ECONOMIC DISASTER BEGINS WITH A PHILOSOPHY OF DOING LESS AND WANTING MORE.

BUDAPESTI GAZDASÁGI FŐISKOLA INTERNATIONAL MARKETING LECTURE- 7 In English 13th April 2012 – FRIDAY 0940hr –1110hr (E.F ) Miklós (Nicholas) SOÓS somi

LECTURE DATES - TIMES - LOCATION RE: Miklós (Nicholas) SOÓS 1.FEB [E.F.13-15] 2.FEB [E.F.13-15] 3.MARCH [E.F.13-15] 4.MARCH [E.F.13-15] MARCH 16. VACATION MARCH 23.VACATION 5. MARCH [E.F.13-15] – re. feb APR [E.F.13-15] (guest lect?) 7. APR [E.F.13-15] 8. APR [E.F.13-15] 8. APR [E.F.13-15] 9. MAY [E.F.13-15] 10. MAY [E.F.13-15] somi

CLASS ATTENDANCE somi LecturesNo.% Lect Lect Lect Lect Lect Lect Lect. 7 Lect. 8 Lect. 9 Lect. 10 absenceNo.% 023, ,4 2811, ,4 469,0 5710, , ,0 ABSENCES

Please ensure that you personally sign the attendance sheet every time you attend a lecture. somi

The visual contents of lectures will be available internally on the following site: K:\Hallgatok\ANGOL\Soós tanár úr (available internally only) somi

SOURCES, REFERENCES – SUGGESTED READINGS The course is NOT based on any specific textbook. The following are recommended. International Marketing, Cateora, P. & Graham, J. (2005) 12th edition, McGraw-Hill Global Marketing, Hollensen, S. (2004) 3rd edition, Prentice Hall International Marketing Strategy, Doole, I. & Lowe, R (2004) 4th edition Thomson International Marketing and Export Management, Albaum G, Prentice Hall London Principles of Marketing, Kotler P et. Al, 2 nd European edition, Prentice Hall E Principles of Marketing, Jobber D, McGraw-Hill Principles of Marketing, Brassington F, Financial Times Prentice Hall, 2000 Marketing on the Internet: Principles of online marketing, Strauss J & Raymond F, Prentice Hall,1999 Internet sites: somi

ASSESSMENT METHOD End of year written examination 60% Two (2) ‘mini’ exams of 20 min. duration during unannounced lectures 40% somi

Where we finished last week. somi

MAJOR WAYS IN WHICH COMPANIES FIRST ENTER INTERNATIONAL MARKETS somi 1 Export 2 Licensing 4 manufacturing 3 Establish sales offices 5 joint venture

Let us now have a brief look at the most important factors that are common to the successful global brands, trademarks. somi

THE FEATURES COMMONLY ASSOCIATED WITH THE TOP GLOBAL BRANDS Quelch Strong in home market Consumers value the country-of-origin Geographical/balance in sales Consistent positioning Product category focus Corporate name Addresses similar consumer needs 7 somi

THE SEVEN FEATURES COMMONLY ASSOCIATED WITH THE TOP GLOBAL BRANDS (Quelch) Strong in home market To be successful on a global scale, firms need to be strong in their home market. The top ten global brands are heavily dominated by US brands e.g. Intel, Disney, and Microsoft. These brands are equally dominant in their domestic, as well as global markets. 1 somi

THE SEVEN FEATURES COMMONLY ASSOCIATED WITH THE TOP GLOBAL BRANDS (Quelch) By definition, a global brand has at least a minimum level of awareness, recognition and sales all over the world. E.g. there is no global brand that is extremely strong in Europe, but hardly known in Asia. Leading global brands such as Toyota have high levels of awareness on a global scale. 2 Geographical/balance in sales somi

THE SEVEN FEATURES COMMONLY ASSOCIATED WITH THE TOP GLOBAL BRANDS (Quelch) The Company’s products are the same (or almost the same) worldwide and meet the same widely-held human needs. In some cases, brands may adapt to local needs, yet the majority tend to highly standardise their marketing mix. The degree of standardisation is one indicator of a global brand. 3 Addresses similar consumer needs somi

THE SEVEN FEATURES COMMONLY ASSOCIATED WITH THE TOP GLOBAL BRANDS (Quelch) Global brands have the same set of values worldwide. E.g., Disney promotes the same family values throughout all of its markets; Sony is synonymous with innovation all over the world. Volvo is known internationally as a safe vehicle 4 Consistent positioning somi

THE SEVEN FEATURES COMMONLY ASSOCIATED WITH THE TOP GLOBAL BRANDS (Quelch) This is typically associated with brand origin and/or country of manufacture. The country-of-origin (COO) effect includes country-of-design, country-of-assembly, and country-of-corporate-ownership. COO affects consumers’ perceptions of brand image and consumer behaviour. E.g., consider: watches from Switzerland televisions made in Japan German cars: BMW, Mercedes 5 Consumers value the country-of-origin somi

THE SEVEN FEATURES COMMONLY ASSOCIATED WITH THE TOP GLOBAL BRANDS (Quelch) The majority of the world’s leading global brands focus on one main product category e.g. Nike – sportswear. A more diversified range of product categories is likely to make it more difficult to become a leading global brand. 6 Product category focus somi

THE SEVEN FEATURES COMMONLY ASSOCIATED WITH THE TOP GLOBAL BRANDS (Quelch) A strong corporate or brand name is extremely important. Brand names are important to both sellers and buyer. One common branding objective is to choose ‘inherently meaningful’ brand names, so that the name itself conveys relevant product information e.g Budapest Bank. The second option is to create an ‘unrelated’ name. This includes words that have no connection with the product being named (e.g. Allianz International), or fictitious names e.g. Lenovo 7 Corporate name somi

Lets have a detailed examination of the factors that need to be considered when entering a foreign market.

FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION External Factors Internal Factors Foreign Market Entry Mode Decision Target Country Market Factors Target Country Environ mental Factors Target Country Produc- tion Factors Home Country Factors Company Product Factors Company Resource/ Commitment Factors somi

FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION External Factors Target Country Market Factors Target Country Environ mental Factors Target Country Produc- tion Factors Home Country Factors somi Market, environmental and production factors in both the target and home countries can seldom be affected by management decisions. They are external to the company and may be regarded as parameters of the entry mode decision. Since no single external factor is likely to have a decisive influence on the entry mode for companies in general it can only be said that such factors encourage or discourage a particular entry mode.

FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION External Factors Target Country Market Factors somi Current & Projected Market Size Small markets favor low breakeven volume entry modes e.g. exporting, licensing contractual Large markets favor entry modes with high breakeven volumes e.g. equity investment, local production Competitive Structure Atomistic – x no. dominant competitors Oligopolistic – few domint. competitors Monopolistic – a single firm Atomistic – usually export Others – equity inv., licensing, contractual modes Marketing Infrastructure The existence or otherwise of good local agents or distributors who are not committed to other foreign companies.

FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION External Factors Internal Factors Foreign Market Entry Mode Decision Target Country Market Factors Target Country Environ mental Factors Target Country Produc- tion Factors Home Country Factors Company Product Factors Company Resource/ Commitment Factors somi

FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION External Factors Target Country Environmental Factors somi Government Policies & Regulations Restrictive import policies: high tariffs tight quotas restrictive foreign investment policy On the other hand gov. may encourage foreign investment Geographical Distance Transportation costs can be prohibitive Economical Factors Market economy Centrally pland. Size of economy GNP/capita Dynamics Rate of investment Personal income Employment External ec. relation Balance of payment Debt service Exchange rate Sociocultural Cultural distance Social structure Language

FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION External Factors Internal Factors Foreign Market Entry Mode Decision Target Country Market Factors Target Country Environ mental Factors Target Country Produc- tion Factors Home Country Factors Company Product Factors Company Resource/ Commitment Factors somi

FACTORS IN THE FOREIGN MARKET ENTRY MODE DECISION External Factors Target Country Production Factors somi quality quantity material cost labor energy transport communication port facilities Productive Agents Economic Infrastructure Low production costs in the target country encourage some form of local production as against exporting.

somi BGF. INTERNATIONAL MARKETING MINI TEST 1 – APRIL DURATION: 15 MINUTES – QUESTIONS ARE OF EQUAL VALUE (10% / question) – ONLY ONE (1) POSSIBLE ANSWER FOR EACH QUESTION – MARK X THE CORRECT ANSWER – ONLY MARK (X) ONE BOX FOR EACH QUESTION OTHERWISE YOUR ANSWER WILL BE IGNORED PLEASE THINK CAREFULLY – ALTERNATIVE ANSWERS CAN BE VERY SIMILAR, HOWEVER ONLY ONE CORRECT ANSWER POSSIBLE FOR EACH QUESTION.

SUCCESS IS NOT SO MUCH WHAT WE HAVE AS IT IS WHAT WE ARE.