international marketing - lecture 8

8/9/2019 International Marketing - Lecture 8

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LECTURE 8



INTERNATIONAL MIDDLEMEN




The channel process includes all activities beginning with the manufacturer

and ending with the final consumer. A marketer’s options range from

assuming all the distribution activities or depending independent or semi-

independent middlemen for some of these activities.








Middlemen, therefore, can be agents who work on a commission, arrange

the sale, but do not take possession of the goods at any point of time.

Merchant Middlemen, on the other hand, actually take possession of the

manufacturer’s goods prior to the sale to the consumer, and so tend to be

less controllable than agents.

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Middlemen, therefore, can be agents who work on a commission, arrange

the sale, but do not take possession of the goods at any point of time.

Merchant Middlemen, on the other hand, actually take possession of the

manufacturer’s goods prior to the sale to the consumer, and so tend to be

less controllable than agents.

Middlemen are therefore no clear cut, precise, clearly defined entities.

Middlemen functions in terms of home country and host country parameters

are described here:

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Home Country Middlemen

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Home Country Middlemen

– Export Management Companies

– Trading Companies (Trading Houses)

– Complimentary Marketers (GE has been distributing merchandise

complimenting their own manufactured products. This adds to the distributionstrength of the company itself.

– Manufacturers’ Export Agents are individual agent middlemen or smallmiddleman firms providing selling services to manufacturers.

– Brokers perform a host of low cost special services in international sales

– Buying Offices generally provide short term buying operations in InternationalTrade

– Selling Groups are various groups of manufacturers cooperating to collectivesell their wares abroad

– Merchant Exporters are essentially domestic merchants operatinginternationally

– Morazi Agents are unique agents specializing in shady or difficult transactions

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Host Country Middlemen

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Host Country Middlemen

– Manufacturers’ Representatives are Agent Middlemen taking responsibility in a

Geographic locations

– Distributors are International Merchant Middlemen taking possession of goodsprior to selling to the customer

– Foreign Country Brokers are similar to Export Brokers of the home country,

and are common in commodity and food products exports/imports

– Managing Agents are Exclusive agents for home country parents, normally on a

cost plus basis, and perform certain specific functions

– Dealers are the last step in the channel to the consumer. In internationaldistribution, they have a long term relationship with the manufacturer and provide

pre-sale and after-sale service to the consumer

– Import Jobbers purchase goods from the manufacturer and sell to wholesalers

and distributors

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Searching for and working with Middlemen

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– Locating Middlemen: Middlemen should be evaluated based on the

following characteristics:

• Productivity• Financial Strength

• Management stability

• Reputation

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– Locating Middlemen: Middlemen should be evaluated based on the

following characteristics:

• Productivity

• Financial Strength

• Management stability

• Reputation

– Selecting Middlemen: Finding middlemen is the easy part; selecting

the right one is more critical. They should be properly screened, a firm

agreement fair to both sides should be drawn up

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– Locating Middlemen: Middlemen should be evaluated based on thefollowing characteristics:

• Productivity

• Financial Strength• Management stability• Reputation

– Selecting Middlemen: Finding middlemen is the easy part; selectingthe right one is more critical. They should be properly screened, a firmagreement fair to both sides should be drawn up

– Motivating Middlemen: Once the Middleman has been selected, apromotional program must be started to maintain a high level of interestin the manufacturer’s products. Middlemen respond to psychologicalrewards, so their efforts must be constantly recognized, to develop aclose rapport between the Middleman and the Company. The adage “allmen help their friends” must be remembered

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– Locating Middlemen: Middlemen should be evaluated based on the followingcharacteristics:

• Productivity• Financial Strength• Management stability• Reputation

– Selecting Middlemen: Finding middlemen is the easy part; selecting the rightone is more critical. They should be properly screened, a firm agreement fair toboth sides should be drawn up

– Motivating Middlemen: Once the Middleman has been selected, a promotionalprogram must be started to maintain a high level of interest in the manufacturer’s

products. Middlemen respond to psychological rewards, so their efforts must beconstantly recognized, to develop a close rapport between the Middleman andthe Company. The adage “all men help their friends” must be remembered

– Terminating Middlemen: When they do not perform, they should be terminated,swiftly and without pain. This should be clearly permitted in the agreement!

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INTERNATIONAL SALESMANAGEMENT




Personnel representing a company in the Global Marketplace

provide the most direct contact with customers. Therefore, their

competence is of vital importance to a company’s success.

Personnel requirements in a foreign country can be filled with

persons from the home country (expatriates), the host country, or a

third country. Each choice demands dealing with cultural attributes

to ensure qualified and effective market representation. The tasks of

building, training, compensating and motivating an international

marketing group generate unique problems at every stage of

management and development.




Source of Marketing and Sales Personnel

The number of Marketing Management personnel from the Home Country

assigned to foreign countries varies according to the size of the operation

and the availability of qualified local persons. Initially, a Host Country

operation is heavily populated by expatriate specialists, with the number

gradually dwindling as the pool of trained experienced locals grows.





The number of Marketing Management personnel from the Home Country

assigned to foreign countries varies according to the size of the operation

and the availability of qualified local persons. Initially, a Host Country

operation is heavily populated by expatriate specialists, with the number

gradually dwindling as the pool of trained experienced locals grows.

The largest personnel requirement abroad for most companies is the sales

force, drawn from expatriate, local and third country sources, depending on

the qualifications and availability of personnel and the company’s needs.





EXPATRIATES on overseas assignments are on the decline the world over

as global trade volume increases and as more companies use locals to fill

their marketing needs. When products are highly technical and where selling

requires an extensive background of applications, the expatriate sales force

is the best choice. In addition to the built in technical and sales knowledge

and training, they sometimes add to the prestige of the product line in the

eyes of the host country customers, simply by being expatriates!

The major disadvantages of the expatriate sales force are high cost, culturaland legal barriers, and the limited number of persons of high caliber willing to

live abroad for an extended period of time, what with growing children,

today’s working spouses, and the chance of being superseded in the

professional race in the home country





Local Nationals are slowly gaining preference over the traditional approach of using

expatriate managers and sales persons in the host country. At the sales level they

empathize with customers, thereby easily eliminating legal and cultural barriers faced

by expatriates. More knowledgeable in the host country’s business structure, they areable to lead the company through the maze of unfamiliar distribution systems. A very

major advantage of the use of local nationals is their relatively lower operating

expense because of their lower cost of living, as well as the costs otherwise incurred

by the company in keeping personnel away from their natural home.





Local Nationals are slowly gaining preference over the traditional approach of usingexpatriate managers and sales persons in the host country. At the sales level theyempathize with customers, thereby easily eliminating legal and cultural barriers facedby expatriates. More knowledgeable in the host country’s business structure, they areable to lead the company through the maze of unfamiliar distribution systems. A verymajor advantage of the use of local nationals is their relatively lower operatingexpense because of their lower cost of living, as well as the costs otherwise incurredby the company in keeping personnel away from their natural home.

Third Country Specialists are fast developing with rapid internationalization of

business. These persons are “Global Executives” who spend their entire working lifein foreign assignments, and whose road to professional success is through theknowledge gained from such assignments. As one personnel director commented,“talent in the Global Corporation ought to flow to opportunity irrepective of thepassport.




Recruiting International Personnel





Effective recruitment and selection of personnel for international positions

depend on precise definition of what is expected of these people. In

additional to formal job definition with long term objectives as well as current

needs, the criteria given should include special requirement indigenous to

various countries.





Effective recruitment and selection of personnel for international positionsdepend on precise definition of what is expected of these people. Inadditional to formal job definition with long term objectives as well as current

needs, the criteria given should include special requirement indigenous tovarious countries.

Traits that are prime requisites for expatriates and third country personnelinclude maturity, emotional stability, and considerable breadth of knowledgeon many subjects both on and off the job. The effective international

marketer on a foreign assignment has to have a favourable outlook to thecountry of his assignment in particular, and to international assignments ingeneral.




Preparing Personnel for Foreign Assignments

The annual cost of sending and supporting a manager and his family abroad

is estimated to be well over 400% of his base salary. The cost increases

substantially if the person were to be unhappy and choose to return home

before completing the full term of his assignment. Therefore it is imperative

that this carefully selected person be adequately prepared for his culturally

difficult assignments abroad, as well as his return to the home country

assignment, which, sometimes poses an even greater culture shock

received at reaching the host country at the start of the assignment.




Re-entry from a foreign assignment can be made easier by following the

steps mentioned below, as has been seen by several successful

Multinational Companies:

– Commit to reassigning expatriates to meaningful assignments on completion of the overseas assignment

– Create a “Mentor Program”, involving senior executives who monitor company

activities and keep expatriates informed by acting as liaison advisors between

them and Head Office personnel

– Guarantee a specific job position to the person right at the beginning of his

overseas assignment – Keep the expatriate fully informed about the Headquarters by periodic briefing

and home country visits

– Prepare the expatriate and his family for the repatriation once the date of return

is set, thus easing the “shock” of the return!



ADVERTISING GLOBALLY

Advertising and Promotion are the basic activities of the marketing mix for an

international company. Once the product is developed to meet the target market

needs and is properly priced and distributed, the target customers must be made

aware of the value and availability of the product. A well designed promotion mix

includes advertising, sales promotion, personal selling and public relations, all of

which, properly coordinated, are mutually reinforcing and focussed on the commonobjective of selling the product.




Advertising and Promotion are the basic activities of the marketing mix for an international

company. Once the product is developed to meet the target market needs and is properly priced

and distributed, the target customers must be made aware of the value and availability of the

product. A well designed promotion mix includes advertising, sales promotion, personal selling

and public relations, all of which, properly coordinated, are mutually reinforcing and focussed on

the common objective of selling the product.

Framework of International Promotion

The basic framework and concepts of international promotion is the same wherever applied. The

following steps are involved:

– Study the target market(s)

– Determine the extent of worldwide standardization – Determine the Promotional mix

– Develop the most effective message(s)

– Select the effective media

– Establish the necessary controls to assist in monitoring and achieving worldwide marketing

objectives




Pattern Advertising – Plan Globally, Act Locally





As discussed earlier, the product is more than a physical item. It is a bundle

of satisfaction received by the buyer. Therefore, while the product may be

required to perform a commonly perceived function, it performs this functionaccording to the cultural needs of the consumer.








Case in point: Use of a camera








Case in point: Use of a camera in the USA








Case in point: Use of a camera in the USA, in Germany








Case in point: Use of a camera in the USA, in Germany, in Africa









Case in point: Use of a bicycle









Case in point: Use of a bicycle in India









Case in point: Use of a bicycle in India, in the USA









Case in point: Use of a bicycle in India, in the USA, in Africa









Case in point: Use of a bicycle in India, in the USA, in Africa

Therefore, Global Advertisement must think Globally, but act Locally!




Global Advertising – World Brands





Global brands are generally the result of a company electing to be guided by a global

strategy. Coca Cola, Pepsi Cola, Colgate Palmolive, Surf Excel, Tata Trucks and

Bata Shoes are all examples of Global Brands. Lack of commonality between

markets should not deter a marketer from being guided by a Global Strategy, seeking

standardization wherever possible, and modifying where needed.





Global brands are generally the result of a company electing to be guided by a global

strategy. Coca Cola, Pepsi Cola, Colgate Palmolive, Surf Excel, Tata Trucks and

Bata Shoes are all examples of Global Brands. Lack of commonality betweenmarkets should not deter a marketer from being guided by a Global Strategy, seeking

standardization wherever possible, and modifying where needed.

Global Market Segmentation and Promotion

Strategy





Global brands are generally the result of a company electing to be guided by a globalstrategy. Coca Cola, Pepsi Cola, Colgate Palmolive, Surf Excel, Tata Trucks and BataShoes are all examples of Global Brands. Lack of commonality between markets shouldnot deter a marketer from being guided by a Global Strategy, seeking standardizationwherever possible, and modifying where needed.

Global Market Segmentation and Promotion Strategy

In going global with its promotional strategy, a company should first identify marketsegments within country boundaries or across countries. These market segments

should be homogenous having customers with similar needs, wants and purchasingbehaviour patterns. Customers in a market segment may come from different culturalbackgrounds, but have similar needs. The two options available to the global marketbrand are then to aim at a mass, high volume market seeking a competitive product, assay the Nirma detergent brand, or go for a niche segment which, though small, is aprofitable market in the aggregate, like Nina Ricci perfume.




Limitations to Creative Challenges





The growing intensity of international competition, coupled with the complexity of

marketing multinationally, demands the international advertisement function at the

highest creative level. To complicate matters, boundaries are placed by legal, tax,

language, cultural, media, production and cost limitations, as mentioned below:





The growing intensity of international competition, coupled with the complexity of

marketing multinationally, demands the international advertisement function at the

highest creative level. To complicate matters, boundaries are placed by legal, tax,

language, cultural, media, production and cost limitations, as mentioned below:

– Legal and Tax considerations vary from country to country

– Language is the greatest barrier to effective international marketing

communication and can easily cause major slips in messages conveyed

– Cultural diversity between countries, and even within the country (as in India or

China) poses a great challenge in the methods of conveying the advertisementmessage

– Limitations in varying degrees imposed by different countries to the creative

strategy cramp the role of advertising internationally

– The cost of advertising programs enhances the value of creativity in advertising

matter and methods

international marketing - lecture 8

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