Marketing Management

INTERNATIONAL MARKETING MANAGEM
Content
Basics of International Marketing

The international Marketing Environment
International Marketing Strategies
International Marketing Mix
Implementation of the international Marketing
Strategies
Content

Importance
Concepts
Drivers
Importance of IM
International expansion helps firm:
Keep pace with competition
Reach a larger market (e.g. US with 25% of worldwide
products/services)
Reap higher profits
Prolong the lifecycle of their products
Also an option for small and medium sized companies
Internationalization Philosophies
Domestic
Marketing
Low or no
international
commitment
Focus on
domestic
consumers
and home
country
environment
Export
Multinatio
Global
Marketing nalMarket Marketing
ing
Limited
international
commitment
Substantial
international
commitment
Extensive
international
commitment
Involves direct
or indirect
export
Focus on
different
international
countries
Focus on
regions
market
segments
rather than
countries
Ethnocentric
Polycentric
Regiocentric
Geocentric
DomesticRaising commitment/ involvement to international marke

focus
Ethnocentric Orientation
Guided by domestic market extension concept

Domestic strategies, techniques, and personnel are
perceived as superior.
International markets are secondary, regarded primarily
as outlets for surplus domestic production.
International marketing plans are developed in-house by
the international
division.
E.g. Disney resort in France: Disneyland Resort Paris had
to adapt it to local preferences: European fairy tales, food,
and dress code for staff.
Polycentric Orientation
Guided by the multidomestic marketing concept

Focuses on the importance and uniqueness of each
international market
Firms establish independent businesses in each target
country.
Fully decentralized, minimal coordination with headquarters
Marketing strategies are specific to each country.
Outcomes:
No economies of scale
Duplicated functions
Higher final product costs
Regiocentric Orientation
Guided by the global marketing concept

World regions that share economic, political, and/or
cultural traits are perceived as distinct markets. (e.g. EU,
NAFTA*)
Divisions are organized based on location.
Regional offices coordinate marketing activities.
*North American free trade agreement
Geocentric Orientation
Guided by the global marketing concept

Marketing strategies aimed at market segments, rather
than geographic locations
Maximizes efficiencies worldwide and provides
standardized product or service throughout the world
E.g. McDonalds
International Expansion Drivers

Business Environment
Drivers
Firm specific Drivers
Competition
Regional Economic and
Political Integration
Technology
Improvements in
Transportation and
Telecommunication
Economic Growth
Transition to Market
Economy
Product Life Cycle

High New Product
Development Costs
Standardization
Economies of Scale
Cheap Labor
Experience Transfers
International Expansion Drivers:

Business Environment (contd.)
Competition
Example: McCann Erickson has been handling the

Coca-Cola account in 129 countries since 1942.
Therefore the advertising agency, follows longtime
client, Coca Cola, Inc., to all countries where Coke is
present.
Nevertheless Coca-Cola moved the management of
its dedicated Red Lounge China marketing unit from
McCann Erickson to Leo Burnett, a competing
advertising agency (2007). At the same time Leo
Burnett lost some international accounts of its
longtime client, McDonald's.
International Expansion Drivers: Business

Environment (contd.)
Regional Economic and Political Integration
Example: Regional agreements such as NAFTA, and

the European Union (EU) lower and eliminate barriers
and promote trade within these markets.
Subsidiaries can be established in these markets to
take advantage of free trade within the region.

Technology
Examples:
Consumers worldwide are exposed to similar

products, services, and entertainment, and
marketing communications.
The Web and the Internet have revolutionized the
way companies conduct business.

Transportation and Telecommunications
Lower cost and higher quality communication due

to satellite technology, teleconferencing, and email
Efficient transportation due to containerization
and just-in-time technology

Economic Growth
Emerging middle class with increasing buying power

in big emerging markets such as Brazil and India.
Opening of new markets previously closed, such as
the markets of China and Vietnam.

Transition to a Market Economy
Transition of the Eastern Bloc to a market economy

created important new markets.
Created opportunities to transform inefficient
government-owned companies into successful
enterprises.

Converging Consumer Needs
Uniform consumer segments emerging
worldwide:
Global teenagers
Global elite
Loyal to international brands (Nike, Levis,
Coca-Cola, Heineken, Ralph Lauren, MTV,
TV shows)

Converging Consumer Needs
Consumers traveling abroad bring with
them product experiences and demand
brands that may not be available in the
home-country market.
Bagel shop in Berlin (Potsdamer Platz)
Firm-Specific Drivers
(contd.)
Product Life Cycle Considerations: prolonging

product lifecycle by entering growth markets
e.g. Cigarette industr

in emerging markets
Intro
Sales
Growth
Maturity
Decline
Sales
Profits
(contd)
High New Product Development Costs

Firm must look beyond home-country market to
recover investment costs.
E.g. Nike: one year to develop a new product, that
last only half a year on the shelves in the US
Standardization, Economies of scale, Cheap
Labor
Price competition during the maturity of the product life
cycle drives firm to new international markets in search
of cheap labor. The firm lowers coststhus pricesdue
to economies of scale and saving from standardization
processes.
Experience Transfers
Experience in one country serves as basis for strategies in
new international markets.
Obstacles to Internationalization
within the company
Finances
Psychological:
unknown
environment
Self-Reference
Criterion
outside
Government
Barriers
Barriers imposed
by International
Competition
Self-Reference Criterion
Conscious and unconscious reference to own

national culture while operating in the host
country. (e.g. eye contact US-Japan)
To counter the impact of the self-reference

criterion, the corporation must select appropriate
personnel for international assignments and
engage in sensitivity training.
Government Barriers
Restriction placed on foreign corporations by

imposing tariffs, import quotas and other
limitations, such as restrictive import license
awards.
Obstacles
Internationalization
to
Barriers imposed by International Competition
Blocked channels of distribution
Exclusive retailer agreements
Cutting prices
Advertising blitzes
Content

Implementation of the international Marketing
Strategies
Content
World economy
International Trade
Regional Economic and Political integration
Cultural Influence on IM
The World Economy

Rather than rising and falling
separately, national economies have
become interdependent and respond
to the same environmental forces
The international economy performs
as a single unit.
(e.g. Finance/ Banking crises
2008/2009)
Categories of countries
First World (Developed countries), Second World

(Socialist countries), Third world (Developing countries)
United Nation: LLDCs Least developed countries and
lowest income) LDCs (less developed and lower income)
NICs (newly industrialized countries e.g. Singapore,
South Korea, Hong Kong)
World Bank (and here): Developed Countries, Emerging
Countries, Developing Countries
Big Emerging Markets
Present the greatest potential for international trade and

expansion
Set the pace for the economy in the region.
Examples: China, India, Argentina, Brazil, Mexico
Characteristics of Emerging Markets
High political stability

Sound currency, low inflation
Pro business, fiscally-conservative, transparent
government policies
Guarantees for the repatriation of dividends and capital
Sound corporate law
Markets reflecting fair prices
Work ethics and a culture of integrity
Content
World economy
International Trade
Facilitators of International Trade
International Trade and Economic Development

Organizations
Government Organizations
Other Institutions and Procedures Facilitating
International Trade
World Trade Organization
Largest and most influential international trade

organization (153 members on 23July2008
from 197 countries worldwide)
Ensures free flow of trade

Functions:
Provides assistance to developing and transition
economies
Offers help for export promotion. Promotes regional
trade agreements and economic cooperation.
Reviews members trade policies and engages in
routine notification of new trade measures.
World Trade Organization

WTO agreements represent trade rules and
regulations and act as contracts guaranteeing
countries trade rights and binding governments
to free trade policies.
Agreements:
General Agreement on Tariffs and Trade (GATT)
General Agreement on Trade in Services (GATS)
Trade-Related Aspects of Intellectual Property
Rights (TRIPS)
Group of Eight - G8
Members from the most industrialized countries:

Canada, France, Germany, Italy, Japan, United
Kingdom, United States and Russia
Yearly meetings involve heads of state, government

ministers, directors of central banks
Addresses: biotechnology, food safety, economic
development, disarmament, arms control, organized
crime, drug trafficking, terrorism, environmental issues
and trade
United Nations Organizations
16 different United Nations Organizations

Maintain international peace and security
develop relations among countries
achieve international cooperation
encourage respect for human rights and freedom
Promote the economic and financial welfare of developing countries.

Focus on developing industrial, communication, agricultural and transportation
infrastructures.
International Monetary Fund (IMF)
Specialized agency of the United Nations (UN), 185

member countries
Encourages unrestricted conversion of currencies
through clear values.
Member voting power linked to amount they
contribute.
a body instituting appropriate development
strategies.
Mediator between debtors and creditors
Provides training and technical assistance for
monetary and financial strategies
Facilitators of International Trade: The

Development Banks
The World Bank
Specialized agency of the UN, works with IMF
Largest international bank that sponsors economic

development
Employs international specialists

in economics, finance, sectoral development
Focus on health and information technology
Facilitators of International Trade: The

Development Banks (contd.)
African Development Bank (poverty reduction)
Asian Development Bank (Private sector)
European Bank for Reconstruction

and Development (focused on markets of
transition in Central and Eastern Europe)
Inter-American Development Bank (private

sector projects)
Facilitators of International Trade:

Government Agencies
Ministry of Trade, Ministry of Foreign Affairs
USA:
US Department of Commerce; Export-Import

Bank of the United States
State and Local Government Agencies, such

as the U.S. Chamber of Commerce
US Agency for International Development

(USAID)
Foreign Trade Zones (FTZs)

Free Trade Zones
Tax-free area not considered part of the country in

terms of import regulations and restrictionssite is
considered an international area.
Merchandise in FTZ is outside the jurisdiction of the
host countrys customs services.
Host country benefits:
Creates demand for local services, products, and raw

materialshence local jobs.
Increases trade balancere-exports add to total number
of exports from the respective country.
Firm benefits from using an FTZ:
Foreign goods are exempt from duties as long as they do

not enter the country.
Goods are imported when demand is high, thus deferring

tariffs until that time.
Payment is delayed until goods are sold.
Firm can use the FTZ for breaking bulk.
Lowers prices for goods sold in the importing country
Firm benefits from using an FTZ, cont.:
Helps importing country impose local content

regulations on products from abroad.
Safer than most ports of entrybonded warehouse.
Products can be labeled as manufactured in the foreign

trade zone country, if products from that country have
a positive country-of-origin (country image).
E.g. Port of Rotterdam (NL)
Other Customs-Privileged Facilities
Variations of FTZ
Products are brought into an in-bond area,
manipulated (processed, repackaged, assembled),
and re-exported to country where products
originated.
Low tariffs assessed only on value-added processing that

took place in the zone.
Limits on products imported to encourage re-exporting.
Content
World economy
International Trade
Obstacles to Economic and Political

Integration
Differences in culture (language, traditions, norms,

religion) and history
Physical distance/ not the same borders
Differences in level of economic development
Political considerations:
Concerns regarding loss of sovereignty/ national

identity
A history of conflict
General Agreements: Bilateral and

Multilateral Forums and Agreements
Bilateral Agreements
Regional trade cooperation between two countries
Multilateral Forums and Agreements:
General agreements between multiple countries.

Typically, they are industry specific
OPEC (Organization for Petroleum Exporting Countries)/ Oil and
Gas
NATO (North Atlantic Treaty Organization)/ Military
OECD (Organization for Economic Cooperation and Development)
APEC (Asia-Pacific Economic Cooperation)
CIS (Commonwealth of Independent States) non-Baltic successors
to the Union of the Soviet Union
Content
World economy
International Trade
Culture
Culture is defined as a continuously changing totality of

learned and shared meanings, rituals, norms, and
traditions among the members of an organization or
society.
Culture is also defined as a societys personality.
Culture
Has a general influence on consumption
Has an influence on the stakeholders
Determines the manner in which individuals respond to
Marketing strategies
Example
The Turkish Client
You are in the middle of negotiations with a potential Turkish
client in Istanbul, over lunch, at the Conrad Hilton Hotel.
You go to the self-service buffet and pile on your plate some tasty
pork chops from a serving dish clearly marked "pork." You ask
the waiter to bring a bottle of wine and offer some to your
potential Turkish client; he declines. Your products are known
for their quality in Turkey and elsewhere in the world, and your
client seems receptive to your price quote.
After lunch, the potential client invites you to his home for coffee;
you decline and state that you need to stay at the hotel to get
some work done and bid him good-bye.
You come back to your home country and find that you cannot
reach your Turkish client. His secretary always claims he is not
in, and he does not return your calls.
What went wrong?
Example
The Turkish Client
in Turkey, the dominant religion is Islam, and Islam bans
the consumption of pork and alcohol.
Could he have been offended by your not going to his
house for Turkish coffee?
Could the hotel staff have told him that you spent the
evening next door, at another air-conditioned hotel, a
former palace, having yet another bottle of wine?
Constituents of Culture
EcologyThe manner in which society adapts to

its habitat.
Social StructureThe organization of society.
IdeologyThe manner in which individuals relate
to the environment and to others.
Elements of Culture
Language
Religion
Cultural Values
Cultural Norms
Cultural Values
Enduring beliefs about a specific mode of conduct or desirable

end-state.
Guide the selection or evaluation of behavior.
Ordered by importance in relation to one another to form a

system of value priorities.
Ultimately affecting product preferences
and perception of products
Learning New Cultures
Enculturation
Acculturation
Process by which individuals learn the beliefs and

behaviors endorsed by ones own culture
Learning a new culture.
Assimilation
Full adoption and maintenance of the new culture, and

resistance to ones old culture.
Cultural Norms
Norms are derived from values and defined as

rules that dictate what is right or wrong,
acceptable or unacceptable.
Imperative
Minimum
requirement
for a
survival
in a new
country
What an outsider must or must not do.
Exclusive
What locals may do but an outsider cannot do.
Adiaphora
What an outsider may or may not do.
Cultural Norms
Imperatives
Exclusives
Business cards:
Wearing a sticker
Asia: presentation
from a political
and receiving with
party
both hands. It has
to stay on the table,
dont write on the
card, dont put it in
the back pants
pocket
In Saudi Arabic
woman are not
allowed to drive or
walk in public
without a man.
Adiaphorous
Eating with
chopsticks in Asia.
Drinking banana
beer in East Africa.
Cultural Variability
Term used to differentiate between cultures on

the Geert Hofstede Dimensions, which are:
Power Distance
The manner in which interpersonal relationships

are formed when there are perceived differences
in power.
U.S.
Low
Germany
Eastern
Europe
Latin
America
China
High
Term used to differentiate between

cultures (contd.)
Uncertainty Avoidance
The extent to which individuals are threatened by

uncertainty and risk and thus adopt beliefs and
behaviors that help them to avoid the
uncertainty.
U.S.
Low
Germany
Japan
Central/
Eastern Europe
China
High
Terms used to differentiate between cultures (contd.)
Masculinity/Femininity
The extent to which a culture is characterized by

assertiveness / selfconfidence, rather than nurturing.
China
Sweden
Low
Masculinity
Canada
Argentina
United
Australia States
High
Masculinity
Terms used to differentiate between

cultures (contd.)
Individualism/Collectivism
The extent to which individuals prefer to act in the

interest of the group rather than in their own selfinterest.
Thailand
Latin America
China
Low
Individualism
Australia United
States
GB
High
Individualism
High vs. Low Context Cultures
Low-Context Cultures
What is said is precisely what is meant.
High-Context Cultures:
The context of the message is meaningful.

Context:
Message source
The sources standing in society or in the
negotiating group
The sources level of expertise, tone of voice, body
language
Cultural Change and Marketing

Marketers need to integrate culture when designing a
marketing strategy by going through the following process:
Researching symbolic elements and cultural
meanings in consumers lives
Identifying cultural meanings of the product
Designing the product accordingly
Designing the marketing campaign using
symbolic cultural elements
The Global Consumer Culture
Shared consumption-related symbols and activities that are meaningful to

market segments
A global consumer culture is attributed to the diffusion of products from
the United States to the rest of the world.
Entertainment (MTV, movies, CDs)

Hamburgers and pizza
Jeans and running shoes, etc.
Global Consumer Culture Trends
Proliferation of transnational firms and the related

globalized capitalism
Globalized consumerism and the desire for

material possessions
Homogenization of global consumption
Referred to as McDonaldization or Cocacolonization
Positioning Based on Culture
Global consumer culture positioning
Local consumer culture positioning
Positioning the product to appeal to individuals

who want to be part of a global consumer culture.
Positioning the product so that it is associated
with local cultural meanings.
Foreign consumer culture positioning
Positioning the product as symbolic of a desired

foreign culture.
Content

Implementation of the international
Marketing Strategies
Case studies
Content
International Marketing Research

International Marketing Planning
Expansion Strategies and Entry
International Marketing Research:

Definition
International marketing research is the systematic
design,
collection,
recording,
analysis,
interpretation,
and reporting
of information for a particular marketing decision facing a company
operating internationally.
International marketing managers need to

constantly monitor the different forces affecting
their international operations.
International marketing research is especially
complex.
Cultural differences
Consumers remain sometimes suspicious of research
Types of International Marketing

Research
Research of Industry, Market

Characteristics, and Trends
Acquisition analyses
Diversification analyses
Market-share analyses
Export research
International Buyer Behavior Research
Brand preferences
Brand attitudes
Brands awareness studies
Purchase behavior studies
Consumer segmentation studies
e.g. Consumers in China tend to go for established

luxury brands; they are more likely to avoid social risk
than Westerners
International Product Research
Concept development and testing studies

Brand name generation and testing
Product testing
Competitive product studies
Packaging design studies
Test marketing
International Pricing Research
International market potential studies

Sales potential studies
Sales forecast
Cost analysis
Profit analysis
Price elasticity studies
Competitive pricing analyses
Studies projecting demand
Currency and countertrade studies
Studies of inflation rates and pricing
Studies of negotiation tactics
The International Marketing Research

Process
STEP 1 Define the International Marketing Research

Problem and Research Objectives
Exploratory (define the relevant dimensions, generate
hypotheses)
Descriptive (observe and describe the problem)
Causal research (cause-and-effect relationships)
STEP 2 Develop the Research Plan (sources, instruments,

methods, procedures, costs)

Process
STEP 3 Decide on the Information Sources

Secondary Data:
Collected to address a problem other than the specific

international marketing problem that the company is currently
facing
Internal and external secondary Data
Collected before primary data

Primary Data:
Collected to address the specific international marketing

problem
Secondary Data
Availability, Reliability, and Validity:
Published statistics may be unavailablein many

markets, relevant market data has not been collected;
the most accurate secondary data is available on
industrialized countries.
Data may not be reliable and validdata may be
underreported or exaggerated.
Primary Data
Used in international marketing research far less

than it should be: Temptation is to use secondary
data to serve all research functions.
Expensive: The costs of collecting primary data in
international markets are likely to be much higher,
especially if an adequate marketing research
infrastructure is lacking.
Time consuming
Qualitative Research
Qualitative research has been useful as a first step in studying

international marketing phenomena.
Examples:
Focus Groups
Depth interviews
Observation
Constraints:
Responses can be affected by culture.

Individuals may act differently if they know they are being
observed.
Quantitative Research
Quantitative research are more structured, involving

either descriptive research approaches, (survey research),
or causal research approaches (experiments).
Examples:
Content analysis, e.g. advertising research

Survey research
Experimental research
Constraints:
Respondent factors
Infrastructure factors

Process
STEP 5 Design Data Collection Instrument
Emic instruments
Etic instruments
Measure phenomena specific to each culture.

Measure the same phenomenon in different cultures.
Constraints:
Translation costs and accuracy
Instrument reliability
Reluctance to answer certain questions

Process
STEP 6 Decide on the Sampling Plan
Sample Unit (Who)
Sample Size (How many)
Sampling Procedure (Selection)
STEP 7 Collect, Analyze, and Interpret Data
Decision Support Systems

for Global Marketing
A coordinated collection of data, systems, tools, and

techniques, complemented by supporting software and
hardware designed for the gathering and interpretation of
business and environmental data.
Computerized
Interactive
Flexible
Discovery oriented
Sales Forecasting
Sales Force Composite Estimates

Personal observations and expectations of the local sales
force and the international sales manager
Jury of Expert Opinion
Opinions of different experts about future demand

The Delphi Method
Experts to estimate market performance; findings are

aggregated, and experts are queried again with the
purpose of arriving at a consensus
Sales Forecasting
Time Series and Econometric Models

Use data of past performance to predict future market
demand.
Analogy Methods
Estimation method that relies on developments and

findings in markets
With similar levels of economic development, or

Where the product is in the same market
development stage, or
In markets which share similar cultural
characteristics
Sales Forecasting
Point of Sale Research
Made with the help of store scanners, in markets

where they are available
Involve comprehensive store audits.
Content

International Strategic Marketing Planning
Developing an International Marketing

Strategy
Requirements:
Strategic fit between the companys objectives,
competencies, and resources and the challenges of its
international market or markets.
Link between the companys resources and its
international objectives in a complex, international
environment.
The strategic planning process must be systematic and
continuous
Companys commitment to its international markets.
The International Strategic Plan

on different levels
Strategic plan allocates

resources to each business
unit based on division goals
and objectives.
Portfolio analysis is used to
decide which brands
to
harvest, invest in, or divest.
Has longer-term focus
A marketing plan is developed

at product level, product line
level, or at brand level.
Has shorter-term focus
Involves the marketing
department
Corporate
Strategic plan allocates resources and

establishes objectives for the whole enterprise
worldwide.
Has long-term focus
Involves the highest levels of management
Involves international target market selection
Division
Business Unit
Product Level
Planning involves decisions

on which consumer segments
to target in each country and
how to target them.
Developing the International Marketing

Plan
Develop strategies for the target market:
Product mix, Distribution, Promotion mix, Pricing

Plan international marketing programs
Manage the international marketing effort
Organize
Implement
Control
International Target Marketing

The process of identifying and focusing on those international market
segments that the company can serve most effectively and designing
products, services, and marketing programs with these segments in
mind.
International Target Marketing
Is Used by Companies to:
Identify consumer segments with similar traits

(International market segmentation).
Select segments company can serve efficiently. Develop
products tailored to each segment (International market
targeting).
Offer products to the target market, communicating
through the marketing mix, product traits and benefits
that differentiate it in the consumers mind (Positioning).
International Segmentation
The process of identifying countries and/or consumers that are
similar with regard to key traits, such as product-related needs
and wants, that would respond to a product and related
marketing mix.
Must be performed at country (macro

segmentation) level AND at the consumer
level (micro segmentation).
Requirements for International

Segmentation
The extent to which international

market segments respond
differently to marketing
strategies
The extent to which the

international target market
is responsive to the
marketing strategies used
The ability to communicate with

the international target market
The ability to estimate

the size of the market
The extent to which the

international market is
large enough to warrant
investment
The extent to which internationa

consumer preferences are stable
over time
International Macro-Segmentation
Country Attractiveness Analysis
Market potentialindicators:
Gross domestic product (GDP) per capita

Industrial and agricultural sector statistics
Market size and potential
Consumer buying power
Investment figures (Foreign direct investment data,
other trade statistics)
International MacroSegmentation
Political, legal and financial environment of

country:
Ethnic conflict
History of war engagement
Antiforeigner sentiment
Recent nationalization activities
Legal ambiguity
Trade barriers
Exchange rate controls
Marketing support infrastructure:
Availability and reliability of distribution and logistics

providers
Availability of competent partners for strategic alliances.
Quality of telecommunication and transportation
infrastructure.
Availability of other service providers:
-
Marketing research firms

Financial firms
Management consulting firms
Strength of own Brand brand franchise

Lead country (where products are first adopted)
Lag country (where products are last adopted)
Degree of Market Fit with Company Policies, Goals, and
Resources.
Typology of international target market
Market attractiveness:
e.g.
Labor costs
Brand management
Working hours
New markets
Machine running times
Taxes
Environmental standards
Administrative barriers
Import barriers
Structure (natural) barriers

Strategic (competition) barrie
Bases for Micro-Segmentation
Clusters of consumers that respond in a similar way

to the marketing strategies
Demographic (descriptive statistics):
Age
Occupation
Education
Income
Ethnicity
Race
Nationality
Life-cycle stage
Social class
Bases for Segmentation
Benefit Segmentation
Example: Cooking oil markets can be
segmented based on benefits soughtolive oil
is targeted to consumers who seek health
benefits.
Geographic Segmentation
Example: Avon segments its market
geographically.
Bases for Segmentation
Usage
Nonusers
Occasional users
Medium users
Heavy users
Ideal
consumer
User Status
User of competitors
products
Potential users
First time users
Regular users
Country Screening and Selection
Three stages:
Assign importance score to each country screening
criteria.
Evaluate country performance on each of the
screening criteria.
Calculate country attractiveness score.
Target Market Decisions

Strategy
Purpose
Differentiated
targeting strategy
Differentiated targeting strategies identify, or even

create, market segments that want different benefits
from a product and target them with different brands,
using different marketing strategies. Example: Procter
& Gamble with different laundry detergents
Concentrated
targeting strategy
Companies select only one market segment and

target it with a single brand. Companies that cannot
afford to compete in a mature market with an oligopoly
may choose to pursue a small segmenta niche.
Example: Mont Blanc pens
Undifferentiated
targeting strategies
The product is aimed at all markets using a single

strategy, regardless of the number of markets and
countries targeted.
Example: Coca Cola
Positioning the Brand

Definition: Placing the brand in the consumers mind in
relation to other competing products
Six possible positioning strategies to reach a
unique selling proposition
1.
2.
3.
4.
5.
6.
Attribute/Benefit Positioning
Price/Quality Positioning
Use or Application Positioning
Product User Positioning
Product class Positioning
Competitor Positioning

Attribute/Benefit Positioning:
Positioning that communicates product attributes/ benefits,

differentiating each brand from the other company brands
and those of competitors (e.g. Procter & Gamble)
Price/Quality Positioning
A strategy whereby products and services are positioned

as offering the best value for the money (e.g. Wal-Mart)
Or a strategy that offers the best product that money can

buy (e.g. Mercedes-Benz, Kempinsky)

Use or Applications Positioning
The process of marketing a precise product application

that differentiates it in the consumers minds from other
products that have a more general use e.g. bikes in Asia or
in the USA)
Product User Positioning
A positioning strategy that focuses on the product user,

rather than on the product. (e.g. Mont Blanc for business
executives)

Product Class Positioning
A strategy used to differentiate a company as a leader in a

product category. E.g. Disney sells magic, Harley sells
excitement
Competitor Positioning
The process of comparing the firms brand with those of

competitors, directly or indirectly.
Content

The international Marketing
Environment
Content

International Marketing Planning
Going International:
Evaluating Opportunities
Consider drivers of international expansion in the

environment:
Competition
Regional economic and political integration
Economic growth
Technology
Converging consumer needs
Consider firm-related international expansion

drivers:
Product life-cycle considerations

New product development costs
Experience transfers
Labor costs
International Entry Mode: Franchising

Franchising refers to the methods of practicing and
using another person's philosophy of business.
Primary international entry mode in the service
industry.
Franchisor:
Gives franchisee right to use brand name,
trademarks and business know-how in return for
royalties.
Franchisee:
Pays royalties for the right to use the know-how,

trademarks, and brand name.
Franchising
Advantages:
Lower-risk entry mode
Limits exposure to economic, financial, and political instability
Higher level of control
Very rapid market penetration

Disadvantages:
Can be problematic if franchisee cannot guarantee quality

Can produce a new competitor: the franchisee
Problematic if the concept can be easily copied
International Entry Mode: Joint Venture

Joint Venture: A corporate entity created with the participation of
two companies that share equity, capital, and labor, among others.
Preferred entry mode in developing countries, where they

contribute to developing local expertise and to the countrys
balance of trade if production is exported.
International firm provides expertise, know-how, most of the

capital, brand name reputation, trademark
Local partner provides the labor, the infrastructure, local
expertise and relationships, and connections to the
government
Joint Venture
Advantages:
Higher control entry mode, potentially resulting in higher profits.

Costs and risks shared with joint-venture partner.
Local partner shares local market expertise, relationships, as well as
connections to government decision-making bodies.
Disadvantages:
Repatriation of profits may be difficult if local government has contro

over/stake in the local joint-venture partner.
Can produce a new competitor: the joint-venture partner
70% of all joint ventures break up within 3.5 years
International Entry Mode: Branch Offices
Branch Offices:
Entities are part of the international company, rather than

a new company (as in the case of the subsidiary).
Involves substantial investment
Sales office
Showroom
Engage in a full spectrum of marketing activity
High level of control
International Entry Mode: Wholly Owned

Subsidiaries
Wholly Owned Subsidiaries:
Involve long-term market commitment

High cost
High control of operations
Greatest level of risk
Can be developed by the company (greenfielding) or can be
purchased (acquisition or merger)
International Strategic Alliances

Sometimes licensing, franchising and joint ventures are called
Strategic Alliances. But in general the Strategic Alliances are
more short term and have not the same level of international
commitment than the named entry modes.
Strategic Alliance: a relationship between two or more
companies attempting to reach joint corporate and market
related goals - while remaining independent organizations.
Typically, the term refers to nonequity alliances.
International Strategic Alliances

Examples of Strategic Alliances
Manufacturing:
Manufacturing alliance (A non equity relationship, in

which one firm handles the others manufacturing (or
some aspects of it),
Contract manufacturing (manufacture of products)

Engineering alliances, Technological alliances, R&D
alliances
Marketing:
A non equity relationship, in which one firm handles

marketing (or some aspects) for another firm.
Distribution:
One firm handles the distribution or some aspect of the

distribution process for another firm.
Content

The international Marketing
Environment
Organizing for International Marketing

Operations
Companies often need to reorganize to more effectively meet

the international challenges
Organizational designs have to fit with their external
environment and with company characteristics and goals.
Organizational design is determined by factors:
In the firms environment
competition, (quick decisions->more flexibility>decentralized)

environmental stability,
similarity with the home country,
common regional integration,

availability of qualified labor.
Factors within the firm
Factors Within the Firm
Internationalization as a priority:
Organizational structure with worldwide regional

divisions in charge of particular countries.
Involvement in international business
an international division that oversees international

operations.
Minimal involvement in international business
small international department.

Companies usually maintain their organizational structure
when they go international.
Concerning hierarchy and centralization.
Concerning product lines
International Organizational Designs
International
International
divisions
divisions
The
The matrix
matrix
structure
structure
Organizational
Organizational
designs
designs
Product
Product
Divisions
Divisions
Worldwide
Worldwide
regional
regional
divisions
divisions
Worldwide Regional Division Structure
Operations are organizes by geographical region or by

country.
Subsidiaries report directly to the single division
responsible for operations in the country or geographic
region.
Creates competitive advantage for firms
Example: It is better equipped to immediately
process and respond to country-specific information
and conditions because of its strong regional
focus.
Allows for some duplication of activities and thus might
increase costs.
Worldwide Regional Division Structure

W
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d
w
i
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a
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:
Worldwide Regional Division Structure: Frito-Lay.

F
Product Division Structure
Subsidiaries report to the product division (strategic

business unit) with responsibility for the particular products.
In the past, this structure was common for high-tech
companies or multinational companies with diversified
portfolios
increasingly, this format is replaced by the matrix structure.
International Division Structure
Firms with an international division have two main

divisions:
The domestic division
The international division
export department structure: division has
responsibility for all international operations
international division structure: all foreign
subsidiaries report directly to a single division
responsible for international operations.
Matrix Structure
Takes into account the multiple dimensions

involved in doing business internationally
functional areas, product, and region/country.
In a matrix structure, two dimensions are
integrated so that each operational unit reports
to both region/country managers and product
managers.
E.g. Unilever with global and local brands
Example of Matrix Structure:

BASF Corp.
Europe
Chemicals
Plastics
Performance
Products
Functional
Solutions
Agricultural
Solutions
Oil & Gas
North
South America,
Asia Pacific
America
Africa, Middle East
Controlling
Marketing Operations
Challenges
Local units and a regional focus add levels that complicate

management, communication, and evaluation processes.
External environment changing at different rates.
Tendency to resist influence in both directions:
Headquarters involvement
Subsidiary Input
Controls
Formal Controls
Establishing performance standards
Measuring performance
Addressing discrepancies
Informal Controls
Frequent contact between home-country headquarters and
regional/local office.
Rotate managers to different assignments.
Hire third-country managers to oversee new or problematic
operations.
Training employees
Future Perspectives in International

Marketing
Internet:
expanded the area of international marketing
increased access to new markets
Research conducted by Nielsen found that more than
491 million people are using the internet (one third in
the US)
Internet use in selected

international markets
Country
Active Users
(in millions)
PC Time per
Person per
Month
Sessions/Visits per
Person per Month
Australia
10.8
34 hrs 28 min
63
Brazil
17.9
35 hrs 53 min
31
France
23.0
39 hrs 49 min
44
Germany
32.8
34 hrs
36
Italy
18.2
25 hrs 27 min
30
Japan
36.6
14 hrs 57 min
25
Spain
12.7
28 hrs 45 min
33
United States
61.0
82 hrs 32 min
67
Internet retail industry profile

Source: Internet Retail Industry Profile:
Global Internet Retail," April 2006: Datamonitor
a. Online Retail Sector Growth (in billions)
Year
$ Billion
% Growth
2003
425.1
26.00
2004
544.6
28.10
2005
656.4
20.50
b. Retail Segments' Share

Product Category
% Share
Drugs, health, beauty
23.50
Computer and related materials
17.50
Clothing and shoes
11.70
Kitchen and home
4.60
Jewelry
4.00
Other
38.70
c. Geographic Segmentation
Challenges for the Internet
Companies cant handle the amount of sales:
46 percent of companies with e-commerce capabilities

turn away international orders because they do not have
the processes in place to fill them.
About $10 million are turned away annually by

companies due to:
Language and cultural barriers that hinder basic

communications.
Difficulty handling the destination countrys import and tax
regulations or export controls in the home country.
Difficulty in handling cumbersome payment mechanisms.
High rate of credit card theft, adding to the companys risk.
Product Challenges
Product life cycles will become shorter:
International firms must be prepared for rapid new

product introductions simultaneously in world markets,
regardless of the markets levels of development.
The battle for market share for market leaders will
increasingly take place in developing countries.
As the world population grows, there will be significant
changes in the consumption process. (Environmental
concern)
Promotion Challenges
Firms will compete on their ability to resonate themes that

appeal to world consumers.
Integrated marketing communications are going to be
standard for both international consumer product companies
and for business-to-business communications.
Consumers will expect extensive information on the websites
of companies with which they do business.
National and Global Appeals

National advertising campaigns will continue to be used for
local brands, services and issues.
Global advertising campaigns will continue to be developed for
global market segments. The global elite continues to be the
target market for the Jaguar automobile.
Distribution
Companies will continue to pursue measures to reduce

distribution costs by adopting just-in-time inventory systems
and creating product flows rather than stocks.
Companies will coordinate their inventory systems with
suppliers and clients through electronic data interchange.
Companies will have to abide by post September 11, 2001,
security measures, which will further reduce merchandise
theft.
Entertainment will be especially important when
communicating with consumers in all retailing
environments.

Marketing Management

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INTERNATIONAL MARKETING MANAGEM

Basics of International Marketing

Basics of International Marketing

DomesticRaising commitment/ involvement to international marke

Guided by domestic market extension concept

Guided by the multidomestic marketing concept

Guided by the global marketing concept

*North American free trade agreement

Guided by the global marketing concept

International Expansion Drivers

Firm specific Drivers

Product Life Cycle

International Expansion Drivers:

Example: McCann Erickson has been handling the

International Expansion Drivers: Business

Example: Regional agreements such as NAFTA, and

International Expansion Drivers:

Consumers worldwide are exposed to similar

International Expansion Drivers:

Lower cost and higher quality communication due

International Expansion Drivers: Business

Emerging middle class with increasing buying power

International Expansion Drivers: Business

Transition of the Eastern Bloc to a market economy

International Expansion Drivers:

International Expansion Drivers:

Bagel shop in Berlin (Potsdamer Platz)

Product Life Cycle Considerations: prolonging

e.g. Cigarette industr

High New Product Development Costs

Conscious and unconscious reference to own

To counter the impact of the self-reference

Restriction placed on foreign corporations by

Barriers imposed by International Competition

Blocked channels of distribution

Exclusive retailer agreements

Basics of International Marketing

The international Marketing Environment

The World Economy

First World (Developed countries), Second World

Big Emerging Markets

Present the greatest potential for international trade and

Characteristics of Emerging Markets

High political stability

The international Marketing Environment

Facilitators of International Trade

International Trade and Economic Development

World Trade Organization

Largest and most influential international trade

from 197 countries worldwide)

Ensures free flow of trade

World Trade Organization

Members from the most industrialized countries:

Yearly meetings involve heads of state, government

United Nations Organizations

16 different United Nations Organizations

Promote the economic and financial welfare of developing countries.

International Monetary Fund (IMF)

Specialized agency of the United Nations (UN), 185

Facilitators of International Trade: The

The World Bank

Specialized agency of the UN, works with IMF

Largest international bank that sponsors economic

Employs international specialists