Transcript 4.7 International Marketing 4.8 Ecommerce

4.7 International Marketing
4.8 Ecommerce
Chapter 29
International Marketing

International Marketing
– Selling products in markets other than the original
domestic market.
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Why sell in international markets?
– Saturated home markets
– Increase profits through rapid sales growth and low
costs in emerging markets
– Spread risks between different markets
– Poor trading conditions in home markets may make
international markets desirable
Differences in International Markets
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Conducting business internationally may
be different:
– Political differences
– Economic and Social differences
– Legal differences
– Cultural differences
– Business practices differences
Political Differences
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Problems that occur for “political” reasons
– Government structures
 Democracy, socialist governments, communism
– Political instability
 Acts of terrorism, civil violence, drug wars
Economic and Social Differences

Problems that occur due to economic or
social reasons
– Average living standards around the globe
range from $160 (Burundi) to $78,559
(Luxembourg) GDP per capita
– Tax rates, interest rates
– Aging population
– Role of women and marriage
Legal Differences

Problems that occur due to legal reasons
– Some goods illegal to sell in some countries
(guns, medications)
– It may be illegal to advertise (children,
tobacco products, birth control)
– Product labeling and safety requirements
maybe stricter in some countries
Cultural Differences

Problems that occur due to cultural
reasons and can be difficult to
measure
– Words have different meaning when
translated
– The use of male/female models may
not acceptable
– Colors can have different meaning
Business Practices

Problems that occur due to different
business practices
– Accounting standards may vary
– Setting up a company may face different
requirements and time frames
Entry into International Markets

Exporting
– Selling a product directly to
a foreign customer
– Selling a product to
intermediary based in a
foreign country

International Franchising
– Using a franchise to
operate your firm’s
activities in a foreign
market
 Can be owned by many
individuals
 Can be owned by 1
company operating many
locations
Entry into International Markets

Joint Ventures
– Agreements between at least 2 companies to operate a new
business venture
 Aera Energy operating in Southern California is a joint venture
between ExxonMobil and Royal Dutch Shell combined efforts to
locate oil in Southern California.
 Japan Nuclear Company is a joint venture between General
Electric, Toshiba Corporation, and Hitachi to manufacture nuclear
fuel for Japan’s nuclear energy industry.
Entry into International Markets

Licensing
– Allows another firm in a foreign country to produce its
branded or patented products under license usually under
strictly controlled terms over quality.
 Goods do not have to be exported if produced locally
 Food products are fresher
 No capital costs of setting up production facilities
 NEGATIVES: Quality issues and unethical
production methods may reflect badly on
the company
– Recent example: Apple factories in China
reports mandatory overtime, factory
explosions, crowded dormitories
Entry into International Markets
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Direct Investment in Subsidiaries
– Company-owned subsidiaries in foreign countries tend to be
more successful than merging with locally based companies.
– Why:
 Culture, organizational structure, and technology differences of
locally acquired business can be too different to overcome.
– Subsidiaries can:
 Be production or retail operations
 Management can be decentralized
– Local managers make most key decisions
 Management can be centralized
– Controlled from the head office in the home country
– Example: BMW US Manufacturing Company
located in Spartanburg, SC
International Marketing Strategies

Globalization is making differences in
taste, culture, and fashion less obvious.
 If true, companies can take advantage of
economies of scale by selling the same product to
the entire world.
 If not true, there will always be differences at the
local level that will prevent the successful global
marketing of products.
International Marketing Strategies

Pan-global marketing
 Adopting a standard product across the globe as if
the whole world were a single market. Selling the
same goods in the same way everywhere.
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Global localization
 Adapting the marketing mix, including different
products, to meet national and regional tastes and
culture. “Thinking global – acting local”
International Marketing Strategies
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Pan-global Marketing
– Successful for 2 categories of products
 Upmarket brands with international appeal
– Rolex watches, Rolls-Royce cars, Versace Dresses
 Mass-Appeal brands
– Apple products, Levi’s jeans, Nike shoes
International Marketing Strategies
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Global localization
– Thinking global – acting local
 YUM – the world’s largest food organization (KFC
and Pizza Hut) use this approach
– China: sells products not available in other countries to
suit local tastes
– Price levels are varied between different countries to
reflect differences in income
– Advertisements contain local ethnicities
Ecommerce
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Ecommerce: The buying and selling of goods
and services on the Internet.
– B2C: Selling of goods and services directly to the
final customer through a website.
– B2B: Selling/buying of goods and services to/from
another business
– Advertising by using the company’s own website or
creating a banner or pop-ad on another firm’s website
to reach target market
– Sales leads are generated by encouraging customer t
leave information
– Collecting market research data by encouraging
customers to answer questions
Ecommerce Impact
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Businesses and Consumers have been impacted
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Music
Film
Banking
Insurance
Travel and Tourism
– These were once typical retail stores. The product
delivery system has drastically changed due to the
Internet.
Ecommerce Impact
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Marketing Mix has been impacted
–Product
 Consumers can be communicated with individually
 Custom services can be easily created
(Airline tickets, hotel reservations, rental cars)
 Custom products can be easily built
(build your own car or computer)
 Larger stocking options because market potential
is greater
Ecommerce Impact
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Marketing Mix has been impacted
–Price
 Prices can be easily compared
 Competitive pricing more likely than cost-plus
 Consumers have more control
Ecommerce Impact
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Marketing Mix has been impacted
–Promotion
 Banners, pop-ups, text messages, web pages are
all NEW ways to promote products
 Promotional opportunities are greater
 Cost to reach potential customers is lower
Ecommerce Impact
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Marketing Mix has been impacted
–Place
 The Internet is transforming how we buy.
 Will there be a need for store-fronts?
?