Chapter 14 Marketing Internationally McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Added Complexities of International Marketing Basic marketing functions are the same world-wide, but differ in local markets due to these issues: Sociocultural Resource & environmental Economic & socioeconomic Legal Financial Labor Basic marketing functions are the same world-wide, but differ in local markets due to these issues: Sociocultural Resource & environmental Economic & socioeconomic Legal Financial Labor LO1 14-2

The Marketing Mix (What to Sell and How to Sell It) The Marketing Mix: –A set of strategy decisions about Product Promotion Price Distribution –Focuses on satisfying target market(s) needs and desires The Marketing Mix: –A set of strategy decisions about Product Promotion Price Distribution –Focuses on satisfying target market(s) needs and desires The international marketing manager’s question: – “Can we standardize worldwide, should we make some changes, or should we formulate a completely different marketing mix?” The international marketing manager’s question: – “Can we standardize worldwide, should we make some changes, or should we formulate a completely different marketing mix?” LO2 14-3

Standardize, Adapt, or Formulate Anew? To Standardize: –Use same marketing mix in all markets –Gains cost savings because of economies of scale and experience To Standardize: –Use same marketing mix in all markets –Gains cost savings because of economies of scale and experience Benefits: –Consistent global message –Sales training & advertising creative work only done once –Pricing avoids customer getting different quotes –Product consistency –Easier coordination & control Benefits: –Consistent global message –Sales training & advertising creative work only done once –Pricing avoids customer getting different quotes –Product consistency –Easier coordination & control LO3 14-4

Type of Product Industrial Products – sold in B-to-B markets, often unchanged –Adaptation used to meet local legal requirements Industrial Products – sold in B-to-B markets, often unchanged –Adaptation used to meet local legal requirements Consumer Products – sold to ultimate consumer for personal consumption Often modified to meet local cultural preferences Consumer Products – sold to ultimate consumer for personal consumption Often modified to meet local cultural preferences Services – “Performances” targeted to B-to-B or ultimate consumer Less complex marketing, but local laws/customs may mandate adaptations Services – “Performances” targeted to B-to-B or ultimate consumer Less complex marketing, but local laws/customs may mandate adaptations LO4 14-5

Foreign Environmental Forces Sociocultural Forces – –different cultural patterns often require changes in brand name, color, label translations, package size & price Legal Forces – –impact every aspect of marketing mix and pollution, consumer protection & operator safety Economic Forces – –income differences impact consumer’s ability to pay requiring quantity and price changes Physical Forces – –climate, terrain, altitude, etc., may demand product alteration Sociocultural Forces – –different cultural patterns often require changes in brand name, color, label translations, package size & price Legal Forces – –impact every aspect of marketing mix and pollution, consumer protection & operator safety Economic Forces – –income differences impact consumer’s ability to pay requiring quantity and price changes Physical Forces – –climate, terrain, altitude, etc., may demand product alteration LO4 14-6

Promotional Strategies 9 possible strategies from 3 alternatives: 1.Marketing same physical product everywhere 2.Adapting physical product to foreign markets 3.Designing new physical product with (a) same, (b) adapted, or different messages 9 possible strategies from 3 alternatives: 1.Marketing same physical product everywhere 2.Adapting physical product to foreign markets 3.Designing new physical product with (a) same, (b) adapted, or different messages Promotion – – “Communication that secures understanding between a firm and its publics to bring favorable buying action and long- term confidence in the firm and its products or services” Promotion – – “Communication that secures understanding between a firm and its publics to bring favorable buying action and long- term confidence in the firm and its products or services” LO4 14-7

6 Commonly Used Promotional Strategies 1.Same product – same message 2.Same product – different message 3.Product adaptation – same message 4.Product adaptation – message adaptation 5.Different product – same message 6.Different product for the same use – different message 1.Same product – same message 2.Same product – different message 3.Product adaptation – same message 4.Product adaptation – message adaptation 5.Different product – same message 6.Different product for the same use – different message LO4 14-8

Advertising Internet Advertising –Provides affluent, reachable, English- speaking audience –Cheap, interactive communications –Customers can determine which messages & information they receive –Best media choice for select audiences Internet Advertising –Provides affluent, reachable, English- speaking audience –Cheap, interactive communications –Customers can determine which messages & information they receive –Best media choice for select audiences Type of Product –Same buying motives for industrial and luxury goods globally = standardization –Low-priced products bought & consumed for same reasons globally = standardized appeals & sales arguments Type of Product –Same buying motives for industrial and luxury goods globally = standardization –Low-priced products bought & consumed for same reasons globally = standardized appeals & sales arguments LO5 14-9

Advertising Foreign Environmental Forces, Especially Sociocultural Forces, Deter Standardization: –Positioning as foreign or local product –Language & Translation –Laws reflect public opinion –Religious limitations Foreign Environmental Forces, Especially Sociocultural Forces, Deter Standardization: –Positioning as foreign or local product –Language & Translation –Laws reflect public opinion –Religious limitations Globalization versus Localization –Product & brand standardization = cost savings –Product content standardization + local packaging = manufacturing efficiency –Local product + local brand = sales, but limited country transferability Globalization versus Localization –Product & brand standardization = cost savings –Product content standardization + local packaging = manufacturing efficiency –Local product + local brand = sales, but limited country transferability LO

“Glocal” Advertising Neither Purely Global nor Purely Local – “Glocal” Advertising –Best way to handle international advertising –Common strategy for large regions = lower costs Neither Purely Global nor Purely Local – “Glocal” Advertising –Best way to handle international advertising –Common strategy for large regions = lower costs Programmed- Management Approach – A middle-ground advertising strategy between globally standardized and entirely local programs Programmed- Management Approach – A middle-ground advertising strategy between globally standardized and entirely local programs LO

Advertising Personal Selling –Importance of personal selling depends on Relative cost of advertising Funds available for advertising Available media Type of product –Industrial firms use personal selling more than advertising –Consumer goods use personal selling in developing markets Personal Selling –Importance of personal selling depends on Relative cost of advertising Funds available for advertising Available media Type of product –Industrial firms use personal selling more than advertising –Consumer goods use personal selling in developing markets Personal Selling and the Internet –If used to build trust, Internet can be effective in personal selling –Internet can be enhanced by face-to- face communication Personal Selling and the Internet –If used to build trust, Internet can be effective in personal selling –Internet can be enhanced by face-to- face communication LO

Sales Promotion – Any of various selling aids, including displays, premiums, contests, and gifts. Standardization is easy – what works in U.S. works abroad, and cultural constraints need be considered. Sales Promotion – Any of various selling aids, including displays, premiums, contests, and gifts. Standardization is easy – what works in U.S. works abroad, and cultural constraints need be considered. Sociocultural and Economic Constraints –Premiums must be culturally meaningful –Contests, games & raffles are successful where people like to gamble –Point-of-purchase displays must be downsized to fit smaller foreign stores Sociocultural and Economic Constraints –Premiums must be culturally meaningful –Contests, games & raffles are successful where people like to gamble –Point-of-purchase displays must be downsized to fit smaller foreign stores LO

Public Relations – Various methods of communicating with the firm’s publics to secure a favorable impression Public Relations – Various methods of communicating with the firm’s publics to secure a favorable impression MNCs need to improve communications to non-business publics because of: Nationalism Anti-MNC feelings Profit from public good Critics of firm’s motives and operations  Choice: defend or do nothing MNCs need to improve communications to non-business publics because of: Nationalism Anti-MNC feelings Profit from public good Critics of firm’s motives and operations  Choice: defend or do nothing 14-14

Pricing, a Controllable Variable The one marketing mix element that can be varied to attain marketing objectives. Standardizing Prices –Foreign National Pricing Local pricing in another country –International Pricing Setting prices of goods for export for both unrelated and related firms –Transfer Price Intracorporate price, or the price of a good/service sold by on affiliate to another, the office to an affiliate, or vice versa” Advantages: 2 profit centers and lower tax environments Standardizing Prices –Foreign National Pricing Local pricing in another country –International Pricing Setting prices of goods for export for both unrelated and related firms –Transfer Price Intracorporate price, or the price of a good/service sold by on affiliate to another, the office to an affiliate, or vice versa” Advantages: 2 profit centers and lower tax environments 14-15

Pricing The Internet is Redefining Pricing Options: –Instant access to multiple sellers world wide –Greater global price competition –Instant price comparisons from 100s of sites The Results: –National boundaries are less important –World prices are becoming a reality in both consumer and B-to-B markets The Internet is Redefining Pricing Options: –Instant access to multiple sellers world wide –Greater global price competition –Instant price comparisons from 100s of sites The Results: –National boundaries are less important –World prices are becoming a reality in both consumer and B-to-B markets LO