Transcript 4.7 International Marketing

IB Business Management
4.7 International Marketing
Learning Outcomes
• To understand the methods of entry into
international markets (A02)
• To analyse and evaluate the opportunities and
threats posed by entry into international markets.
(A03)
• To be able to discuss and evaluate the strategic
and operational implications of international
marketing (A03)
• To be able to discuss and evaluate the role of
cultural differences in international marketing
(A03)
• To be able to discuss and evaluate the
implications of globalisation in international
marketing (A03)
Central Question
Do you keep the
7P’s the same
when you enter a
new
country/market?
International Marketing
“the marketing of a firm’s products /
services in foreign countries”
Watch the Video on Oreos
• What factors have contributed to a successful
international marketing approach for the brand
Oreos?
LOOK AT THESE INTERNATIONAL
BRANDS THAT ARE MARKETED
UNDER DIFFERENT BRAND NAMES
INTERNATIONALLY
International Marketing
• The marketing mix for
the product may have to
be adapted
• This can be called
‘glocalisation’
Methods of Entering
International Markets
1. Exporting – sell products directly to overseas buyer
Advantage
Disadvantage
Overseas buyer responsibility to sell and
they know their market
Overseas buyer takes commission or a
certain profit margin  reduced profits
No need to setup business in the new
market  reduced cost and risk
Do not control marketing/distribution in
the overseas market  is it in line with
your brand image,? Is there quality
control?
Methods of Entering
International Markets
2. Direct Investment – setting up a business presence
in the overseas location
Advantage
Disadvantage
Wider distribution channel  solves
exporting problems (quotas, tariffs)
Are there the right resources in the
country (Capital, Enterprise, Land, Labour)
to make the product and maintain
standards?
Overseas Government can offer incentives
to the company to help set up because it
improves their economy by adding jobs
and up skilling. Incentives include tax
breaks & grants
Are there cultural and ethical issues e.g.
Do they need to adapt their motivational
methods to suit the labour market. Is the
company exploiting the country by using
cheap labour and sending profits back to
domestic nation?
Methods of Entering
International Markets
3. E-commerce – trading via the internet
Advantage
Disadvantage
Low costs and reduced risks of
international marketing as do not need to
setup pyhsical stores
Do the products meet the safety and
quality standards in the overseas nation.
E.g. Garuda Air was banned from EU
airspace due to safety concerns.
Can ‘tweak’ or adapt website to cater for
different overseas market needs and
cultures.
Damages can occur in distribution phase.
Security concerns regarding online
transactions.
Technology (drones/3D printing) changing
the distribution landscape and potentially
making it cheaper and more efficient.
Time taken for customer to receive end
product
Methods of Entering
International Markets
4. Joint Ventures – 2 or more companies invest in a
shares business project. Resources are combined to form a
separate business e.g. Sony Ericsson
Advantage
Disadvantage
Companies retain their individual separate
legal entities
Share the profits of the venture
Spread risks, shared expertise and
resources  minimise risks further
Time needed to identify the most
appropriate businesses to combine with
If joining with a company in the overseas
market – they will have knowledge of that
market  advise and recommend an
appropriate entry strategy.
Methods of Entering
International Markets
6. Strategic Alliances – similar to joint ventures but no
new company is formed. E.g. airlines often do this to have
access to new regions/destinations
Advantage
Disadvantage
An alliance with a business in the overseas
market can help gain access into that
market.
Do both businesses share the same vision
& mission
Risks reduced and Resources shared
Is there a culture clash  communication
and organizational problems
Methods of Entering
International Markets
7. Franchising – A business allowing others to trade
under its name in return for a fee and a royalty
payment e.g. McDonalds
Advantage
Disadvantage
Established and recognised Brand and
product selection
Start up costs can be high and franchisee
pays % of sales every year to franchisor
Marketing completed by the Franchisor
All procurement of resources has to be
through the franchisor (often expensive)
Quick and easy to start trading
Bound by the conditions of the franchise
agreement
Negative publicity towards the brand in
anyway could impact the franchisee
Methods of Entering
International Markets
8. Licensing – when another firm buys the right to
produce the goods of the licensor e.g. Nike, Disney
Advantage
Disadvantage
Entering new markets with minimal risk
Will the Licensee maintain quality and
safety standards. If not Global brand image
could be affected.
Licensee likely to have knowledge and
experience of their market  can adopt
appropriate strategy for success given the
cultural/societal differences
Fraudulent copies e.g. China
Licensing can apply to patents and
trademarks and can receive through
Tend not to get % of sales (just fixed
payment for the period of licensing
agreement) so could be missing out on
potential profits/revenue
Methods of Entering
International Markets
9. Mergers – When two businesses decide to
integrate into a single organisation e.g. Daimler
Chrysler
Advantage
Disadvantage
Merging with a foreign company can help
gauge access to overseas markets and
lessen risk of failure
Share profits
Share losses
Perhaps a Loss of old brand
identity/loyalty
Combined capital and resources
Clash of cultures  inefficiency, poor
communication and diseconomies of scale
Economies of scale due to increase in size
Methods of Entering
International Markets
10. Acquisitions or Takeovers – When one
business buys out another by purchasing a majority
stake in the target company
Advantage
Disadvantage
Quick way to enter a new overseas market
Requires large capital investment
Economies of scale  cost savings
Possible diseconomies of scale if size not
managed efficiently
Expands product portfolio and spreads risk Can give the firm that takes over a
negative image due to reaction of pressure
groups or stakeholders e.g. Kraft &
Cadbury
Opportunities for Entering
new Markets
•
•
•
•
•
•
Increased customer base
Economies of scale
Increased brand recognition
Spread risks
Extend Product Life Cycle
Gain more profit
Threats for Entering new
Markets
•
•
•
•
•
Legal issues e.g. ?
Political issues e.g. ?
Social & Demographic issues e.g. ?
Pressure groups – e.g. ?
Economic Issues – e.g. ?
Google Doc Time 
TASK 10 minutes – Research real examples of
companies entering overseas markets and identify any
factors the company faced relevant to the above
threats.
PEST FACTORS REGARDING
INTERNATIONAL TRADE
Issues & Problems: Legal
• Copyright & patent
protection differ
o
o
Inventions
Ideas, logos, slogans, etc.
o
Advertising
o
Many countries pushing for
ban on junk food
advertising
• Consumer protection laws
differ
 Children
 Weapons
 Smoking & Drinking
Issues & Problems: Political
• Trade barriers
•
o
o
o
o
o
Quotas
Tariffs
Embargoes
Regulation, licenses, visas
Subsidies
o
Visas etc
Administrative barriers
Issues & Problems: Social &
Demographics
•
•
•
•
•
•
Different Culture
Multicultural nations
Differing consumer tastes
Internet uptakes
Average age within nation
Incomes vary within &
among countries
• Pressure Groups
o Language
Language barriers examples
•In Taiwan, the translation of the Pepsi slogan "Come alive with the
Pepsi Generation" came out as "Pepsi will bring your ancestors back
from the dead."
•Also in Chinese, the Kentucky Fried Chicken slogan "finger-lickin'
good" came out as "eat your fingers off."
•When General Motors introduced the Chevy Nova in South America, it
was apparently unaware that "no va" means "it won't go." After the
company figured out why it wasn't selling any cars, it renamed the car
in its Spanish markets to the Caribe.
•When Parker Pen marketed a ballpoint pen in Mexico, its ads were
supposed to say "It won't leak in your pocket and embarrass you."
However, the company mistakenly thought the spanish word
"embarazar" meant embarrass. Instead the ads said that "It wont leak
in your pocket and make you pregnant."
•In Italy, a campaign for Schweppes Tonic Water translated the name
into Schweppes Toilet Water.
Issues & Problems: Economic
• Things to watch out
for:
o Transportation
costs
o Longer Supply
Chains
o Communications
costs
o Interest rates
o Exchange rate
fluctuations
International Marketing Mix
How would the marketing mix of the
following products have to be adapted for
different markets
Price
Product
Place
Promotion
Physical
Evidence
• Processes
• People
• Packaging
•
•
•
•
•
How Can Cultural Differences
influence International
Marketing
Google Doc Time again ;)
Task – for a chosen company work in pairs to
answer the above question. And add to the doc so
we all have as a reference. Give relevant examples.
What are the Implications of
Globalisation on International
Marketing
Google Doc Time again ;)
Task – for a chosen company work in pairs to
answer the above question. And add to the doc so
we all have as a reference. Give relevant examples.
Is the Ansoff’s Matrix Relevant to
International Marketing?
PRODUCTS
Existing
New
Market
Penetration
Existing
Consolidation
Withdrawal
Product
Development
Do Nothing
Increasing risk
MARKETS
New
Market
Development
Diversification
Increasing risk
International Marketing –
CUEGIS?
CONCEPT
CHANGE
CULTURE
ETHICS
GLOBALISATION
INNOVATION
STRAETEGY
RELEVANCE TO INTERNATIONAL MARKETING
THEORY