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Chapter Objectives
To understand a range of product policies and the
circumstances in which they are appropriate internationally To grasp the reasons for product alternations when deciding between standardized versus differentiated marketing programs among countries To appreciate the pricing complexities when selling in foreign markets To interpret country differences that may necessitate alterations in promotional practices To comprehend the different branding strategies companies may employ internationally To discern complications of international distribution and practices of effective distribution To perceive why and how emphasis in the marketing mix may vary among countries
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Marketing Strategies
Marketing: the performance of a wide range of
business activities directed at satisfying needs and wants through the exchange process
marketing orientation target market(s)
market segments that exist in more than one country. Ways of identifying consumer market segments within and across countries include demographics (income, age, gender, religion) and psychographics
(attitudes, values, lifestyles).
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Marketing Orientations
production orientation: emphasizes production variables
such as efficiency, quality, and/or capacity [used internationally
for selling commodities and passive exports and for serving foreign market segments that resemble domestic markets]
societal marketing orientation: requires that activities be conducted in a way that preserves or enhances the well-being of all stakeholders [addresses the environmental, health, social, and
work-related problems that arise in foreign operations]
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Pricing
Price: the value asked for a product
[Although usually expressed as a monetary value, in countertrade transactions, it might not be.]
The complexities of pricing are exacerbated in the international arena. Pricing decisions must assure the firm of sufficient funds to replenish inventory. In the long-run, price must be low enough to generate sufficient demand but high enough to yield a profit.
The Internet is causing more firms to compete for the same business as customers gain increasing access to global products and global prices.
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Pricing Complexities
Government Intervention
Every country has laws that either directly or indirectly affect prices to the final customer. Price controls may set either maximum or minimum prices for designated products. The WTO permits a government to establish restrictions against any imports that enter the country at a price below the price charged to customers in the exporting country (dumping). A firm may charge different prices in different regions or countries because of differing competitive and demand factors.
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Pricing Complexities
many ways of segmenting the market for a given product. Depending upon market conditions, a firm may adopt any of the following pricing strategies: skimming price: sets a high price for a new product
aimed at market innovators [Over time, the price will be progressively lowered in response to demand and supply conditions, i.e., the presence of additional competitors.] penetration price: sets an aggressively low price (i) to discourage competition and (ii) to attract a maximum number of customers (some of whom will hopefully switch from competitors brands) cost-plus price: sets the price at a desired margin over cost
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Pricing Complexities
Price Escalation in Exporting
Common reasons for price escalation in export sales are (i) tariffs and (ii) the often greater distance to the market. If standard markups occur within a distribution channel, either lengthening the channel or adding expenses at additional points within the network will increase the delivered cost of a product. To compete in export markets, a firm may have to sell its products to intermediaries at reduced prices in order to lessen the amount of price escalation.
A firm may choose to exclude fixed costs in the price calculation of products exported to developing countries in order to be price competitive in those markets.
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Pricing Complexities
Fixed-cost vs. Variable-cost Pricing
The extent to which producers can set prices at the retail level varies substantially by country. There is substantial variation in whether, where, and for which products customers expect to be able to negotiate a price. Local laws and customs may limits firms abilities to set optimal prices. In many cultures prices are simply the starting point in the bargaining process.
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IMPORTERS REACTION
Promotion
Promotion: the presentation of messages
intended to help sell a product
[direct and indirect forms of communication designed to inform, persuade, and/or remind a target audience about an organization, its products, and/or its positions]
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translation [content, meaning, images] legality [differing views on consumer protection, competitive protection, standards of morality, and nationalism] message needs [national differences in perceptions and product demand]
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Branding
Brand: a name, term, symbol, and/or design
intended to identify a product or product line and differentiate it in the marketplace Trademark: a brand, or part of a brand, i.e., a mark, that is granted legal protection because it is capable of legal appropriation
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Distribution
Distribution: the physical and legal path that products
follow from the point of production to the point of consumption Distribution channel: the set of interdependent individuals and organizations that take title to or assist in the transfer of a title to a product from producer to final customer [banks --- transportation companies] [producers --- wholesalers --- retailers]
[agents & brokers]
divide a country into distinctly viable and non-viable markets. The selling of goods through unauthorized distributors, i.e., the gray market, causes a firms operations in different countries to complete with one another, thus preventing them from pricing according to local market conditions.
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Firms may need to invest in service centers, which in turn can become important sources of revenues and profits.
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A new client may need to offer distributors extra incentives or be willing to enter into exclusive arrangements.
Firms may choose a combination of internal distribution and outsourced distribution services.
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poor infrastructure [port, roads, warehouse facilities] levels within a distribution system [multi-tiered
retail inefficiencies [an insistence upon counter service] government restrictions [laws protecting small retailers
or limiting hours of operation]
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Challenges
Customers worldwide can quickly compare prices from different distributors, thus intensifying price competition. Differentiation is difficult because the same web ads and prices reach customers everywhere. Internet ads and prices must comply with the laws of each country where a firm markets its products.
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Gap analysis helps managers determine both the size of and the reasons for the differences between market potential and actual sales.
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Implications/Conclusions
Marketing is a social and managerial process
through which individuals and organizations satisfy their needs and objectives through the exchange process. A standardized approached to worldwide marketing means maximum uniformity in products and programs amongst countries in which sales occur.
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ditions may cause firms to alter their marketing strategies, but the cost of adaptation must be measured against the potential gain in sales. Gap analysis is a tool that help firms determine (i) why they have not yet maximized their market potential in given countries and (ii) what parts of the marketing mix to emphasize in which countries and regions.
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