International Marketing

òDomestic Market Extension òMulti-domestic òGlobal Marketing

Domestic Market Extension òSales of domestic products in int. markets. òDomestic orientation òInternational Market secondary òFirm seeks markets similar to domestic. òLittle adaptation of product or marketing mix. òUsually produced domestically

Multi-Domestic Orientation òSeparate operations in each country - production, marketing etc. òDifferent strategies and marketing mixes òVery little interaction òMarkets could be very different.

Global-Marketing Orientation òViews the world as one market. òDevelop product and marketing strategies for world markets. òStandardize as far as possible, adapt where necessary. òEconomies of scale, transfer of knowledge and technology, global image, and better competitive position.

International vs. Domestic - Marketing Mix. òStandardization/Differentiation mainly in terms of Product and Promotions. òProduct and Promotion Extension (Standardization) òProduct Extension/Promotion Adaptation òProduct Adaptation/Promotion Extension òDual Adaptation (Differentiated) òProduct Invention

Five International Product and Promotion Strategies Product Straight extension Dual adaptation Communi- cation adaptation Product adaptation Adaptproduct Promotion Do not change product Develop new product Do not change promotion Adaptpromotion Product invention

Three components which could be changed. zCore component; packaging component; and support services component. zCore component - Physical product, design features, functional features. zCulture and use; standards or regulations; minor changes easier; major changes costly; functional features easy to adapt.

Three components which could be changed. zPackaging component - Price, quality, styling, color, trademark, brand name, etc (psychological features). zEconomic or environmental requirements;Govt. regulations; Distribution requirements; consumer/cultural requirements.

Three components which could be changed. òSupport services component - deliveries, warranty, repair and maintenance, spare parts etc. òMarket characteristics, size, competition, level of development etc.

Country of origin effects. òStereotypes about products and countries. òEnglish Tea, French Perfume, Chinese Silk, Italian leather, Japanese cars and electronics. òUsually product specific. òStereotypes based on level of industrialization. òCan be overcome with good marketing.

Pricing. òObjectives depend upon company orientation òStandard worldwide Pricing – Based on average unit costs of fixed, variable and export related costs. òDual 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, R&D, Domestic overhead, and domestic marketing are disregarded. òMarket-differentiated pricing – demand–oriented. Marginal costs and export-related costs considered.

Variables that influence international pricing òTaxes and tariffs - Specific duty, Ad Valorem, Combination. òInflation - Time, Payment terms, possible price control. òExchange rate Fluctuation - Prices of products and profits. òMiddlemen and transportation costs - Longer, diverse, underdeveloped, smaller order quantities, could all increase costs. òParallel Imports.

Parallel Imports/ Gray Markets. zValue of currencies. zPricing policies. zCosts of transportation less than price differential. zPrice controls or quotas. zExclusive distribution agreements. zIn the US – Gray market for Cars, Watches, cameras etc. – valued at $6-10 billion.

Global Advertising and Promotion Effort. òGlobal or standardized advertising strategy. òPattern Advertising (similar basic message with some local variation) òCustomized. òMarketing strategy; Cultural differences; Behavior in terms of the product; Media availability.

Global advertising strategy. zDeveloped on a global basis not exported. zMost large firms do not use, only 8% of U.S. multi-national firms.

Pattern advertising. zPlan globally act locally. zBroad outlines or basic positioning given but details can be adapted. zAssuming that there are some differences in culture and consumer behavior even if primary function is the same.

Creative challenges. òMedia 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. òLanguage limitations - translating ad slogans, literacy levels, use of different languages.

Creative challenges. òCultural diversity - Symbols, colors, tastes, values and beliefs etc. - subcultures. òProduction and cost limitations - Poor quality printing, lack of high grade paper, film editing and processing facilities, high comparative cost for quality. òMedia - Availability, Audience data, international media.

Advertising agencies. òLocal agency. òCompany owned agency. òMultinational Agency with local branches. Survey says % using single agency worldwide. 20% two agencies. 5% using three. 10% using four. 32.5% using more than four.