© 2004 Mark H. Hansen

International International MarketingMarketing

International Marketing

Why Expand Internationally?

• limited domestic market opportunities

• achieve economies of scale/global volumes

• access factors of production economically

• leverage the competencies of the firm

International Marketing

Successful international marketing depends on:

• the product

• is the product a ‘standard’ product, or

• will the product require customization

• the message

• can the message be the same, or

• must the message be altered

International Marketing

Successful international marketing depends on:

• the foreign culture

• the foreign infrastructure

• the foreign government

• the foreign economic conditions

International Marketing

Standardization vs. Customization

• depends on the product

• depends on needs (tastes and preferences)

• this choice influences international strategyand mode of entry decisions

• the choice is a continuum, not either/or

International Marketing

International Expansion

Motivations Deterrents

• market size• stabilize risk• profit potential• unsolicited orders• proximity• excess capacity• scale economies• smoothing cycles

• red tape• trade barriers• transportation• human resources• governments• slow payments• culture barriers• language barriers

International Marketing

The International Expansion Choice

Corporate Level Decision

• Is this a business we should be in?

Business Level Decision

• stakeholder expectations

• situation analysis

• positioning decisions

• mode of entry

International Marketing

The International Expansion Choice

Functional Level Analysis & Decisions

• Do we have the necessary resources to carryout the decisions taken at the corporate and business levels?

International Marketing

• Marketing Mix Decisions

The International Expansion Choice

Functional Level Analysis & Decisions

• Product/Promotion• one product, one message, worldwide• product extension, promotion adaptation• product adaptation, promotion extension

• dual adaptation• product invention

International Marketing

The International Expansion Choice

Functional Level Analysis & Decisions

• Marketing Mix Decisions

• Pricing

• relative to prices in other countries

• what the market will bear

• dumping

International Marketing

The International Expansion Choice

Functional Level Analysis & Decisions

• Marketing Mix Decisions

• Distribution & Logistics

• infrastructure differences (refrigeration)

• control issues

International Marketing

International Expansion Strategies

Global Strategy

• high level of standardization

Multidomestic Strategy

• high level of customization

• highly centralized

• highly decentralized

International Marketing

Modes of Entry

• Exporting

• Licensing

• Joint Ventures

• Direct Investment (Wholly Owned Subsidiary)

International MarketingModes of Entry

Cost

Control

Exporting

Licensing

Franchising

Joint Venture

Wholly OwnedSubsidiary

Low High

High

Acquisition

In general, there is a cost/control tradeoff in choosingwhich mode of entry to use.

International Marketing

Cultural Differences

• Language

• Colors

• Customs

• Religious Beliefs

• Values

International Marketing

Government / Political Issues

• Tariffs

• Trading Blocks

• Expropriation

• Commercial Centers

• Monetary Policy