Transcript International Marketing

International Marketing
Strategies and Marketing mix
ESG
March 2008
Jean-Philippe Javel
Size and nature of international markets
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Niches
Local markets
Regional markets
Global markets
Niche markets
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Purely local niches
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Limited to a specific geographical area
Often, historical roots, consumer behavior linked to old traditions
Worldwide niches
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Small market but potential customers in several countries
Example: Hummer H2
» derived from the military vehicle
» Target:
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Wealthy
« show-off »
Mostly urban
Niche in some countries, mass market in others
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Example : oil lamp
Decoration item (sailing style) in western countries
Local, regional and global markets
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Local markets (country)
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Strong cultural links
Specific market conditions
Examples :
» medias (press, radio, TV)
» cheese
» airlines : state regulations (ex: Morocco)
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Regional, multi-country markets
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Specific products and marketing mix
Example : cars
» North America, Europe, Poor African countries
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Global markets
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Rather undifferentiated goods, universal solutions,
not culturally related, commodities
» Example : wheelbarrow
» Example: vehicle gasoline
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Luxury brands
» Strong global brand image
» Marketing mix may be adapted locally
Chevrolet Tahoe
The Maharaja Mac is an example of an
Ad ap ted Marketing Mix
Adapting or standardizing
your marketing strategy and/or mix ?
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 Markets and consumers needs and wants can be different in
each country / region
 But it is not always optimal to localize the marketing strategy
and radically change the whole marketing mix for each country
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For example : developping a new product
 Mainly for cost reasons (economies of scale) and organisational
reasons (simplify)
Adapt
locally
Where is the optimum ?
Customer
needs and wants
Standardize
globally
Reduce costs
Maximize profits
 Consequently, a multinational company has to find out and
implement the optimal approach, between global and local,
depending on several factors and market screening
Strategic Adaptation to Foreign Markets
High
Level of
cultural
grounding
Need for
adaptation
Low
Industrial /
Technology
intensive
Consumer
Nature of product
Marketing : Globalization versus Adaptation
Factors encouraging
Factors encouraging
Adaptation to local markets
Globalization
• Different customer needs and wants,
behavior patterns
 cultural background
 use conditions
• It’s sometimes possible
 Lifestyles and consumer behavior
are converging (more or less)
• Cost reduction
• Different economic situation
 Economies of scale (lower
manufacturing & purchasing costs)
• Legal, tax, political barriers
 No product adaptation means less
R&D, Marketing, inventories costs
• Different competition landscape
• Specific sales/retail channels
• External growth and acquisition of
foreign local brands
• Unleash local managers’ initiative
• Simplify management
 Easier control & coordination
 Centralized decisions
• Global marketing campaigns
 Communication etc
 Possible fast worldwide launch
The 4 Types of International Marketing
Global marketing strategy
Local marketing strategies
(same everywhere)
(specific to each country or region)
Global tactics
Some tactics
adapted locally
Pure Global
Global
Mix of global &
local tactics
« Glocal »
Only local
tactics &
marketing mix
Pure Local
Bongrain : cheeses
Marketing Strategy : Pure global
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Strategies and tactics are the same
everywhere
2 conditions
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Markets adequate for such globalization
Strong brand policy, with no exception
Mostly luxury brands
Examples:
- Chanel n°5 perfume
- Omega watches
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Other examples
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La Maison du Chocolat
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same product
same shops (Paris, New York, Tokyo)
same service
same positioning, highest price on the market
Ikea
» same strategy everywhere (developped countries) :
same brand, same positioning, same target
» same marketing mix : products and services, pricing,
place, communication
» But a flop in China !
Marketing Strategy : Global
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Same brand, same positioning, same product
But the marketing mix can be partially adapted
locally, depending of local market conditions and
competition
Example : Air France
- Same brand, same planes, same quality of service, maintenance and
security
- Pricing is adapted locally
» When Air France has a quasi-monopolistic position (West Indies, some
African countries), prices are very high
» When Air France is on a market with fierce competition, especially from low
cost companies such as EasyJet or RyanAir (ex: Europe), prices are much
lower and special promotions are proposed
Marketing strategy : « Glocal »
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« Think global, act local »
Standardizes certain core elements and localizes
some marketing mix elements
Example : Honda Accor
Same brand and positioning
in Europe and in the USA
But the product is not the same everywhere
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In Europe, Accor sales are low, and cars are imported from
Japan
In the US, sales are higher and a special product is
manufactured for the US market
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Automatic gearbox
Slightly different style
Different motors
Different interior design and equipment
Since 1986, Honda has developped a new brand,
Acura, on the high-end, in the US & Japan, with
specific models and a dedicated retail network
Coca Cola marketing is coherent worldwide
and some elements are global
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Brand
Colors
Symbols
Same major sales channels
Some advertising campaigns
Sponsoring of major sport events
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Olympic Games since 1928
Football World Cup
But some elements of the products are localized
Example: adaptation of the Diet Coke product
« Diet » has a negative
meaning in many countries.
It was changed to « light » in
South Europe and Japan.
(same problem with « coke »
in French !)
USA
Cherry flavor for
the US market
Packaging, name and
formulas can be different
in local markets
China
Thailand
Marketing strategy : Pure local
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Brands, positioning, products and marketing mix are totally specific
and adapted to each country
Example: Bongrain, world leader of cheeses
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Tastes, preferences and traditions are very different in each country
Presence in 150 countries
Several hundreds of brands and products, with local marketing mix
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France : Caprice des Dieux, Saint Agur, Chavroux etc (28 brands)
Spain : Burgo de Arias etc
Hungary: Pannonia etc
USA : Alouette etc
India : Le Bon
China : Pikifou
Japan: Gerard Selection
Examples of product adaptation
Depending on needs and wants differences, and local
constraints, there are various approaches :
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Exactly the same core product worldwide
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Natural goods : Evian water
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Manufactured luxury goods : Cartier watches
Partially localized product
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Personal Computers : keyboard (20 different types in Europe), electrical
power, software etc
Mainly or totally localized product
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Cosmetics : different ethnic skins etc
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Yoghourts :
French and American tastes
are very different
(creamy formula, flavor,
size, number of items)
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Coffee : very different tastes and preferences in the world
International pricing strategies
Main reasons to adapt pricing in local markets
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Different strategic goals in each country
- Market penetration / high-end
» Example : Bonne Maman jam
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Different standards of living
- L’Oreal mass market products are less expensive in China
- Coca-Cola prices are lower in India than in Japan
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Manufacturing and/or shipping costs
- Evian bottle sold in Japan or in the USA (far away from France):
the price includes a rather high transport cost
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Tax, custom duties
Currency rates
Competition
International pricing strategies
Limits of different pricing by country
 May blur brand image and positioning
- example : Champagne Pommery used to be sold at different prices in
Europe, which was confusing some consumers (who travel)
 Foreign market price gaps may lead to “gray marketing” and
“parallel imports”
- sales of authentic, legally trademarked goods through unauthorized or
tolerated channels
- example : Renault cars imported from Spain and sold in France
- example of a technological response : DVD zones
- same issue with different tax levels :
- blank CD or DVD
- cigarettes
 Less and less price differences are possible in the European
Union because of 2 factors easing price comparisons :
 Euro common currency
 Internet price comparators
 leguide.com, Kelkoo, Lycos etc
International pricing strategies
Example : Louis Vuitton - Alma bag
Price is around 40%
higher in Japan than in
France (585 €)
But Louis Vuitton has to
impose purchase limits
to Japanese tourists
in France
Counterfeiting is also a major concern !
International communication strategies
Advertising
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Choice of medias : a localized approach is usually better
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Different audience
Different regulations
» Example: alcohol
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Message : a certain level of globalization is usually preferable
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Economies of scale
Brand image coherence worldwide
TV commercials, press ads etc often require localization
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But most multinational companies choose a advertising agency with offices
worldwide, to enable a global level of coherence in localized campaigns
There are few actual worldwide global advertising campaigns
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Example : Launch of Gillette Mach 3
Same TV commercial in 19 European countries and in the US
Only the soundtrack and slogan were translated
« The best a man can get »: « La perfection au masculin »
Choice of an international stars : David Beckham
International communication strategies
When is globalization of promotion most possible?
 Products / brands that can use a primarily visual
appeal
 Products / brands that can use images associated
with rather “universal” appeals
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such as sex or wealth
 Products / brands that appeal to a market segment
with universally similar tastes, interests, needs, and
values
 Products with a nationalistic flavor if the country has
a reputation in that field
 High tech products free of cultural bounds
Example : Apple iPod
Worldwide advertising campaign
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Same campaigns worldwide
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Different music soundtracks : Rock, electro / house, hip hop, jazz etc
Characters are presented in shadow style to avoid ethnic issues and to focus
more on the product (contrast effect)
Apple is now a dominant leader on the MP3 player market
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32 million iPods sold in 2005, more than 60% of market share
900 million songs sold through iTunes Music Stores, nearly 85% of the legal market
International communication issues
In which countries can’t you launch such a campaign ?
A low budget ?
Why not try viral marketing ?
Be creative !
Market entry strategies
Market entry strategies
Exporting
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Direct
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Domestic base
Overseas sales branch
Traveling sales representative
Foreign-based distributors/agent
Indirect-occasional, or active exporting
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Domestic-based export merchant
Domestic-based export agent
Cooperative organizations
Export-management company
Market entry strategies
Contractual Agreements
- Franchising: A contractual arrangement where a wholesaler or retailer
(the Franchisee) agrees to make some payment and to meet the
operating requirements of a manufacturer or other franchiser in
exchange for the right to use the firm’s name and to market its goods or
services
- Foreign Licensing: an agreement that grants foreign marketers the right
to distribute a firm’s merchandise or to use its trademark, patent, or
process in a specified geographic area.
- Subcontracting: a contractual agreement where a firm hires a local
company to produce goods or services in a specific geographic area.
Market entry strategies
International Direct Investment
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An additional strategy for entering global markets
Requires direct investment in foreign firms,
production, and/or marketing facilities
Advantages
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cheaper labor cost in some countries
government incentives
creates better image
deeper relationships with government, customers, suppliers and
distributors
- full control of operations and marketing
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Risks involved:
- economic difficulties of the host country
- political instability and negative perception
Comparison of Market Entry Strategies
Form
Control
Risk
Advantage
Export
Very limited
Low
Low cost
Ownership
Total
High
Control
Joint Ventures
Shared
Moderate
Local
expertise
Licensing
Limited
Moderate
Low cost
Internet
Total
High
No physical
presence required
Market Screening
Economic Size and Structure
Living
Standards
Growth
Prospects
Environmental
Factors
Import
Restrictions
Legal
Framework
Political
Stability
Social and Cultural Factors
Nature of
The Society
Segmentation of
The Market
Consumer
Groups
Geographical
Factors
Distinctive
Features
Marketing
Systems
Distribution
Promotion
Consumer
Behaviour
Extent of
Competition
After International Marketing, Bennett & Blythe, 2002
The 12C framework
to analyse international markets
Country - What are the political, legal and economic issues of your
potential overseas market, as well as its current market potential and your
knowledge and experience of it?
 Currency - If foreign currencies fluctuate a lot against your home currency,
you may have difficulties in pricing your goods or making a profit. Some
countries, like China don’t allow their currency to leave the country, so you
may have to work in $
 Culture - Every culture is different - even from one European country to
another. Your product, advertising and even brand may need to be adapted
to suit your new market.
 Control & Co-ordination - Trading abroad is not only about selling, but
also after sales service. All these people will have to be hired, trained,
managed and controled.
 Concentration (of markets) – some countries are vast (China, India etc).
It may not be so easy or cost effective to sell to different groups in isolated
areas. However, there may be opportunities to sell cross-countries to
different nationalities with similar cultural/language attitudes
 Commitment - Selling abroad seriously requires long term planning,
significant financial investment, time and skills of your staff. There are risks
and the return on investment may be long to come.
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The 12C framework
to analyse international markets
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Communication - You need to consider the language skills of you,
your staff and your contacts abroad, and what media or information technology
they have (advertising, telecommunications, e-mail etc). If it is difficult to
communicate, it will slow up and complicate matters. It may also prevent you
from developing your business properly.
Choices (of consumers) - It is possible that there are perfectly good products
or services available from local suppliers. Yours are likely to be more expensive,
so consider what would make your product better or more desirable.
Channels of distribution - Getting goods and services to overseas markets can
be difficult. Building an efficient retail network is usually hard and long.
Contractual obligations - Make sure that the contract meets everyone’s needs
and that you and your customer are fully aware of the commitments listed.
Failure to meet the exact requirements of the contract, can result in nonpayment.
Capacity to pay - You should take a look at the customer and their ability to pay
as well as the country itself. This will include not only financial health, but also
political issues, and currency and banking regulations.
Caveats (laws) Some countries have laws that are very protective of their local
traders and do not readily accept imports. There may be restrictions or
differences between your country and the foreign market about what can be sold
and under what circumstances.