Ch 14 International Marketing

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Ch 14 - International Marketing

• Domestic Market Extension
• Multi-domestic
• Global Marketing

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Domestic Market Extension

• Sales of domestic products in int. markets.
• Domestic orientation
• International Market secondary
• Firm seeks markets similar to domestic.
• Little adaptation of product or marketing mix.
• Usually produced domestically

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Multi-Domestic Orientation

• Separate operations in each country - production,
  marketing etc.
• Different strategies and marketing mixes
• Very little interaction
• Markets could be very different.

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Global-Marketing Orientation

• Views the world as one market.
• Develop product and marketing strategies for
  world markets.
• Standardize as far as possible, adapt where
  necessary.
• Economies of scale, transfer of knowledge and
  technology, global image, and better competitive
  position.

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International vs. Domestic - Marketing Mix.

• Standardization/Differentiation mainly in terms
  of Product and Promotions.
• Product and Promotion Extension (Standardization)
• Product Extension/Promotion Adaptation
• Product Adaptation/Promotion Extension
• Dual Adaptation (Differentiated)
• Product Invention

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Five International Productand Promotion
Strategies
Product
Do not change product
Develop new product
Adapt product
Straight extension
Product adaptation
Do not change promotion
Product invention
Promotion
Dual adaptation
Communi- cation adaptation
Adapt promotion
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Three components which could be changed.

• Core component packaging component and support
  services component.
• Core component - Physical product, design
  features, functional features.
• Culture and use standards or regulations minor
  changes easier major changes costly functional
  features easy to adapt.

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Three components which could be changed.

• Packaging component - Price, quality, styling,
  color, trademark, brand name, etc (psychological
  features).
• Economic or environmental requirementsGovt.
  regulations Distribution requirements
  consumer/cultural requirements.

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Three components which could be changed.

• Support services component - deliveries,
  warranty, repair and maintenance, spare parts
  etc.
• Market characteristics, size, competition, level
  of development etc.

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Country of origin effects.

• Stereotypes about products and countries.
• English Tea, French Perfume, Chinese Silk,
  Italian leather, Japanese cars and electronics.
• Usually product specific.
• Stereotypes based on level of industrialization.
• Can be overcome with good marketing.

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Pricing.

• Objectives depend upon company orientation
• Standard worldwide Pricing Based on average
  unit costs of fixed, variable and export related
  costs.
• Dual Pricing Domestic and export prices are
  differentiated.
• Cost-plus pricing and
  marginal cost method.
• Cost-plus full
  allocation of domestic and foreign
• costs.
• Marginal cost Fixed
  costs for plants, RD, Domestic
• overhead, and domestic
  marketing are disregarded.
• Market-differentiated pricing demandoriented.
  Marginal costs
• 
  and export-related costs considered.

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Variables that influence international pricing

• Taxes and tariffs - Specific duty, Ad Valorem,
  Combination.
• Inflation - Time, Payment terms, possible price
  control.
• Exchange rate Fluctuation - Prices of products
  and profits.
• Middlemen and transportation costs - Longer,
  diverse, underdeveloped, smaller order
  quantities, could all increase costs.
• Parallel Imports.

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Parallel Imports/ Gray Markets.

• Value of currencies.
• Pricing policies.
• Costs of transportation less than price
  differential.
• Price controls or quotas.
• Exclusive distribution agreements.
• In the US Gray market for Cars, Watches,
  cameras etc. valued at 6-10 billion.

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Global Advertising and Promotion Effort.

• Global or standardized advertising strategy.
• Pattern Advertising (similar basic message with
  some local variation)
• Customized.
• Marketing strategy Cultural differences
  Behavior in terms of the product Media
  availability.

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Global advertising strategy.

• Developed on a global basis not exported.
• Most large firms do not use, only 8 of U.S.
  multi-national firms.

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Pattern advertising.

• Plan globally act locally.
• Broad outlines or basic positioning given but
  details can be adapted.
• Assuming that there are some differences in
  culture and consumer behavior even if primary
  function is the same.

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Creative challenges.

• Media Regulations
• comparative advertising e.g., Germany
  prohibits
• 
  use of superlatives.
• time allocations e.g., In Italy 12
  ads per hour.,
• special taxes e.g., Japan,
• type of product, type of copy and
  illustration, etc.
• Language limitations - translating ad slogans,
  literacy levels, use of different languages.

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Creative challenges.

• Cultural diversity - Symbols, colors, tastes,
  values and beliefs etc. - subcultures.
• Production and cost limitations - Poor quality
  printing, lack of high grade paper, film editing
  and processing facilities, high comparative cost
  for quality.
• Media - Availability, Audience data,
  international media.

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Advertising agencies.

• Local agency.
• Company owned agency.
• Multinational Agency with local branches.
• Survey says -
• 32.5 using single agency worldwide.
• 20 two agencies.
• 5 using three.
• 10 using four.
• 32.5 using more than four.