Teaching International Marketing David A. Griffith Department of Marketing & Supply Chain Management The Eli Broad College of Business Michigan State University

Agenda The Basics Teaching Approaches Basics of marketing Segmentation, Targeting and Positioning Marketing Mix Basics of international marketing Teaching Approaches Presentation: Global vs. Comparative Observational Experiential Application

Focus Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Segmentation, Targeting and Positioning

The Complete Process Market Segmentation Market Targeting Market Positioning Design a product or service to meet a segment’s needs and develop a marketing mix that will create a competitive advantage in the minds of the selected target market Identify and describe market segments Evaluate segments and decide which to go after

Market Segmentation Identifying distinct groups of consumers whose purchasing behavior differs from other in important ways. Marketing mix adjusted to reflect differing purchasing patterns in segments. Geography Demographics Socio-cultural factors Psychological factors

Two main issues in the differences between countries Market Segmentation Two main issues in the differences between countries The structure of market segments The existence of segments that transcend national borders

Market Targeting and Positioning Marketers evaluate the attractiveness of each potential segment and decide which of these groups they will try to turn into customers Mass Differentiated Concentrated Custom Developing a marketing strategy aimed at influencing how a particular market segment perceives a product or service in comparison to the competition 4 common positioning errors Underpositioning: lack of differentiation Overpositioning: too narrow Confused: too many things to too many people Doubtful: consumer just doesn’t believe it

Marketing Mix

Marketing Mix Price Product Consumers Place Promotion

Marketing Mix: Product

Product Attributes A product is a bundle of attributes. If consumer needs were the same all over, a firm could simply sell the same product worldwide. Unfortunately, differences in the three following areas often necessitate adaptations Cultural differences Economic differences Product and technical standards

Cultural Differences Range of dimensions: Social structure Language Religion Education Most important - the impact of tradition Some tastes and preferences becoming cosmopolitan

Economic Differences Consumer behavior is influenced by economic development Consumers in highly developed countries tend to have extra performance attributes in their products Consumers in less developed countries tend not to demand these extra performance attributes

Product and Technical Standards Government standards can prevent the introduction of global products Different technical standards impede global markets, as well Come from idiosyncratic decisions made long ago

Marketing Mix: Place

Distribution Strategy Three different distribution systems: Retail concentration: number of retailers Cost/benefit of each alternative vary from country to country Channel length: levels of channel members Longer the channel in a country, the higher the price Shorter channel in a country, lower price Channel exclusivity: access Match to positioning of product in country

A Typical Distribution System Manufacturer Inside the Country Manufacturer Outside the Country Import Agent Wholesale Distributor Retail Distributor Final Customer

Marketing Mix: Price

Pricing Strategy Price discrimination Strategic pricing Regulatory factors

Pricing Strategy Price discrimination: Different prices, different countries, same product Charging what the market will bear Two factors: Must keep national markets separate Different price elasticities Arbitrage:Charging different prices in different countries for same product Doesn’t always work Sometimes it does Income level and competitive conditions determine elasticity Elasticity (price) tends to be be greater in countries with low income levels Elasticity (demand) tends to be greater in countries where there are many competitors

Strategic Pricing Predatory pricing: Multipoint pricing strategy: Using price as a competitive weapon Multipoint pricing strategy: When two or more international firms compete against each other in two or more national markets A firm’s pricing strategy in one market may impact a rival in another market Experience curve pricing: Firms price low worldwide to build market share. Incurred losses are made up as company moves down experience curve

Regulatory Influences on Prices Antidumping regulations: Selling a product for a price that is less than the cost of producing it Predatory pricing and experience curve pricing may violate regulations Antidumping rules place a floor under export prices and limit a firm’s ability to pursue strategic pricing Competition Policy: Promote competition Restrict monopoly practices Can limit the prices a company can charge in a given country

Nike Pricing Strategy Price discrimination across markets Multi-point pricing

Marketing Mix: Promotion

Communications Strategy Effectiveness of international communications can be impacted by: Cultural barriers Need to develop cross-cultural literacy

Communications Strategy Effectiveness of international communications can be impacted by: Cultural barriers Need to develop cross-cultural literacy Source and country of origin effects Receiver of the message evaluates it based upon the status of the sender Country of origin effects: Emphasize/de-emphasize foreign origin

Communications Strategy Effectiveness of international communications can be impacted by: Cultural barriers. Need to develop cross-cultural literacy Source and country of origin effects Receiver of the message evaluates it based upon the status of the sender Country of origin effects: Emphasize/de-emphasize foreign origin Noise levels Tends to reduce the effectiveness of a message Developed countries - high Less developed countries - low Push versus Pull: Push emphasizes personal selling Pull depends on mass media advertising

Teaching Approaches Teaching Approaches Presentation Observational Global Comparative Observational Seeing: television shows, movies, etc. Perceiving: literature Experiential Taste it, See it, Feel it Providing Assistance Application Cases Live Cases

Takeaways Planning Engage Students Topical content Global vs. comparative vs. mixed Engage Students Make it apply What they eat, buy or wear Seeing differences Experiencing differences Unpredictability of International Marketing Finding the bizarre Finding the humorous