Presentation on theme: "Importance & Characteristics of International Marketing"— Presentation transcript:
1Importance & Characteristics of International Marketing Pesewa Presentations
2Increasing importance of international markets due to: (a) lowering of barriers to trade and investment(b) improvements in transportation and logistics(c) new goods and services with international appeal(d) advances in communications and emergence of e-commerce(e) increasing linkages among businesses(f) internationalization of capital markets(g) excess capacity in many industries(h) rapid growth of world trade.Innovations and changes create opportunities for some, challenges and threats to others.Combination of firm factors, home country market factors, host company factors, and global factors explain movement toward internationalization.
3What Is International Marketing? the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organisations“satisfaction” and “exchange”Forms - export-import trade, licensing, joint ventures, wholly owned subsidiaries, turnkey operations, management contracts
4Key Questions to be Answered How will my idea, good, or service fit into the international market?Should I obtain my supplies domestically or from abroad?What marketing adjustments are or will be necessary?What threats from global competition should I expect?How can I work with these threats to turn them into opportunities?What are my strategic global alternatives?
5Differences between domestic and international marketing - marketing variables Interactions with, or ways of manipulating, marketing variables are differentFirm’ domestic approach can be counterproductive, inefficient or illegal in foreign marketsTwo more Ps – political power and public opinion formation -> mega-marketing (Kotler), which has two implications:(1) enlarging the multiparty marketing concept;(2) blurring the distinction between environmental and controllable variables
6International, multinational, and global marketing Terms sometimes used interchangeably, but imply differences in approach.International marketing is a broad term for any type of marketing across national boundaries.Multinational marketing implies a strong commitment to international marketing, and may be taken to mean that the marketer develops differentiated products and marketing strategies for each of its markets. Associated with adjusting products and practices in each country, with attendant relatively higher costs.Global marketing generally implies that the company tries to standardize products and marketing practices worldwide in order to achieve economies of scale and lower prices.
7Types of International Operations Ethnocentric (or monocentric) - the identity of the foreign subsidiary is strongly identified with the parent company.Polycentric - few international subsidiaries that are well integrated and operate on a decentralised basisGeocentric - cosmopolitan outlook, high integration and close co-ordination
8Three states of international involvement 1. Experimental international involvement – need stimuli2. Active international involvement – systematic exploration of foreign market opportunities3. Committed international involvement – constantly making choices in resource allocation for foreign markets
9International product life cycle ExportForeign country BForeign country ATime
10International marketing management Three basic decisions:(1) whether to engage in international marketing activities;(2) markets to be served;(3) methods or systems to be used.Major dimensions of international marketing: exporting, importing, and management of international marketing operations to and in foreign countries.The marketing program or mix is the planned and coordinated combination of marketing methods or tools used to achieve a predetermined goal.Market-driven versus product- or technology-driven firms; tendency to move towards market-driven.Profitability of any marketing program is situation-specific and influenced by many variables.
11Questions for Discussion Compare and contrast domestic and international marketing.Describe some opportunities and challenges in international marketing created by new advances in information technology.Find the ten largest multinational corporations and briefly explain their key products. You may wish to use the websites of publications such as Forbes, Fortune, Wirtschaftswoche, etc.
12Questions for Discussion Will the future expansion of world trade be similar to the past?Does increased world trade mean increased risk?Is it beneficial for nations to become dependent on one another?Using WTO data (www.wto.org), identify the following:a) the top ten exporting and importing countries in the world merchandise trade andb) the top ten exporting and importing countries of commercial services
13Questions for Discussion Why is international trade important to a nation?Discuss the role of “voluntary import restraints” in international marketing.What is meant by multilateral negotiations?How have consumer demands changed international trade?Discuss the impact of import restrictions on consumers
14International trade Dr Svetla Marinova MSc International Business, International Marketing 2006, Lecture 1, Part B
15World Trade Importance World trade has grown tremendously in the past three decades.The Iron Curtain is gone and capitalism has replaced the old economic doctrines.Firms invest on a global scale.New technologies have changed the way we do business.New trading blocs are emerging.
16Growth in World TradeWorld trade in merchandise has grown from $6.2 trillion in 2000 to over $9 trillion in 2005.World trade in services has expanded from $1.5 trillion in 2000 to $2.1 trillion in 2005.
21Export Promotion Efforts Reasons National need to earn foreign currency.Encouragement of domestic employment.Increase in domestic economic activity
22Environmental Scanning Country Market Analysis Cultural, Economic, Political, Financial and Legal EnvironmentDr Svetla Marinova,MSc International Business, 2006International Marketing, Lecture 1, Part C
23The Social Environment The product or service should be acceptable to the society for which it is intendedLevels at which the marketing mix operates as a possible agent for change:a/ Conventionsb/ Moralsc/ Laws
24The Cultural Environment Various definitions of culture but generally culture may be viewed as the sum of a group’s learned behavior patterns, attitudes, and material things. Usually changes slowly over time, though governmental or other organizations may attempt to force more rapid change. There are cultural universals that all cultures have: language, sports, status differentiation, etc.The self-referencing criteria when assessing a foreign cultureMaslow’s hierarchy of needs:physiological needs, safety needs, love and belonging, esteem and social acceptance, self actualisationMost global American brands are ethnocentric but with global acceptance - why? Can we explain that with Maslow’s hierarchy of needs?
25Success and CultureAn understanding of cultural differences allows marketers to determine when adaptation may be necessary and when commonalities allow for regional or global approaches
26Defining CultureAn integrated system of learned behavior patterns that are distinguishing characteristics of the members of any given society.The definition encompasses a wide variety of elements, from materialistic to the spiritual
27Elements of Culture Elements of Culture Manners and Customs Language Material ElementsAestheticsEducationSocial InstitutionsLanguageverbalnon-verbalReligionValues and Attitudes
28LanguageVerbalHow words are spoken.Gestures made.Body position assumed.Degree of eye contact.Local language capability’s important role in international marketingAids in information gathering and evaluation.Provides access to local society.Important to company communications.Allows for interpretation of contexts.
29Nonverbal Language Hidden language of cultures Time flexibility and sensibility.Social acquaintance and rapport.Personal physical space and personal touching.Non-verbal gestures and signaling.
30Manners and CustomsPotential problem areas for marketers arise from an insufficient understanding of:different ways of thinking.the necessity of saving face.knowledge and understanding of the host country.the decision-making process and personal relations.the allocation of time for negotiations.
31The Cultural Environment Edward HallHigh context cultures - the silent culture of communicationLow context culturesMonochronic use of time - do one thing at a time and adhere to pre-set schedules, M-type people are called ‘agenda’ culturesPolychronic use of time - do many things at a time and easily modify pre-set schedules, more committed to persons than to schedules
32Context Cultures High-context culture Low-context culture is where the social context in which what is said strongly affects the meaning of the message.Examples: Japan and Saudi ArabiaLow-context cultureis where the meaning of the message is explicitly expressed by the words and is less affected by the social context.Example: North America
33The Cultural Environment HofstedeIndividualism vs. CollectivismPower distanceUncertainty avoidanceMasculinity vs. FemininityWhat are the implications for marketers?
34Implications of Culture on Marketing: Cultural affinity zones in Europe Sweden, Norway, Denmark, FinlandHollandGermanyAnglo-SaxonEuropeUKIrelandGermanyGermanyLuxemburgBelgiumAustriaFranceSwitzerlandFrance/ItalySpainPortugalGreeceItaly
35Implications of Culture on Marketing: Cultural affinity zones Cultural affinity classes exist in terms of age brackets and across socio-demographic categories(example: the teenagers in France, Japan, USA)Cultural affinity zones correspond to national cultural groups or cultural groups with similar dimensions(example: the teenagers in Scandinavia)Understanding the general patterns and themes of culture is not enough for the international marketer. He/she must learn the specifics of the culture which affect the marketing of the firm’s products or services.
36Making Culture Work Embrace local culture. Build relationships. Employ locals to gain cultural knowledge.Help employees understand you.Adapt products and processes to local markets.Coordinate by region.
37The Economic Environment Population/household/urbanizationGDP per capitaIncome/Purchasing Power Parities (PPP) - how many units of currency are needed in one country to buy the amount of goods and services that one unit of currency will buy in another countryWhat about self-produced or bartered consumption?Variations in market potential in individual markets
38The Economic Environment Non-tariff barriers /”invisible tariffs”/quotas and trade control“buying national”restrictive customs procedures, reducing the number of ports of entry for any foreign goodselective monetary controls - example: advance deposit equal to the value of the imported goodrestrictive administrative and technical regulations
39The Economic Environment DumpingSporadic - where surplus is unloaded abroad at advantageous prices not to be sold in the domestic market at lower prices as that can create a precedent for future behaviourPredatory - when foreign producers use low prices to weaken indigenous competition abroadPersistent - the continued sales of products at prices lower than those of its country of origin
40The Economic Environment InfrastructureTransportationCommunicationsEnergyOrganisations providing infrastructure support servicesDiffusion of Internet technologyMultinational corporations operating in a market
41The Financial Environment Commercial risk - refers to the insolvency of, or protracted payment default by an overseas buyer, called commercial as it refers to transactions and commercial banksPolitical risk - beyond the control of either the buyer or sellerForeign exchange risk - related to exchange rate fluctuations
42The Financial Environment Credit policyfavourable credit terms to the buyerfinancing packages (often developed with the help of the government)The extent of credit offered is determined by:Firm specific factorssuch as size, experience in international tradeMarket characteristicssuch as degree of economic development, availability of means of paymentFactors relating to a particular transaction,such as the amount of payment and the need for protection, terms offered by competitors, the relative strength and attractiveness of the trading partner
43The Political Environment Home country:Intellectual property rightsLegislation on payments by companies for environmental protectionThe government help against grey market activitiesThe government may work towards lowering trade barriersGovernmental restrictions on international marketing
44The Political Environment Host countryPolitical riskOwnership risk - expropriation, confiscation, domesticationOperating riskTransfer riskOften business become targets for expressing politicalviewsExchange controls - on the movement of capital or goodsTax ratesPrice controls (in high sensitive sectors such as food or health care)
45The Legal EnvironmentTheocratic law - a mix of societal, legal and spiritual guidelines (Islamic law, Hebrew lawCommon law - based on tradition, precedent and custom and less dependent on written codesCode law - based on comprehensive set of written clauses. All possible legal rules are spelled out explicitly. Based on Roman law, rigid in nature
46The Legal Environment Antidumping laws Laws requiring import and export licensingHealth and safety standardsRules on genetically modified foodsRules on advertisingLobbying providing access to policymakers and legislators
47The Legal Environment International law European Patent Convention International Convention for the protection of Industrial PropertyMadrid Arrangement for International Registration of trademarksInter-American Convention for Trademark ProtectionBilateral treaties of friendship, commerce and navigationInternational Jurisdiction disputes/arbitration vs. litigation