International Marketing

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International Marketing

• Tim Beal
• Lecture 4
• 19 March 2002

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Today

• Housekeeping
• Impact of Technology
• transportation
• internet
• breakgtgtgood and bad sites

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Housekeeping

• Wine case study next week
• THURSDAY 28 March
• Last day of teaching before Easter break
• Box Murphy 2nd floor
• penalties 2 per weekday
• Hand in to Mrs Jessie Johnston at Rutherford
  House 11.19

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Class representative

• Chris Bryant
• Contact details on coursepage

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Course so far

• SWOT information and IM
• Factiva now available
• Aspects of the international business environment
• the environment in which IM takes place

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international business environment

• Economics of globalisation
• Politics of globalisation
• Liberalisation..FTAs
• HK deal unlikely
• 3 Social trends
• 4 Technology
• Next week Marketing of education services
• after breakgtgtissues, strategies and markets

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Technology Overview

• Distribution
• transportation
• Internet

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Internet

• History
• Structure and characteristics
• Global data growth, distribution of internet
  markets
• Types of websites
• Globalisation
• Internet no longer American
• Internet and marketing

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Technology

• Technology affects every aspect of marketing/IM
• every good/service is produced, promoted and
  distributed by technology
• even price and payment affected
• Here concentrate on some key elements
• distribution
• internet
• two are closely connected

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Distribution

• distribution tends to be more important in IM
  than in M
• distances tend to be greater
• distance from NY to Toronto less than NY to SF
• Costs of distribution are substantial
• Falling transportations costs key driver of
  international marketing

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Transportation costs

• Silk route an example
• only very high value (expensive), non-perishable
  items feasible
• transportation revolution made global economy
  possible
• Ships gtgtgtrailways gtgtInternal combustion
  engine/roadsgtgtships (tankers/containers) gtgtair

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Example

• The cost of moving farm produce and manufactured
  goods over long distances fell 95 percent between
  1815 and 1860. With that drop, farmers could grow
  wheat in Indiana and sell it at a profit in New
  York City, while New England manufacturers could
  make work shoes and sell them to the farmers of
  Indiana

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Other technological impacts on transportation

• feasibility
• refrigeration
• transformed 19th century NZ
• now chilled, gas-packed meats can fetch high
  prices in affluent markets
• also happening with fruits and vegetables
• much sent by plane

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Combination

• Combination of
• cheaper
• faster
• improved storage
• greatly increases range of products that can be
  marketed internationally
• distance
• market segments

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Investment

• Development of new planes, airports, container
  terminals etc. extremely costly
• Nevertheless, new airports have been built
  recently in
• Korea (Incheon)
• Kuala Lumpur
• Hong Kong
• Japan (Kansai)
• airports around the world being upgraded
• proximity to airport important for IM business
• goods, tourism

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Globalisation of production

• Because of cheaper transport, production can be
  moved away from target markets
• US, JapanTaiwan gtgtgtproduction shifting to
  cheaper places
• labour
• land
• environmental standards
• increases role of IM
• domestic productiongtgtgtmove offshoregtgtgtimported
  back

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Geography is history

• Internet takes this process to its limits
• Distance has little effect on
• cost
• time

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What is the internet?

• global network of computers
• origins in US defense
• gtgtuniversities
• business use very recent
• IBM survey in US
• 1994 - less 50 aware of internet
• 1999 - intricate part

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Structure of Internet
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Internet

• Two main technological components
• Email
• World Wide Web
• different characteristics
• two main types
• b2c and b2b

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Characteristics of email

• proactive goes from sender to recipient
• need to have recipients address
• SPAM junk email
• simple to buy large number of email addresses and
  send junk
• Is it effective?
• Currently text-based

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Characteristics of the Web

• reactive customer has to come to website
• task 1 attracting hits
• task 2 converting hits to sales
• multimedia
• use of media should be tailored to purpose of
  website
• content is king should be driven by customer
  needs not technology

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Customer

• B2B is main use of Internet
• cuts costs
• makes communication with suppliers, distribution
  channels, etc faster and cheaper
• 1/3 of all US B2B via Internet
• ordering stationery at VUW
• B2C has higher profile
• big names Amazon, yahoo
• Amazon has just posted its first profit
• dot coms have had a bad time over 2 years

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Growth of the Internet

• number of people/businesses online has grown
  markedly
• Internet has spread from US to Europe, NZ,
  India, ChinaNK
• Data on consumer base
• growth
• uneven spread
• Look at some recent data

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Internet use wealth?

• Relationship between wealth and internet use
• but other factors as well
• culture of adopting innovation
• language
• English
• Telecommunications infrastructure and costs

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Future

• Rapid but uneven growth in users
• e-commerce - predictions vary widely

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US e-commerce small but growing

• 1.4 of SB Internet use - e-commerce sales
• Internet sales - lt1 of total US retail sales
• only 5 of WWW visitors become customers
• online retail marketing 200 annual growth
• estimates vary widely
• 25 billion - 300 billion

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Customer characteristics

• Gender originally overwhelmingly male, now more
  balanced
• Age tend to be younger (20-30) growth in
  teenage and senior market
• Income tend to be higher income
• Education tend to be more highly educated
• (role of universities?)

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Types of websites

• Static billboards
• Dynamic billboards
• Database driven
• Storefronts
• 4th type gtgte-commerce

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Static billboards

• brochureware
• put hardcopy on line
• fairly uncommon now except for-

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gone to sleep

• websites require maintenance
• resources
• personnel
• many sites just go to sleep
• happens even with big organisations
• House of Nobilo

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Dynamic billboards

• Updated
• but how often?
• Relative ease and cheapness of updating great
  advantage over print media
• Corbans

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Database driven

• interactive interface to link customers and
  products/services
• Proquest

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Storefronts

• Database interface
• purchase, pay and sometimes consume online
• Amazon.com

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Laying the foundations for e-commerce

• Reader p 120

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What is Internet best for?

• Positive
• global niche
• electronic delivery
• high information content
• Negative
• low value physical product
• undifferentiated product
• local market (eg local baker)

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Examples

• Information agency
• specialised field
• with alliances offers 24 hour service
• quick turnaround (all electronic)
• Software developers
• Bangalore
• utilises relatively cheap, skilled labour
• but delivers as fast as Silicon Valley

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E-Commerce and Globalisation

• Internet (WWW) inherently global
• uneven spread of connectivity but does allow
  unprecedented access to global markets
• Still often physical constraints
• distribution
• payment systems (eg lack of credit cards in
  China)
• Global environment is complex - legal, political
  and cultural

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Global cultures and exposure

• Internet exposes companies usually to wider range
  of cultures and languages
• Few, if any, companies - even largest- have yet
  addressed challenge of multicultural, polyglot
  Internet customers
• Internet exposes companies to unprecedented
  global competition
• local bookshop - Amazon.com

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Disintermediation and leveling

• Disintermediation
• removal of intermediaries
• ie channels of distribution
• travel agents
• Leveling
• leveling playing field between big and small
  companies
• brand and resources still count

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Good, bad and the ugly

• dangers of humour
• Sapich's 'Purple Death'
• Illegibility
• As it is now
• Trade New Zealand
• As it was
• a year ago

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Localisation

• websites should reflect needs of customers
• language
• local currency
• local information

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How not to do language variants

• Wellington College of Languages

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Globalisation of website airlines

• Singapore bestbut what of the others?
• MARK302 Links

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Conclusions

• Internet will grow but predications vary
  considerably
• Topography of business will change in
  unpredictable ways
• More volatile relationship between companies and
• each other
• customers
• large companies

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Internet no longer American

• Local growth and use will differ from the States
• leapfrogging
• adoption truncation
• local variation

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Leapfrogging

• follower advantage you know whats ahead so can
  cut corners
• leapfrog over old technologies into new
• ie mobile in China..
• Not many landline telephones so great growth in
  mobiles

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Adoption truncation

• in States better off, better educated males took
  lead
• uptake elsewhere more evenly spread

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Local variation

• China credit cards uncommon so payment on
  delivery
• Japan use network of convenience stores
• India Cybercafes
• use of vernacular languages will grow

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basic rule

• as elsewhere in IM
• keep asking questions
• every aspect of marketing strategy needs to be
  re-examined
• customer focus
• what does the customer wanthow do customers vary
  across the world?

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Today

• Distribution
• transportation
• Internet

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Internet

• History
• Structure and characteristics
• Global data growth, distribution of internet
  markets
• Types of websites
• Globalisation
• Internet no longer American
• Internet and marketing

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Next week

• Tim Fowler and David Scott
• International marketing of education services in
  practice