International Marketing – Building a Knowledge Base

1. International Marketing – Building a Knowledge Base Pesewa Presentations

2. The Importance of the Knowledge Base • Key condition for international marketing success • Companies need to accumulate data and information through research • Primary and secondary research • It should have a business purpose

3. Defining Marketing Research • “Systematic and objective identification, collection, analysis and dissemination of data for the purpose of improving decision making related to the identification and solutions of problems and opportunities in marketing.” AMA • Marketing research is the systematic search for, and analysis of, information relevant to the identification and solution of problems relevant to the firm in marketing decisions and activities. • Functions: description and explanation, prediction, evaluation. • To provide information for planning, control and evaluation. • Information from both present and potential customers is of particular importance. Customer satisfaction measurement.

4. International Market Research • The tools may be the same but the environment differs. Although the objectives can be the same, the execution of the research may differ as a process. • New parameters • New environments • Number of factors involved • Broader definition of competition

5. Research Problems • Language • Lack of published market information • Time factor • Lack of international standardisation and so statistical bases. • Governments compile statistics for their own use. • Beware local market distortion factors

6. Comparability of National Statistics? • Very little! Government is the largest single source of statistical information, compiled for its own purposes. • Harmonisation is taking place across nations.

7. Identifying Messages • Can we find out hidden information in officially published statistical data? • How can such analysis and derived information help marketing decision makers?

8. Decision Making for Foreign Markets • More expensive, more variables involved, special legal, financial and area skills required • Less likely to arise from company market survey, more likely to result from external pressures on the firm • More likely to be result of selective analysis of market opportunities rather than universal and comparative analysis

9. Steps in Secondary Data Research Process • Understand the need for information • Determine research objectives • Identify sources of data • Evaluate data source, quality and compatibility • Obtain data • Interpret and analyse data • Present research results

10. Sequential Process of Researching Foreign Markets • Stage 1: Preliminary screening for attractive country markets – so, which foreign markets warrant detailed investigation? • Stage 2: Assessment of industry market potential - so, what is the aggregate demand in each of the selected markets? • Stage 3: Company sales potential analysis – so, how attractive is the potential demand for company products and services? S.Tamer Cavusgil

11. Research Plan • Background information • Analysis of supply • Demand and end-use analysis • Demand forecasts • Information on prices • Market access • Trading practices • Sales promotion • Documentation

12. Evaluating Data Source and Quality • Source Quality • Data Compatibility • Data Quality • Comparability of data from different countries often a problem: different definitions, different methods of data collection, different views and uses of products.

13. Most Critical Information • Macro Data • Tariff information • Import/export information • Non-tariff measures • Foreign export/import data • Data on government trade policy • Micro data • Local laws and regulations • Size of market • Local standards & specifications • Distribution system • Competitive activity

14. Market segmentation • A breakdown into segments of customers for particular products in particular countries. • Need to consider countries, channels, customer segments, etc. • Bases of segmentation • General market indicators; specific product indicators • Several models available as guides to market segmentation, no one model is a complete guide. • psychographic segmentation. • segmentation by core values for certain products. • Strategies available to increase sales, include (Asoff’s product/market matrix): • (a) increase penetration: extra market share in existing markets • (b) develop products: product innovation • (c) extend markets: new users for existing basic offerings • (d) widen activities: new products and markets around core activities.

15. Need to Know Behaviour, attitudes and needs of • Consumers • Intermediaries • Competitors and response of consumers and intermediaries to these activities

16. Where Data is Lacking… • Market Quality Index calculated by averaging the percentage figures over eight variables (apart from population) • First 4 reflect economic development • Next 4 reflect quality of life

17. Market Quality Index and Market Potential • Population • Income per capita • Employment in manufacturing???? • Steel consumption • Kilowatt hours produced • Motor vehicle registration • Telephones in use • Radio licences • Television licences

18. Foreign Market Entry Decision Criteria • Speed of market entry desired • Costs (direct and indirect) • Flexibility • Risk • Investment payback period • Long term profit objectives

19. Operating Risk Reduction Mechanisms • Production & Logistics • Stimulation of local suppliers. • Specialisation of production. • Multiple sourcing of production. • Location of facilities e.g. refineries. • Control of transportation. • Control of patents and know-how. • Marketing • Marketing control. • Brand name & trademark control.

20. Operating Risk Reduction Mechanisms • Financial • Maximising local debt finance • Localising capital structure. • Utilising contractual protection devices. • Internal money management practices. • Organisation • Joint ventures. • Multiple nationality. • Management contracts.

21. Operating Risk Reduction Mechanisms • Political • Gain home country political support. • Political patronage. • Active external relation strategy. • Bribery & illicit methods.