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International Business : The Challenge of Global Competition, 8/e
Donald Ball
Wendell H. McCulloch, California State University Long Beach
Paul L. Frantz, California State University Long Beach
Michael Geringer, California Polytechnic State University
Michael S. Minor, University of Texas Pan American
Marketing Internationally

E Learning Session

  1. Added complexities of international marketing PowerPoint (32.0K)
    1. Markers have basic requirements of the marketing process Concept Check
      • Know the market
      • Develop products or services to satisfy customers' needs
      • Prices the products or services so they are readily acceptable to the market
      • Make them available to buyers
      • Inform potential customers and persuade them to buy
    2. International markets make these elements more uncertain because to the uncontrollable environmental forces
    3. Even controllable environmental forces vary widely from country to country
    4. International marketing managers must be prepared to control several market efforts, not just one
  2. The marketing mix (how and what to sell)
    1. Standardization, adaptation or completely different
      • Global standardization is preferred (cost factors)
      • Standardization
        1. Lowers cost
        2. Easier to control and coordinate from headquarters
        3. Reduces time spent on developing marketing plans
      • Most often some customizing in the market process is needed
    2. Product strategies
      • The product is the central focus of the marketing mix
      • If it fails to satisfy customers, no amount of promotion or price alteration will sell it
      • International marketing managers focus on the total product, which is what the customers buys, including the physical product, brand name, accessories, after-sales service, warranty, instructions for use, company image, and packaging Concept CheckPowerPoint (30.0K)
      • Total and physical product
        1. Much discussion about whether or not a firm can have a "global product" is because of confusion about the concept discussed- the total product, physical product, or brand name
        2. A physical product may be global while its total product concept is customized
      • Type of product
        1. The amount of change needed is related to whether the product is consumer or industrial oriented
        2. In general consumer products require greater customization than industrial products
        3. Industrial products Concept Check
          1. Products that are used in the production of other products
          2. Many times, the only modification needed is name plates in different languages or gage face plates in metric
          3. Some machinery requires more significant modification if destined for developing countries
            • Because of lack of experience with machine tools, these cultures are unfamiliar with how the products are effectively used
            • Workers in these cultures tend to overload equipment
            • Workers tend to under maintenance machines
        4. Consumer products
          1. Generally require greater modification because of local preferences
          2. Some do not require modification, usually luxury goods for which a desire crosses country boundaries
          3. In general as marketers target segments of the sociocultural structure at lower levels, greater modification of products is required
          4. Again, this does not suggest that modification of the physical product is the only option
          5. Modification of other components of the total product may meet the variation in needs
        5. Services
          1. Marketing services is similar to marketing industrial goods
          2. Legal constraints may require altering some service characteristics
      • Foreign environmental forces Concept Check
        1. Sociocultural forces
          1. Dissimilar cultural patterns usually necessitate changes in food or other consumer goods
          2. Some products are successful in keeping brand name in global distribution (ex. Campbell and Kodak)
          3. Even if colors and brand names are retained, instructions must be customized to the language of the market
          4. Acceptable brand names in one country may be unacceptable as a brand name in other countries
        2. Legal forces
          1. Strong influence on design of product
          2. Laws concern issues from pollution to standards compliance
          3. Laws can prohibit certain classes of product
          4. Laws may also influence use of brand names
            • American law provides right to a name with first use
            • In code law countries rights belong to the first to register the name
        3. Economic forces
          1. The great disparity among incomes world wide is a string influence on product standardization
          2. Many products successful in industrialized nations are just too expensive for developing nations
          3. Market size influences product mix
          4. Poorer countries have smaller populations with large numbers of people who cannot afford anything but the bare necessities
        4. Physical forces
          1. Climate and terrain reduce success of standardization
          2. Heat and humidity of tropics reacts differently with products from the climate of North America or Europe
          3. High altitudes countries require some modification to food products
          4. Shipping costs in mountainous regions are high because of the taxes imposed on the high cost of road building
    3. Promotional strategies Concept Check
      • Promotion
        1. Is one of the basic elements of the marketing mix
        2. It is all forms of communication between the firm and its publics
        3. Nine distinct promotion strategies based on degree of product customizations and degree of message alteration. The six most popular are
          1. Same product-same message: use in markets where consumer attitudes toward product are the same across country boundaries
          2. Same product-different message: use in markets where a product may fill two different needs in two countries
          3. Product adaptation-same message: used in markets where the product fills the same need but requires light modification to adapt to different conditions
          4. Product adaptation-message adaptation: in some case both the product and the message require some modification to appeal to local tastes
          5. Different product-same message: Some products are unsuitable for the environment in which they must operate requiring a different product to meet the need but with only slight modification of the message
          6. Different product-different message: In some instances the different product will also require a different message
      • Advertising: PowerPoint (33.0K)
        1. Paid, nonpersonal presentation of ideas, goods, or services by an identified sponsor
        2. Greatest similarities around the world, based on American practices
        3. Global and regional brands
          1. Manufacturers are increasing use of global or regional brands
            • Cost reduction most often given reason
            • Quality of work by a single producer of advertising is higher than achieved by funding a number of local sources
            • Greater support to a single image throughout a region
            • Organizational structures with centralized functions such as marketing
            • Global and regional satellite television are becoming available
          2. Economies of scale can be achieved with same brand approach
        4. Global or national
          1. The debate over the best approach is ongoing
          2. Brand names are so valuable, that some companies a reluctant to mess with the brand's image in converting it to a global brand
        5. Private brands
          1. Private branding has become such a serious competitor that they are responsible for a shift in power from the manufacturer to the retailer
        6. Availability of media
          1. Satellite broadcasters are making it possible for messages to reach millions of homes in dozens of countries at the same time
          2. More international print media are being published
          3. Other media cover multiple countries including cinema advertising
        7. Internet advertising
          1. A potential advertising medium with global implications
          2. Internet users are typically affluent, highly literate group
          3. Visiting a sight self-selects interest relationship
          4. It doesn't reach all groups, but it is highly effective for the groups it does reach
        8. Types of products
          1. Buyers of industrial products and luxury goods usually act in similar ways around the world
          2. In addition products that are low-priced, used in the same way around the world, and bought for the same reasons are candidates for standardization of advertising
        9. Foreign environmental forces
          1. Youth around the world seem to be similar markets rather than different ones
          2. Language of advertising must be customized to local environment
          3. Culture serves to bar some products and categories of products into countries
          4. Types of advertising are limited by some cultural mores
            • Women in ads in Islamic countries
            • Sexual innuendoes in conservative religious countries
        10. Globalization versus localization
          1. Some believe good advertising ideas are applicable in almost all countries
          2. Too often business people believe they must do things differently in each market when it's not really necessary
          3. Shared sensibilities make consumers at socioeconomic levels closer to those at the same level in other countries than to those at lower class levels in their own countries
          4. Others believe the strength of national identity will override preferences
        11. Neither purely global nor purely local
          1. Most firms are neither pure global or pure local
          2. Must remain flexible to meet challenges as they are encountered
          3. As Coca-Cola adopted "Think globally, but act locally"
        12. Gillette's panregional approach
          1. Gillette uses a geographic approach
          2. Implementing a global strategy while allowing for regional differences
        13. Programmed-management approach
          1. Home office and subsidiaries agree on advertising objectives and subsidiaries develop their own advertising programs
      • Personal selling Concept CheckPowerPoint (30.0K)
        1. As in US manufacturers depend more heavily on personal selling than advertising
        2. Personal selling may be emphasized in developing countries for consumer goods
        3. Personal selling and the Internet
          1. Successful personal selling is based on establishing trust between the sales person and the buyer
          2. The Internet hasn't developed the same degree of trust
          3. Nonverbal cues are lost in Internet communication
        4. International standardization
          1. Training, sales representation methods are similar between home and host countries
          2. Home country approach has worked in many unexpected applications
            • Dell computer's mail order
            • Avon cosmetics
        5. Recruitment
          1. Recruiting in foreign countries is sometimes more difficult than domestically
          2. Selling has as cultural stigma in some countries
          3. Sales represents hired must be aligned with the culture of the location they'll serve
          4. American companies have an advantage in the perception they have excellent training programs for sales people
      • Sales Promotion PowerPoint (31.0K)
        1. Provides selling aids, including displays, premiums, contests, and gifts
        2. In general, sales promotion that's successful in the US will be successful in most parts of the world
        3. Sociocultural and economic strengths
          1. Cultural and economic constraints make some sales promotion activities difficult to use
          2. To serve as a premium for purchase an item must have value to the purchaser and some premium gadgets do not have the same perception of desirability across cultures
          3. Other sales promotion activities such as contests, raffles and games are very successful especially in countries with cultures that like to gamble
        4. Two unsuccessful sales promotions
          1. Hoover in the UK
            • Hoover UK offered airline tickets for the purchase of a vacuum cleaner
            • Although the price of a ticket exceed the price of a vacuum, Hoover executives were betting that a majority of buyers would not redeem the premium because of restrictions on travel
            • 200,000 people bought inexpensive vacuums and demanded the air tickets
            • Hoover lost more than $70 million US honoring the promotion
          2. Pepsi in the Philippines
            • The winning number in a lottery promotion, 349, was printed on 900,000 bottle caps, half of which carried a one million peso prize
            • The Pepsi pay out could have exceeded $18 billion US
            • Pepsi offered each winning number holder $19 US.
            • Pepsi walked away from the situation and market share dropped dramatically
      • Public relations
        1. This is the firm's communication and relationships with its various publics, including governments
        2. Focuses on informing stakeholders about the company and its activities
        3. Nationalism has made it imperative that multinational firms do public service and inform publics about the activities
      • Pricing strategies
        1. This is an important but complex component of the promotion mix
        2. Pricing decisions affect many parts of the organization
        3. Pricing, a controllable variable
          1. Pricing must be thought of as a tool to achieve marketing objectives
          2. For example, if the marketer wants to position a product as high quality, a high price reinforces the perception
          3. Interaction between marketing and other functional areas
            • Finance people want prices that are profitable and conducive to steady cash flow
            • Production supervisors want prices that create large sales volume which permit long production rums
            • Legal department wants pricing that does run the risk of antitrust investigation
            • Tax people want prices that provide best possible tax advantage for organization
            • Domestic sales manager wants export prices high enough to avoid having to compete with products purchased for export but diverted to domestic markets
        4. International standardization
          1. Forces that exert influence on standardization of other market mix components affect pricing
          2. Foreign national pricing
            • Local pricing in a foreign country
            • In some countries minimum pricing may be controlled by government
            • Prices can vary because of import duties
            • Costs contributions such a labor can affect local pricing as well
            • Some countries may be more competitive and need special pricing in comparisons to other areas
            • Trade groupings may be reducing this effect
            • In general, fixing prices among competitors is not permitted
          3. International pricing
            • Involves setting prices for a product produced in one country and sold in another
            • Export pricing falls into this category
            • Intracorporate sales
              1. Transfer pricing of parts sold between affiliates in the supply chain
              2. Transfer pricing usually is set in home office
              3. Objective is to set prices for maximum tax and duty benefit
              4. Governments are interest in the value added to components for tax and duty calculation
    4. Distribution Strategies
      • Interdependence of distribution decision
        1. Distribution decisions affect other market mix elements
        2. Products with greater need for after-sale service require different distribution than those that do not
        3. Channel decisions are critical because they are long term decisions
      • International standardization
        1. Availability of channel members
          1. Starting point for local distribution design is the availability of channel members
          2. Local managers may be able to find advantage in contracting distribution members
          3. Some firms consider their distribution plans non negotiable and strictly adhere to them
        2. Foreign environmental forces
          1. Cultural and legal forces exert influence on distribution channel decisions
          2. Changes in the environment occur slowly
          3. The introduction of hypermarts, or large scale retailers, in Europe was met with resistance as a major change
          4. The growth of hypermarts slowed dramatically but they continue to open throughout Europe as they slowly become accepted
          5. The growth of the Internet as a retailing force has been slow in some parts of the world since it represents a major change in relationships between buyer and seller
        3. Economic conditions also affect distribution decisions
          1. Example, Japan's financial problems have led to increasing number of women in the work force taking them away from the traditional role of leisurely acquiring household items and preparing meals
          2. Convenience stores in Japan are becoming pick up locations as Japanese Internet buyers are reluctant to use credit cards on the Internet
      • Disintermediation
        1. This refers to the unraveling of traditional distribution structures
        2. Most often occurs with the entrance of the Internet and fast delivery services
    5. Channel selection
      • Direct or indirect marketing
        1. Decisions must be made about the use of middlemen
        2. Size of product and price affects the decision about how to market
        3. Some types of products are marketed indirectly
          1. Channel members are selected on basis of there territory coverage, costs, and susceptibility to company control
      • Factors influencing channel selection
        1. Market characteristics
          1. Obvious place to start in designing channels is the target market
          2. Marketer seeks optimum coverage into target market
        2. Product characteristics
          1. Low-cost products sold in small quantities usually requires a long channel of distribution
          2. If goods are perishable, short distribution is desired
          3. If product is technical, effective middlemen are difficult to find
        3. Company characteristics
          1. A firm with good financial resources is in good position to use its own sales force
          2. Financially weak firms must use middlemen to distribute effectively
        4. Middlemen's characteristics
          1. Many larger products require considerable after-sales support
          2. Middlemen are sometime the key to effective after-sales support
          3. When no channel members are available to reach a target market the firm must (a) abandon the attempt to enter the market, or (b) establish the distribution elements to access the market
    6. Foreign environment forces and marketing mix matrix
      • Table 16.3 summarizes the constraints on the internationalization of the marketing mix




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