Flashcards in Cases Int Marketing Deck (105):
What are the key questions of international marketing?
- Whether to go international: Less competitive market? Ready to go international (takes resources away from own market)? Why struggling in home market (don’t repeat abroad)? Resources, quality, money, strategy, skills... NB: not usually profitable in the 1st year in a new market.
- Where to operate
- What are the rules of engagement: intensity of engagement, how much effort in each market
- What to market in the overseas environment
- How should be operate internationally: modes of operation – partnering with others.
- What are the likely currency fluctuations
What is the flow of the marketing strategy process?
1. Organisation’s objections + Information on foreign market potential
2. Decision to go international
3. Strategy, level of involvement
4. Selection of markets
5. Method of foreign market entry (consider marketing, finance, operations and human resources issues)
6. Plan for each market
7. Overall international business plan: how does it fit all together, where to invest
8. Organisation for international business
9. Operations in foreign markets
10. Feedback on effectiveness of operations, modification of strategic and other decisions => Step 3: Strategy, level of involvement
What considerations for the method of foreign market entry are there for marketing?
- Phyiscal evidence
What considerations for the method of foreign market entry are there for finance?
- Capital budgeting
- Working capital
- Exchange risk
- Political risk
- Transfer pricing
What considerations for the method of foreign market entry are there for operations?
- Foreign manufacture
- Locations of facilities
What considerations for the method of foreign market entry are there for human resources?
- Foreign nationals
What are some reasons for going international?
- Financial reasons (might get easier to finance in certain countries, tax haven)
- Product life cycle differences (sell older products to the developing countries (careful here!))
- Organisational reasons (managers holiday overseas, see opportunities)
- Geographic diversification (risk minimisation)
- Excess capacity
- Competition (international)
- Comparative advantage in skill, product or technology (opportunity overseas)
- Saturated home markets
What does marketing encompass?
It encompasses the entire company's market orientation toward customer satisfaction in a competitive environment.
What are the 5 stages for the evolution of marketing in the international context?
1. Domestic marketing
2. Export marketing
3. International marketing ("multi-domestic")
4. Multinational marketing (often as regio-centric approach - different marketing campaigns in several countries)
5. Global marketing:
- Standardisation efforts
- Coordination across markets
- Global integration
NB: sometimes companies go global on Day 1 (ebay, Apps, internet businesses); but a lot of money is needed to realise 5 steps at once.
What are the domains of knowledge for the international manager?
- Country/regional knowledge
- Cross-cultural knowledge
- Cross-border transaction knowledge
What are the issues in the cross-cultural knowledge domain for the international manager?
- Cultural differences
- Organisational features
- Decision making styles
- Ethical values
- Negotiation styles
What are the issues in the country/regional knowledge domain for the international manager?
- Market access
- Product standards
- Trade/distribution channels
- Commercial infrastructure
- Contract law
What are the issues in the cross-border knowledge domain for the international manager?
- Currency markets
- Product adaptation
- International logistics
- Legal climate
- Letters of credit
Describe the single country market strategy.
= Target market strategy
Involves marketing mix development: product, price, place, promotion
Describe the global marketing strategy.
= Global market participation
- Marketing mix development = product, price, place and promotion adaptation or standardisation
- Concentration and coordination of marketing activities
- Integration of competitive moves
What is the history and development of the global village?
- 1960s: multinational companies evolved and expanded into most regions of the world
- Today large regions are addressed in similar ways from a production and marketing perspective
- It is based on the discovery, creation and development of similar customer behaviour patterns (enough similarity to effect a satisfactory product/market match)
What is creating similarities across the globe?
- Global consumers (want the newest, best)
- Multinational and transnational corporations
- Technology and communication
- Urbanisation (easy and cheap access to customers)
- World brands (customers look for familiar patterns in their choice of what they buy)
What does the future hold?
- Better opportunities
- Businesses must internationalise their offers (no choice)
- Compete and collaborate simultaneously (Cooptition)
- Customer needs are converging
- Reconfigure approach to dealing with customers
- Relationship marketing and information processing
- Information technology and communications as main driving forces
What are some approaches to meeting the challenges of the future?
- Create a thinking organisation (rather than top-down approach)
- Think outside the box
- Think customer, first and last
- Step outside the industry rules
- Be entrepreneurial, take risks
- Internationalise the operations
- Collaborate and compete
What environmental factors must be considered?
- Focusing on the customer-organisation relationship
- Use SLEPT: socio-cultural, legislative, economic, policial, and technological factors
- PLUS: competition and currency
What is culture?
The specific learned norms based on attitudes, values and beliefs of a group of people
What are the components of culture?
Customer behaviour is influenced through their culture by:
- Social organisation (Muslims --> no alcohol; HIndus --> no beef)
- Technology and material culture (affects how open people are to the products: Japan --> love new things; German --> is it useful?)
- Aesthetics: What is beautiful?
- Values and attitudes (Germans --> long life products, enviro friendly)
- Law and politics (USA = 21; Germany = 18)
Describe the Self Reference Criteria by Lee
1. Look at the situation through the eyes of the home culture
2. Define the problem in Step 1 through the eyes of the foreign culture. (Could be inappropriate, illegal, embarrassing...)
3. Find the gap between the cultures in steps 1 and 2 and how this will influence the problem
4. Bridge the gap between the cultures:
E.g. redefine the business problem, but this time without the self reference criteria influence, and solve for the "optimal" business goal solution.
What is the A-B-C-D paradigm for the whole environment (not just culture)?
2. Buying Behaviour
3. Conumption characteristics
Each of these stages is heavily influence by the culture in which the consumer thrives.
What does Access in the A-B-C-D paradigm involve?
Access: Can consumers obtain your product/service
→ invest to enter market
- Economic access - affordability
- Physical access – international trade barriers, distributions system, infrastructure
What does Buying behaviour in the A-B-C-D paradigm involve?
Buying behaviour: How is the decision to buy made by consumers?
- Perceptions – country of origin (Brand equity; price-quality) – As a German company, Siemens is considered expensive, even if it isn’t.
- Brand loyalty/store loyalty
- General attitudes towards marketing/consumption (USA: necessary; German: critical)
- Deeper analysis of consumer psyche, e.g. impact of social norms, psychological orientation etc.
What does consumption characteristics in the A-B-C-D paradigm involve?
Consumption characteristics: What factors impact consumption patterns? (frequency)
- Social class/reference group influence
- Cultural orientation (traditional v modern)
- Urban v rural sector consumption patterns (different or similar? GER: more homogenous than other metropolis like London, Paris)
- Product v service consumption in culture (GER: product focus; Japan: service focus)
What does disposal in the A-B-C-D paradigm involve?
Disposal: How do consumers dispose of the product (resale, recycling, etc). What are the implications of product disposal?
- Resale, recycling and remanufacturing considerations (Japan: unusual to buy used cars; if they do, they change the seats)
- Social responsibility/environmental implications of product disposal
How does culture relate to the marketing mix?
Product policy: E.g.
- Cars in China: more legroom, smaller engines
- Skin whiteners in Asian countries
- Customer’s willingness to pay for your product will vary across cultures
- Odd pricing: 99 cent prices; some have rounded up prices
- 9 versus 8 in Chinese cultures (“ba”, wealth), 4 has a bad image
- Avon had to change according to lifestyle, small kiosks, home shopping TV – e.g. Tupperware.
- Low context versus high context cultures, dogs as unclean animals
- Malaysia and public beer promotion (it’s an offence to promote beer in public)
What are the key aspects of the political environment to take into account?
• The political threats
o Govt may confiscate assets, expropriate them or increase governmental control over the company assets.
• Role of govt in the economy:
o Participation vs regulator
o From command (high political intervention) to market economy
• Ideologies and marketing
• Political stability: can I take the profits out of the country? How to operate in the country?
• International relations
o Between home government and host government (e.g. USA/Cuba → influence on Germany not going to Cuba)
o Between host governments and future destinations
What are the key aspects of the legal environment for international marketing?
Look at your own and other countries’ laws – what permits do I need…Conflicting requirements in different countries?
- Local domestic law: Common law, civil law/codified law, theocratic law
- International law (exclude it?)
- Domestic law: Export controls, abiding by national law locally and internationall
- Laws and international market activity: Marketing mix will be affected by law
What are the economic environmental factors to consider?
DEDUCE NT PPP
- Disposable income and distribution (Gini coefficient)
- Economic activity
- Differential inflation (difference between the 2 countries)
- Climate (little manufacturing in Dubai)
- Energy and communications (low energy costs)
- Natural resources
- Topography (alps divide Switzerland --> diff languages)
- Population size and growth
- Population density and concentration
- Population age and distribution
What are the key technological environmental factors to consider?
- Can every company afford the latest technology?
- Can technology reduce barriers? (e.g. music downloads…)
- What are the opportunities coming from the internet?
- Pressures on price and margins are at a global level
What are the key competitive environmentla factors to consider?
- Increasing competition both at local and global level
- Less developed countries are no longer satisfied by exporting raw materials (Juan Valdez, Colombia)
What are the key factors of the currency environment to consider?
- Most changes are difficult to predict
- Currency changes are outside the company's control
- Changes can easily turn profit into loss (can't always keep up or increase prices as exchange rate worsens)
What are the key factors to consider in foreign market selection?
- Market potential
Look as of now and in a few years time --> increasing potential so enter now before the others.
What are the key factors associated with market potential to consider in foreign market selection?
- Market size
- Customer demand, wants, income (e.g. do they drink coffee?)
What are the key factors associated with similarity to consider in foreign market selection?
- Geographical proximity (closer -> easier)
- Psychological proximity (cultural heritage too)
What are the key factors associated with accessibility to consider in foreign market selection?
- Management communications
- Political distance
- Geographic (difficult to enter Afghanistan - war, commerce, language, mountains)
- Delivery time
What grid/graph can be used to select a foreign market?
x-axis: Country attractiveness (in the product category) - High, medium, low
y-axis: Company's compatibility with each country - Low, medium, high
Both high: P = primary market
1 high, 1 medium: S = secondary market
Both medium or 1 high 1 low: T = tertiary market
What do similarities between countries provide?
- Economies of scale
- Optimisation of marketing
- Easier diffusion of production (distribution)
- Ease of operation, management and control
- Greater profitability.
What is the approach to international market segmentaion?
1. Classify countries into primary, secondary, tertiary and avoidance markets
2. Identify customer segments within the chosen countries by demographics, buyer behaviour, consumer motivations and life styles.
What is the concept of strategically equivalent segments (SES)?
1. Identify countries with sufficient infrastructure to support its product and which are lucrative to the company.
2. Screen those countries to arrive at a realistic short-list
3. Develop micro-segments within those countries identified by product characteristics required (e.g eat in/take away)
4. Identify the key characteristics of demand in each micro-segment searching for similarities in terms of behavioural patters
5. Through cluster analysis identify meaningful cross-national segments which would respond similarly to a consistent marketing mix strategy.
What is the goal of global market segmentation?
- Break down the market for a product/service into
- different groups of customers who
- differ in their response to the firm's marketing mix program
--> tailor the marketing mix to the segment and therefore do a better job to satisfy the needs of the target segment.
What are the properties of a market segment?
- Identifiable: easy to define and measure (indicator!)
- Sizeable: large enough to be worth going after (exception to the rule = high priced, long tail marketing)
- Accessible: easy to reach through promotional and distributional efforts
- Stable: If composition of target markets change over time, efforts are less likely to succeed. E.g. only get married once --> also offer baby items?
- Responsive: Segments respond differently from each other to differentiated marketing mixes.
- Actionable: the mix necessary to address their needs is consistent with the goals and the core competences of the company.
What are the major steps for international market segmentation?
1. Country screening: preliminary screening of a few relevant indicators (go, no go, future possibilities) to decide about further examination.
2. Global marketing research: Country clusters are gathered to focus on a select few countries for initial research on customer needs.
3. Entry decision: to look for similar countries to the successful ones.
4. Segmentation decisions are instrumental in setting the company's product positioning strategy.
5. Resource allocation across different countries
6. Marketing mix policy
What are the possible international market segmentation approaches?
1. Country-as-segments or aggregate segmentation (e.g. culture/income segments)
2. Disaggregate international consumer segmentation
3. Two-stage international segmentation as a combination of both
What is the country-as-segments or aggregate segmentation approach?
= Classify countries as distinct segments.
There are numerous country traits.
The segmentation variables are usually collapsed into a smaller set of dimensions, using data reduction techniques like factor analyis.
Flaws: Country boundaries rarely define differences in consumer response.
What is the disaggregate international consumer segmentation approach?
Approach = Focus on the individual consumer, lifestyle, demographic or values as segmentation basis.
Problem: Geographically dispersed consumer segments are a logistical nightmare
Possibilities: if you are world-class in one segment, e.g. pro golf, highly specialised equipment.
What is the two-stage international segmentation approach?
= a combination of country-as-segments or aggregate segmentation, and disaggregate international consumer segmentation.
1. (Aggregate or macro-level stage) Countries are grouped on general segmentation basis. Some bases are independent of the product or service. Unacceptable countries are screened out.
2. (Disaggregate or micro-level phase) - Data are gathered on product-specific bases and is used to identifiy the cross-national segment of consumers with the geographic segment chosen
What are the benefits of the two-stage international segmentation approach?
- Customers are more responsive than for aggregate segmentation, as they focus on consumer needs
- More accessible than purely disaggregate segmentations.
What are the possible segmentation scenarios?
- Universal or global segments: segments that transcend national boundaries. Consumers in this segment have common needs, eg. MTV, business people, global elite
- Regional segments: similarities in some regions are large
- Unique (diverse) segments: the gaps in cross-country customer needs and preferences are so substantial that it becomes very hard to derive cross-border segments.
What approach should you take in the case of unique (diverse) segments?
- Localise the marketing mix
- Pick the most attractive target markets in each market first
What kinds of bases for country segmentation are there?
- Socio-economic variables
- Behaviour-based segmentation
What are some examples of demographic country segmentation?
- Thrifty shoppers
- Falling behind
- Good students
What are some examples of socio-economic variables for country segmentation?
- Monetisation of transactions within a country
- Grey and black sector of the economy
- Income disparities
What are some examples of behaviour-based country segmentation?
- Degree of brand loyalty
- Usage rate
- Product penetration
What is the process for developing international positioning strategies?
1. Identify a relevant set of competing products or brands. What is the competitive frame?
2. Determine current perceptions held by consumers about your product/brand and the competition
3. Develop possible positioning themes (e.g. Starbucks - 3rd place between work and home)
4. Screen the positioning alternatives and select the most appealing one
5. Develop a marketing mix strategy that will implement the chosen positioning strategy
6. Over time, monitor the effectiveness of your positioning strategy
What universal positioning appeals?
- Specific product features
- Product benefits (rational or emotional) solutions for problems
- User category (target groups)
- User application (e.g. for a certain environment)
- Lifestyle (e.g. golf lifestyle)
What kinds of consumer culture positioning strategies are there?
- Global consumer culture positioning strategy: Sony, Nike
- Local consumer culture poitioning strategy: Mercedes E-class in Japanese setting
- Foreign consumer culture positioning strategy: Foster beer as 'Australian beer', Timberland
What factors need to be considered when looking at your level of involvement for the entry strategy alternatives?
• Corporate objectives/ambition/resources: What do you want to/is it possible to achieve
• Nature of markets/product category/competition: If BMW has a subsidiary there, Daimler must have one too – can’t go through a distributor.
• Nature of consumer culture: Deal directly with the company?
• Speed of entry: Local partner has network, knowledge → faster entry, less control
• Level of control
• Administrative requirements (not possible to buy land, so joint venture?)
• Profit payback: When break even?
• Personnel (easier through partner?)
• Investment cost
• Coverage of the market
• Flexibility (the more people involved, the less flexible)
• Marketing cost and commitment
What kinds of market-entry strategies are there according to the risk profile?
1. Exporting (least control, least risk):
Internet → Exporter → Importer → Distributor → Direct sales
2. Contractual agreement:
→ Licensing and franchising
3. Strategic Alliance:
→Strategic alliance → Joint Venture and consortia
4. Ownership (Greatest control and risk) → Direct Foreign Investment.
What are the two basic entry strategy routes?
2. Overseas production
What kind of market entry strategies does exporting encompass?
Indirect exporting (PIDE):
- Piggy-backing (using the infrastructure of another company)
- International trading companies
- Via domestic organisation (Overseas orgs with buyers in domestic market, or multinationals' procurement offices)
- Export houses
Direct exporting: Agents (issue of bribery to get the deal), distributors, company marketing subsidiary
What are the market entry options encompassed by overseas production?
Foreign manufacture without direct investment: Licensing, franchising, contract manufacture
Foreign manufacture with direct investment:
- Joint Venture
- Strategic alliances (no shared ownership, critical to one of the parties)
- Greenfield development (from scratch)
What are forms of wholly owned overseas production?
- Greenfields development
- Managing the licensing agreement
- Contract manufacture
What influences the decision on market entry alternatives?
Entry strategy implementation considerations:
What grid can help you decide on your market expansion strategy?
x-axis: Market (segment) - concentration, diversification
y-axis: Country - diversification, concentration
- Top left (both concentration): Narrow focus
- Top right (market diversification, country concentration): Country Focus
- Bottom left (Country diversification, market concentration): Country diversification
- Bottom right (both diversification): Global diversification
How can you finance global operations?
Internal sources of financing: accumulated surpluses and cash
External sources of financing SP-DCF-VAJ:
- international stock markets
- leasing hire purchase
- discount markets
- commercial and private banks
- factoring and forfeiting
- venture capital
- bilateral and multilateral aid in cases of international development (e.g. World Bank)
- joint financing
What are the reasons to have an exit strategy?
- Political reasons: changing political situations sometimes force companies to exit markets. Expropriation is often a risk in some countries.
- Business failure: but to exit a major market can be very expensive and can be damaging to the global reputation (e.g. Renault, Peugeot and Fiat in US market)
Define global marketing
The process of focusing an organisation's resources on the selection and exploitation of global market opportunities consistent with and supportive of its short- and long-term strategic objectives and goals.
What did Theodore Levitt in the Harvard Business Review 1983 say about globalisation?
- There is no such thing as local markets, and all markets tend towards a universal standard.
- Companies should therefore consider marketing, production and service on a global basis.
What types of marketing are there when looking at international or global marketing?
- Domestic marketing
- Export marketing
- International marketing
- Multinational marketing
- Multiregional marketing
- Global marketing
What is domestic marketing?
Marketing directed at the domestic or home market only
What is export marketing?
Making the product or service in the home markets and selling it in international markets
What is international marketing?
Moving beyond exporting; the organisation often still makes the product/service in the home market, but has its:
- own representation for sales, marketing and distribution int he foreign markets.
What is multinational marketing?
= Multidomestic strategy
Next stage of growth and involvement beyond international marketing.
The organisation has greater proportion of its assets in markets other than its domestic base. Domestic market is now one of many markets all approached mainly on an individual basis.
What is multiregional marketing?
Region = more than 1 country
To find economies of scale in operations, the organisation has started to standardise its international marketing strategies around regional groupings of markets.
Describe global marketing
- The organisation defines a single strategy for a product, service or company that can be followedin all markets in which the organisation operates.
- Typically senior management will set general strategic guidelines and local offices will develop these at local market levels.
What is the EPRG framework?
- Ethnocentrism (domestic/export marketing orientation)
- Polycentrism (international marketing orientation)
- Regiocentrism (multinational marketing orientation)
- Geocentrism (global marketing orientation)
What factors are driving globalisation?
- International flow of information
- International spread of technology
- Size of investment required (e.g. Starwars)
- Reduction of trade barriers
- Relative global peace (peace is good for business) - due to terrorism to be reconsidered.
- Evolution of global market segments in recent years.
What factors are inhibiting globalisation?
- Consumer tastes may require market adaptation of product and service
- Culture can be a major barrier to globalisation strategies
- Local market conditions: there are a number of other variables than culture, eg. topography, lack of wholesale network...
- Pressure groups: growing pressure by various groups opposed to the global operators protesting at meetings like G8. Principl objection = perception that excessive profits are made at the expense of mainly developing countries.
What are the cross-cultural dimensions of global strategy?
- How to account for cultural diversity, complexity and sensitivity
- How the culture sees the benefits of the product/service offered
- How the local culture culture affects decision-making to purchase the product/service
- Which aspects of the cultural map are particularly strongly triggered by the offering?
- What aspects of the marketing mix might make the offer culturally sensitive?
- What alternatives already exist for the proposed product/service, how are these related to the local culture?
Why is the international marketing mix management fundamental to international marketing success?
Strategies are only worthwhile if they are implemented.
Customer needs are the starting point for considerations and product, price, place etc follow from the customer need.
What can assist the analysis of the marketing mix?
- Use Porter's value chain: Break the value chain into distinct area where value can be added.
- Identify how, using superior technology, service, personnel or marketing factors he can add value to gain competitive advantage.
- This can lead to a focus on one link in the value chain to do it better than the competition.
What features distinguish services from products?
1. Intangibility: can't see, touch, smell or feel service
2. Perishability: can't store services and sell tomorrow what can't be sold today
3. Heterogenity: services are rarely identical from one delivery to the next
4. Inseparability: The consumption of the service normally takes place at the same point at which it is created, therefore being inseparable from the source of the service.
What are the five key areas of analysis to develop the international product policy?
2. Product/promotion mix
3. Image, branding and positioning
4. Packaging decisions
5. Application of portfolio analysis to international product range decisions
What are the drivers of product standardisation / adaptation?
- The "French"/"American image" (even if it isn't original from there, e.g. Marlboro cowboys only since 1950s) --> less adaptation necessary, although can be influenced by another country, e.g. sushi - Californian roll.
- Consumer mobility - confused customer if positioning is different everywhere - people might also expect the original food
- Economies of scale in production, R and D and marketing
- Spread and flow of technology
- Flow of information
- Cost of investment
- Reducing trade barriers --> easier to have standardised products
What are the restrainers of product standardisation / adaptation?
- Differing use conditions
- Government factors
- Culture and language
- Local market needs
- Local tastes
- Company history and operations
- "Not invented here"
What are the three levels of a product, which can be adapted for overseas markets?
1. Core component
2. Packaging component
3. Support services component
What are the core components of a product?
- physical product
- functional features
What are the packaging elements of a product?
- Price and quality
- Styling and design
- Staff behaviour and appearance
What are the support services components of a product?
- Delivery and installation – Ikea – you build it!
- Access points – where can you take the product back to?
- Maintenance and repair
Why might the core product need to change?
- Government standards → need to change product
- Labour costs and local income – affordable? Costs a lot to replace a part?
- Technical skill
- Isolation and climate
Why might need the packaging need to change?
- Consumer tastes
- Education and literacy
- Languages, information needs and promotion
- Distribution systems – service or self service
- Protection and transportation – for transport / climate…
Why might the support services component need to change?
- Geography, topography, distance from home
- Use conditions
- Communications and technology
- Competitive strategy
- Competition’s service level
- Locally available services – can I do that with partners?
What factors influence standardisation and adaptation?
x-axis: Markets, supply, competition
y-axis: National, regaional, global
bubbles with arrows pointing opposite up and down.
What are the critical issues for product standardisation regarding market?
- Driven by tastes, available distribution channesl, prices, trade barriers --> most markets exist on national/regional scale
Market tendency for polarisation:
- markets becoming more national and sub-national in search for products/services that reinforce local identity.
- Markets becoming more regional as consumers responde to Economies of Scale from standardised product
What are the critical issues for product standardisation regarding supply?
- Technology, Economies of Scale, increasing costs of investment --> supply conditions tend towards regional and are being pushed global
- BUT pulled local to satisfy increasingly individualistic/nationalistic needs
What are the critical issues for product standardisation regarding competition?
- Competition faced is predominantly regional
- Larger international and multinational orgs operating globally or in Europe, N America or Pacific Rim are driving most competition in this decade.
- Signs of polarisation towards local competition due to individualism and global competition.
What is the product-promotion mix?
- Promotion or performance promises can be standardised or adapted to the local target market
x-axis: Product: Standard - Adapt
y-axis: Promotion: Adapt - Standard
Top left (both standard): Global
Top right (Product adapt, promotion standard): Product extension
Bottom left (Product standard, promotion adapt): Promotion extension
Bottom right (both adapt): Dual adaptation.
What is a company's positioning made of?
- the product's physical or objective attributes
- its image or subjective attributes mainly formed through advertising
NB: to offer a standardised consistent position in all markets a company operates in does not necessarily mean that the product itself is standardised (Coca Cola)
What are brands?
The names and personal we give our products and services
What issues are associated with branding?
- Should brand names be internationalised and used everywhere the company operates?
- Difficulties: cultural and linguistic differences between markets --> many brands, brand names, brand marks or brand concepts don't travel well
- Brand equity shows the importance and value of a successful brand: important is the reach/degree of internationalisation at the interbrand method of measuring brand equity.