ST.

JOHN OF
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International
Marketing
Management
(Compilation of Reports)

Submitted to:
Prof. Adrian A. Aquino
Table of Contents

I. Understanding Customer Buying Behavior

II. International Marketing Research
III. International Product Management
IV. International Marketing Communication
V. Strategies of Pricing
VI. Distribution and Logistics
VII. Evaluation and Control
 Understanding Customer Buying
Behavior
Reporter: Irish D. Megio

Definition of Buying Behavior

Buying Behavior is the decision processes and acts of people involved

in buying and using products.

Need to understand:

why consumers make the purchases that they make?

what factors influence consumer purchases?

the changing factors in our society.

Consumer Buying Behavior

Consumer buying behavior is the sum total of a consumers attitude

preference, intention and decision regarding the consumer behavior in
the market place when purchasing a product or service.

Consumer Buying Behavior refers to the buying behavior of the ultimate

consumer. A firm needs to analyze buying behavior for:

Buyers reactions to a firms marketing strategy has a great impact on

the firms success.

The marketing concept stresses that a firm should create a Marketing

Mix (MM) that satisfies (gives utility to) customers, therefore need to
analyze the what, where, when and how consumers buy.

Marketers can better predict how consumers will respond to marketing

strategies.
 Stages of the Consumer Buying Process
The 6 stages are:

1. Problem Recognition (awareness of need) - difference between the

desired state and the actual condition.

2. Information search

o Internal search, memory.

o External search if you need more information. Friends and

relatives (word of mouth).

3. Evaluation of Alternatives - need to establish criteria for evaluation,

features the buyer wants or does not want. Rank/weight alternatives or
resume search.

4. Purchase decision - Choose buying alternative, includes product,

package, store, method of purchase etc.

5. Purchase - May differ from decision, time lapse between 4 & 5,

product availability.

6. Post-Purchase Evaluation - outcome: Satisfaction or

Dissatisfaction. Cognitive Dissonance, have you made the right
decision. This can be reduced by warranties, after sales communication
etc.

Types of Consumer Buying Behavior

The four type of consumer buying behavior are:

1. Routine Response/Programmed Behavior - buying low

involvement
2. frequently purchased low cost items; need very little search and
decision effort; purchased almost automatically. Examples include soft
drinks, snack foods, milk etc.
3. Limited Decision Making - buying product occasionally. When you
need to obtain information about unfamiliar brand in a familiar product
category, perhaps. Requires a moderate amount of time for
information gathering.

4. Extensive Decision Making - Complex high involvement, unfamiliar,

expensive and/or infrequently bought products. High degree of
economic/performance/psychological risk. Examples include cars,
homes, computers, education. Spend alot of time seeking information
and deciding.
Information from the companies MM; friends and relatives, store
personnel etc. Go through all six stages of the buying process.

5. Impulse buying, no conscious planning.

Factors Influencing Consumer Buying Behavior

1. Cultural
Growing up children learn basic values perception & wants from
the family and other important groups
2. Personal
Unique to particular person
Demographic
Gender, Race etc
Who in the family responsible for decision making

3. Psychological
Motives
Perception
Ability and knowledge
Attitudes
Personality
4. Social
Opinion of others
Role and Family influences
Reference of group
 International Marketing Research
Reporter: Jane Gladys Bautista

INTRODUCTION
The explosive growth of world trade has unleashed a torrent of demand for
information about markets throughout the world. Companies expanding into
new and unfamiliar markets need information about market demand and
market conditions. Managers seeking to expand and diversify operations
need information to develop effective strategies in these markets.
Information needs now extend from the mature industrialized markets of
Europe, the US and Japan, the unstable but growing markets of Latin
America, the politically uncertain markets of the Middle East and Russia, and
the rapidly changing markets of South East Asia to the emerging African
markets. At the same time, increasing cultural diversity makes it important
to collect information with regard to changing lifestyle and consumption
patterns in different parts of the world. Increased travel, waves of migration
and global communications are resulting in the blurring of cultural
boundaries. Traditional notions of culture as defined by geographical territory
are changing as cultural interpretation occurs, resulting in a
deterritorialization of culture. Links are being established between
geographically dispersed cultures, resulting in the introduction of new ideas,
products and lifestyles from one culture to another. In some instances, this
generates a process of cultural fusion, resulting in the emergence of new
hybrid cultures and global patterning of culture. Research is needed to
investigate the impact of these changing cultural dynamics on consumption
and purchasing patterns worldwide. Advances in communications and
information systems technology are further accelerating the pace
of change, linking markets through flows of information, images and ideas
across national boundaries. As markets become more integrated worldwide,
there is a growing need to conduct research spanning country boundaries, to
identify regional or global segments, examine opportunities for integrating
and better coordinating strategies in world markets, launching new global
brands and developing effective global branding strategies. Effective and
timely research is an essential tool for crafting strategy in a rapidly changing
global marketplace. Research can aid in uncovering potential opportunities in
international markets, in correctly positioning new products and formulating
products for international markets, as well as in identifying appropriate
advertising appeals and diagnosing potential issues in relation to other
aspects of the marketing mix.

Correctly Positioning New Products

Research can help in correctly positioning new products. In China, PepsiCo
was initially unsuccessful in introducing its Frito-Lay brand of potato chips
into the market. Sales were particularly low in summer months. Research
revealed that Chinese shoppers associated fried foods with yang, believed to
generate body heat in summer months (Fowler and Setoodeh, 2004). As a
result, Lays introduced a cool lemon variety in pastel-colored packaging to
reflect yin, a cool feeling. The product subsequently became Lays most
successful in China.
Avoiding Product Formulation Errors
Research can also help in uncovering how to reformulate products for local
palates. HJ Heinz, for instance, wanted to market its oat-based baby food in
China. Research showed that the Chinese were not familiar with oats and
hence it was unlikely to be a popular food for babies (Fowler and Setoodeh,
2004). On the other hand, whitebait, a tiny fish, was discovered to be a
staple food for infants in China. Heinz reformulated its baby food and
produced a whitebaitoats combination. This proved to be an instant success
among Chinese consumers.
Sensitivity to Geographical Differences
Costly mistakes can be avoided by consulting secondary data. Often it can
be as simple as making sure that geography is politically correct. Microsoft
launched Windows 95 in India with a color-coded map that did not show the
disputed Jammu-Kashmir region as being part of India. As a result, Windows
95 was banned throughout India, leading to a substantial loss of sales. When
Office 97 was launched, the color coding was eliminated and the company
sold 100 000 copies. A similar problem was encountered when Microsoft
employees were arrested in Turkey because Kurdistan had been shown as a
separate entity on maps. Microsoft ended up removing Kurdistan from all
maps as a result (Brown, 2004).

Understanding Cultural Change

Rapid changes around the world make it imperative that firms understand
what consumers are thinking and how values are changing. To help its
clients, McCann Erickson, the large global advertising agency, conducts
marketing research in more than 40 countries simultaneously. The
research allows it to understand each countrys values from the
consumers perspective. The survey results help the agency determine
the structure of consumption in each country, brand choice, lifestyles and
 media influence. Comparisons are made between sets of countries. This
information helps spot trends and facilitates the creation of advertising.
Identifying Appropriate Advertising Appeals
The appropriateness of advertising appeals also needs to be assessed
through research. An $800 000 research project in Brazil helped Coke identify
a motherly female kangaroo as the advertising device mostly likely to appeal
to women shopping for their families. In Brazil women account for 80% of
Cokes $3.5 billion sales (Advertising Age International, 1997). The ads are
themed Mom knows everything and feature the kangaroo sporting
sunglasses and toting Coke cans instead of a baby. Although there are no
kangaroos in Brazil, the animal tested well among Brazilian women, who said
they thought it represented freedom, but at the same time responsibility and
care for children.
Assessing Translation Errors

Research can also aid in assessing the need for translation. In entering
Eastern Europe, Procter & Gamble (P&G) translated its detergent labels into
Polish and Czech to adapt its products to the local market. However,
consumers reacted negatively, perceiving this as an effort to dupe customers
by passing the company off as a local Polish firm. Research revealed that
labels should be written in imperfect Polish to show the company was trying
to fit in, but was not quite adept enough to be fluent (Business Week, 1993).

COMPLEXITY OF INTERNATIONAL MARKETING

Marketing on a global scale poses problems that are inherently more

complex than those encountered in a firms domestic market (Douglas and
Craig, 1995). Operations take place on a much broader scale and scope,
often involving a range of different types of activities and management
systems, including licensing, strategic alliances and joint ventures. At the
same time, international marketing entails operating in a variety of diverse
environmental contexts. International markets are also characterized by
rapid rates of change in the technological, economic, social and political
forces that shape their development. Often these changes affect markets at
differing rates and in different ways. Sometimes, events such as an economic
meltdown in one country can have a ripple effect, cascading through markets
worldwide. Change is not only rapid and all-pervasive, but also often
unexpected and unpredictable, radically altering the character and nature of
opportunities and threats in international markets.
Diversity of the International Environment

In addition to the broad geographical scope of international operations,

international marketing decisions are made more complex by the diversity of
environments in which these operations are conducted. Diversity occurs in
relation to consumer tastes, preferences and behavior, and to a lesser extent
in business-to-business markets. Differences in the nature of the marketing
infrastructure, for example the availability and reach of media, the banking
system or the structure of distribution, add a further level of complexity to
strategy development and implementation. This, in turn, is further
compounded by government regulation of business operations, product
formulation and packaging,advertising, promotion and pricing as well as
trade barriers such as tariffs, import quotas etc.
Continually Changing Environment of International
Markets

In addition to cultural and economic diversity, international markets are

characterized by rapid rates of change (Craig and Douglas, 1996a). Change
pervades all aspects of human life and business activity. Not only are rates of
technological change and knowledge obsolescence accelerating and
transforming the competitive landscape, but also unforeseen events are
changing the political and economic context of international markets. At the
same time, rapid social and economic change is taking place, fueled in part
by advances in communication technology, which shrink distances and
stimulate greater awareness and cross-fertilization of ideas, attitudes and
lifestyles across the mosaic of the international market place. Technological
change makes product development, production processes and experience
rapidly bsolete and contributes to heightened competitive pressures as well
as social change.

IMPORTANCE OF RESERARCH FOR

INTERNATIONAL MARKETING DECISIONS
The diversity and complexity of the international environment, coupled with
managements frequent lack of familiarity with a foreign market, underscore
the importance of undertaking research prior to making decisions and laying
out marketing strategy. This is true whether with regard to decisions on initial
market entry, product positioning or marketing mix, or subsequent
expansion. Research is necessary to avoid the costly mistakes of
inappropriate strategy and the possibility of lost opportunities in
international markets. In the later stages, research is needed to determine
how far international operations can be coordinated across countries to take
advantage of potential synergies arising from marketing in a global
environment. Research is also needed to determine when and whether new
global brands can be launched and whether global strategies can be
developed for existing brands.

Information Needs

Information needs vary depending on the firms experience and degree of

involvement in international markets (Craig and Douglas, 1996b). In the
initial phase of entry into international markets, information is needed to
assess opportunities and risks in different countries throughout the world and
to plan international market entry and mode of operation. Once initial entry
decisions have been made, attention shifts to issues relating to marketing
mix decisions such as new product development and testing, advertising
copy and media research and price sensitivity. As experience in international
markets develops and operations become more widespread, greater
emphasis is likely to be placed on building global information systems to
improve resource allocation across markets and countries and to take
advantage of potential synergies through improved integration and
coordination of international strategies.

Phase 1 Information for International Market Entry

In collecting information for initial market entry decisions, management

requires data at two different levels. In the first place, management needs
information relating to the general business environment in a country or
region, for example the political situation, financial stability, the regulatory
environment, market size and growth as well as the market infrastructure.
This is information that is taken for granted in a companys domestic market,
as management is typically aware of, and in touch with, the local business
environment. In entering international markets, information on the business
environment is of paramount importance in order to determine the most
attractive market opportunities and appropriate mode of entry or operation
in the market. Secondly, management needs information relating to the
specific product market or service industry the company plans to enter. This
includes information on sales potential and rate of market growth, product
market structure and sources of direct and indirect competition, as well as
the competitive situation.

Phase 2 Information for Local Market Planning

Limited management knowledge and experience outside the domestic
market often mandate a preliminary phase of information collection in
researching international markets. This is intended to help formulate
research specifications and research design. Qualitative research is
frequently helpful in providing input for the design of a market survey. Such
research enables identification of constructs, product class definitions or
relevant attitudes and behavior to be examined in subsequent phases of
research. Preliminary research may also include the collection of background
information, relating for example to the product market, complementary or
substitute products, existing attitudinal studies, competitive analyses etc.

Phase 3 Information for Global Rationalization

As the firm moves into the phase of global rationalization, it faces new
information requirements as well as the need to make more effective use of
data already collected. Secondary data that helped guide country entry
decisions should now be used to monitor changes in the firms operating
environment and assess the degree of market integration and interlinkage.
Countries that were stable politically or welcomed foreign investment at one
time can become unstable or hostile to foreign investment. Economic growth
can slow down or alternatively accelerate. Inflationary pressures may rise
and foreign exchange rates fluctuate. Data on trade flows and
communication linkages can be used to assess the extent to which market
boundaries are changing and markets becoming more interconnected,
requiring reassessment of global strategy.

Issues in International Marketing Research

The task facing the international manager is a complex and challenging one.
Correspondingly, the challenges facing the international researcher are
equally daunting. In particular, there are a number of conceptual and
operational issues to consider that do not arise, or at least not in the same
magnitude as in domestic marketing research.

Complexity of Research Design

In the first place, designing research for international marketing decisions is

more complex than where a single country is concerned. The conduct of
research in different countries implies that much greater attention is required
to defining the relevant unit and level of analysis; that is, countries versus
groups of countries or regions, or national markets versus global market
segments, as well as the scope of the research. This includes the need to
examine issues at different levels i.e. within versus across countries as
well as the extent to which the relevance of a given unit of analysis, for
example the country, is changing. In addition, the definition of the problem
needs to be assessed and whether this is similar in structure and relevant
parameters, for example whether products are the same across countries.

Difficulties in Establishing Comparability and

Equivalence

Considerable difficulties are likely to be encountered in establishing

equivalence and comparability of research in different countries, both with
secondary and primary data and with methods of data collection. For
example, secondary data on motor vehicle registrations may not provide
equivalent data between countries. In many industrialized countries, a
company car is provided to sales people and is counted as a commercial
vehicle. It may, however, also be used extensively for personal transport.
Thus, data on noncommercial registrations would understate the actual
extent of personal cars.
 Coordination of Research and Data Collection across
Countries

The conduct of research in the international environment not only adds

considerably to the complexity of research design and data collection, but
also gives rise to a number of issues relating to the organization and
administration of research in different countries.

Intrafunctional Character of International Marketing

Decisions

The intrafunctional character of many international decisions especially in

selecting countries to enter, where to expand, or what methods of operation
to use suggests the need for intrafunctional research. In selecting
countries, for example, an important issue is not only the existence of
market opportunities and market potential, but also possible sources of
supply. This suggests that marketing research should be coordinated with
research to identify and evaluate alternative suppliers or sources of supply.

Economics of International Investment and Marketing

Decisions

A final factor to be considered is the economics of international investment

and marketing decisions. The time horizon required for making such
decisions is typically considerably greater than that required for comparable
domestic decisions. This is due in part to the much more rapid rate of growth
and change in many international markets, as for example Asia or Latin
America. In particular, it is important to take a long-term view of market
potential, and to consider entry at an early stage of market development, to
avoid pre-emption of the market by competitors. The rapid pace of change in
many industries, such as telecommunications, consumer and industrial
electronics, means that market trends need to be monitored worldwide, as
does the impact of different environmental scenarios on these trends

International Product Management

Reporter: Prenedy Ojel

International Product Management

Managing products in foreign or multiple countries

Challenges of International product management

External Internal

Language -Hiring

-Culture -Communication

-Consumer Behavior -Cultural Differences

-Regulations -Consistency

-Competition -Centralized mgt.

-Infrastructure -Local mgt.

-Time difference -Local experience

International product strategy

Product Extension

Companies here extend the same product marketed successfully in the

home country to other parts of the world without many modifications

Product Adaptation

Product Adaption come in several forms. Marketing strategies in a

country-by-country basis are tailored with the peculiarities of the local
market.

Product Development
 Many firms now develop new products with global markets in mind. These
global products are based on cores and derivatives. The product core might
be the same for all products in all regions.

Product Portfolio

A product portfolio is a comprised of all the products which an

organization has. A product portfolio may comprise of different product
lines and finally the individual product itself.

A portfolio of products can be analysed using the Boston Group Consulting

Matrix. This categorises the products into one of four different areas, based
on:

Market share does the product being sold have a low or high market
share

Market growth are the numbers of potential customers in the market

growing or not

How does the Boston Matrix work?

The four categories can be described as follows:

Stars are high growth products competing in markets where they are
strong compared with the competition. Often Stars need heavy
investment to sustain growth. Eventually growth will slow and,
assuming they keep their market share, Stars will become Cash Cows

Cash cows are low-growth products with a high market share. These
are mature, successful products with relatively little need for
investment. They need to be managed for continued profit - so that
they continue to generate the strong cash flows that the company
needs for its Stars

Question marks are products with low market share operating in high
growth markets. This suggests that they have potential, but may need
substantial investment to grow market share at the expense of larger
competitors.
 Dogs refers to products that have a low market share in unattractive,
low-growth markets. Dogs may generate enough cash to break-even,
but they are rarely, if ever, worth investing in. Dogs are usually sold or
closed.

Pricing Strategy
Reporter: Fatima Ga

Price - decide the amount required as payment for (something offered for
sale).

Pricing -is the process whereby a business sets the price at which it will sell
its products and services, and may be part of the business's marketing plan.
In setting prices, the business will take into account the price at which it
could acquire the goods, the manufacturing cost, the market place,
competition, market condition, brand, and quality of product.

Good pricing strategy helps you determine the price point at which you can
maximize profits on sales of your products or services. When setting prices, a
business owner needs to consider a wide range of factors including
production and distribution costs, competitor offerings, positioning strategies
and the business target customer base.

While customers wont purchase goods that are priced too high, your
company wont succeed if it prices goods too low to cover all of the business
costs. Along with product, place and promotion, price can have a profound
effect on the success of your small business.

Pricing strategy - Activities aimed at finding a product's optimum price,

typically including overall marketing objectives, consumer demand, product
attributes, competitors' pricing, and market and economic trends.

- Price is the value that is put to a product or service and is the result of a
complex set of calculations, research and understanding and risk taking
ability. A pricing strategy takes into account segments, ability to pay, market
conditions, competitor actions, trade margins and input costs, amongst
others. It is targeted at the defined customers and against competitors.

Here are some of the various strategies that businesses implement when
setting prices on their products and services.

Types of Pricing Strategies

The table below explains different pricing methods and price strategies with
an example of each pricing strategy.
Pricing Strategy Definition
Here the organization sets a
low price to increase sales and
market share. Once market
Penetration Pricing
share has been captured the
firm may well then increase
their price.
The organization sets an initial
high price and then slowly
lowers the price to make the
Skimming Pricing product available to a wider
market. The objective is to skim
profits of the market layer by
layer.
Setting a price in comparison
with competitors. In reality a
firm has three options and
Competition Pricing
these are to price lower, price
the same or price higher than
competitors.
Pricing different products within
Product Line Pricing the same product range at
different price points.
The organization bundles a
group of products at a reduced
Example
A television satellite
company sets a low
price to get
subscribers then
increases the price as
their customer base
increases.
A games console
company reduces the
price of their console
over 5 years, charging
a premium at launch
and lowest price near
the end of its life
cycle.
Some firms offer a
price matching
service to match what
their competitors are
offering. Others will go
further and refund
back to the customer
more money than the
difference between
their price and the
competitor's price.
An example would be
a DVD manufacturer
offering different DVD
recorders with
different features at
different prices e.g. A
HD and non HD
version.. The greater
the features and the
benefit obtained the
greater the consumer
will pay. This form of
price discrimination
assists the company
in maximizing
turnover and profits.
 Cost-Plus Pricing

Many manufacturers use cost-plus pricing. The key to being successful with this
method is making sure that the "plus" figure not only covers all overhead but
generates the percentage of profit you require as well. If your overhead figure is not
accurate, you risk profits that are too low. The following sample calculation should
help you grasp the concept of cost-plus pricing:

Ex.

A firm has fixed costs of $900 and a variable cost of $1 per unit. They estimate that
they will sell 100 units. Their total cost is 900+100 = $1000 meaning a price of $10
per unit. They want to fix their mark-up at 30%. Therefore, the price will equal to 1.3
x 10 = $13 and the profit will be 3 x 100 = $300.

Fixed cost those costs that do not change based on production levels.
Variable cost increase or decrease based on production.

Total cost formula FC + VC (Q) = TC

The formula used to calculate costs is FC + VC (Q) = TC, where FC is fixed costs, VC
is variable costs, Q is quantity, and TC is total cost. It is important to understand
that variable costs, as opposed to fixed costs, are those costs that change based on
the amount of product being produced.

Important Microeconomic Formulas

Total Product = Quantity (Q)

Average Product (AP) = Total Product (Q) / Labour (L)
Marginal Product (MP) = Change in Total Product / Change in Labour
Profit = Total Revenue (TR) Total Costs (TC)
Profit = (Average Revenue Average Cost) x Quantity
Total Revenue (TR) = Price (P) x Quantity (Q)
Total Costs (TC) = Total Fixed Costs (TFC) + Total Variable Costs (TVC)
Total Cost (TC) = Average Cost (AC) x Quantity (Q)
Average Cost (AC) = Total Costs (TC) / Quantity (Q)
Average Fixed Costs (AFC) = Total Fixed Costs (TFC) / Quantity (Q)
Average Variable Costs (AVC) = Total Variable Costs TVC) / Quantity (Q)
Average Revenue (AR) = Total Revenue (TR) / Quantity (Q)
AR = P = Demand (Dd)
 Marginal Revenue (MR) = Change in Total Revenue / Change in
Quantity
Marginal Cost (MC) = Change in Total Cost / Change in Quantity

Distribution and Logistics

Reporter: Sarah Pena
The Scope of Logistics in Business

Logistics / Supply Chain in a business aim to the following contributions:

Achieve maximum customer service level

Ensure high product quality

Achieve minimum (possible) cost

Be flexible in the constant market changes

Logistics management is. . . the planning, implementation and control

of the efficient, effective forward and reverse flow and storage of goods,
services and related information between the point of origin and the point
of consumption in order to meet customer requirements.

Evaluation and Control

Reporter: Precious Bongar

Strategic Evaluation and Control is the final phase of strategic management.

Types of Marketing Evaluation Control

1. Annual Plan Control - for sales of the company.

*Sales Analysis - comparing your target sales with your actual sales.

*Market-share Analysis - comparing your sales to your competitors.

*Market Expenses to Sales Analysis - ratio of expenses to sales.

*Financial Analysis - planning, budgeting, monitoring, forecasting and

improving objectives.

*Market Scoreboard Analysis

2.Profitability Control

*Market Profitability Analysis

*Determining Corrective Action

*Direct cost vs. Full costing

-Direct cost is the cost of product or operation.

-Full costing is the manufacturing cost including variable and fixed cost.

3.Efficiency Control

*Sales force efficiency

*Advertising efficiency

*Sales promotion efficiency

*Distribution efficiency
4.Strategic Control

*Marketing Environment (Micro)

-SWOT

-Suppliers

-Distributors

-Customers

-Competitors

*Marketing Environment (Macro)

-PESTLE

*Marketing Strategy

-Mission and Vision

-Position Statement

-Objectives and goals