Transcript International Marketing

International
Marketing
Introduction
International marketing is defined
as the performance of business
activities designed to plan, price,
promote, and direct the flow of a
company´s goods and services to
consumer or users in more than one
nation for a profit.
Definition
The activity, set of institutions, and
processes for creating, communicating,
delivering, and exchanging offerings
that have value for customers, clients,
partners, and society at large in more
than one country.
International marketing consists of the activity,
institutions, and processes across national borders
that create, communicate, deliver, and exchange
offerings that have value for stakeholders and society.
Forms of international marketing include export–
import trade, licensing, joint ventures, wholly owned
subsidiaries, turnkey operations, and management
contracts.
Marketing serves as a key agent of societal change
and as a key instrument for the development of
societal responsive business strategy.
Scope of International Marketing
Exports and Imports: International trade can be a good beginning to
venture into international marketing. By developing international markets
for domestically produced goods and services a company can reduce the risk
of operating internationally, gain adequate experience and then go on to set
up manufacturing and marketing facilities abroad.
Contractual Agreements: Patent licensing, turn key operations, co –
production, technical and managerial know – how and licensing agreements
are all a part of international marketing. Licensing includes a number of
contractual agreements whereby intangible assets such as patents, trade
secrets, know – how, trade marks and brand names are made available to
foreign firms in return for a fee.
Joint Ventures: A form of collaborative association for a considerable
period is known as joint venture. A joint venture comes into existence when
a foreign investor acquires interest in a local company and vice versa or
when overseas and local firms jointly form a new firm. In countries where
fully owned firms are not allowed to operate, joint venture is the
alternative.
Cont…
Wholly owned manufacturing:
A company with long term interest in a foreign market may establish fully
owned manufacturing facilities. Factors like trade barriers, cost differences,
government policies etc. encourage the setting up of production facilities in
foreign markets. Manufacturing abroad provides the firm with total control over
quality and production.
Contract manufacturing:
When a firm enters into a contract with other firm in foreign country to
manufacture assembles the products and retains product marketing with itself, it
is known as contract manufacturing. Contract manufacturing has important
advantages such as low risk, low cost and easy exit.
Management contracting:
Under a management contract the supplier brings a package of skills that will
provide an integrated service to the client without incurring the risk and benefit
of ownership.
Cont…
Third country location:
When there is no commercial transactions between two countries due to
various reasons, firm which wants to enter into the market of another nation,
will have to operate from a third country base. For instance, Taiwan’s entry
into china through bases in Hong Kong.
Mergers and Acquisitions:
Mergers and Acquisitions provide access to markets, distribution network,
new technology and patent rights. It also reduces the level of competition for
firms which either merge or acquires.
Strategic alliances:
A firm is able to improve the long term competitive advantage by forming a
strategic alliance with its competitors. The objective of a strategic alliance is to
leverage critical capabilities, increase the flow of innovation and increase
flexibility in responding to market and technological changes. Strategic alliance
differs according to purpose and structure.
The International Marketing Task
Foreign Environment
(Uncontrollables)
7. Structure of
Distribution
1. Competition
Domestic environment
(Uncontrollables)
Environmental
uncontrollables
country market A
(Controllables) 1. Competition
2. Technology
Price
Product
Target
5. PoliticalEnvironmental
7
Market
Legal
uncontrollables
6. Geography and
country
2 .Technology
Promotion Place
Infrastructure
market B
4.
Culture
Environmental
3. Economy
uncontrollables
5. Political3. Economy country
Legal
market C
4. Culture
Why Firms go International
Proactive Stimuli
• Profit advantage
• Unique products
• Technological
advantages
• Exclusive information
• Economies of scale
• Market size
Reactive Stimuli
• Competitive pressures
• Overproduction
• Stable or declining domestic
sales
• Excess capacity
• Saturated domestic markets
• Proximity to customers and
ports
Reasons for marketing
abroad
s Economies of scale and scope

 Existence of lucrative markets in foreign countries
 Saturated markets in the home country
 High R&D costs
 International opportunities
 Less competition
 New trade agreements
…
Differences between domestic and
international marketing
Domestic
International
Research data is available in a
single language and is usually
easily accessed
Research data is generally in foreign
languages and may be extremely
difficult to obtain and interpret
Business is transacted in a single
currency
Many currencies are involved, with
wide exchange rate fluctuations
Head office employees will
normally possess detailed
knowledge of the home market
Head office employees might only
possess and outline knowledge of the
characteristic foreign markets
Promotional messages need to
consider just a single national
culture
Numerous cultural differences must
be taken into account
Market segmentation occurs within Market segments might be defined
a single country
across the same type of consumer in
many different countries.
Differences between domestic and
international marketing (continued)
Domestic
International
Communication and control are
immediate and direct
International communication and
control might be difficult
Business laws and regulations are
clearly understood
Foreign laws and regulations might
not be clear
Business is conducted in a single
language
Multilingual communication is
requires
Business risks can usually identified
and assessed
Environments may be so unstable
that it is extremely difficult to identify
and assess risks
Planning and organizational control
systems can be simple and direct
The complexity of international trade
often necessitates the adoption of
complex and sophisticated planning,
organization and control systems
Differences between domestic and
international marketing (continued)
Domestic
International
Functional specialization within a
marketing department is possible
International marketing managers require a
wide range og marketing skills
Distribution and credit control are
straightforward
Distribution and credit control may be
extremely complex
Selling and delivery
documentation is routine and
easy to understand
Documentation is often diverse and
complicated due to meeting different
border regulations
Distribution channels are easy to
monitor and control
Distribution is often carried out by
intermediaries, so is much harder to
monitor
Competitors’ behavior is easily
predicted
Competitors’ behavior is harder to
observe, therefore less predictable
New product development can be New product development must take
geared to the needs of the home account of all the markets the product is
sold in.
Opportunities and Challenges
in International Marketing
To handle newly emerging forces and
dangers of unforeseen influences from
abroad, firms need to:
Be prepared and develop active
responses.
Envision new strategies.
Develop new plans.
Change the way of doing business.
Cont…
The growth of global business activities offers
increased opportunities.
Knowledge transfer around the globe helps an
international firm to build and strengthen
its competitive position.
International opportunities require an
awareness of global developments, an
understanding of their meaning, and a
development of capabilities to adjust to
change.
Benefits of International Marketing
Coca Cola in India
Disney International
The Nestlé Way
• Nestlé
sells more than 8,500 products produced in 489
factories in 193 countries
• Nestlé is the world’s biggest marketer of infant formula,
powdered milk, instant coffee, chocolate, soups, and
mineral water
•
The “Nestlé way” to dominate
markets is summarized in four
points:
(1) think and plan long term
(2) decentralize
(3) stick to what you know
(4) adapt to local tastes
Benefits of Global Marketing
•
•
•
•
Economies of scale
Unifying product development, purchasing, and
supply activities across countries
Transfer of experience and know-how across
countries through improved coordination and
integration of marketing activities
Stability of revenues and operations
4 P’s OF INTERNATIONAL MARKETING MIX
Product adaptation and development for
international marketing
Choice of pricing strategy
Competitor analysis
Packaging and labelling
Determination of discount
structures
Credit management
Translation of technical literature
Quality management
Licensing and contract manufacturing
Product
Place
Price
Choice of delivery terms
Costing and budgeting
Promotion
International distribution
International advertising, public
relations and sales promotion
Control of agents
International direct marketing
Export documentation
Control of salespeople
Cargo insurance
Translation of sales literature
Establishment of joint ventures
and subsidiaries
Exhibiting
Market research