1. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Principles of Marketing Theocharis Katranis Lecture 11 Spring Semester 2013 1

2. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 2 Today’s Lecture 1. We will discuss the need to understand competitors as well as customers through competitor analysis. 2. We will explain the fundamentals of competitive marketing strategies based on creating value for customers 3. We will illustrate the need for balancing customer and competitor orientations in becoming a truly market-centered organization. 4. We will discuss how the international trade system and the economic, political-legal, and cultural environments affect a company’s international marketing decisions. 5. We will describe three key approaches to entering international Markets 6. We will explain how companies adapt their marketing mixes for international markets. 7. We will identify the three major forms of international marketing organization.

3. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Competitors Analysis Lecture 11 3 Competitor Analysis is the process of identifying key competitors; assessing their objectives, strategies, strengths and weaknesses, and reaction patterns; and selecting which competitors to attack or avoid. Definition:

4. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 11 4 Definition: Competitive Advantage Competitive advantage is an advantage over competitors gained by offering consumers greater value than competitors do.

5. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 11 5 Competitive Marketing Strategies Definition: Competitive Marketing Strategies are strategies that strongly position the company against competitors and that give the company the strongest possible strategic advantage.

6. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 11 6 Competitor Analysis 1. Identifying Competitors 2. Assessing Competitors i.e. Competitor objectives, Strategies, Strengths, Weaknesses, Reactions 3. Selecting Competitors to Attack or Avoid I.e. Strong or Weak competitors, close or distant, Good or Bad (follow rules), 4. Designing a Competitive intelligence system

7. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 11 7 Competitive Strategies 1. Overall cost leadership – The company works hard to achieve the lowest production and distribution costs. 2. Differentiation – The company concentrates on creating a highly differentiated product line and marketing program. 3. Focus – The company focuses its efforts on serving a few market segments well rather than going after the whole market.

8. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 11 8 Competitive Positions 1. Market Leader – The firm in an industry with the largest market share 2. Market Challenger – A runner-up firm that is fighting hard to increase its market share in an industry 3. Market follower – A runner-up firm that wants to hold its share in an industry without rocking the boat 4. Market nicher – A firm that serves small segments that the other firms in an industry overlook or ignore.

9. Principles of MarketingTheocharis Katranis, MBA,Spring Semester 2013 Lecture 11 9

10. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 10 Balancing Customer and Competitor Orientations Whether a company is a market leader, challenger, follower, or nicher, it must watch its competitors closely and find the competitive marketing strategy that positions it most effectively.

11. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 11 Balancing Customer and Competitor Orientations Company Orientations 1. Competitor-centered company 2. Customer-centered company 3. Market-centered company

12. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 12 Balancing Customer and Competitor Orientations Company Orientations 1. Competitor-centered company Competitor-centered company is a company whose moves are mainly based on competitors’ actions and reactions.

13. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 13 Balancing Customer and Competitor Orientations Company Orientations 2. Customer-centered company Customer-centered company is a company that focuses on customer developments in designing its marketing strategies and on delivering superior value to its target customers.

14. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 14 Balancing Customer and Competitor Orientations Company Orientations 3. Market-centered company Market-centered company is a company that pays balanced attention to both customers and competitors in designing its marketing strategies.

15. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 15 Porter’s Strategies

16. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 16 The Global Marketplace Companies that go global may face highly unstable government and currencies, restrictive government policies and relations, and high trade barriers. Corruption is also an increasing problem – officials in several countries often award business not to the best bidder but to the highest briber.

17. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 17 The Global Marketplace Global firm – Definition: Global firm is a firm that by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.

18. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 18 Looking at the Global Marketing Environment Before deciding whether to operate internationally, a company must consider the following: 1. The International Trade System 2. Economic Environment 3. Political-Legal Environment 4. Cultural Environment

19. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 19 Looking at the Global Marketing Environment 1. The International Trade System 1.1 Trade Restrictions 1.2 Government Quotas – Limits in imported quantities 1.3 Government Tariffs on certain imported products 1.4 Exchange Controls – Exchange rates against other currencies 1.5 Nontariff Trade Barriers – Restrictive Product Standards – China’s Banking Services 1.6 The World Trade Organization and GATT – (General Agreement on Tariffs and Trade)

20. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 20 Looking at the Global Marketing Environment 2. The Economic Environment Industrial/Agricultural Country - High/Low Income Country – Manufacturing Country – Exporting Country (Manufactured goods and services)

21. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 21 Looking at the Global Marketing Environment 3. The Political-Legal Environment A company should consider factors such as the country’s attitudes towards international buying, governmental bureaucracy, political stability and monetary regulations.

22. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 22 Looking at the Global Marketing Environment 4. Cultural Environment A company should understand country’s norms and taboos, country’s cultural traditions and business behavior.

23. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 23 Deciding whether to go global Major questions to be considered: 1. Can the company learn to understand the preferences and buyer behavior of consumers in other countries? 2. Can it offer competitively attractive products? 3. Will it be able to adapt to other countries’ business cultures and deal effectively with foreign nationals? 4. Do the company’s managers have the necessary international experience? 5. Has the management considered the impact of regulations and the political environments of other countries?

24. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 24 Deciding which Markets to Enter A company should consider the following: 1. How many markets it wants to enter. 2. What types of markets it wants to enter. 3. Also market size, market growth, cost of doing business, competitive advantage, risk level.

25. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 25 Deciding which Markets to Enter

26. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 26 Deciding How to Enter the market 1. Exporting 2. Joint Venture 2.1 Licensing 2.2 Contract Manufacturing 2.3 Management Contracting 2.4 Joint Ownership 3. Direct Investment

27. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 27 Deciding How to Enter the market 1. Exporting – Definition: Exporting is entering a foreign market by selling goods produced in the company’s home country, often with little modification.

28. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 28 Deciding How to Enter the market 2. Joint Venture – Definition: Joint Venture is entering foreign markets by joining with foreign companies to produce or market a product or service.

29. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 29 Deciding How to Enter the market 2.1 Joint Venture by Licensing – Definition: Joint Venture by Licensing is a method of entering a foreign market in which the company enters into an agreement with a licensee in the foreign market.

30. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 30 Deciding How to Enter the market 2.2 Joint Venture by Contract Manufacturing It is a joint venture in which a company contracts with manufacturers in a foreign market to produce the product or provide its service.

31. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 31 Deciding How to Enter the market 2.3 Joint Venture by Management Contracting It is a joint venture in which the domestic firm supplies the management know-how to a foreign company that supplies the capital; the domestic firm exports management services rather than products.

32. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 32 Deciding How to Enter the market 2.4 Joint Venture by Joint Ownership It is a joint venture in which a company joins investors in a foreign market to create a local business in which the company shares joint ownership and control.

33. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 33 Deciding How to Enter the market 3. Direct Investment Direct Investment is entering a foreign market by developing foreign-based assembly or manufacturing facilities i.e. HP company that opened a second factory near Delhi to make PC for the local market.

34. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 34 Deciding on the Global Marketing Program Companies should consider the following: 1. Standardized Global Marketing 2. Adapted Global Marketing 3. Straight Product Extension 4. Product Adaptation 5. Product Invention 6. Communication Adaptation 7. Dual Adaptation

35. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 35 Deciding on the Global Marketing Program 1. Standardized Global Marketing Definition: Standardized Global Marketing is an international marketing strategy for using basically the same marketing strategy and mix in all the company’s international markets.

36. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 36 Deciding on the Global Marketing Program 2. Adapted Global Marketing Definition: Adapted Global Marketing is an international marketing strategy for adjusting the marketing strategy and mix elements to each international target market, bearing more costs but hopping for a larger market share and return.

37. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 37 Deciding on the Global Marketing Program 3. Straight Product Extension - Definition Straight Product Extension is marketing a product in a foreign market without any change.

38. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 38 Deciding on the Global Marketing Program 4. Product Adaptation – Definition: Product Adaptation is adapting a product to meet local conditions or wants in foreign markets.

39. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 39 Deciding on the Global Marketing Program 5. Product Invention – Definition: Product Invention is creating new products or services for foreign markets.

40. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 40 Deciding on the Global Marketing Program 6. Communication Adaptation – Definition: Communication Adaptation is a global communication strategy of fully adapting advertising messages to local markets.

41. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 41 Deciding on the Global Marketing Program

42. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 42 Deciding on the Global Marketing Program Companies should consider also the following: 1. Price Issues 2. Promotion Issues 3. Distribution Channels Issues 3.1 Channels Between Nations 3.2 Channels Within Nations

43. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 43 Deciding on the Global Marketing Program 3.1 Channels Between Nations – Definition: Channels Between Nations moves company products from points of production to the borders of countries within which they are sold.

44. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 44 Deciding on the Global Marketing Program 3.2 Channels Within Nations Channels Within Nations moves the products from their market entry points to the final consumer.

45. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 45 Deciding on the Global Marketing Organization Companies can: 1. Have an Export Department 2. Have International Divisions or Subsidiaries 2.1 Be Geographical Organizations 2.2. Be International Subsidiaries 3. Be Global Organizations

46. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Lecture 11 46 Summary – Lecture 11 1. We discussed the need to understand competitors as well as customers through competitor analysis. 2. We explained the fundamentals of competitive marketing strategies based on creating value for customers 3. We illustrated the need for balancing customer and competitor orientations in becoming a truly market-centered organization. 4. We discussed how the international trade system and the economic, political-legal, and cultural environments affect a company’s international marketing decisions. 5. We described three key approaches to entering international Markets 6. We explained how companies adapt their marketing mixes for international markets. 7. We identified the three major forms of international marketing organization.

47. Principles of MarketingTheocharis Katranis, MBASpring Semester 2013 Chapters 18 and 19 Lecture 11 47 END of Lecture 11 Thank you for your attention