Chapter 16: International Marketing International Business, 4th Edition Griffin & Pustay ©2004 Prentice Hall

Chapter Objectives_1 Characterize the nature of marketing management in international business Discuss the basic kin of product policies and decisions made in international business Identify pricing issues and evaluate pricing decisions in international business ©2004 Prentice Hall

Chapter Objectives_2 Identify promotion issues and evaluate promotion decisions in international business Discuss the basic kinds of distribution issues and decisions in international business ©2004 Prentice Hall

Marketing Process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individuals and organizational objectives ©2004 Prentice Hall

Figure 16.1 International Marketing as an Integrated Functional Area Operations Management Accounting Marketing Finance Human Resource Management ©2004 Prentice Hall

Marketing Mix How to develop the firm’s product(s) How to price those products How to sell those products How to distribute those products to the firm’s customers ©2004 Prentice Hall

Figure 16.2 The Elements of the Marketing Mix for International Firms Product Pricing Promotion Place ©2004 Prentice Hall

Key Decision-Making Factors Standardization versus customization Legal forces Economic factors Changing exchange rates Target customers Cultural influences Competition ©2004 Prentice Hall

Standardization versus Customization Should the firm adopt an ethnocentric approach? Should it adopt a polycentric approach? Should it adopt a geocentric approach? ©2004 Prentice Hall

Table 16.1 Standardized International Marketing Advantages Reduces marketing costs Facilitates centralized control of marketing Promotes efficiency in R&D Results in economies of scale in production Reflects the trend toward a single global marketplace Disadvantages Ignores different conditions of product use Ignores local legal differences Ignores differences in buyer behavior patterns Inhibits local marketing initiatives Ignores other differences in individual markets ©2004 Prentice Hall

Table 16.1 Customized International Marketing Advantages Reflects different conditions of product use Acknowledges local legal differences Accounts for differences in buyer behavior patterns Promotes local marketing initiatives Accounts for other differences in individual markets Disadvantages Increases marketing costs Inhibits centralized control of marketing Creates inefficiency in R&D Reduces economies of scale in production Ignores the trend toward a single global marketplace ©2004 Prentice Hall

Prices of these t-shirts in Rome converted from several hundred lira to less than 13 Euro ©2004 Prentice Hall

Pricing Policies Standard price policy Two-tiered pricing Market pricing ©2004 Prentice Hall

Figure 16.3a Determining the Profit-Maximizing Price ©2004 Prentice Hall

Figure 16.3b Determining the Profit-Maximizing Price ©2004 Prentice Hall

Conditions for Market Pricing Firm must face different demand and/or cost conditions in the countries in which it sells its products Firm must be able to prevent arbitrage ©2004 Prentice Hall

Risks to Market Pricing Complaints about dumping Damage to its brand name Development of a gray market for its products Consumer resentment against discriminatory prices ©2004 Prentice Hall

Promotion Mix Advertising Personal Selling Sales Promotion Public Relations ©2004 Prentice Hall

Factors affecting Advertising Strategy The message it wants to convey The media available for conveying the message The extent to which the firm wants to globalize its advertising effort ©2004 Prentice Hall

A customer entering this domino parlor in Egypt encounters no language barriers in knowing that the establishment serves Coke ©2004 Prentice Hall

Advantages of Personal Selling for International Firms Local sales representatives understand local culture, norms, and customs Personal selling promotes close, personal contact with customers Personal selling makes it easier for firm to adopt valuable market information ©2004 Prentice Hall

Distribution Issues Physically transporting its goods and services from where they are created to the various markets in which they are to be sold Selecting the means by which to merchandise its good in the markets it wants to serve ©2004 Prentice Hall

Table 16.2 Advantages and Disadvantages of Different Modes of Transportation for Exports Sample Products Train Safe, reliable, inexpensive Limited to rail routes, slow Automobiles, grains Airplane Safe, reliable, fast Expensive, limited access Jewelry, medicine Truck Versatile, inexpensive Small size Consumer goods Ship Inexpensive, good for larger products Slow, indirect Automobiles, furniture Electronic Media Fast Unusable for many products Information ©2004 Prentice Hall

Basic Parts of a Distribution Channel The manufacturer A wholesaler The retailer The actual customer ©2004 Prentice Hall

Figure 16.4 Distribution Channel Options ©2004 Prentice Hall