Transcript lesson 3: international marketing

Marketing Management
Of International Trade
October - December 2011
Ing. Ilona Bergquist, MBA
LESSON 3: INTERNATIONAL MARKETING
 Unit 1: Segmentation and positioning
– Product portfolio planning
– Segmentation
– Branding strategies
– Positioning
 Unit 2: Applying 4Ps in foreign operations
– Product and packaging strategies
– Pricing strategies
– Placement / distribution strategies
– Promotions / communication strategies
Page 1
LESSON 3: INTERNATIONAL MARKETING
Strategic product portfolio planning
–
Analysis to select key brands (key segments) the company will support abroad
Boston Consulting Group Matrix
High
MARKET GROWTH RATE

STARS
QUESTION MARKS
CASH COWS
DOGS
Use large amount of cash,
are leaders, generate cash
10%
Profits and cash generation
high, investment low
Have the worst cash
characteristics, low returns.
Either invest/increase m.s. or
sell
Avoid and minimize
Low
10x
1x
0,1x
RELATIVE MARKET SHARE
(m.s. of your firm/m.s. of largest competitor)
Page 2
LESSON 3: INTERNATIONAL MARKETING
Strategic product portfolio planning
GE Multifactor Portfolio Matrix
MARKET ATRACTIVITY

High
Maintain current status-quo
Good potential, invest (or selectively)
Avg.
Not good potential,
needs to be either
improved or dispose of
Low
Strong
Avg.
Weak
COMPETITIVE STRENGHT of the firm
Page 3
LESSON 3: INTERNATIONAL MARKETING

PORTFOLIO MANAGEMENT:

Brand priorities and life cycle
– BUILD
– launch and build brand, high marketing support
– GROW
– share growth, average marketing support
– SUSTAIN – share maintanance, low marketing support
– HARVEST – minimal /no marketing support, max. leverage of sales
100
•
Line Optimalization
95
– TURF analysis (opt. Reach)
– Distribution limits
75
+5%
81
+9
%
80
+19
%
70
65
97
90
90
85
96
95
62
60
55
50
Optimal number and combination of items
in the line
Page 4
LESSON 3: INTERNATIONAL MARKETING

SEGMENTATION
–
Dividing the market into homogenic groups of customers which can be targeted
through our communication mix
–
Basic Segmentation: B2C, B2B, Public sector
–
Consumer products segment (B2C)
–
Geographical (regions, size of cities, climate zones…)
–
Demographic (age, sex, family situation, ethnicity…)
–
Socioeconomic (education, income, structure of HH expenditure…)
–
Psychographic (social class – top managers, state employees, entrepreneurs,
introverts vs. extroverts)
–
Attitudinal (values and lifestyles, hobbies/interests, opinions, media watching
habits….)
–
Attitudes towards brands / category
–
Behavioral (purchase and usage habits, benefit expectations, motivations,
loyalty to brands)
Secondary
sources
Primary
sources
Better targeting with relevant offers
Page 5
LESSON 3: INTERNATIONAL MARKETING

SEGMENTATION
–
Business customers segment (B2B)
–
Characteristics of B2B
–
–
Limited number of customers, large value clients
–
Demand is often derived from end-product demand (i.e. building construction) and
price is less elastic
–
More rational purchasing behavior (large supplies can be ordered from HQ,
many factors influencing purchase – tech parameters, quality…image, trust,
payment terms….)
–
Close relationship & Personal contact
Segmentation can be according to:
–
Value of client (or size / potential) - Key/Priority Accounts
–
Business Industries
–
Geographical areas
–
Firms business dept.
–
Other – operational characteristics, financial situation of customers, flexibility in
decision…
Better targeting with relevant offers
Page 6
LESSON 3: INTERNATIONAL MARKETING


SEGMENT SELECTION
–
Factors influencing target selection are:
–
Size of segment, growth of segment, atractivity (level of competitors, risk of new
competitors entering, substitute market, strong position of buyers, strong position
of suppliers)
–
Internal capabilities – do we have the skills, resources and image to be successful
on the foreign market
SEGMENTATION STRATEGIES
–
Cost/Not differentiated marketing (Lidl, Private label brands…)
–
Differentiated marketing (different product for different segments, leveraging
different distribution, price)
–
Niche (targeting very small segments)
Page 7
LESSON 3: INTERNATIONAL MARKETING

SEGMENTATION STRATEGIES EXAMPLES
Page 8
LESSON 3: INTERNATIONAL MARKETING

SEGMENTATION STRATEGIES EXAMPLES
Page 9
LESSON 3: INTERNATIONAL MARKETING


POSITIONING reflects:
–
Characteristics of the products (functional and emotional benefits)
–
Expectations of international customers
–
Differentiation from competitors (USP)
Global positioning vs. Local Positioning (for local brands)
– GP used in industries like electronics, cars, PC, financial services, luxury brands
– A brand can has different positioning in local market vs. foreign market (Heineken)

Country of origin can have a big impact on the brand image - National Brand Index
Rating (1. Germany, 2. France, 3. GB, 4. Canada, 5. Japan), BRIC improving, CR # 31

POSITIONING TYPES:

Product benefit positioning - “Beautiful hair without dandruff”

Positioning focused on certain consumer segment – Fernet Stock, men also have
their days”

Positioning according to life style…

Sometimes it is needed to adjust the brand to modern trends and do a
repositioning
(National Brand Index - 2008 survey in 20 countries, 1K resp. in each c., 50 countries being evaluated), Based on: exports, governance, culture, people,
tourism, investment opportunities, economy trends
Page 10
LESSON 3: INTERNATIONAL MARKETING
Personalita / hodnoty
−Tradice
−Aktuálnost
−Nesobeckost, štědrost
Emoční benefit
−Pomáhá mi cítit se v klidu a v pohodě
−Partner k zajištění bydlení a finanční
jistoty
Funkční benefit
−Výhodné a spolehlivé finanční produkty
−Jednoduchost zřízení a užívání služby
Esence značky
Partner pro
zajištění bydlení a
finanční jistoty
Reason to believe / reason why
−Stabilita, tradice (prokázaná dlouhodobá
síla společnosti)
−Jisté zúročení mých vkladů
−Poradci, kteří znají mé potřeby
Diskriminátor / USP
−Pomáhá mi cítit se v klidu a v pohodě
−Atraktivní produkty s nízkým rizikem
−Poskytuje finanční produkty na míru
Insight
−Potřeba opravdového partnera pro moje finance
Cílová skupina
−Lidé se zájmem o finanční produkty
−Česká populace s důrazem na mladší populaci 18 – 35 let
Konkurenční kontext
−Finanční instituce poskytující produkty k zajištění bydlení a finanční jistoty (banky, spořitelny, pojišťovny,
nebankovní finanční instituce)
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LESSON 3: INTERNATIONAL MARKETING
Page 12
LESSON 3: INTERNATIONAL MARKETING

BRANDING STRATEGIES:

Trends:

Increasing role and usage of corporate brands – trust, guarantee

Building of global brands – mktg efficiency, strong image

Growing role of private label brands – economical for consumer,
growing quality of PL

Merging of brands

Growth of co-branding (payment cards, Intel inside, L’Oreal
buying Giorgio Armani for men perfumes, Coca Cola…)
D2 / GE and Omnitel in Italy
U – end of 90ties 1 600 brands, now about ¼ of that
Page 13
LESSON 3: INTERNATIONAL MARKETING
Corporate Brands
Three levels of brand architecture:
Corporate Brands
Endorsed Brand
Individual Brands
Criteria for selecting brand architecture:
• Target group(s)
• Brand elasticity
• Portfolio
• Geographical needs
• Brand role
• Ownership of brand (licence)
• Distribution channels
an other….
Page 14
LESSON 3: INTERNATIONAL MARKETING
What global brand has the highest value today?
44 mld USD
Page 15
Značky s největší hodnotou
TOP 100 znacek:
50 USA
GE
Fr
Jap
Svycar
(zdroj: ibid)
Other sources: interbrand.com
Page 16
LESSON 3: INTERNATIONAL MARKETING

BRANDING STRATEGIES:

Growing role of private label brands
PLMS International Private Label Yearbook
Younger shoppers more aware of PL and buying PL
Page 17
LESSON 3: INTERNATIONAL MARKETING
 Unit 1: Segmentation and positioning
– Product portfolio planning
– Segmentation
– Branding strategies
– Positioning
 Unit 2: Applying 4Ps in foreign operations
– Product and packaging strategies
– Pricing strategies
– Placement / distribution strategies
– Promotions / communication strategies
Page 18
LESSON 3: INTERNATIONAL MARKETING

PRODUCT STRATEGIES:
–
–
To decide whether to modify a product for the int’l market or not, we need to
consider the following factors:
–
Basic characteristics of the product, related services, symbolic values
–
Needs that the product meets
–
Consumer habits, preferences, style of living, taste…
–
Legal factors, norms, technical parameters
–
Buying power of people, size of market
–
Cost of adaptation
More focus on services and image, since functionality is
cost of entry
Offering financing
(Electra Group, ME)
Page 19
LESSON 3: INTERNATIONAL MARKETING

PRODUCT STRATEGIES:
–
Packaging: most frequently adapted for int’l markets
–
Role of product protection + communication (legal and mktg)
–
Pckg has to be attractive, convenient, supporting brand’s image
–
Countries with small buying power – smaller packages preferred
–
Customer habits may effect type of material (US: beer in cans vs. EU glasses)
–
In poorer countries, graphical depiction of usage direction needed
–
Innovative packaging can drive purchase interest…… very important for gift
packaging, decorative bottles, perfume flacons….and apple
Page 20
LESSON 3: INTERNATIONAL MARKETING

PRICING STRATEGIES:
–
Factors influencing pricing:
–
Income taxes, business (CR 35% in 1999 and 20% in 2009), EU avg. 23%,
Asia 28%, USA / Japan 40%
–
Taxes on goods and services (basic and lowered rate, 19% and 9% in CR)
–
Exchange rates, tariffs
–
Fixed and variable cost
–
Price strategy in other markets (standardization vs. differentiation –
may be needed if low buying power, different costs etc)
–
Competition (developed countries punish cartel prices)
–
Pressure of retailers (trade support)
–
Demand (limiting production can create exclusivity)
–
Image / positioning
Page 21
LESSON 3: INTERNATIONAL MARKETING

PRICING STRATEGIES:
1. Price skimming: short-term high price than lowering, typically for a completely
new product/service high launch price (to return cost on development), firm
gains monopoly advantage, than lowers the price as competition comes
–
Often for trendy, branded products …. computer games, apple iPhone
2. Premium pricing: long-term maintenance of higher price, high quality brand
and image, association with exclusivity and prestige (Nike, Prada, Chanel…)
3. Penetration price strategy: low prices to quickly penetrate markets, get high
market share, high volumes (results in lowering production costs/pcs).
–
Precondition is that the category has high price elasticity, firm has high
production capacity.
–
Potential threat is price war with competition, or lower trust of customers
–
Often used by Asian manufacturers
4. Transfer prices: large int’l firms use internal purchasing – subsidiaries buy from
mother company (global suppliers) to realize financial economies (keep profits in
countries with low income taxes)
Page 22
LESSON 3: INTERNATIONAL MARKETING

PROCESS OF SETTING PRICE:
– Cost Plus pricing: cost + mark-up
– Break-even pricing: cost + mark-up to gain ROI in given time period, no
consideration of competition or price elasticity
– Value-perceived pricing: marketing approach to prices, offering certain quality
to given target segment and based on perceived value, based on positioning and
product benefits/image
– Value-added pricing: relatively low price for good quality product, showing
continuous improvement in delivering quality and value (mobile phone co., PC
makers)
– Going-rate pricing: taking only in consideration the market leader price and not
own cost or demand
– In B2B, sealed-bid pricing: price set to win the project, more considering
competition than own costs
– Other: Dynamic pricing: changing price based on demand (Ryanair),
Discriminatory pricing: various price for different customers (mass transit student/senior prices)
Page 23
LESSON 3: INTERNATIONAL MARKETING

DISTRIBUTION:
– Building distribution is a longer term activity and requires lot of resources
– Trend: 1. Internationalization and concentration of retailers
– Growth of discount retailers (Schwarz: Lidl a Aldi) and Russian / Chinese firms
– In EU, concentration highest in Scandinavia,
Switzerland, France X lowest concentration in
Spain and Italy (globally in Asia)
– In CR, share of top 10 retailers 64% (FMCG)
WM in US, 30% share
– Trend: 2. Effort to be the dominant power in global markets
– Strong negotiating power of large retailers … pressure on price, quality, payment
conditions, supply process, trade support
– Markets where retailers have small share create too high cost – leaving
Page 24
LESSON 3: INTERNATIONAL MARKETING

DISTRIBUTION:
– Trend: 3. Diversification strategies of retailers – more than one store concept
– Supermarket: 400 – 2 000 m2 , 4 000 items, mostly food
– Hypermarket: 10 000 m2 , 30 000 items
– Discount stores: 600 m2 , 600 – 1 500
– Convenience stores, Department stores
– Pharmacy, Drug stores, Direct sales
– Also diversification of their
Private label brands
– Private label share on store sales:
Schwarz
60%
Tesco
50%
WM
40%
Carrefour 36%
Page 25
LESSON 3: INTERNATIONAL MARKETING
Page 26
Next Session
Key topic areas:

International trade development, role in the economy, benefits for companies

Entry modes for international business and developing international strategies

International marketing

Marketing Research; Creating and leveraging knowledge + finish Communication

Managing business plans; Managing HR
Home work:
Readings
1. Local Memoirs of Global Manager
Case Studies
McKinsey & Co: Managing Knowledge and Learning
(Nike presentation)
Page 27