International Business Environments & Operations

Name: International Business Environments & Operations
Uploaded: 2017-11-24T09:12:25+00:00
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Description: International Business Environments & Operations

International Business Environments & Operations
Daniels ● Radebaugh ● Sullivan International Business Environments and Operations 14e by Daniels, Radebaugh, and Sullivan Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Chapter 16 Marketing Globally Chapter 16: Marketing Globally Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Learning Objectives To understand a variety of international product policies and their appropriate circumstances To be aware of product alterations when deciding between standardized and differentiated marketing programs among countries To appreciate the pricing complexities when selling in foreign markets To be familiar with country differences that may necessitate alterations in promotional practices To comprehend the different branding strategies companies may employ internationally To discern effective practices and complications of international distribution To perceive why and how emphasis within the marketing mix may vary among countries The Learning Objectives for this chapter are To understand a variety of international product policies and their appropriate circumstances To be aware of product alterations when deciding between standardized and differentiated marketing programs among countries To appreciate the pricing complexities when selling in foreign markets To be familiar with country differences that may necessitate alterations in promotional practices To comprehend the different branding strategies companies may employ internationally To discern effective practices and complications of international distribution To perceive why and how emphasis within the marketing mix may vary among countries Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Introduction Marketing principles in foreign markets are similar to those in domestic markets Product Price Promotion Place However, some or all elements may need to be adapted to better fit local markets International marketing is like domestic marketing in that a firm needs a desirable product or service, must tell people about it, price it at an acceptable level, and offer it in the right location. However, because international marketing managers operate in an unfamiliar environment each of these activities becomes more complex. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Introduction Marketing as a Means of Pursuing an International Strategy This Figure shows how international marketing fits in with a firm’s operations. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Marketing Strategies Marketing strategy depends on marketing orientation Production Sales Customer Strategic marketing Social marketing There are five common marketing orientations. The production orientation assumes that customers want lower prices or higher quality. This approach is generally only used for commodity sales, passive exports, and foreign niches. The sales orientation assumes that foreign customers are similar to domestic customers, so the company simply sells abroad what it can sell at home. The customer orientation, in contrast, holds the country as a constant and varies the product and marketing method. The strategic marketing orientation adapts product strategy by degree. Finally, the social marketing orientation considers decisions from the perspective of all stakeholders. Firms using this approach try to act in a socially responsible way. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Marketing Strategies Firms can segment and target markets By country By global segment Using multiple criteria Companies have to segment markets and identify specific segments to target. Three basic ways to do this is are by country, by global segment, and using multiple criteria. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Product Policies Learning Objective 1: To understand a variety of international product policies and their appropriate circumstances Learning Objective 1: To understand a variety of international product policies and their appropriate circumstances. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Product Policies Learning Objective 2: To be aware of product alterations when deciding between standardized and differentiated marketing programs among countries Learning Objective 2: To be aware of product alterations when deciding between standardized and differentiated marketing programs among countries. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Why Firms Alter Products
Firms alter products for Legal reasons Cultural reasons Economic reasons Firms prefer not to alter their product for foreign markets because of the costs involved in doing so. However, in many cases different legal, cultural, and economic conditions in the target market make product alterations a necessity. When product changes are necessary, firms can still try to find ways to control alteration costs by changing only what needs to be changed and keeping everything else the same. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

The Product Line: Extent and Mix
Product line decisions depend on Sales and cost considerations Product life cycle considerations In addition to deciding whether a product needs to be adapted for a target market, firms also need to consider the extent and mix of the product line that will be sold in foreign markets. This requires sales and cost considerations as well as product life cycle considerations. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Pricing Strategies Learning Objective 3: To appreciate the pricing complexities when selling in foreign markets Learning Objective 3: To appreciate the pricing complexities when selling in foreign markets. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Pricing Strategies Potential obstacles in international pricing Government intervention Set minimum or maximum pricing Prohibit certain pricing practices Market diversity Consumers may be willing to pay higher prices Pricing in international markets is more complex than domestic pricing. Governments, for example, may establish pricing guidelines or even forbid certain pricing strategies. Similarly, market diversity can encourage different pricing across markets. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Pricing Strategies Pricing tactics Skimming strategy Penetration strategy Cost-plus strategy Export price escalation Fluctuations in currency value Firms can use different pricing strategies. A skimming strategy involves charging a high price for a new product by aiming first at consumers willing to pay the price, and then progressively lowering the price. Firms using a penetration strategy introduce a product at a low price to induce a maximum number of consumers to try it. A cost-plus strategy involves pricing at a desired margin over cost. Keep in mind that export price escalation may occur. This typically happens for two reasons. First, channels of distribution usually include additional intermediaries because exporters need to contract with organizations that know how to sell in foreign markets. Second, tariffs and transport are additional costs that may be passed on to consumers. Finally, remember that pricing in highly volatile currencies can be extremely troublesome. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Pricing Strategies Why Cost-Plus Pricing Pushes Up Prices
This Figure shows why cost-plus pricing pushes up prices. Keep in mind that export price escalation can make it difficult to compete in foreign markets. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Pricing Strategies Gray market or product diversion the selling and handling of goods through unofficial distributors According to one consulting firm, U.S. companies lose as much as $63 billion per year because of grey markets. Today, easy access to information makes it much harder for firms to price on a country-to-country basis. Grey markets typically emerge when differences exist. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Pricing Strategies Negotiating Import-Export Prices
This Table shows ways that exporters can negotiate prices more effectively. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Promotion Strategies Learning Objective 4: To be familiar with country differences that may necessitate alterations in promotional practices Learning Objective 4: To be familiar with country differences that may necessitate alterations in promotional practices. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Promotion Strategies Promotion the presentation of messages intended to help sell a product or service Push-pull mix Push uses direct selling techniques Pull relies on mass media Promotion can vary significantly depending on the company, the product, and the country of operation. Push promotion uses direct selling while pull relies on mass media. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Promotion Strategies Advantages of standardized advertising lower cost better quality at local level common global image rapid entry into multiple countries However, firms could have problems with translation legalities market needs Companies face numerous challenges because of diverse national environments. Very often, companies find that they have to adapt their promotion to local market conditions. For example, companies may find that promotion in rural areas requires specially designed strategies. Similarly, government regulations can pose problems as can differences in income levels. Keep in mind that even if a standardized approach is possible it may not always be beneficial. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Branding Strategies Learning Objective 5: To comprehend the different branding strategies companies may employ internationally Learning Objective 5: To comprehend the different branding strategies companies may employ internationally. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Branding Strategies Brand an identifying mark for a product or service Brands give products instant recognition. Businessweek estimates that U.S. companies own 52 of the top 100 global brands. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Branding Strategies Advantages of a worldwide brand global image global player identification Problems with global brands language brand acquisition country-of-origin generic and near-generic names Using the same brand worldwide helps a firm develop a global image, but may not always be possible because of language differences or because the firm has acquired a locally branded product. Country-of-origin can also be a factor in branding. A global brand can help a company overcome negative country-of-origin images, but keep in mind that images can change. Note also that the advantages of a well-known brand can be negated if the brand becomes a generic term. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Distribution Strategies
Learning Objective 6: To discern effective practices and complications of international distribution Learning Objective 6: To discern effective practices and complications of international distribution. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

the course – physical path or legal title – that goods take between production and consumption When it comes to distribution, international marketing managers not only have to figure out how to get the product to a particular country, they also need to develop a strategy to get it to the end user. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Deciding whether to standardize Distribution can vary substantially among countries Distribution can be difficult to change As with other elements in the marketing mix, managers need to decide whether distribution can be standardized or whether it needs to be adapted to fit the needs of each market. In general, distribution is the most difficult element to standardize. Keep in mind that the cost and time involved in establishing a distribution system can make it difficult to change even when the situation changes. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

When choosing distributors and channels firms must consider whether internal handling is feasible which distributors are qualified the reliability of after-sales service Companies must decide whether to handle distribution in-house or outsource it. If a firm decides to outsource, it must ensure that it uses a qualified distributor. In addition, reliable after-sales service needs to be available especially for products using new technology. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Distributors choose which products to handle To get a distributor to work for them, companies may have to give incentives use successful products as bait for new ones convince distributors that their product and company are viable Companies looking for distributors may find that many are locked into exclusive arrangements. In some cases, it may be necessary to offer distributors incentives or offer proven products as bait for taking on new ones. Companies may even find that they have to convince distributors of the viability of the company itself. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Factors that can contribute to distribution cost differences among countries include Infrastructure conditions The number of levels in the distribution system Retail inefficiencies Size and operating hour restrictions Inventory stock-outs Distribution costs can vary between countries because of infrastructure conditions, the number of levels in the distribution system, retail inefficiencies, size and operating hour restrictions, and inventory stock-outs. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

E-commerce and the Internet Opportunities can replace traditional sales methods faster customer service Problems cannot differentiate sales programs between countries still must comply with local laws The growth in online availability creates new opportunities and challenges in selling globally over the Internet. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Managing the Marketing Mix
Learning Objective 7: To perceive why and how emphasis within the marketing mix may vary among countries Learning Objective 7: To perceive why and how emphasis within the marketing mix may vary among countries. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Gap analysis a method for estimating a company’s potential sales by identifying prospective customers it is not serving adequately Usage Product line Distribution Competitive The difference between total market potential and a company’s sales is a result of gaps. A usage gap exists when collectively, all competitors sell less than the market potential. A product line gap exists when the company lacks some product variations. A distribution gap exists when a company misses geographic or intensity coverage. A competitive gap exists when competitors’ sales are not explained by product line and distribution gaps. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

Evolving Challenges to Segment Markets
Disparities between “haves” and “have-nots” will increase Companies will have conflicting opportunities to serve both “haves” and “have-nots” Attitudinal differences will continue to affect demand Materialism, cosmopolitanism, and consumer ethnocentrism What challenges will face international marketing managers in the future? There are several issues to consider. It’s anticipated that disparities between the “haves” and “have-nots” will grow in the foreseeable future, both within and among countries. Those who are better educated and more connected to the Internet will be better able to search globally for lower prices for what they buy. So, globally, the affluent segment will have even more purchasing power than their incomes indicate. At the other extreme, companies will have opportunities to develop low cost standardized products to fit the needs of those with lower disposable incomes. Attitudinal differences are also likely to affect demand in general as well as demand for particular types of products and services. Although global communications are reaching far-flung populations, different people react differently to them. Finally, companies will continued to be challenged by materialism, cosmopolitanism, and consumer ethnocentrism. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

International Business Environments & Operations

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