International business, 5 th edition chapter 16 international marketing

intern

ation

al bu

siness, 5

th edition

chapter 16international marketing

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Chapter Objectives 1

• Characterize the nature of marketing management in international business

• Discuss the basic kinds of product policies and decisions made in international business

• Identify pricing issues and evaluate pricing decisions in international business

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Chapter Objectives 2

• Identify promotion issues and evaluate promotion decisions in international business

• Discuss the basic kinds of distribution issues and decisions in international business

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Marketing

Marketing is “the process of planning and executing the conception, pricing, promotion, and distribution of ideas,

goods, and services to create exchanges that satisfy individual and

organizational objectives.”

International marketing is the extension of these activities across

national boundaries.

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Figure 16.1 International Marketing as an Integrated Functional Area

OperationsManagement

FinanceHuman

ResourceManagement

Accounting

Marketing

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Market Strategy Must Support Business Strategy

Differentiation

Focus

Cost leadership

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Marketing Mix Decisions

• How to develop the firm’s product(s)

• How to price those products

• How to sell those products

• How to distribute those products to the firm’s customers

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Figure 16.2 Elements of the Marketing Mix for International Firms

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Key Decision-Making Factors

• Standardization versus customization

• Legal forces

• Economic factors

• Changing exchange rates

• Target customers

• Cultural influences

• Competition

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Standardization versus Customization

Ethnocentric Approach

Polycentric Approach

Geocentric Approach

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Table 16.1 Standardized International Marketing

Advantages

• Reduces marketing costs

• Facilitates centralized control of marketing

• Promotes efficiency in R&D

• Results in economies of scale in production

• Reflects the trend toward a single global marketplace

Disadvantages

• Ignores different conditions of product use

• Ignores local legal differences

• Ignores differences in buyer behavior patterns

• Inhibits local marketing initiatives

• Ignores other differences in individual markets

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Table 16.1 Customized International Marketing

Advantages

• Reflects different conditions of use

• Acknowledges local legal differences/ differences in buyer behavior

• Accounts for other differences in individual markets

Disadvantages

• Increases costs/ inefficiencies

• Inhibits centralized control of marketing

• Reduces economies of scale in production

• Ignores the trend toward a single global marketplace

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Product

Product comprises both the set of tangible factors that the consumer

can see or touch (the physical product and its packaging) and

numerous intangible factors such as image, installation, warranties,

and credit terms.

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Factors Affecting the Standardization of Products

Legal forcesCultural

influences

Economic factors

Brand names

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Factors Affecting Pricing Policies

Business strategy

Competitive environment

Costs of doing business

Exchange rate fluctuations

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Pricing Policies

Standard pricepolicy

Marketpricing

Two-tiered pricing

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Figure 16.3a Determining the Profit-Maximizing Price

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Figure 16.3b Determining the Profit-Maximizing Price

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Conditions for Market Pricing

• Firm must face different demand and/or cost conditions in the countries in which it sells its products

• Firm must be able to prevent arbitrage

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Risks to Market Pricing Policy

Charges of dumping

Development of a gray market

Consumer resentment

Damage to brand name

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Promotion Mix

Advertising Personal selling

Sales promotion Public relations

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Factors Affecting Advertising Strategy

• The message it wants to convey

• The media available for conveying the message

• The extent to which the firm wants to globalize its advertising effort

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Global Advertising

A customer entering this domino parlor in Egypt encounters no language barriers in knowing that the establishment serves Coke.

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Advantages of Personal Selling for International Firms

• Local sales representatives understand local culture, norms, and customs

• Personal selling promotes close, personal contact with customers

• Personal selling makes it easier for firm to adopt valuable market information

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Sales Promotion

Sales promotion comprises specialized marketing efforts

designed to offer an incentive for behavior such as coupons, in-store promotions, sampling, direct mail

campaigns, cooperative advertising, and trade fair attendance.

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Public Relations

Public relations consists of efforts aimed at enhancing a firm’s

reputation and image with the general public, as opposed to touting

the specific advantages of an individual product or service.

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Distribution Issues

Physicaltransportation

mode

Merchandisingmode

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Table 16.2 Advantages/Disadvantages of Transportation Modes

Mode Advantages Disadvantages Sample Products

Train Safe, reliable, inexpensive

Limited to rail routes, slow

Automobiles, grains

Airplane Safe, reliable, fast Expensive, limited access

Jewelry, medicine

Truck Versatile, inexpensive

Small size Consumer goods

Ship Inexpensive, good for larger products

Slow, indirect Automobiles, furniture

Electronic Media

Fast Unusable for many products

Information

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Basic Parts of a Distribution Channel

Manufacturer

Wholesaler

Retailer

Customer

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Figure 16.4 Distribution Channel Options