International marketing Ing. Jiří Šnajdar 2013 Mgr. Evžen Staněk
Main mistakes Innovation strategies - Formal principles of marketing – methodical processes, techniques – are is case of domestic and international marketing identical (formal structure of marketing planning, methodical process of creation of marketing strategy, technique of market research, tools of marketing mix are identical in national and international marketing).
In the game enter such factors, as are : public power in given country, which usually does not play neither passive, not neutral role political risks bound with countries where wants a company new operate. Task of international marketing is also among others : to identify possible jeopardy and advantageous conditions and integrate them international strategy of company´s development innovation behaviour of company is integral part of total strategy and politics of a company. New products and technologies can be base for future growths of the company and for keeping of balanced product portfolio.
But creation of new products is very demanding for financial means and time and very risky. Expenses for failure of new products are permanently increasing. Innovation effort must be aimed oriented, it means adapted to aims, which were marked out by the company as general targets and marketing strategies. To firms, that are not engaged in export, can the sale in international scale seem as very complex activity, demanding extensive sources and large and expensive marketing team with large amount of products, that is sold. But in fact it is not so.
But if the company is able to export much depends on product´s price, quality and provided services. Firm strategy - with consideration to way of trade and provided services, endurance to develop export markets - is really pivotal in this question, more than size a placement of the firm. Technical details of trade with foreign countries differ from those that are connected with domestic trade. Are standardised and at disposal to everybody who are in the interests. If you once get these knowledge, export is not more complicated than sale on “domestic ground”. But researches show that many companies do at the beginning of their activities on international market many mistakes, that defend them to succeed.
Main mistakes in international marketing 1.Failure or intentional rejection of qualified export counselling and processing of main international marketing plan before starting the export. Management of non-exporting firms has big knowledge about “his” industry branch and manufacturing process. When these managers think over a possible export, bank on their knowledge of industry characteristics and their company, without fully comprehending and understanding of target export markets. Lack of knowledge leads inescapably to failure or to less than optimal penetration on a market.
From this reason it is necessary, that the company seeks out qualified counselling and works out main marketing before start of export. Qualified consultant can be expensive, but costs are smaller than potential lost in case of failure. Besides the firm should have, before start of trade on international markets, worked out a good international marketing plan. This plan provides tendency and direction and secures, that export efforts will lead to the market or market segments, that open up for the company the biggest potential.
2) Insufficient effort of top management to get over the initial difficulties and financial requirements of export. Managers of almost each company will claim, that they are resolute to develop export markets, so the company would have benefit of it. But in practice are many managers disappointed because they recognise that export operations require more time and money than they expected. - Before a success appears, the top management must invest necessary time and funds to long-term activity.
3) Inconvenient mediator or distributor Many firms starting with export think, that everything what is necessary to successful export is agent or distributor on given market. Here the managers make a critical mistake when establish with first agent, who “falls them into the hands”. Choice of responsible agent or distributor it the most important part of yours export efforts. Agent of distributor should be chosen by firm on the base how competent he is to satisfy the companies´ needs and not only on the base of first contact.
4) Scramble for orders on the world instead of building bases for profitable operations and proper growth. Many firms start to export so, that simply perform requirements of customers, who contact the firm. After some time this cycle of demands and reactions on it becomes on side of the producer the only one activity, that he will do in scope of export. Demand or order “from outside” is usually hard price competitive and disadvantages exporters. Better approach is market analysis and elaboration of marketing plan of export. It enables to establish a place on the market and usually this leads to accomplishment of higher profit range. This process of acquaintance and planned growth should be target of firm with starting export.
5) Failure of export when the market is expanding. Some managers are interested in exporting only when domestic markets stagnate of are affect by recession. Then they look for foreign markets, where they could place production and increase utilisation of capacity. When domestic market growths, these workers immediately forget export until next decrease in domestic economic comes. To be successful, you must view the export markets the same way like domestic markets. Nothing destroys export markets so fast as reputation, that you enter into and pull out without any evident reason.
6) Uneven approach to agents and distributors abroad and to domestic business partners. It is necessary to negotiate with all distributors equally. Many incipient firms think that they can make different prices of their products on different markets. But this leads to small confidence of business partners and in many cases also to direct competition between individual distributors on export markets. If agent has a feeling that it is not negotiated with him correctly, starts to represent someone else.
7) Unwillingness to change a product to conform to regulations and preferences of other country. Some managers deal with production process and prices at the expense of understanding of market, where they deliver goods. Before starting export you must carefully analyse the market and get acquainted with regulations and cultural differences of the country. Necessary modifications are often small, but can signify difference between success and fail in export.
8) Forgetting of printing of usage instructions, sale and guarantee conditions in local language. Some companies do not understand how important is that all written materials are understandable in language of export market. If customers have possibilities, they choose certainly the product, which looks it is produced for them.
9) Forgetting of cooperation possibilities with export trade companies or other marketing mediator. When we thing over the possibilities of export you can get to conclusion that you have insufficient sources as personnel so financial to start export. Such a company should think over employ of one of trade companies that would work for it as export department. These mediators, even if they are usually not fully effective, provide you with opportunities to start export and take hold on the market.
10) Forgetting of possibility to provide a licence and establish a joint-venture company. If a company decides that export on given market is not required, the management should find out whether the company could assign a licence or production process to given market. It is also possible to establish joint-venture with other company on given market.
Example : Firms McDonald´s and Coca-Cola unknowingly insulted the whole Muslim world when used on their products symbols from South Arabia flag. The flag contained also quotation from Koran. Muslims hold an opinion that their sacred writing must not be used at any business activities. - Firm Nike landed itself in Arabian countries in similar situation. Muslims protested that its new trade mark, used in stylised form on sport footwear, remarks in Arabian writing the word Allah. Firm apologised and footwear was withdrawn from distribution.
Innovation strategy - Innovation strategy of a company is inseparable part of total strategy and company´s politics. New products and technologies can be the base for future growth of the company and for holding of balanced production portfolio. - On the other hand, the creation of new products very demanding on resources and time, and very risky.
Innovation behaviour of companies should be oriented to satisfy customers needs with appropriate products in required quality in exactly set time, with adequate expenses, prices. On the other side must be directly oriented, it means adapted to targets, that were marked out by the company as total targets or marketing strategies. When we accept as basic resource of creation of innovation strategies and programmes the marketing concept of the company, than it is necessary to define new products from this view. To define new products in accordance with marketing concept of the company means to consider as new such products, that are new not only from view of the company, but primarily from view of the market.
From view of the company and market can be consumable and industrial products considered as new, if belonging to some of following categories. New technologies – absolute innovation New technologies can be considered as the highest level of invention and innovation changes forasmuch as require the biggest change in consumer´s or user´s behaviour and often join in replacement of existing products, also products of company, which brings out the technologies. (Thanks to technology Bluetooth arisen completely new markets using cordless connection between two divides).
2. Following innovation Many completely new ideas, inventions bringing out require following innovations, that enable that products or technologies will better adjust to the market and its requirements. These following innovations proceed also during life cycle of product with aim of its improvement of modification so, that could again catch the more advantageous position on the market or in its segment. (Thanks to today already known technology Bluetooth thought out Indian Bluetooth researchers device for heart monitoring. In case of heart attack is sent SMS to nearest hospital).
3. New for the market Products in some cases must not be new for consumer, bur can be new from marketing view, it means new for some market or distribution channels. (For example sale of dishes that were designated only for retail shops and end customers, in the hospitals etc.) 4. New for certain country Products or thoughts can be transformed also from geographical view, it means from country of origin to other country, territory etc. (Delivery of hot pizza home broke through in our country in the time when it was quite known in the world).
5. New category of products for company From marketing view it is necessary to take as new also products, that company adds to its existing production programme. Also here must products present on the market with different marketing mix than existing products. (Famous car producer of trade mark Ferrari together with the company Acer participated on development of new monitors and LCD televisions).
6. New brand As new can be considered also products, that enter the market with new mark also in case that it concerns expansion or increasing of product line. Also such products must have its marketing plan, that would situate them in correspondence with companies´ targets. (Company Mittal Steel Ostrava Plc., as other firms from the biggest steel group of the world, changes its logo and introduces new mark Arcelon Mittal. Name of Ostrava´s company Mittal Steel Ostrava Plc. stays the same for the present, but its change is planned).
7. New situation, modification of product During life cycles are products often new situated considering to competition and certain market segment : their characters, shape, colour, size, material are so modified to get ahead on the same market again, eventually in different market segment, what brings also necessary modification of marketing mix. (Producer of vacuum cleaners of mark Dyson modified vacuum cleaner without bags DC20 Animal Pro, that will appreciate especially people who have allergy or for pets. New filter suffice to wash up with warm water every three months.)
8. New package Even change of packaging can cause that product is understood by consumer as new without changing any characters of product. Together with appropriate advertising or other distribution and placement of product in a shop can the packaging bring new increase of sale. (In correspondence with new packaging of ink patrons mark Epson is changing also packaging of papers mark Epson. On the front side of packaging will be in the future for different qualities pictured the same motive, so it will be facilitated the right choice of required product. Customer, who needs for example new photo paper Premium Glossy, will only look for packaging with tropical fish).
9. Products expanding or increasing product line Expansion or increasing of product lines, for example addition of new shape, size or colour means from marketing and market view also presenting of new product on the market, even if the marketing effort is incomparably less than at presentation of new technologies, also new innovations of existing products. (At models of personal cars SX4 from production Magyar Suzuki Corporation changed offered colours : existing colour ZEE Ocean Light Blue Met. Will not be used any more and will be replaced by new colour ZKC Lagoon Turquoise).
- In conditions of competition is the base assumption for keeping of firm position on the market methodical care about introducing of new products on the market. In marketing strategy we understand product innovations as processes of changing in company, that are connected with product development. We differentiate : subjective dimensions (new, for whom ?) dimensions of intensity (how much new ?) time dimensions (how long new ?) Product variations are considered for the easiest and often the most available elements of product marketing strategy. They include for example changes of physical, function, aesthetic and also symbolic characteristics of product, pertinently changes of supplementary functions.
The target is the most attractive approach the reality of product to customer´s vision, pertinently as appropriately as possible to adapt the product to needs of appropriate market segment. Introducing of new products on the market In contemporary practice of prosperous world firms are used at management of production innovation process “methods made-to-measure.” Effort to generalise them leads to categorisation of these methods into following stages : 1. Elaborating of innovation strategy The target of innovation strategy is to define the most presumptive ways of technical development in sphere of firm activities and steps, that lead the firm to technical and economical mastery of potential innovation themes.
2.Research and creation of themes Each product produces in form of idea. In this stage it is initiation of formation of new themes for future concentration of production programme of the company, their selection and evaluation, leading to decision about perspective development ways of product innovations. Effective system for searching of themes is in usage of available information sources, following the development in sphere of technique and technology, competition, requirements of our customers, trends on world markets etc.
3. Analysis of use of chosen themes on the market “Business Analysis” represents the most important step at evaluation of suitability of chosen innovation themes. A part of evaluation is : preliminary evaluation of production and sales opportunities (identification of market, the intended product is allocated for, market tendencies, appraisal of presumptive reaction of competition, detail market analysis to appoint expected share on market, sales ways etc.) evaluation of appraisal of expected returns
The target is to have continuously actualised overview about expected returns (profit, profitability, available share on market etc.) This overview is necessary especially at decision about releasing or not-releasing additional sources for product development, for its market testing or advertisement before introduction on market. Actual data can lead also to decision to stop further financing of the project at markedly disadvantageous development.
4. Development Proposals for products, that were evaluated as technically practicable and commercial interesting, are handed over to research and development department. It is an important step from following reasons : It is first try to develop a product in actual form. Still existed only an idea, thought, pertinently drawing or simple model. Development stage means for a firm expenditure of large cost, that probably exceed costs connected with evaluation of proposal in previous stages. It this stage first appears if in the scope of given limitations is possible to remodel chosen draft in real product. If this is not possible to manage, than all still expended costs are for the firm lost (with exception of information obtained in previous innovation process).
5. Market testing Result of previous stage (Development) is a drawn up manufacturing documentation, pertinently technically sworn prototype. Also the producer already knows resultant technical parameters of the product, knows usage of material and time for its making, has relatively clear vision about costs on its production. Successful product must connect technological and construction solutions with wishes and requirements of consumers.
6. Commercialism In this stage it is fully introduction on the market – product enters into competition conditions, where fully appears how the producer accommodates the customers not only with technical parameters of product, but also with its design, price, packaging etc. Before product introducing on the market it is necessary to do appropriate modifications of the product, of which warned results of market testing and to think over what elements of marketing mix and in what combination will be used. (in consideration come different combinations of price level, propagation costs, ways of distribution, sales subvention etc.)
- Stage of commercialism belongs to financial more demanding phases of complex conceived product innovation. The producer must secure financial means for performing of advertisement campaign, equipment by necessary technique, material, must train workers and sales personnel. Samples : Through system at Bosh production System, initiated according to Japanese sample by the group BOSH in the Czech Republic, in branches were discovered other reserves allowing savings. Are developed also new products for “low cost” cars, that are important especially in developing countries. In next ten years in the whole world will exceptionally grow car production, which price will not exceed 7000 Euro.
Table telephone From the moment of invention of telephone apparatus passed more than one century. During this time went the table telephone through many innovations.
Questions to think over: 1.Characterise mistakes, that make managers on international markets. 2.Specify specialities of international marketing. 3.Specify and characterise components of international ambience. 4.What is the role of information in international marketing ? 5. What way proceeds according to you choice of international markets ? 6. Characterise forms on entering into international market. 7. Deal with distribution problems on international markets. 8. Characterise international marketing plan.
9. Describe individual categories of classification of new products. 10. Explain marketing conception of the product. 11. Characterise group of new products. 12. Describe stages of introducing of new products on the market. 13. What role plays in the company research and development department ? 14. What is market testing used for ? How is it providing ? 15. What is the purpose of commercialism ? 16. What aspects of development should contain innovation strategy ?