Transcript International Business

International
Marketing
16-1
Chapter Preview
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Introduce techniques for assessing sizes for given
countries
Contrast policies of standardized versus
differentiated marketing programs for each country
in which sales are made
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Identify the five international communication
strategies
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Describe each element that impacts international
distribution strategies
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Identify various international pricing strategies and
the factors that influence selection
Forecasting Demand
• Per capita consumption
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Forecasting Potential Demand
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Additional variables
• Obsolescence and leapfrogging of
products
• Costs – essential vs nonnecessity
• Income elasticity – necessity vs discretionary
• Substitution
• Income inequality
• Cultural factors and taste
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Gap Analysis
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Method for estimating a company’s
potential sales by identifying market
segments it is not serving adequately
When sales are lower than the estimated
market potential for a product, the
company has potential for increase sales
Types of gaps
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Usage
Competitive
Product line
distribution
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Gap Analysis
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Reasons to Penetrate Markets
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Country’s size
Growth potential
Proximity to home operations
Stability of currency
Political stability
Orientations (Product policy)
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Production
Sales
Customer
Strategic marketing
Societal marketing
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Globalization and Marketing
Standardized product
and promotion
Adapted product
and/or marketing
• Consistent image
and message
• Respond well to
local needs
• Contain costs
• Obey local laws
National Business
Environments
Cultural
differences
Laws and
regulations
National
image
Counterfeit
goods
Brand and Product Names
Brand name
 Competitive advantage
 Consistent image
 Consider connotation
Product name
 Select carefully
 Respect cultures
 Obey local laws
International Branding Decisions
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Brand versus no brand
Manufacturer’s brand versus private brand
One brand versus multiple brands
Worldwide brand versus multiple brands
Issues:
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Language differences
Expansion by acquisition
Nationality images
Laws concerning generic names
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Product Life Cycles
Consecutive market introductions
 Technology and travel make obsolete
New-product development efforts
 Result is shorter product life cycles
Push and Pull Strategies
Push Strategy
Pull Strategy
Pressure channel members to carry a Create buyer demand that will encourage
product and promote it to final users
channel members to stock a product
Choosing Push or Pull
Powerful channel
members make push difficult
Fewer media outlets in emerging
markets makes pull difficult
Brand loyalty makes pull easier
Marketing Communications
• Process of sending promotional messages
about products to target markets
The Communications Mix
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Advertising
• any paid form of nonpersonal presentation by
a sponsor
Personal Selling
• personal presentations by a firm’s sales force
Sales Promotion
• short term incentives to encourage sales
Public Relations
• building good relations with various publics
Direct Marketing
• short term incentives to encourage sales
Communication Strategy I
Extend product and communications
Global
Simple and
Luxury items consumer
profitable
goods
Communication Strategy II
Extend product / adapt communications
Satisfies
Serves
Appeals to
different need different function different buyer
Communication Strategy III
Adapt product / extend communications
Local
infrastructure
Local
content laws
Can be costly
Communication Strategy IV
Adapt product and communications
Rather
uncommon
Can be
expensive
Requires large
profitable
segment
Communication Strategy V
Product invention
Purchasing
power
Economic
development
level
Varying
infrastructure
Distribution Strategy
Planning, implementing, and controlling the
physical
flow of a product from origin to consumption
Physical goods
Consulting services
News providers
Distribution Channels
Degree of exposure
Exclusive channel
• One / few resellers
Intensive channel
• Many resellers
Channel length
Number of
intermediaries
Cost implications
Product Characteristics
Value
density
Product’s value relative
to its weight and volume
The lower a product’s value
density, the more localized
is its distribution system
Distribution Problems
 Lack of market
understanding
 Theft and
corruption
 Financial loss
 Strategic impact
Pricing Strategy
Must match overall firm strategy
 Low-cost leadership
 Differentiation
 Focus
Worldwide Pricing
Single selling price for all international
markets
Difficulties
• Local production cost
• Export, distribution
cost
• Local purchasing power
• Exchange rates
Dual Pricing
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Different selling price
abroad than at home
• Price escalation
• Lower local price
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Separate
international from
domestic buyers
• If not, arbitrage
possible
Pricing Issues
Transfer price Intra-company transfer
Arm’s length price Free-market price
Price controls Upper or lower limits
Dumping Unfairly-low export price
International Pricing Issues
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Different degrees of governmental
involvement
Greater diversity of markets
Price escalation for exports
Changing values of currency
Differences in fixed versus variable
pricing practices
Retailers’ strength with suppliers
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Price Escalation in Exporting
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