Transcript International Market Expansion

Presented By
Robert Cascio, Doctoral Candidate
Department of Marketing
College of Business, UCF
June 2011
Seminar for Study Abroad Program
University of Jaén
DAY 1 (2.5 hours):

Part I: Culture
• Attitudes, Beliefs, Color, Communication, Context, Values;
introduce Hofstede’s Topology
• Class Exercise

Part II: Diffusion | Segment, Target, and Position
• Adopter types, adoption process, adoption factors, etc.
• Video

Part III: Market Entry Steps and Options
• Entry Method – Licensing, Joint Venture, Direct Investment
• In-Class Case

Overview of Case for Monday and Homework.
DAY 2 (2.5 hours):


Case Study Quiz
Case Study Presentations
1. Position yourself as the International Market Development
team
2. Prepare a 7 to 10-minute boardroom-style presentation to
convince the CEO and top executives that your strategy is
the best alternative to take. Review rubric. Discuss peer
evaluation.
3. Discussion of strategies


Game Theory Discussion
Recent Customer Service Research Findings
between the North America and Europe.
 Culture–ways
of living, built up by a group of
human beings, that are transmitted from one
generation to another
 Culture has both conscious and unconscious
values, ideas, attitudes, and symbols
 Culture is acted out in social institutions
 Culture is both physical (clothing and tools)
and non-physical (religion, attitudes, beliefs,
and values)
 Family
 Education
 Religion
 Government
 Business
 These
institutions function to reinforce
cultural norms.
“Culture is the collective programming of the mind
that distinguishes the members of one category of
people from those of another.”
-Geert Hofstede
A
nation, an ethic group, a gender group, an
organization, or a family may be considered as
a category.
 Attitude–learned
tendency to respond in a
consistent way to a given object or entity
 Belief–an organized pattern of knowledge that
an individual holds to be true about the world
 Value–enduring belief or feeling that a specific
mode of conduct is personally or socially
preferable to another mode of conduct.
 Red–associated
with blood, wine-making,
activity, heat, and vibrancy in many countries
but is poorly received in some African
countries.
 White–identified with purity and cleanliness in
the West, with death in parts of Asia.
 Gray–means inexpensive in Japan and China,
but high quality and expensive in the U.S.
Yellow
indicates a
merchant in
India
Red signifies
good luck and
celebration in
China
In England
and the U.S.,
“Something
Blue” on a
bride’s garter
symbolizes
fidelity

Speaking English around
the Globe

Nonverbal
Communication
• There are more people
• Westerners tend to be
who speak English as a
foreign language than
native speakers
• 85% of European teens
study English
• Sony, Nokia, Matsushita
require managers to speak
English
verbal; Asians value
nonverbal communication
• In Japan, bowing has many
nuances
• In the Mideast, Westerners
should not show the soles
of shoes or pass documents
with the left hand

High Context

• Messages are explicit and
• Information resides in
context
• Emphasis on background,
basic values, societal status
• Less emphasis on legal
paperwork
• Focus on personal
reputation

Saudi Arabia, Japan
Low Context
specific
• Words carry all information
• Reliance on legal
paperwork
• Focus on non-personal
documentation of
credibility

Switzerland, U.S.,
Germany
 Power
Distance
 Individualism/Collectivism
 Masculinity
 Uncertainty Avoidance
 Long-term Orientation

Group rules:
• 1 marketing major in each group
• 1 finance major in each group
• 1 laptop owner in each group

Assignment
• 10 minutes to prepare
• 3 minutes each to present
 Group 1: Explain 2 different
entry methods
 Group 2: VIA Ready Brew,
Breakfast value meal; keep
focus international please
 Group 3: Starbucks vs.
McDonalds; globally, who is
better positioned

The mental stages through which an individual passes
from the time of his or her first knowledge of an
innovation to the time of product adoption or purchase
• Awareness
• Interest
• Evaluation
• Trial
• Adoption
 Innovation
is something new; five factors
that affect the rate at which innovations
are adopted include:
•
•
•
•
•
Relative advantage
Compatibility
Complexity
Divisibility
Communicability
1.
2.
3.
4.
5.
6.
7.
Slalom Waterski
Wakeboard
Wakeskate
Kiteboard
Handglide
Paraglide
Volcanoboard (ashboarding)
 Represents
an effort to identify and
categorize groups of customers and
countries according to common
characteristics
 The
process of evaluating segments and
focusing marketing efforts on a country,
region, or group of people that has
significant potential to respond
 Focus on the segments that can be
reached most effectively, efficiently, and
profitably
 Positioning
is required to differentiate
the product or brand in the minds of
the target market.
 Defined
as the process of identifying
specific segments—whether they be
country groups or individual consumer
groups—of potential customers with
homogeneous attributes who are likely to
exhibit similar responses to a company’s
marketing mix.
 Demographics
 Psychographics
 Behavioral
characteristics
 Benefits sought
Skiing became a sport in
Norway where it was
invented 4,000 years ago.
 Income
is a valuable segmentation variable
• 2/3s of world’s GNP is generated in the Triad but
only 12% of the world’s population is in the Triad
 Do
not read into the numbers
• Some services are free in developing nations so
there is more purchasing power
 For
products with low enough price,
population is a more important variable
 Benefit
segmentation focuses on the
value equation
• Value=Benefits/Price
 Based
on understanding the problem a
product solves, the benefit it offers, or the
issue it addresses
 Standardized
global marketing
• Mass marketing on a global scale
• Undifferentiated target marketing
• Standardized marketing mix
• Minimal product adaptation
• Intensive distribution
• Lower production costs
• Lower communication costs
 Concentrated
marketing
global
• Niche marketing
• Single segment of
global market
• Look for global depth
rather than national
breadth
• Ex.: Chanel, Body
Shop
 Differentiated
marketing
global
• Multi-segment
targeting
• Two or more distinct
markets
• Wider market
coverage
• Ex.: P&G markets Old
Spice and Hugo Boss
for Men
 Locating
a brand in
consumers’ minds over
and against competitors in
terms of attributes and
benefits that the brand
does and does not offer
• Attribute or Benefit
• Quality and Price
• Use or User
• Competition
 Local
consumer culture
positioning
• Identifies with local cultural
•
•
•
Clydesdale =
Which Beer?
•
meanings
Consumed by local people
Locally produced for local
people
Used frequently for food,
personal, and household
nondurables
Ex.: Budweiser is identified with
small-town America



Trade barriers are
falling around the
world
Companies need to
have a strategy to enter
world markets
Starbucks has used
direct ownership,
licensing, and
franchising for shops
and products
In 2008, Starbucks had 12,000 cafes in 35
countries and sales of $10.8 billion. Its goal
is to reach 40,000 units worldwide.
 It
depends on:
• Vision
• Attitude toward risk
• Available investment
capital
• How much control is
desired
A
contractual agreement whereby one
company (the licensor) makes an asset
available to another company (the licensee) in
exchange for royalties, license fees, or some
other form of compensation
• Patent
• Trade secret
• Brand name
• Product formulations
 Partial
or full ownership of operations
outside of home country
• Foreign Direct Investment
•Forms
–Joint ventures
–Minority or majority
equity stakes
–Outright acquisition
IKEA, with affordable furniture and
housewares, spent $2 billion in Russia.
Top Target Countries
for U.S. Investment
1.
2.
3.
United Kingdom
Canada
The Netherlands
2000 cumulative total by U.S.
companies = $1.2 trillion
Top Foreign Countries
Investing in the U.S.
1.
2.
3.
United Kingdom
Japan
The Netherlands
2000 investment by foreign
companies in U.S. = $1.2
trillion
 Entry
strategy for a single target country
in which the partners share ownership of a
newly-created business entity
 Builds upon each partner’s strengths
 Examples: Budweiser and Kirin (Japan),
GM and Toyota, GM and Russian
government, Ericsson’s cell phones and
Sony, Ford and Mazda, Chrysler and BMW

Advantages
• Allows for risk sharing–
financial and political
• Provides opportunity to
learn new environment
• Provides opportunity to
achieve synergy by
combining strengths of
partners
• May be the only way to
enter market given
barriers to entry

Disadvantages
• Requires more investment
•
•
•
•
than a licensing agreement
Must share rewards as well
as risks
Requires strong
coordination
Potential for conflict among
partners
Partner may become a
competitor
 Start-up of new operations
• Greenfield operations or
• Greenfield investment
 Merger with an existing enterprise
 Acquisition
of an existing enterprise
 Examples: Volkswagen, 70% stake in
Skoda Motors, Czech Republic
(equity), Honda, $550 million auto
assembly plant in Indiana (new
operations)




Gladwell, M. (2000). The Tipping Point. New York:
Little, Brown, and Company.
Hofstede, G. (2001). Culture's Consequences.
Thousand Oaks, CA: Sage.
Keegan, W. J. (2011). Global Marketing (Vol. 6th
Edition). Boston: Prentice Hall.
• This is the required text for the Global Marketing
elective course at UCF.
Rogers, E. M. (1986). The Diffusion of Innovations (3rd
ed.). New York: The Free Press.
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