International Marketing ATM Semester 2 Tutorial 10 By Dildara Gapparova / Pavel Galkin

What is International Marketing? International marketing can be defined as "marketing carried on across national boundaries". Philip Kotler.

Additional definition of International Marketing International marketing has also been defined as ' the performance of business activities that direct the flow of goods and services to consumers or users in more than in one nation'.

Why do the companies go International? Reduce dependence on current markets by spreading your risk. Declining domestic sales. Overproduction. To increase Sales. Saturated domestic markets, etc.

Culture: what is it? Culture can be define as the sum of knowledge, beliefs, art, morals, laws, customs and any other capabilities and habits acquired by human members of society Culture is ‘everything that people have, think and do as members of their society’

Cultural Factors Never touch the head of a Thai or pass an object over it – the head is considered sacred in Thailand. Avoid using triangular shapes in Hong Kong, Korea and Taiwan – the triangle is considered a negative shape. The number 7 is considered bad luck in Kenya and good luck in the Czech Republic. The number 10 is bad luck in Korea while The number 4 means death in Japan. Red represents witchcraft and death in many African countries but it is a positive colour in Denmark.

Seminar Exercise

Examples of Company Failure Due to Cultural Mistakes When Gerber, a Nestle owned purveyor of baby foods first started selling their baby food in Africa, they used the same packaging as in the USA – with the cute baby on the label. Later they found out that in Africa companies routinely put pictures on the label of what is inside the package, since most people cannot read.

Examples of Company Failure Due to Cultural Mistakes A golf ball manufacturing company packed golf balls in packs of four for convenient purchase in Japan. Unfortunately, pronunciation of the word “Four: in Japanese sounds like the word “Death” and items packaged in four are unpopular.

What are the Foreign Market Entry Modes? Exporting Licensing Joint Ventures Direct Investments

Seminar Exercise What kind of Market Entry mode companies should use in order to enter Uzbekistan market?

Exporting Exporting is the marketing and direct sale of domestically – produced goods in another country.

Advantages and disadvantages of Exporting Low financial Risks Speed of entry Acquire knowledge about local market for further decision- making process. Disadvantages: Logistical complexities Potential conflict with distributors Limited access to local information Company viewed as an outsider

Licensing Licensing is when a firm, called licensor, leases the right to use its intellectual property – technology, work methods, patents, copyrights, brand names, or trademarks – to another firm called the licensee, in return for a fee.

Advantages and disadvantages of licensing Low financial Risks Low cost as well as fast way to assess foreign market Licensee provide knowledge of local market to the licensor Disadvantages: Limited market opportunities / profit Dependence on licensee Potential conflicts with licensee

Joint Ventures A joint venture is an entity formed between two or more parties to undertake economic activity together. The parties agree to create a new entity by both contributing equity, and then they share in the revenues, expenses, and control of the enterprise. Advantages: Disadvantages: Benefits from local partner`s knowledge Risk giving control of technology to Partner Shared costs/ risks with partner Shared ownership can lead to conflict Reduce political risk Difficult to manage

Direct Investments Companies enter the international market through FDI, invest their money, establish manufacturing and marketing facilities through ownership and control from scratch.

Advantages and disadvantages of Direct Investments High degree of control Ability to better understand the consumer needs Disadvantages: Requires a high level of recourses Higher risk than other modes

Ways of foreign market penetrations A firm does not have to be a global giant like Mitsubishi or Boeing to look for business opportunities abroad. Most important thing while going internationally is to choose proper strategic orientation which will suit the company. Strategic orientation is an indication of the direction in which a business wants to or should go in the future, and how well it is set up to do so.

International Marketing Orientations Domestic market extension Multi-domestic market Global marketing

Domestic market extension Domestic market extension of a firm considers that the products, marketing strategies and techniques applicable in the home market are equally so in the overseas market as well. In such a firm, all foreign marketing operations are planned and carried out from home base, with little or no difference in product formulation and specifications, pricing strategy, distribution and promotion measures between home and overseas markets. The firm generally depends on its foreign agents and export-import merchants for its export sales.

Multi-domestic market Is when the firm attempts to organize its international marketing activities on a country to country basis. Each country is treated as a separate entity and individual strategies are worked out accordingly. Local assembly or production facilities and marketing organizations are created for serving market needs in each country. Multi-domestic market orientation could be most suitable for firms seriously committed to international marketing and have its resources for investing abroad for fuller and long-term penetration into chosen markets.

Global marketing In Global marketing orientation approach, the firm accepts a regional marketing policy covering a group of countries which have comparable market characteristics. The operational strategies are formulated on the basis of the entire region rather than individual countries. The production and distribution facilities are created to serve the whole region with effective economy on operation, close control and co-ordination.

Global marketing orientation con... This orientation favors neither home country nor foreign countries where the company operates. It is also called a global approach the main idea of which is to target “global consumers” who have similar tastes. The main idea of this orientation is to borrow from every country what is best. 

Reading P. Kotler, K.Keller, 2006, Marketing Management, 12 ed, Prentice Hall D.Jobber, Principles and Practice of Marketing, 3ed, 2001, McGrawHill Isobele and Lowe, (2008). International Marketing Strategy [Online]. Available from: https://www.cengagebrain.co.uk/content/doole07630_1844807630_02.01_chap ter01.pdf International Marketing Strategy and Theory (2008) by John Shaw