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intern
ation
al bu
siness, 5
th edition
chapter 16international marketing
16-2
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
16-3
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
16-4
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.
16-5
Figure 16.1 International Marketing as an Integrated Functional Area
OperationsManagement
FinanceHuman
ResourceManagement
Accounting
Marketing
16-6
Market Strategy Must Support Business Strategy
Differentiation
Focus
Cost leadership
16-7
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
16-8
Figure 16.2 Elements of the Marketing Mix for International Firms
16-9
Key Decision-Making Factors
• Standardization versus customization
• Legal forces
• Economic factors
• Changing exchange rates
• Target customers
• Cultural influences
• Competition
16-10
Standardization versus Customization
Ethnocentric Approach
Polycentric Approach
Geocentric Approach
16-11
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
16-12
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
16-13
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.
16-14
Factors Affecting the Standardization of Products
Legal forcesCultural
influences
Economic factors
Brand names
16-15
Factors Affecting Pricing Policies
Business strategy
Competitive environment
Costs of doing business
Exchange rate fluctuations
16-16
Pricing Policies
Standard pricepolicy
Marketpricing
Two-tiered pricing
16-17
Figure 16.3a Determining the Profit-Maximizing Price
16-18
Figure 16.3b Determining the Profit-Maximizing Price
16-19
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
16-20
Risks to Market Pricing Policy
Charges of dumping
Development of a gray market
Consumer resentment
Damage to brand name
16-21
Promotion Mix
Advertising Personal selling
Sales promotion Public relations
16-22
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
16-23
Global Advertising
A customer entering this domino parlor in Egypt encounters no language barriers in knowing that the establishment serves Coke.
16-24
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
16-25
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.
16-26
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.
16-27
Distribution Issues
Physicaltransportation
mode
Merchandisingmode
16-28
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
16-29
Basic Parts of a Distribution Channel
Manufacturer
Wholesaler
Retailer
Customer
16-30
Figure 16.4 Distribution Channel Options