor training Salesforce, dealer and distributor training
and developmentand development Retailer merchandisingRetailer merchandising First contact customer serviceFirst contact customer service After sales serviceAfter sales service Quality managementQuality management Brand managementBrand management
INTERNAL & EXTERNAL INTERNATIONAL INTERNAL & EXTERNAL INTERNATIONAL COMMUNICATION PROGRAMME #2COMMUNICATION PROGRAMME #2
Externally Focused Programmes Externally Focused Programmes (Marketing Mix)(Marketing Mix)
Product attributesProduct attributes
Distribution channelDistribution channel
PricePrice
Product/service promotionProduct/service promotion
PeoplePeople
Customer service processCustomer service process
Physical evidence for the service deliveryPhysical evidence for the service delivery
MARKETING COMMUNICATION TOOLS #1MARKETING COMMUNICATION TOOLS #1
Personal selling and word of mouthPersonal selling and word of mouth Exhibitions and trade fairsExhibitions and trade fairs Trade missionsTrade missions AdvertisingAdvertising
TV advertisingTV advertising Press advertisingPress advertising
Use of agencies and consultanciesUse of agencies and consultancies FinancialFinancial Specialist knowledgeSpecialist knowledge Creative inputCreative input External perspectiveExternal perspective
TOP 15 ADVERTISING SPENDERS OUTSIDE TOP 15 ADVERTISING SPENDERS OUTSIDE THE USATHE USA
MARKETING COMMUNICATION TOOLS #2MARKETING COMMUNICATION TOOLS #2
Sales promotionsSales promotions Direct MarketingDirect Marketing Cyberspace advertisingCyberspace advertising
Communicating with a wider range of Communicating with a wider range of stakeholdersstakeholders Corporate identityCorporate identity SponsorshipSponsorship Public RelationsPublic Relations
FUTURE MARKETING CHALLENGES FUTURE MARKETING CHALLENGES FACING THE USE OF INTERNETFACING THE USE OF INTERNET
Customers in some countries place a Customers in some countries place a higher emphasis on using verbal higher emphasis on using verbal interactionsinteractions
Brand values dependent on image, Brand values dependent on image, reputation, word of mouth etcreputation, word of mouth etc
eCommerce favours global playerseCommerce favours global players Design of web site critical in winning Design of web site critical in winning
customers from domestic companycustomers from domestic company
THE DIMENSIONS OF TRANSACTION AND THE DIMENSIONS OF TRANSACTION AND RELATIONSHIP MARKETINGRELATIONSHIP MARKETING
TransactionTransaction Purchaser-marketer Purchaser-marketer
interactioninteraction Features-benefits Features-benefits
offeroffer Discrete interactionsDiscrete interactions CompetitiveCompetitive Winning new Winning new
customerscustomers Top down directivesTop down directives Quality, value and Quality, value and
serviceservice
RelationshipRelationship Team based, Team based,
integrated integrated interactionsinteractions
Value addedValue added Continuous Continuous
interactionsinteractions Co-operationCo-operation Retaining customersRetaining customers Horizontal Horizontal
interactionsinteractions Customer satisfactionCustomer satisfaction
BRAND VALUE BASED ON CUSTOMER BRAND VALUE BASED ON CUSTOMER SERVICE SERVICE
Product Price
Promotion
Distribution
Customerservice
Customer satisfaction
The standar
dbrand mix
Brandperception
(with luck)
(the promise)
(the reality)
BRAND VALUE BASED ON CUSTOMER BRAND VALUE BASED ON CUSTOMER SATISFACTIONSATISFACTION
Brandperception
Customersatisfaction
CustomerService
The flexible
mix
Product
Price
Distribution
Promotion
(no compromise)
TRADITIONAL RELATIONSHIPTRADITIONAL RELATIONSHIP
PARTNERSHIP LINKAGESPARTNERSHIP LINKAGES
FOCUSING ON THE SIX MARKETSFOCUSING ON THE SIX MARKETS
MANAGING CURRENCYFLUCTUATIONS #3
When the domestic currency is strong:Compete on non-price factors (quality, delivery, service)Improve productivity and reduce costsPrioritise strong currency countries for exportsUse counter-trade for weak currency countriesReduce profit margins and use marginal costs for pricing
MANAGING CURRENCYFLUCTUATIONS #4
When the domestic currency is strong:Keep the foreign earned income in the local countryMaximise expenditures in local country currencyBuy services abroad in local currenciesBorrow money for expansion in local marketsInvoice foreign customers in their own currency
COUNTER-TRADE #1COUNTER-TRADE #1
Forms:Forms: BarterBarter Compensation tradingCompensation trading Counter-purchaseCounter-purchase OffsetOffset Switch dealsSwitch deals BuybackBuyback
COUNTER-TRADE #2COUNTER-TRADE #2
Advantages of Counter-trade Advantages of Counter-trade New marketsNew markets Sell off surplus or poor quality products Sell off surplus or poor quality products Disguise dumpingDisguise dumping Strengthens inter-government tiesStrengthens inter-government ties Entry to high risk areasEntry to high risk areas Circumvent government restrictionsCircumvent government restrictions
COUNTER-TRADE #3COUNTER-TRADE #3
Disadvantages of Counter-trade Disadvantages of Counter-trade Lack of flexibilityLack of flexibility Exchange products difficult to sellExchange products difficult to sell No price guideNo price guide Difficult profit evaluationDifficult profit evaluation May create new competitionMay create new competition
THE EXPORT ORDER PROCESS
Initial EnquiryInitial Enquiry
Pro-Forma InvoicePro-Forma Invoice
Confirmed OrderConfirmed Order
Letter of CreditLetter of Credit
Shipping GoodsShipping Goods
Shipment of DocumentsShipment of Documents
Commercial Invoice &Commercial Invoice &Documents in Letter of CreditDocuments in Letter of Credit
PaymentPayment
CCOOMMPPAANNYY
CCUUSSTTOOMMEERR
CONFIRMING
BANK
ISSUING
BANK
1
2
3
45
6
7
8
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