International Marketing

1
International Marketing

• Tim Beal
• Lecture10
• 22 May 2001

2
Today

• Final assignment
• Global Product Development and Branding
• Japan

3
Final assignment

• Three components
• Marking guide

4
Components

• Environmental analysis and market opportunity
  assessment
• SWOT analysis
• Strategic marketing recommendations

5
Stages

• 1 Group selects client (ISO or FCA)
• 2 Members select country/market for environmental
  analysis
• 3 Group does SWOT
• 4 Group formulates recommendations

6
1 Environmental analysis

• Each person selects particular market
• Probably a country

7
information?

• Library
• web
• check coursepage
• links to TradeNZ, NZ Education International
• reader has info on some countries
• classmates from abroad
• Keep it RELEVANT
• Word limit 1500

8
Environmental analysis

• See Reader 3.1
• PEST, SLEPT
• Course Outline has more detailed list of factors
  appropriate to industry/product
• Framework for you to approach analysis
• Importance of factors varies with country

9
Culture

• Culture not very important for selling of TVs,
  computers..
• Culture may be very important for education
  services
• Break into components ethnicity, religion,
  language
• Eg Malaysia Malays, Chinese, Indians 3 main
  cultural groups
• If cultural similar to NZ then not such an issue
  (eg Australia)

10
Effect of culture

• Religion
• Requirements and prohibitions
• Eg do we provide Halal food? Is there a suitable
  mosque?
• Segregation of sexes?
• Decision making process
• Individual
• Family
• Fathermother
• Teacher..family members

11
Cultural differences

• Chinesecommerce?
• Malaysarts, sciences?
• Indians engineering, medicine, law?
• Have they been the ethnic-based schools? If so,
  are there any implications? (eg command of
  English)
• Do males and females have different access to
  education? Going abroad? Different subjects?

12
Demographics

• Population in targeted age-range
• Class structure, geographical location
• Eg There are 35 million people aged 18-22
  identified as middle class which access to
  sufficient et funds for overseas eduction. 80
  live in the three main cities

13
Social

• May combine with cultural
• Importance of education
• Role of family in decision making, providing
  funds..
• Sexually conservative? (is image of NZ congruent
  with desired education destination?)

14
Economics

• How rich is economy? Growing, declining,
  stagnant? Wealth distribution? Size and location
  of middle class
• How important is foreign trade, role of
  multinational companies (eg is experience in
  English speaking country passport to good job?)

15
Politics

• Is there political stability/crisis (eg Indonesia
  rich send children abroad for safety and study)
• Do males have to do military service? Are there
  other constraints on studying abroad?
• Keep it relevant dont waste too much time on
  generalities

16
Technological

• Is distance delivery (i.e. by Internet) feasible?
• What about communication and promotion (i.e. VUW
  website?)

17
Competitive
Tim Beal ages

• Domestic competitors
• International competitors
• Prices, status,image, strategies

18
Foreign exchange

• What is movement of currency against
• NZ
• US
• A
• Are there any foreign exchange restrictions?

19
Legal

• May combine with political
• Are there restrictions on studying abroad?
• Does the government encourage it, discourage it?
• Does the government impose restrictions of
  foreign educations
• Joint venture (21, 13..)

20
Information checklist

• Coverage have you covered main factors?
• Information gaps have you identified where
  crucial information is not available
• Will the information lead to effective, realistic
  and actionable recommendations?

21
2 SWOT

• Choose either ISO or FCA
• Use information from stage 1
• not limited to those markets
• Use information from guest presentations
• group exercise
• 1000 words per person

22
3 Recommendations

• group exercise
• country/market priorities
• entry strategies
• product development strategies
• product delivery strategies
• communications strategies
• group limit 500 words

23
Conciseness

• Recommendations a distillation of previous two
  stages
• bullet points
• Discuss details with your tutor
• WORD LIMIT 10 of marks for every 100 words
  over limit

24
Marking guide

• On coursepage
• Each component is divided into FIVE sections,
  worth 0-4 marks

25
Environmental analysis (1-3)

• Content
• Is the material presented of sufficient relevance
  to enable the client to make adequate decisions?
• Coverage
• Does the material presented cover all issues for
  the client to make adequate decisions?
• Research
• Has the research used an appropriate range of
  sources? Has it identified information gaps?

26
Environmental analysis (4-5)

• Analysis
• Are raw facts presented or has the report
  developed these into themes?
• Technical features
• Does section 1 include accurate referencing,
  appropriate spelling and grammar, and a structure
  facilitating clear and concise analysis?

27
SWOT analysis (1-3)

• Content
• Is the material presented relevant to the
  selected client?
• Coverage
• Are all issues in the environmental report
  covered adequately?
• Research
• Is the research appropriate?

28
SWOT analysis (4-5)

• Analysis
• Are the points logical and coherent?
• Technical features
• Does section 2 include accurate referencing,
  appropriate spelling and grammar, and a structure
  facilitating clear and concise analysis?

29
Strategic marketing recommendations (1-3)

• Content
• Do they flow from the previous sections?
• Coverage
• Are all required issues (as per page 7 of the
  course outline) covered adequately?
• Analysis
• Are the points logical and coherent?

30
Strategic marketing recommendations (4-5)

• Value to client
• Do the recommendations appear effective,
  realistic and actionable?
• Technical features
• Does section 3 include referencing, appropriate
  spelling and grammar, and a structure
  facilitating clear and concise analysis?

31
Global Product Development

• Levitt The Globalisation of Markets
• Onkvisit and Shaw The International Dimension of
  Branding

32
Levitt

• Technology is globalising the world economy
• Almost everyone, everywhere wants global products
• Prefer low prices to supposed national
  characteristics
• example of refrigerators in Europe

33
Strategy

• Companies should move from multi-domestic
  (multinational) to global strategy
• Do not adapt to superficial differences but force
  suitably standardised products globally
• Offering everyone simultaneously high-quality,
  more or less standardised products at optimally
  low prices

34
Multi-domestic strategy

• Treating each country market as different
• Adapting products for these separate markets
• However, forces of standardisation are strong
• In fact, most companies do both
• standardise
• adapt
• Think global, act local

35
Advantages of standardisation

• Cheaper - economies of scale
• Gains from experience
• For many products
• human needs and wants are basically similar
• If products are new then they set the standard
• Many differences are due to historical accident
• Companies create markets (eg Sony Walkman)

36
Arguments for M-Domestic(I)

• Industry standards diverse
• companies have to produce variants for different
  national standards
• eg TVs, cars
• Customer demand local differences
• customary habits can be hard to change
• eg degree of sweetness varies between markets
• eg Japanese demand higher level of packaging
  (though now backlash)

37
Arguments for M-Domestic (II)

• Often preference for product perceived to be
  local
• eg Toyotas adverts very kiwi
• However, there is often preference for foreign
  goods eg French perfumes, wines
• Global organisations difficult to manage

38
Global marketing

• Making no distinction between domestic and
  foreign market opportunities
• Not developing a product for domestic market and
  then going offshore
• Japanese released colour TV in USA before their
  home market, which was not saturated for BW sets
• Seeks to identify global market opportunities

39
Forces driving globalisation (I)

• Flow of information
• We know what films Hollywood produces, what
  computers are developed in Silicon Valley
• We means people in Bombay, Beijing as well as
  Wellington or London

40
Forces driving globalisation (II)

• Flow of people
• More and more people are familiar with products
  in foreign markets
• eg the Fuji film that you buy at an airport in
  Paris has to be the same as that sold in a temple
  in Japan

41
Forces driving globalisation (III)

• Technology
• economies of scale
• Cheaper transportation makes global-sourcing
  possible
• FMS allows economies of scale with marginal
  variationeg producing variants of car (colour,
  etc) on same assembly line

42
Forces driving globalisation (IV)

• Cost - huge investment needed for new product
  development
• strategic alliances
• requires global market to provide sufficient
  demand
• Japanese example
• from 1960s Japanese products swept the world
  radios, TVs, cars, specifically developed for
  foreign markets

43
Forces driving globalisation (V)

• Economic liberalisation
• GATT, WTO, etc.
• Strategic positioning
• unsafe to let competitors free access to markets
• One reason foreign companies want to get into
  Japanese market is to deprive Japanese companies
  of unchallenged springboard
• Demand or Supply driven?

44
Transnational strategy

• Globalisation demands a transnational strategy
• transnationals seek-
• Global scale efficiency and competitiveness
• Local responsiveness and flexibility
• cross-market learning
• Act global, think local

45
Some implications

• Product and market policies - may be simple,
  complex, independent, interdependent
• no set rules
• Customer segments - may be unique to specific
  country/market, or may cut across
  national/cultural boundaries
• former declining - not many products unique to
  specific countries
• most products overlap national, and sometimes
  cultural boundaries

46
Market ltgtcountry

• Country is often used as shorthand
• Not the same thing as market
• Often countries are treated as separate markets
  for legal and administrative reasons
• In reality, most modern markets dont recognise
  national boundaries

47
Market ltgt country

• Many markets are broader that national boundaries
• thought there may be some local adaptation
• eg Hallal meat, Spice Girls CDs, laptop computers
• Many markets are sub-divisions of countries
• especially large countries such as USA or China

48
Global product development and branding

• Two sides of same coin
• Two brands may be physically identical but are
  perceived to be different
• Products may be created different in order to
  function as separate brands
• From point of view of IM brand is more important
  and broader than (physical)product

49
Branding

• Articles in Reader 3.3 and course links page
• Brand and brand name are trademarks
• Trademark integral part of product
• Branding strategy key part of marketing
• More complex in global environment

50
Four levels

• brand vs. no brand
• Manufacturers brand vs private brand
• one brand vs multiple brands
• worldwide brand vs local brands

51
No Brand advantages

• Lower production cost
• eg lower quality control
• Lower marketing cost
• Lower legal cost
• registering trademarks expensive

52
No Brand disadvantages

• Severe price competition
• May be facing lower cost competitors
• Lack of market identity

53
Branding Advantages

• Better identification and awareness
• Better chance for product differentiation
• Possible brand loyalty
• Possible premium pricing

54
Branding Disadvantages

• Higher production cost
• Higher marketing cost
• Higher legal cost

55
To brand or not?

• Depends on whether commodity or product
• commodity undifferentiated product
• product value added and differentiated
• Products need
• quality and quantity consistency
• possibility of product differentiation
• importance to customers of that differentiation

56
Manufacturer or private brand?

• Private brand - distributors brand
• One way of entering foreign market
• eg Matsushita producing for American retailers
• Often companies do both
• eg Michelin, Matsushita

57
Disadvantage of private brand

• Price pressure - manufacturer is supplying
  commodity to retailer
• reflection of relative power of manufacturer and
  distributor
• eg Sears wanted RCA TVs under its brand RCA
  declined Sanyo and Toshiba agreed
• now sells under own brand
• Other examples include Acer (Taiwan)

58
Single/Multiple

• Depends on heterogeneity of market
• eg Swiss watch manufacturers
• high end - Omega, Longines
• medium
• innovative Swatch

59
Legal considerations

• eg ban on comparative advertising in Spain
• Companies create brands so that they can compare
  their leading brands against them without fear of
  legal penalty

60
Worldwide vs local

• Advantages
• Constraints

61
Global brand advantages

• market efficiency and economies of scale
• associated with status and prestige
• familiar to international travellers
• familiar via TV, movies etc

62
Constraints

• Legal constraints
• may be in conflict with existing brands
• antitrust/competition law
• Political constraints
• LDCs may discriminate against foreign brands in
  order to promote local ones
• Popular preference for local products (eg French
  wine in France)

63
Local brand advantages

• When product quality varies between countries
• cf Ericson - product quality in China has to be
  at the same level as in Sweden
• Linguistic barriers
• global name may be unsuitable
• unpronounceable, rude, unpleasant

64
Acquiring brands

• Common way of entering foreign market is to
  acquire a local brand

65
Industry specific factors

• Some products more suitable for homogeneous
  branding, others less so
• eg Unilever
• global brands for detergents and personal
  products
• local brands for food products

66
Creation of global brands

• Coca Cola, Heineken, McDonaldss etc transferred
  onto global market
• Japanese more likely to create global brands
• eg Sony, National Panasonic, (Nissan originally
  called Datsun)
• Creation probably becoming more common
• high tech products
• small country global producers more likely

67
Global Product development

• Technological and economic change producing
  global markets
• Degree of adaptation to local conditions varies
  with
• market and economic specifics of industry
• Nature of product
• Legal constraints
• Company strategies

68
Global products, global brands

• Brand is integral part of product
• IM lays stress on branding
• otherwise price-sensitive commodities
• eg Zespri rather than kiwifruit, Cervana rather
  than venison
• Global product development and branding are
  linked parts of global marketing strategy

69
Japan

• 2nd (3rd) largest economy in world
• Rich and discriminating
• Cf Porter seek out the difficult customers
• ancient culture with borrowings from
  China...Germany, US
• Distribution seen as major problem
• See Japanese distribution system in Reader (3.2)
• Check out coursepage links on Japan

70
Where were at

• Today
• Final assignment
• Global Product Development and Branding
• Japan
• Next week
• Pricing and Communication in global markets
• Two very different markets
• Sunil Ranjan on India
• Alex Morozov on Russia