International Marketing

1. International Marketing

2. International Marketing • Domestic Market Extension • Multi-domestic • Global Marketing

3. Domestic Market Extension • Sales of domestic products in int. markets. • Domestic orientation • International Market secondary • Firm seeks markets similar to domestic. • Little adaptation of product or marketing mix. • Usually produced domestically

4. Multi-Domestic Orientation • Separate operations in each country - production, marketing etc. • Different strategies and marketing mixes • Very little interaction • Markets could be very different.

5. Global-Marketing Orientation • Views the world as one market. • Develop product and marketing strategies for world markets. • Standardize as far as possible, adapt where necessary. • Economies of scale, transfer of knowledge and technology, global image, and better competitive position.

6. International vs. Domestic - Marketing Mix. • Standardization/Differentiation mainly in terms of Product and Promotions. • Product and Promotion Extension (Standardization) • Product Extension/Promotion Adaptation • Product Adaptation/Promotion Extension • Dual Adaptation (Differentiated) • Product Invention

7. Five International Productand Promotion Strategies Product Do not change product Develop new product Adapt product Do not change promotion Straight extension Product adaptation Product invention Promotion Communi- cation adaptation Dual adaptation Adapt promotion

8. Three components which could be changed. • Core component; packaging component; and support services component. • Core component - Physical product, design features, functional features. • Culture and use; standards or regulations; minor changes easier; major changes costly; functional features easy to adapt.

9. Three components which could be changed. • Packaging component - Price, quality, styling, color, trademark, brand name, etc (psychological features). • Economic or environmental requirements;Govt. regulations; Distribution requirements; consumer/cultural requirements.

10. Three components which could be changed. • Support services component - deliveries, warranty, repair and maintenance, spare parts etc. • Market characteristics, size, competition, level of development etc.

11. Country of origin effects. • Stereotypes about products and countries. • English Tea, French Perfume, Chinese Silk, Italian leather, Japanese cars and electronics. • Usually product specific. • Stereotypes based on level of industrialization. • Can be overcome with good marketing.

12. Pricing. • Objectives depend upon company orientation • Standard worldwide Pricing – Based on average unit costs of fixed, variable and export related costs. • Dual Pricing – Domestic and export prices are differentiated. Cost-plus pricing and marginal cost method. Cost-plus – full allocation of domestic and foreign costs. Marginal cost – Fixed costs for plants, R&D, Domestic overhead, and domestic marketing are disregarded. • Market-differentiated pricing – demand–oriented. Marginal costs and export-related costs considered.

13. Variables that influence international pricing • Taxes and tariffs - Specific duty, Ad Valorem, Combination. • Inflation - Time, Payment terms, possible price control. • Exchange rate Fluctuation - Prices of products and profits. • Middlemen and transportation costs - Longer, diverse, underdeveloped, smaller order quantities, could all increase costs. • Parallel Imports.

14. Parallel Imports/ Gray Markets. • Value of currencies. • Pricing policies. • Costs of transportation less than price differential. • Price controls or quotas. • Exclusive distribution agreements. • In the US – Gray market for Cars, Watches, cameras etc. – valued at $6-10 billion.

15. Global Advertising and Promotion Effort. • Global or standardized advertising strategy. • Pattern Advertising (similar basic message with some local variation) • Customized. • Marketing strategy; Cultural differences; Behavior in terms of the product; Media availability.

16. Global advertising strategy. • Developed on a global basis not exported. • Most large firms do not use, only 8% of U.S. multi-national firms.

17. Pattern advertising. • Plan globally act locally. • Broad outlines or basic positioning given but details can be adapted. • Assuming that there are some differences in culture and consumer behavior even if primary function is the same.

18. Creative challenges. • Media Regulations – comparative advertising – e.g., Germany prohibits use of superlatives. time allocations – e.g., In Italy 12% ads per hour., special taxes – e.g., Japan, type of product, type of copy and illustration, etc. • Language limitations - translating ad slogans, literacy levels, use of different languages.

19. Creative challenges. • Cultural diversity - Symbols, colors, tastes, values and beliefs etc. - subcultures. • Production and cost limitations - Poor quality printing, lack of high grade paper, film editing and processing facilities, high comparative cost for quality. • Media - Availability, Audience data, international media.

20. Advertising agencies. • Local agency. • Company owned agency. • Multinational Agency with local branches. Survey says - 32.5% using single agency worldwide. 20% two agencies. 5% using three. 10% using four. 32.5% using more than four.