1. International Marketing Strategies and Marketing mix ESG March 2008
International Marketing Strategies and Marketing mix ESG March Jean-Philippe Javel

2. Size and nature of international markets
Niches
Local markets
Regional markets
Global markets

3. Niche markets Purely local niches Worldwide niches
Limited to a specific geographical area
Often, historical roots, consumer behavior linked to old traditions
Worldwide niches
Small market but potential customers in several countries
Example: Hummer H2
derived from the military vehicle
Target:
Wealthy
« show-off »
Mostly urban
Niche in some countries, mass market in others
Example : oil lamp
Decoration item (sailing style) in western countries

4. Local, regional and global markets
Local markets (country)
Strong cultural links
Specific market conditions
Examples :
medias (press, radio, TV)
cheese
airlines : state regulations (ex: Morocco)
Regional, multi-country markets
Specific products and marketing mix
Example : cars
North America, Europe, Poor African countries
Global markets
Rather undifferentiated goods, universal solutions,
not culturally related, commodities
Example : wheelbarrow
Example: vehicle gasoline
Luxury brands
Strong global brand image
Marketing mix may be adapted locally
Chevrolet Tahoe

5. Adapting or standardizing your marketing strategy and/or mix ?
Markets and consumers needs and wants can be different in each country / region
But it is not always optimal to localize the marketing strategy and radically change the whole marketing mix for each country
For example : developping a new product
Mainly for cost reasons (economies of scale) and organisational reasons (simplify)
Adapt
locally
Where is the optimum ?
Standardize
globally
Customer
needs and wants
Reduce costs
Maximize profits
Consequently, a multinational company has to find out and implement the optimal approach, between global and local, depending on several factors and market screening

6. Strategic Adaptation to Foreign Markets
High
Need for
adaptation
Level of
cultural
grounding
Low
Industrial /
Technology
intensive
Consumer
Nature of product

7. Marketing : Globalization versus Adaptation
Factors encouraging Globalization
It’s sometimes possible
Lifestyles and consumer behavior are converging (more or less)
Cost reduction
Economies of scale (lower manufacturing & purchasing costs)
No product adaptation means less R&D, Marketing, inventories costs
Simplify management
Easier control & coordination
Centralized decisions
Global marketing campaigns
Communication etc
Possible fast worldwide launch
Factors encouraging Adaptation to local markets
Different customer needs and wants, behavior patterns
cultural background
use conditions
Different economic situation
Legal, tax, political barriers
Different competition landscape
Specific sales/retail channels
External growth and acquisition of foreign local brands
Unleash local managers’ initiative

8. The 4 Types of International Marketing
Global marketing strategy
(same everywhere)
Local marketing strategies
(specific to each country or region)
Global tactics
Some tactics adapted locally
Mix of global & local tactics
Only local tactics & marketing mix
Pure Global
Global
« Glocal »
Pure Local
Bongrain : cheeses

9. Marketing Strategy : Pure global
Strategies and tactics are the same everywhere
2 conditions
Markets adequate for such globalization
Strong brand policy, with no exception
Mostly luxury brands
Examples:
Chanel n°5 perfume
Omega watches
Other examples
La Maison du Chocolat
same product
same shops (Paris, New York, Tokyo)
same service
same positioning, highest price on the market
Ikea
same strategy everywhere (developped countries) :
same brand, same positioning, same target
same marketing mix : products and services, pricing, place, communication
But a flop in China !

10. Marketing Strategy : Global
Same brand, same positioning, same product
But the marketing mix can be partially adapted locally, depending of local market conditions and competition
Example : Air France
Same brand, same planes, same quality of service, maintenance and security
Pricing is adapted locally
When Air France has a quasi-monopolistic position (West Indies, some African countries), prices are very high
When Air France is on a market with fierce competition, especially from low cost companies such as EasyJet or RyanAir (ex: Europe), prices are much lower and special promotions are proposed

11. Marketing strategy : « Glocal »
« Think global, act local »
Standardizes certain core elements and localizes some marketing mix elements
Example : Honda Accor
Same brand and positioning
in Europe and in the USA
But the product is not the same everywhere
In Europe, Accor sales are low, and cars are imported from Japan
In the US, sales are higher and a special product is manufactured for the US market
Automatic gearbox
Slightly different style
Different motors
Different interior design and equipment
Since 1986, Honda has developped a new brand, Acura, on the high-end, in the US & Japan, with specific models and a dedicated retail network

12. Coca Cola marketing is coherent worldwide and some elements are global
Brand
Colors
Symbols
Same major sales channels
Some advertising campaigns
Sponsoring of major sport events
Olympic Games since 1928
Football World Cup

13. But some elements of the products are localized Example: adaptation of the Diet Coke product
« Diet » has a negative meaning in many countries.
It was changed to « light » in South Europe and Japan.
(same problem with « coke » in French !)
USA
Cherry flavor for the US market
Packaging, name and formulas can be different in local markets
China
Thailand

14. Marketing strategy : Pure local
Brands, positioning, products and marketing mix are totally specific and adapted to each country
Example: Bongrain, world leader of cheeses
Tastes, preferences and traditions are very different in each country
Presence in 150 countries
Several hundreds of brands and products, with local marketing mix
France : Caprice des Dieux, Saint Agur, Chavroux etc (28 brands)
Spain : Burgo de Arias etc
Hungary: Pannonia etc
USA : Alouette etc
India : Le Bon
China : Pikifou
Japan: Gerard Selection

15. Examples of product adaptation
Depending on needs and wants differences, and local constraints, there are various approaches :
Exactly the same core product worldwide
Natural goods : Evian water
Manufactured luxury goods : Cartier watches
Partially localized product
Personal Computers : keyboard (20 different types in Europe), electrical power, software etc
Mainly or totally localized product
Cosmetics : different ethnic skins etc
Yoghourts :
French and American tastes
are very different
(creamy formula, flavor,
size, number of items)
Coffee : very different tastes and preferences in the world

16. Different strategic goals in each country
International pricing strategies Main reasons to adapt pricing in local markets
Different strategic goals in each country
Market penetration / high-end
Example : Bonne Maman jam
Different standards of living
L’Oreal mass market products are less expensive in China
Coca-Cola prices are lower in India than in Japan
Manufacturing and/or shipping costs
Evian bottle sold in Japan or in the USA (far away from France):
the price includes a rather high transport cost
Tax, custom duties
Currency rates
Competition

17. International pricing strategies Limits of different pricing by country
May blur brand image and positioning
example : Champagne Pommery used to be sold at different prices in Europe, which was confusing some consumers (who travel)
Foreign market price gaps may lead to “gray marketing” and “parallel imports”
sales of authentic, legally trademarked goods through unauthorized or tolerated channels
example : Renault cars imported from Spain and sold in France
example of a technological response : DVD zones
same issue with different tax levels :
blank CD or DVD
cigarettes
Less and less price differences are possible in the European Union because of 2 factors easing price comparisons :
Euro common currency
Internet price comparators
leguide.com, Kelkoo, Lycos etc

18. International pricing strategies Example : Louis Vuitton - Alma bag
Price is around 40% higher in Japan than in France (585 €)
But Louis Vuitton has to
impose purchase limits
to Japanese tourists
in France
Counterfeiting is also a major concern !

19. International communication strategies Advertising
Choice of medias : a localized approach is usually better
Different audience
Different regulations
Example: alcohol
Message : a certain level of globalization is usually preferable
Economies of scale
Brand image coherence worldwide
TV commercials, press ads etc often require localization
But most multinational companies choose a advertising agency with offices worldwide, to enable a global level of coherence in localized campaigns
There are few actual worldwide global advertising campaigns
Example : Launch of Gillette Mach 3
Same TV commercial in 19 European countries and in the US
Only the soundtrack and slogan were translated
« The best a man can get »: « La perfection au masculin »
Choice of an international stars : David Beckham

20. International communication strategies When is globalization of promotion most possible?
Products / brands that can use a primarily visual appeal
Products / brands that can use images associated with rather “universal” appeals
such as sex or wealth
Products / brands that appeal to a market segment with universally similar tastes, interests, needs, and values
Products with a nationalistic flavor if the country has a reputation in that field
High tech products free of cultural bounds

21. Example : Apple iPod Worldwide advertising campaign
Same campaigns worldwide
Different music soundtracks : Rock, electro / house, hip hop, jazz etc
Characters are presented in shadow style to avoid ethnic issues and to focus more on the product (contrast effect)
Apple is now a dominant leader on the MP3 player market
32 million iPods sold in 2005, more than 60% of market share
900 million songs sold through iTunes Music Stores, nearly 85% of the legal market

22. International communication issues
In which countries can’t you launch such a campaign ?

23. A low budget ? Why not try viral marketing ? Be creative !

24. Market entry strategies

25. Market entry strategies Exporting
Direct
Domestic base
Overseas sales branch
Traveling sales representative
Foreign-based distributors/agent
Indirect-occasional, or active exporting
Domestic-based export merchant
Domestic-based export agent
Cooperative organizations
Export-management company

26. Market entry strategies Contractual Agreements
Franchising: A contractual arrangement where a wholesaler or retailer (the Franchisee) agrees to make some payment and to meet the operating requirements of a manufacturer or other franchiser in exchange for the right to use the firm’s name and to market its goods or services
Foreign Licensing: an agreement that grants foreign marketers the right to distribute a firm’s merchandise or to use its trademark, patent, or process in a specified geographic area.
Subcontracting: a contractual agreement where a firm hires a local company to produce goods or services in a specific geographic area.

27. Market entry strategies International Direct Investment
An additional strategy for entering global markets
Requires direct investment in foreign firms, production, and/or marketing facilities
Advantages
cheaper labor cost in some countries
government incentives
creates better image
deeper relationships with government, customers, suppliers and distributors
full control of operations and marketing
Risks involved:
economic difficulties of the host country
political instability and negative perception

28. Comparison of Market Entry Strategies
Form Control Risk Advantage
Export Very limited Low Low cost
Ownership Total High Control
Joint Ventures Shared Moderate Local expertise
Licensing Limited Moderate Low cost
Internet Total High No physical
presence required
As organizations became “less ignorant” and more confident about marketing in the international arena, they tended to become more reliant on their international operations. And in becoming more reliant on their international operations, they acquired the expertise to enter new markets differently depending upon market conditions, laws and the degree of risk they wanted to face in any given market.
If you look at the above as a continuum export is on one end and ownership of non-domestic operations is on the other. With licensing on the end toward export and JVs on the end toward ownership. The main thing to note is that as you move to full ownership a company gains control but looses local market expertise and has added risk.
The important thing to remember here is, again, with the possible exception of total “ownership” of non-domestic operations, a company is doing business very differently “abroad” than the way it conducts its activities in its home market.
And finally, as we discussed earlier, what we have described here is the way “business” has been traditionally done as organizations became more reliant on sales from its non-domestic market to supply cash for its revenue stream.

29. Market Screening Economic Size and Structure
Social and Cultural Factors
Environmental
Factors
Marketing
Systems
Segmentation of
The Market
Living
Standards
Growth
Prospects
Nature of
The Society
Distinctive
Features
Import
Restrictions
Legal
Framework
Political
Stability
Consumer
Groups
Geographical
Factors
Distribution
Promotion
Consumer
Behaviour
Extent of
Competition
After International Marketing, Bennett & Blythe, 2002

30. The 12C framework to analyse international markets
Country - What are the political, legal and economic issues of your potential overseas market, as well as its current market potential and your knowledge and experience of it?
Currency - If foreign currencies fluctuate a lot against your home currency, you may have difficulties in pricing your goods or making a profit. Some countries, like China don’t allow their currency to leave the country, so you may have to work in $
Culture - Every culture is different - even from one European country to another. Your product, advertising and even brand may need to be adapted to suit your new market.
Control & Co-ordination - Trading abroad is not only about selling, but also after sales service. All these people will have to be hired, trained, managed and controled.
Concentration (of markets) – some countries are vast (China, India etc). It may not be so easy or cost effective to sell to different groups in isolated areas. However, there may be opportunities to sell cross-countries to different nationalities with similar cultural/language attitudes
Commitment - Selling abroad seriously requires long term planning, significant financial investment, time and skills of your staff. There are risks and the return on investment may be long to come.

31. The 12C framework to analyse international markets
Communication - You need to consider the language skills of you,
your staff and your contacts abroad, and what media or information technology they have (advertising, telecommunications, etc). If it is difficult to communicate, it will slow up and complicate matters. It may also prevent you from developing your business properly.
Choices (of consumers) - It is possible that there are perfectly good products or services available from local suppliers. Yours are likely to be more expensive, so consider what would make your product better or more desirable.
Channels of distribution - Getting goods and services to overseas markets can be difficult. Building an efficient retail network is usually hard and long.
Contractual obligations - Make sure that the contract meets everyone’s needs and that you and your customer are fully aware of the commitments listed. Failure to meet the exact requirements of the contract, can result in non-payment.
Capacity to pay - You should take a look at the customer and their ability to pay as well as the country itself. This will include not only financial health, but also political issues, and currency and banking regulations.
Caveats (laws) Some countries have laws that are very protective of their local traders and do not readily accept imports. There may be restrictions or differences between your country and the foreign market about what can be sold and under what circumstances.