Transcript International Business in an Age of Globalization

Chapter Sixteen
Global Marketing and
Supply Chain.
Learning Concepts – Chapter 16
1. Understand how to determine market potential
of a foreign country.
2. Understand there are adaptations that are
necessary for a product to sell in another country.
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Chapter Sixteen
three
Global Marketing and
Supply Chain.
Learning Concepts – Chapter 16 (cont)
3. Understand there can be domestic
manufacturing influence, translating to product
demand.
4. Understand that channel decisions are very
important in international marketing.
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Marketing Domino’s
Internationally
Domino’s opened its first foreign store (Winnipeg) in
1983. Japan was in 1984; United Kingdom was in
1985, Mexico was in 1989. It hit Taiwan in 1987,
and Hong Kong in 1984. Per store sales volume in
Asia is more than twice the United States. Their
secret: product adaptation (corn and squid on
pizza??), pricing determination, national promotion
and advertising, and customized transportation (the
scooter in Asia).
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The International Marketing
Challenge
International markets offer vast opportunities for firms
with a product or service in high demand. Newness,
cultural adaptation, attractiveness, and appropriate
marketing strategies can help tremendously.
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Assessing Market Potential
To assess market potential, firms seek to identify the
aggregate demand for a product and estimate the
costs associated with product introduction and
distribution. Population growth provides a coarse
estimate of future market potential. So do
consumption patterns.
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Globalization and Localization in
International Markets
Striking a balance between globalization and
localization is a key challenge. Generally, the more
closely defines the market segment, the less
important are national stereotypes (Germans and
ecology, Italians on performance). Across national
markets, there is a trend toward greater similarity on
product specifications, price, and packaging. On
the other hand, cultural and national differences
exist and require flexibility in communication with
customers.
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Globalization Forces
Global Brands (Kellogg’s, McDonalds, Budweiser,
Coke) are products that enjoy worldwide
recognition and are relatively unaltered in terms
of brand and appearance when sold abroad.
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Localization Forces
Localization forces represent pressures towards
adjustment in product marketing or distribution
to make it more appealing or to meet
requirements particular to a foreign market.
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Product Adaptation
Faced with a foreign market with different
characteristics, a firm may choose not to offer a
product or a service in that market, to offer the
same product it offers in other markets, or to
adapt it to regional or country requirements.
The Benefit/Cost approach and the User/Needs
approach help determine whether adaptation is
necessary.
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Product Adaptation
McDonald’s Product Adjustments: The Veggie Mac
(Switzerland), Chicken Rice (Singapore), no
pork (Saudi), McMacos and McFiesta
(Paraguay), McKroket (Netherlands), Teriyaki
McBurger (Japan), Curry Pie (Hong Kong),
McRoyal (Germany), McCafe (Argentina),
McCafe (Australia), McPalta (Chile). Hey, you
deserve a break today!!
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Country-of-Origin Effect
This is the influence of the country of manufacturing
image on the buying decision. The effect consists
of innovativeness; design; and workmanship.
There is strong evidence that country of origin
influences buyer’s decisions.
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Branding
Branding is the process of creating and
supporting positive perceptions associated
with a product or service. Branding is
especially complex in the international market.
Some issues:
 Selecting the right name
 Understand the local market
 Fine tune the size, price, value construct
 Quality/reliability at competitive price
 Holistic marketing using multiple channels
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Branding
 Turning trademarks into “trustmarks”
 Establishing leadership brands, and changing
social habits
 Selecting allies and partners
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Channel Decisions
 Export Intermediary choice is very important
 Direct Marketing is a potential channel
 Niche marketing is also very viable
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Promotion
It is important to choose the right mix marketing
communications like advertising and direct
marketing.
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Marketing Alliances
Marketing Alliances are frequently very important
because they serve as partners in the marketing
communications effort.
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