copyright atomic dog publishing, 2008copyright atomic dog publishing, 2 international strategic...

Copyright Atomic Dog Publishing, 2008Copyright Atomic Dog Publishing, 2

International Strategic Planning

Dana-Nicoleta Lascu

Chapter 7

Copyright Atomic Dog Publishing, 2008Copyright Atomic Dog Publishing,

Chapter Objectives• Develop a general understanding of international marketing strategy at

the different levels of the international organization and provide some insights into the international marketing planning process of selected companies.

• Identify the rationale for adopting a particular target marketing strategy in international markets.

• Introduce the concept of country attractiveness analysis and offer a blueprint for conducting the analysis.

• Identify the bases for consumer segmentation and offer company application examples.

• Describe the three targeting strategies used by companies worldwide.

• Describe the six positioning strategies that international companies can use to position their brands in the minds of target consumers.


Developing an International Marketing Strategy

• Involves developing and maintaining a strategic fit between the international company’s objectives, competencies, and resources and the challenges presented by its international market or markets.

• The international strategic plan forges a link between the company’s resources and its international goals and objectives in a complex, continuously changing international environment.

• Given the changing nature of the environment, the strategic plan cannot afford a typical long-term focus (a 5- or 10-year plan); rather, the planning process must be systematic and continuous, and it must reevaluate objectives in light of new opportunities and potential threats.

• Most relevant: the company’s commitment to its international markets.


The International Strategic Plan

Corporate

Division

Business Unit

Product Level

Creates a link between company resources and its international goals and objectives. Levels:


Levels of Strategic Planning

• Strategic plan allocates resources and establishes objectives for the whole enterprise worldwide.

• Has long-term focus.• Involves the highest levels of management.• Involves international target market selection.

Corporate


Levels of Strategic Planning, continued

• Strategic plan allocates resources to each business unit based on division goals and objectives.

• Portfolio analysis is used to decide which brands to harvest, invest in, or divest.

• Has longer-term focus.

Division



• Planning involves decisions on which consumer segments to target in each country and how to target them.

Business Unit



• A marketing plan is developed at product level, product line level, or at brand level.

• Has shorter-term focus.• Involves the marketing department.

Product Level


Developing the International Marketing Plan

• Develop strategies for the target market Product mix Distribution Promotion mix Pricing

• Plan international marketing programs• Manage the international marketing effort:

Organize Implement Control


International Target Marketing

• Defined as the process of identifying and focusing on those international market segments that the company can serve most effectively and designing products, services, and marketing programs with these segments in mind.


International Target Marketing Is Used by Companies to:

• Identify consumer segments with similar traits.

• Select segments company can serve efficiently.

• Develop products tailored to each segment.

• Target marketing involves offering products to the target market, and communicating, through the marketing mix, product traits and benefits that differentiate it in the consumer’s mind .


International Segmentation

The process of identifying countries and/or consumers that are similar with regard to key traits, such as product-related needs and wants, that would respond to a product and related marketing mix.

MUST BE performed at country level AND at consumer level.


Effective International Segmentation Requirements

• Measurability• The ability to estimate the size of the market.• Important questions:

Are population statistics and economic development data reliable?

Are consumers accessible for data collection? Are they willing respondents?


International Segmentation Requirements (contd.)

• Substantiality• The extent to which the international market is

large enough to warrant investment.• Important questions:

What is the segment’s growth potential?

What is the projected per capita income in the following ten years?

Are population statistics and economic development data reliable?



• Stability over time• The extent to which international consumer

preferences are stable over time.• Important questions:

What is the likelihood that the segment will change as a result of a rapidly changing environment?

How often should we re-evaluate our market segment?



• Accessibility• The ability to communicate with the international

target market.• Important questions: Are population statistics and economic

development data reliable? Are consumers willing respondents for marketing research studies? Is it possible to effectively communicate with the target consumers?

Brands such as Coca Cola, Avon, and others are now rapidly entering the Tibetan market. A new train connecting mainland China with Tibet has created new access to this once closed market.



• Actionability• The extent to which the international target market

is responsive to the marketing strategies used.• Important question:

Will consumers buy the company’s product?



• Differential response• The extent to which international market segments

respond differently to marketing strategies.• Important questions:

Can we distinguish segments from each other? Do consumers have different preferences in this international market?


International Macro-Segmentation

• Market potential – indicators: Gross domestic product (GDP) per capita. Industrial and agricultural sector statistics. Market size and potential. Consumer buying power. Investment figures (FDI, other trade statistics).


International Macro-Segmentation (contd.)

• Political, legal and financial environment of country:

• Involves assessing: Ethnic conflict. History of war engagement. Antiforeigner sentiment. Recent nationalization activities. Legal ambiguity. Trade barriers. Exchange rate controls.



• Marketing support infrastructure: Involves assessing the following: Availability and reliability of distribution and logistics

providers. Availability of competent partners for strategic

alliances. Quality of telecommunication and transportation

infrastructure. Availability of other service providers:

- Marketing research firms.- Financial firms.- Management consulting firms.



• Strength of brand or company franchise relative to competing products and companies: Markets where a brand name is already established with local consumers offers high potential to the company.

• Degree of market fit with company policies, goals, and resources.


Bases for Micro-Segmentation

• Demographics: Statistics that describe the population:

- Age- Occupation- Education- Income- Ethnicity- Race- Nationality- Life-cycle stage- Social class


Bases for Micro-Segmentation (contd.)

• Psychographic segmentation: Involves clustering consumers based on different behavioral and psychological dimensions.

- Hofstede dimensions: • Power-distance• Masculinity-femininity• Uncertainty avoidance• Individualism-collectivism

- Global segments:• Global teenagers• Global elite



• Benefit Segmentation: Involves understanding the motivation behind consumer purchases, in order to be able to send the appropriate message to the relevant market segments. Example: cooking oil markets can be

segmented based on benefits sought: olive oil is targeted to consumers who seek health benefits.



• Geographic Segmentation: Can be performed at the macrosegmentation level, as well as within the country, identifying different consumer segments within a geographic region. Example: Avon segments its market

geographically.


Bases for Micro-Segmentation (contd.)• Usage and usage status segmentation: groups

consumers based on the usage rate for the product (usage segmentation), or based on the familiarity of the consumer with the product (user status segmentation). • Usage

NonusersOccasional usersMedium usersHeavy users

User Status- User of competitors’ products- Ex-users- Potential users- First-time users- Regular users


Country Screening and Selection• Assigning an importance score to country screening

criteria: • Involves aggregating a selection of criteria, with each

criterion having an importance weight. • The criteria are:

market potentialpolitical and financial stabilitythe availability of the appropriate marketing infrastructurethe degree of brand and company franchise in the local marketthe degree of market fit with company goals, policies, and resources.

• Evaluating country performance on each of the screening criteria.

• Calculating the country attractiveness score: The importance score is multiplied by performance. The attractiveness score is the total score for each country calculated by adding the resulting scores.


Target Market Decisions

• Differentiated Companies identify or create market segments

that want different benefits from a product and target them with different brands using the appropriate marketing strategies.

Example: Procter & Gamble’s brands – Dreft, Tide, Ariel are targeted at different segments who want different types of performance from their laundry detergent.


Target Market Decisions (contd.)

• Concentrated Select only one market segment and target it

with a single brand. Example: Mont Blanc pens aimed at

consumers who want a high-performing pen with status cachet.

Note: Niching (targeting a niche market) is an example of a concentrated strategy.


Target Market Decisions (contd.)

• Undifferentiated Product is aimed at the market using a single

strategy regardless of number of countries targeted, and regardless of the locations where it is marketed and the number of market segments.

Example: powder milk, beans


Positioning the Brand

Steps Involved in positioning the brand:

Identify competitors Determine how they are perceived by consumers Determine positioning in consumer’s minds Analyze customers Select positioning Monitor position


Positioning the Brand (contd.)Firms use different approaches to positioning the brand:

• Attribute/benefit positioning: • Uses product attributes and benefits to position it in the

consumers' mind relative to competitors' products and services.

• Price/quality positioning: • Products are positioned as either offering the best value for

the money (especially useful when marketing in developing countries) or as being the best product that money can buy, stressing its high price and quality.

• Use or applications positioning: • Positioning a product as having a precise application, thus

differentiating it in the consumers' minds from similar products with a more general use.


Positioning the Brand (contd.)

• Product user positioning: • Focuses on the product user, rather than on the

product, thus associating the product with a certain segment of the market.

• Product class positioning: • Differentiating the company as a leader in a

particular product category. Company defines the product.

• Competitor positioning: • Comparing the firm's brand with that of

competitors.


Chapter Summary

• Addressed international marketing strategy decisions at the different levels of the international organization and provide some insights into the international marketing planning process of selected companies.

• Discussed rationales and requirements for adopting target marketing strategies in international markets.

• Studies country attractiveness, and bases for consumer segmentation and company application examples.

• Discussed different international targeting and positioning strategies.

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