IB Business Management
4.7 International Marketing
Learning Outcomes• To understand the methods of entry into
international markets (A02)• To analyse and evaluate the opportunities and
threats posed by entry into international markets. (A03)
• To be able to discuss and evaluate the strategic and operational implications of international marketing (A03)
• To be able to discuss and evaluate the role of cultural differences in international marketing (A03)
• To be able to discuss and evaluate the implications of globalisation in international marketing (A03)
Central Question
Do you keep the 7P’s the same
when you enter a new
country/market?
International Marketing“the marketing of a firm’s products /
services in foreign countries”
Watch the Video on Oreos• What factors have contributed to a successful
international marketing approach for the brand Oreos?
LOOK AT THESE INTERNATIONAL BRANDS THAT ARE MARKETED
UNDER DIFFERENT BRAND NAMES INTERNATIONALLY
International Marketing• The marketing mix for
the product may have to be adapted
• This can be called ‘glocalisation’
Methods of Entering International Markets
Advantage DisadvantageOverseas buyer responsibility to sell and they know their market
Overseas buyer takes commission or a certain profit margin reduced profits
No need to setup business in the new market reduced cost and risk
Do not control marketing/distribution in the overseas market is it in line with your brand image,? Is there quality control?
1. Exporting – sell products directly to overseas buyer
Methods of Entering International Markets
Advantage DisadvantageWider distribution channel solves exporting problems (quotas, tariffs)
Are there the right resources in the country (Capital, Enterprise, Land, Labour) to make the product and maintain standards?
Overseas Government can offer incentives to the company to help set up because it improves their economy by adding jobs and up skilling. Incentives include tax breaks & grants
Are there cultural and ethical issues e.g. Do they need to adapt their motivational methods to suit the labour market. Is the company exploiting the country by using cheap labour and sending profits back to domestic nation?
2. Direct Investment – setting up a business presence in the overseas location
Methods of Entering International Markets
Advantage DisadvantageLow costs and reduced risks of international marketing as do not need to setup pyhsical stores
Do the products meet the safety and quality standards in the overseas nation. E.g. Garuda Air was banned from EU airspace due to safety concerns.
Can ‘tweak’ or adapt website to cater for different overseas market needs and cultures.
Damages can occur in distribution phase.Security concerns regarding online transactions.
Technology (drones/3D printing) changing the distribution landscape and potentially making it cheaper and more efficient.
Time taken for customer to receive end product
3. E-commerce – trading via the internet
Methods of Entering International Markets
Advantage DisadvantageCompanies retain their individual separate legal entities
Share the profits of the venture
Spread risks, shared expertise and resources minimise risks further
Time needed to identify the most appropriate businesses to combine with
If joining with a company in the overseas market – they will have knowledge of that market advise and recommend an appropriate entry strategy.
4. Joint Ventures – 2 or more companies invest in a shares business project. Resources are combined to form a separate business e.g. Sony Ericsson
Methods of Entering International Markets
Advantage DisadvantageAn alliance with a business in the overseas market can help gain access into that market.
Do both businesses share the same vision & mission
Risks reduced and Resources shared Is there a culture clash communication and organizational problems
6. Strategic Alliances – similar to joint ventures but no new company is formed. E.g. airlines often do this to have access to new regions/destinations
Methods of Entering International Markets
Advantage DisadvantageEstablished and recognised Brand and product selection
Start up costs can be high and franchisee pays % of sales every year to franchisor
Marketing completed by the Franchisor All procurement of resources has to be through the franchisor (often expensive)
Quick and easy to start trading Bound by the conditions of the franchise agreement
Negative publicity towards the brand in anyway could impact the franchisee
7. Franchising – A business allowing others to trade under its name in return for a fee and a royalty payment e.g. McDonalds
Methods of Entering International Markets
Advantage DisadvantageEntering new markets with minimal risk Will the Licensee maintain quality and
safety standards. If not Global brand image could be affected.
Licensee likely to have knowledge and experience of their market can adopt appropriate strategy for success given the cultural/societal differences
Fraudulent copies e.g. China
Licensing can apply to patents and trademarks and can receive through
Tend not to get % of sales (just fixed payment for the period of licensing agreement) so could be missing out on potential profits/revenue
8. Licensing – when another firm buys the right to produce the goods of the licensor e.g. Nike, Disney
Methods of Entering International Markets
Advantage DisadvantageMerging with a foreign company can help gauge access to overseas markets and lessen risk of failure
Share profits
Share losses Perhaps a Loss of old brand identity/loyalty
Combined capital and resources Clash of cultures inefficiency, poor communication and diseconomies of scale
Economies of scale due to increase in size
9. Mergers – When two businesses decide to integrate into a single organisation e.g. Daimler Chrysler
Methods of Entering International Markets
Advantage DisadvantageQuick way to enter a new overseas market Requires large capital investment
Economies of scale cost savings Possible diseconomies of scale if size not managed efficiently
Expands product portfolio and spreads risk Can give the firm that takes over a negative image due to reaction of pressure groups or stakeholders e.g. Kraft & Cadbury
10. Acquisitions or Takeovers – When one business buys out another by purchasing a majority stake in the target company
Opportunities for Entering new Markets
• Increased customer base• Economies of scale• Increased brand recognition• Spread risks• Extend Product Life Cycle• Gain more profit
Threats for Entering new Markets
• Legal issues e.g. ?• Political issues e.g. ?• Social & Demographic issues e.g. ?• Pressure groups – e.g. ?• Economic Issues – e.g. ?
Google Doc Time
TASK 10 minutes – Research real examples of companies entering overseas markets and identify any factors the company faced relevant to the above threats.
PEST FACTORS REGARDING INTERNATIONAL TRADE
Issues & Problems: Legal• Copyright & patent
protection differo Inventionso Ideas, logos, slogans,
etc.• Consumer protection
laws differo Advertising
Children Weapons Smoking &
Drinkingo Many countries pushing
for ban on junk food advertising
Issues & Problems: Political
• Trade barrierso Quotaso Tariffso Embargoeso Regulation, licenses,
visaso Subsidies
• Administrative barrierso Visas etc
Issues & Problems: Social & Demographics
• Different Culture • Multicultural nations• Differing consumer
tastes• Internet uptakes• Average age within
nation• Incomes vary within &
among countries• Pressure Groupso Language
Language barriers - examples
•In Taiwan, the translation of the Pepsi slogan "Come alive with the Pepsi Generation" came out as "Pepsi will bring your ancestors back from the dead."
•Also in Chinese, the Kentucky Fried Chicken slogan "finger-lickin' good" came out as "eat your fingers off."
•When General Motors introduced the Chevy Nova in South America, it was apparently unaware that "no va" means "it won't go." After the company figured out why it wasn't selling any cars, it renamed the car in its Spanish markets to the Caribe.
•When Parker Pen marketed a ballpoint pen in Mexico, its ads were supposed to say "It won't leak in your pocket and embarrass you." However, the company mistakenly thought the spanish word "embarazar" meant embarrass. Instead the ads said that "It wont leak in your pocket and make you pregnant."
•In Italy, a campaign for Schweppes Tonic Water translated the name into Schweppes Toilet Water.
Issues & Problems: Economic
• Things to watch out for:o Transportation
costso Longer Supply
Chainso Communications
costso Interest rateso Exchange rate
fluctuations
International Marketing Mix
How would the marketing mix of the following products have to be adapted
for different markets
• Price• Product• Place• Promotion• Physical
Evidence• Processes• People• Packaging
How Can Cultural Differences influence
International MarketingGoogle Doc Time again ;)
Task – for a chosen company work in pairs to answer the above question. And add to the doc so we all have as a reference. Give relevant examples.
What are the Implications of Globalisation on
International MarketingGoogle Doc Time again ;)
Task – for a chosen company work in pairs to answer the above question. And add to the doc so we all have as a reference. Give relevant examples.
Is the Ansoff’s Matrix Relevant to International Marketing?
Market Penetration
Consolidation
Withdrawal
Do Nothing
Product Development
Market Development
Diversification
Existing
MARKETS
New
Increasing risk
Increasing risk
PRODUCTSExisting New
International Marketing – CUEGIS?
CONCEPT RELEVANCE TO INTERNATIONAL MARKETING THEORY
CHANGE
CULTURE
ETHICS
GLOBALISATION
INNOVATION
STRAETEGY