Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16-1 Part Six Managing International Operations Chapter Sixteen Marketing Globally

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16-2 Chapter Objectives To understand a range of product policies and the circumstances in which they are appropriate internationally To grasp the reasons for product alterations 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

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16-3 Marketing as a Means of Pursuing an International Strategy

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16-4 Marketing Orientations International marketing strategies depend on companies’ orientations that include:  Production  Sales  Customer  Strategic marketing  Societal marketing

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16-5 Production Orientation Companies focus primarily on production - either efficiency or high quality - with little emphasis on marketing. Used internationally for certain cases:  Commodity sales  Passive exports  Foreign-market segments or niches

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16-6 Other Orientations Sales orientation: a company tries to sell abroad what it can sell domestically and in the same manner on the assumption that consumers are sufficiently similar globally. Customer orientation: the product and method of marketing it are varied Strategic Marketing orientation: combines production, sales, and customer orientations Social Marketing orientation: Companies consider effects on all stakeholders when selling or making their products.

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16-7 Segmenting and Targeting Markets The most common way of segmenting markets is through demographics and psychographics Three basic approaches to international segmentation:  By country  By global segment  By multiple criteria

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16-8 Why Firms Alter Products Legal factors are usually related to safety or health protection. Examination of cultural differences may pinpoint possible problem areas. Personal incomes and infrastructures affect product demand. Although some standardization of products would eliminate wasteful alterations, there is resistance because:  A changeover would be costly.  People are familiar with the “old.”

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 16-9 Potential obstacles in International pricing Government intervention Market diversity Export price escalation Fluctuations in currency value Fixed versus variable pricing Relations with suppliers

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall The Push-Pull Mix Promotion may be categorized as push, which uses direct selling techniques, or pull, which relies on mass media. For each product in each country, a company must determine its promotional budget as well as the mix between push and pull Factors in Push-Pull Decisions:  Type of distribution system  Cost and availability of media to reach target markets  Consumer attitudes toward sources of information  Price of the product compared to incomes Click for Video

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Standardization of Advertising Programs Advantages of standardized advertising include:  Some cost savings.  Better quality at local level.  Rapid entry into different countries. Major problems for standardizing advertising among countries are:  Translation  Legality  Message needs

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Branding Strategies A brand is an identifying mark for products or services. Global branding is hampered by:  language differences  expansion by acquisition  nationality images  laws concerning generic names Global brands do help develop a global image

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Distribution Strategies Distribution is the course - physical path or legal title - that goods take between production and consumption. Distribution reflects different country environments:  It may vary substantially among countries.  It is difficult to change.

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Choosing Distributors and Channels Distribution may be handled internally:  When volume is high.  When companies have sufficient resources.  When there is a need to deal directly with the customer because of the nature of the product.  When the customer is global.  To gain a competitive advantage. Some evaluation criteria for distributors include their:  Financial capability.  Connections with customers.  Fit with a company’s product.  Other resources.  Trustworthiness.  Compatibility with product image.

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall The Challenge Of Getting Distribution Distributors choose which companies and products to handle. Companies:  May need to give incentives.  May use successful products as bait for new ones.  Must convince distributors that product and company are viable. Five factors that often contribute to cost differences in distribution are infrastructure conditions, the number of levels in the distribution system, retail inefficiencies, size and operating-hour restrictions, and inventory stock- outs.

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall The Internet and Electronic Commerce Although the Internet offers new opportunities to sell internationally, using the Internet does not negate companies’ needs to develop sound programs within their marketing mix

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Managing the Marketing Mix The difference between total market potential and companies’ sales is due to gaps:  Usage - less product sold by all competitors than potential.  Product line - company lacks some product variations.  Distribution - company misses geographic or intensity  coverage.  Competitive - competitors’ sales not explained by product line and distribution gaps.

Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall Gap Analysis