INTERNATIONAL MARKETING

INTERNATIONAL MARKETING
By Dr. HJH. ZAINON HJ. MAT SHARIF

International Marketing
Content What is International Marketing? Definition of International Marketing What is Global Marketing? International Marketing Environment International Marketing Culture International Market Entry Evaluation Process International Marketing Communication International Marketing and Price International Marketing and Products Advantages and Disadvantages of Standardization International Marketing Issues and Challenges

What is International Marketing?
International marketing is simply the application of marketing principles to more than one country. However, there is a crossover between what is commonly expressed as international marketing and global marketing, which is a similar term.

Definition International Marketing
At its simplest level, international marketing involves the firm in making one or more marketing mix decisions across national boundaries. At its most complex level, it involves the firm in establishing manufacturing facilities overseas and coordinating marketing strategies across the globe. Doole and Lowe (2001).

International Marketing is the performance of business activities that direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. Cateora and Ghauri (1999)

International marketing is the application of marketing orientation and marketing capabilities to international business. Muhlbacher, Helmuth, and Dahringer (2006)

The international market goes beyond the export marketer and becomes more involved in the marketing environment in the countries in which it is doing business. Keegan (2002)

What is Global Marketing?
Global marketing refers to marketing activities coordinated and integrated across multiple country markets. Johansson (2000)

The result is a global approach to international marketing. Rather than focusing on country markets, that is, the differences due to the physical location of customers groups, managers concentrate on product markets, that is, groups of customers seeking shared benefits or to be served with the same technology, emphasizing their similarities regardless of geographic areas in which they are located. Muhlbacher, Helmuth, and Dahringer (2006

Global/transnational marketing focuses upon leveraging a company's assets, experience and products globally and upon adapting to what is truly unique and different in each country. Keegan (2002)

International Marketing Environment
PEST Analysis

PEST Political Factors Economic Factors Socio cultural Factors Technological Factors + Environment Factors, Legal Factors, Security Factors PESTELS

Regulations Legislators
10Ps Processes Principles Policies Buyers Suppliers Pricing Promotion Media Positioning Consumers Investors Place Product Regulations Legislators Physical Evidence People

An International PEST Analysis International PEST Analysis would consider: How easy will it be to move from purely domestic to international marketing? Would your business benefit from inward foreign investment? What is the nature of competition within each individual market, and how will companies from other nations compete when you meet with them head-to-head in unfamiliar countries? Many other factors that are specific to your organization or industry.

Political Is there any historical relationship between countries that would benefit or hinder international marketing? What is the influence of communities or unions for trading? E.g. The European Union and its authority over European laws and regulation. What kind of international and domestic laws will your business encounter? What is the nature of politics in the country that you are targeting, and what is their view on encouraging foreign competition from overseas?

Economic What is the level of new industrial growth? What is the impact of currency fluctuations on exchange rates, and do your home market and your new international market - share a common currency? There are of course the usual economic indicators that one needs to be aware of such as inflation, Gross Domestic Product (GDP), levels of employment, national income, the predisposition of consumers to spend savings or to use credit, as well as many others.

Socio-cultural Culture, religion and society are of huge importance. What are the cultural norms for doing business? Will cultural norms impact upon your ability to trade overseas?

Technology Do copyright, intellectual property laws or patents protect technology in other countries? E.g. China and Jordan do not always respect international patents. Does your technology conform to local laws? E.g. electrical items that run on non-domestic currents could be dangerous. Are technologies at different stages in the Product Life Cycle (PLC) in various countries? E.g. versions/releases of software.

Tariff and Non-Tariff Barriers Tariff barriers are charges imposed upon imports - so they are a form of import taxation. This could mean that your margins are reduced so much that trading overseas becomes too unprofitable. However they are normally transparent and you can plan to take them into account.

Non-tariff barriers are trickier to spot. Governments sometimes act in favour of their own domestic industries rather than allow competition from overseas. Bureaucracy is a hurdle often encountered by exporting companies - it takes many forms and includes unnecessary hold-ups and red tape. Quotas are another form of non-tariff barrier i.e. restricting the quantity of a product that can be imported into a particular country.

SWOT Analysis

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.

Five Force Analysis

Five Forces Analysis helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products.

Five forces analysis looks at five key areas namely:- the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.

International Marketing Culture

Culture is the way that we do things around here. Culture could relate to a country (national culture), a distinct section of the community (sub-culture), or an organization (corporate culture).

The Terpstra and Sarathy Cultural Framework helps marketing managers to assess the cultural nature of an international market. It is very straight-forward, and uses eight categories in its analysis.

The Eight categories are Language, Religion, Values and Attitudes, Education, Social Organizations, Technology and Material Culture, Law and Politics and Aesthetics.

International Market Entry Evaluation Process
How to Enter a Foreign Market. The International Marketing Entry Evaluation Process is a five stage process, and its purpose is to gauge which international market or markets offer the best opportunities for our products or services to succeed.

The five steps are Country Identification, Preliminary Screening, In-Depth Screening, Final Selection and Direct Experience.

Step One - Country Identification Step Two - Preliminary Screening Step Three - In-Depth Screening Step Four - Final Selection Step Five - Direct Experience

Modes of Entry How does an organization enter an overseas market?
Here you will be consider modes of entry into international markets such as the Internet, Exporting, Licensing, International Agents, International Distributors, Strategic Alliances, Joint Ventures, Overseas Manufacture and International Sales Subsidiaries. Finally we consider the Stages of Internationalization.

Modes of Entry The Internet Exporting Licensing
International Agents and International Distributors Strategic Alliances (SA) Joint Ventures (JV) Overseas Manufacture or International Sales Subsidiary

International Marketing Communication
Media Choices for International Marketing Influences upon International Media Choice. There are a number of factors that will impact upon choice and availability of media such as: The nature and level of competition for marcoms channels in your target market. Whether or not there is a rich variety of media in your target market. The level of economic development in your target market (for example, in remote regions of Africa there would be no mains electricity on which to run TVs or radios).

The availability of other local resources to assist you with your campaign will also need to be investigated (for example, sales people or local advertising expertise). Local laws may not allow specific content or references to be made in adverts (for example, it is not acceptable to show naked legs in adverts displayed in Muslim countries). And of course a lot depends upon the purpose of the international campaign in the first place. What are your international marketing communications objectives?

Issues Language Design, symbolism and aesthetics sometimes do not transcend international boundaries Culture The manner in which people present themselves in terms of dress and appearance changes from culture to culture.

Other factors that need to be considered include: The work ethic of employees and customers to be targeted by media. Levels of literacy and the availability of education for the national population. The similarity or diversity of beliefs, religion, morality and values in the target nation. The family and the roles of those within it are factors to take into account.

Media Choices in International Marketing
Personal selling Advertising Other potential media would include Web-based marketing International tradeshows, trade missions, sponsorship

International Marketing and Price
Influences on pricing for international marketing. The cost of manufacturing, distributing and marketing your product. The physical location of production plants might influence price.

Of course fluctuations in foreign currencies affect pricing. Many companies are benefiting from a relatively low US Dollar price during the 2010s. This make imports to the United States expensive, but exports relatively cheap to other nations. However fluctuations make it very difficult for companies to make long-term decisions - such as building large factories in global markets i.e. costs of production are cheap today, but could be expensive in the future, impacting upon the price that your business is forced to charge.

The price that the international consumer is willing to pay for your product. Your own business objectives will influence price. For example, large international companies such as Starbucks may operate at a loss in some locations but still need a local presence in order to maintain their economies of scale, as well as their reputation as a global player.

The price that competitors in international markets are already charging. Business environment factors such as government policy and taxation.

Grey Markets A business can expect problems with grey markets where it trades across national boundaries. So if Company Y is English it will trade in Stirling or Pound notes. If it trades in the United States during the 2010s, to be competitive it will need to sell at a reduced price in the US. However, there is little to stop an entrepreneur from traveling to the US, filling up a transport container with products, which have been exported from Company Y in England, then returning them back to England and marketing the same product at a lower price than Company Y is willing to trade. This is an example of parallel trade, which is legal - just. Therefore it is known as grey marketing.

International Pricing Approaches Export Pricing - a price is set for by the home-based marketing managers for the international market. The pricing approach is based upon a whole series of factors which are driven by the influences on pricing listed above. Then mainstream approaches to pricing may be implemented

Non-cash payments - less and less popular these days, non-cash payments include counter-trade where goods are exchanged for goods between companies from different parts of the World.

Transfer Pricing - prices are set in the home market, and goods are effectively sold to the international subsidiary which then attaches its own margin based upon the best price that local managers decide that they could achieve.

Standardization versus adaptation - do you use a standard, common approach to pricing in each market, or do you decide to adapt the price to local conditions?

International Marketing and Products
Product is a focal element of the marketing mix.

Marketing Mix

Marketing Mix The marketing mix is probably the most famous marketing term. Its elements are the basic, tactical components of a marketing plan. Also known as the Four P's, the marketing mix elements are price, place, product, and promotion.

Marketing Mix Price There are many ways to price a product. Let's have a look at some of them and try to understand the best policy/strategy in various situations.

Marketing Mix Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.

Marketing Mix Product For many a product is simply the tangible, physical entity that they may be buying or selling.

Marketing Mix Promotion
Another one of the 4P's is promotion. This includes all of the tools available to the marketer for 'marketing communication'.

Marketing Mix Physical Evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues.

Marketing Mix People People are the most important element of any service or experience. Services tend to be produced and consumed at the same moment, and aspects of the customer experience are altered to meet the 'individual needs' of the person consuming it.

Marketing Mix Process Process is another element of the extended marketing mix, or 7P's.There are a number of perceptions of the concept of process within the business and marketing literature. Some see processes as a means to achieve an outcome.

When considering the nature of products and services in international marketing, the same models apply such as: Product Life Cycle (PLC) - products could be at different points in the PLC in various nations, possibly creating new opportunities.

Ansoff's Matrix - market development could mean that an existing product is marketed in a new international market. Three Levels of a Product - marketers would consider the local market's need for core, actual and augmented products. Internet Marketing and Product - how do eMarketers make product decisions?

Product Life Cycle (PLC)

Introduction. The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.

Growth. Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilize.

Maturity. Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilize. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.

Decline. At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Issues and Challenges Problems with Product Life Cycle.
In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Remember that PLC is like all other tools. Use it to inform your gut feeling.

Ansoff’s Matrix Ansoff’s Matrix

Ansoff’s Matrix Market Penetration
Here we market our existing products to our existing customers. This means increasing our revenue by, for example, promoting the product, repositioning the brand, and so on.

Ansoff’s Matrix Market Development
Here we market our existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region.

Ansoff’s Matrix Product Development
This is a new product to be marketed to our existing customers. Here we develop and innovate new product offerings to replace existing ones. Such products are then marketed to our existing customers.

Ansoff’s Matrix Diversification
This is where we market completely new products to new customers. There are two types of diversification, namely related and unrelated diversification. Related diversification means that we remain in a market or industry with which we are familiar.

The Three Levels of a Product

In order to actively explore the nature of a product further, lets consider it as three different products - the CORE product, the ACTUAL product, and finally the AUGMENTED product.

The CORE product is NOT the tangible, physical product. You can't touch it. That's because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly.

The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car example, it is the vehicle that you test drive, buy and then collect.

The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacture, and any after-sales service.

eMarketing Product

eMarketing Product A - Online Extender
An Online Extender is an existing business that has a strategy whereby it extends its marketing activities to the Internet. It could be any traditional, terrestrial organization that has historically grown through using traditional channels of distribution to get existing products, brands, services or solutions to market.

eMarketing Product B - Online Alternative
The Online Alternative is a new start-up that uses the Internet as an original channel of distribution to get products, brands, services or solutions, currently available elsewhere, to market. Some segments may be better targeted with this online alternative, for example remote or fragmented markets.

eMarketing Product C and D - Online Innovators
Online Innovators come in two forms: C - Online Innovators are existing businesses that see a benefit to launching new and innovative products, brands, services or solutions online by leveraging new technology. Existing businesses have a wealth of knowledge and learning that underpin their moves onto the Web. Remember, the Internet is not a business paradigm shift (at least not yet) and so current business approaches are often adapted for the Internet. Existing businesses have experience.

eMarketing Product D - Online Innovators are start-ups that seize the opportunity to launch new and innovative products, brands, services or solutions online. Despite not having as much knowledge and learning as some of their competitors, they are flexible and can move much more quickly. Start-ups often lack experience.

Advantages of Standardization
International uniformity has its own advantages. As people travel the World, they can be assured that wherever they go the product that they buy from you will be same and that it will have the same, standard benefits. This could mean the components that they buy from you in different local markets as they themselves become global.

Standardization reinforces positive consumer perceptions of your product. One of the payoffs of great quality for a single product category is that the reputation of your product will help you sell more of it. Positive word-of-mouth pays dividends for brand owners.

Cost reduction will give economies of scale. Since you are making large quantities or the same, non-adapted product - you benefit from the advantages associated with manufacturing in bulk. For example, components can be bought in large quantities, which reduces the cost-per-unit. There are other benefits relating to economies of scale, including improved research and development, marketing operational costs, lower costs of investment, and in an age where trade barriers are coming down - standardization is a plausible product strategy.

Quality is improved since efforts are concentrated upon the single product. Staff can be trained to enhance the quality of the product and manufacturers will invest in technology and equipment that can safeguard the quality of the standardized product offering.

Disadvantages of Standardization
Since the product is the same wherever you buy it, it is wholly undifferentiated. It is not unique in anyway. This leaves the obvious opportunity for a competitor to design a tailor-made, differentiated or branded product that meets the needs of local segments. Of course products have different uses in different countries (for example cycling is a leisure activity in some nations, and a form of transport in others). Local markets have local needs and tastes. Therefore by standardizing, you could leave yourself vulnerable.

Another problem with standardization is that it depends largely upon economies of scale. With global businesses, your business will manufacture in a number of nations. However, some countries implement trade barriers (and yes - this includes the USA and the European Union). If this is the case, then localization and the resultant adaptation is inevitable.

What exactly do you intend to standardize? Is your whole product 'experience' to be standardized? Do you standardize customer service and product support, marketing communications, pricing, and channels of distribution? Then you have a standardized marketing mix - surely this cannot benefit your business

Aligning the ‘7S’s is Essential for Success
Strategy Structure Systems VISION MISSION Shared Values Style Skills Staffing Dynamic 7S

Issues and Challenges PEST = PESTELS SWOT PORTER FIVE FORCE
CULTURE – language, manner, symbol, culture 4 P’s = 10P’s 4 M’s = 10M’s 7 S’s

THANK YOU VERY MUCH

INTERNATIONAL MARKETING

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