international business, 5 th edition chapter 16 international marketing

16-2 Chapter Objectives 1 Characterize the nature of marketing management in international business Discuss the basic kinds of product policies and decisions made in international business Identify pricing issues and evaluate pricing decisions in international business

16-3 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

16-4 Marketing Marketing is “the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.” International marketing is the extension of these activities across national boundaries.

16-5 Figure 16.1 International Marketing as an Integrated Functional Area Operations Management Finance Human Resource Management Accounting Marketing

16-6 Market Strategy Must Support Business Strategy Differentiation Focus Cost leadership

16-7 Marketing Mix Decisions 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

16-8 Figure 16.2 Elements of the Marketing Mix for International Firms

16-9 Key Decision-Making Factors Standardization versus customization Legal forces Economic factors Changing exchange rates Target customers Cultural influences Competition

16-10 Standardization versus Customization Ethnocentric Approach Polycentric Approach Geocentric Approach

16-11 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

16-12 Table 16.1 Customized International Marketing Advantages Reflects different conditions of use Acknowledges local legal differences/ differences in buyer behavior Accounts for other differences in individual markets Disadvantages Increases costs/ inefficiencies Inhibits centralized control of marketing Reduces economies of scale in production Ignores the trend toward a single global marketplace

16-13 Product Product comprises both the set of tangible factors that the consumer can see or touch (the physical product and its packaging) and numerous intangible factors such as image, installation, warranties, and credit terms.

16-14 Factors Affecting the Standardization of Products Legal forces Cultural influences Economic factors Brand names

16-15 Factors Affecting Pricing Policies Business strategy Competitive environment Costs of doing business Exchange rate fluctuations

16-16 Pricing Policies Standard price policy Market pricing Two-tiered pricing

16-17 Figure 16.3a Determining the Profit-Maximizing Price

16-18 Figure 16.3b Determining the Profit-Maximizing Price

16-19 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

16-20 Risks to Market Pricing Policy Charges of dumping Development of a gray market Consumer resentment Damage to brand name

16-21 Promotion Mix AdvertisingPersonal selling Sales promotionPublic relations

16-22 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

16-23 Global Advertising A customer entering this domino parlor in Egypt encounters no language barriers in knowing that the establishment serves Coke.

16-24 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

16-25 Sales Promotion Sales promotion comprises specialized marketing efforts designed to offer an incentive for behavior such as coupons, in-store promotions, sampling, direct mail campaigns, cooperative advertising, and trade fair attendance.

16-26 Public Relations Public relations consists of efforts aimed at enhancing a firm’s reputation and image with the general public, as opposed to touting the specific advantages of an individual product or service.

16-27 Distribution Issues Physical transportation mode Merchandising mode

16-28 Table 16.2 Advantages/Disadvantages of Transportation Modes ModeAdvantagesDisadvantagesSample Products TrainSafe, reliable, inexpensive Limited to rail routes, slow Automobiles, grains AirplaneSafe, reliable, fastExpensive, limited access Jewelry, medicine TruckVersatile, inexpensive Small sizeConsumer goods ShipInexpensive, good for larger products Slow, indirectAutomobiles, furniture Electronic Media FastUnusable for many products Information

16-29 Basic Parts of a Distribution Channel Manufacturer Wholesaler Retailer Customer

16-30 Figure 16.4 Distribution Channel Options