IB Business Management 4.7 International Marketing

Learning Outcomes To understand the methods of entry into international markets (A02) To analyse and evaluate the opportunities and threats posed by entry into international markets. (A03) To be able to discuss and evaluate the strategic and operational implications of international marketing (A03) To be able to discuss and evaluate the role of cultural differences in international marketing (A03) To be able to discuss and evaluate the implications of globalisation in international marketing (A03)

Central Question Do you keep the 7P’s the same when you enter a new country/market?

International Marketing “the marketing of a firm’s products / services in foreign countries”

Watch the Video on Oreos What factors have contributed to a successful international marketing approach for the brand Oreos?

LOOK AT THESE INTERNATIONAL BRANDS THAT ARE MARKETED UNDER DIFFERENT BRAND NAMES INTERNATIONALLY

International Marketing The marketing mix for the product may have to be adapted This can be called ‘glocalisation’

Methods of Entering International Markets AdvantageDisadvantage Overseas buyer responsibility to sell and they know their market Overseas buyer takes commission or a certain profit margin  reduced profits No need to setup business in the new market  reduced cost and risk Do not control marketing/distribution in the overseas market  is it in line with your brand image,? Is there quality control? 1. Exporting – sell products directly to overseas buyer

Methods of Entering International Markets AdvantageDisadvantage Wider distribution channel  solves exporting problems (quotas, tariffs) Are there the right resources in the country (Capital, Enterprise, Land, Labour) to make the product and maintain standards? Overseas Government can offer incentives to the company to help set up because it improves their economy by adding jobs and up skilling. Incentives include tax breaks & grants Are there cultural and ethical issues e.g. Do they need to adapt their motivational methods to suit the labour market. Is the company exploiting the country by using cheap labour and sending profits back to domestic nation? 2. Direct Investment – setting up a business presence in the overseas location

Methods of Entering International Markets AdvantageDisadvantage Low costs and reduced risks of international marketing as do not need to setup pyhsical stores Do the products meet the safety and quality standards in the overseas nation. E.g. Garuda Air was banned from EU airspace due to safety concerns. Can ‘tweak’ or adapt website to cater for different overseas market needs and cultures. Damages can occur in distribution phase. Security concerns regarding online transactions. Technology (drones/3D printing) changing the distribution landscape and potentially making it cheaper and more efficient. Time taken for customer to receive end product 3. E-commerce – trading via the internet

Methods of Entering International Markets AdvantageDisadvantage Companies retain their individual separate legal entities Share the profits of the venture Spread risks, shared expertise and resources  minimise risks further Time needed to identify the most appropriate businesses to combine with If joining with a company in the overseas market – they will have knowledge of that market  advise and recommend an appropriate entry strategy. 4. Joint Ventures – 2 or more companies invest in a shares business project. Resources are combined to form a separate business e.g. Sony Ericsson

Methods of Entering International Markets AdvantageDisadvantage An alliance with a business in the overseas market can help gain access into that market. Do both businesses share the same vision & mission Risks reduced and Resources sharedIs there a culture clash  communication and organizational problems 6. Strategic Alliances – similar to joint ventures but no new company is formed. E.g. airlines often do this to have access to new regions/destinations

Methods of Entering International Markets AdvantageDisadvantage Established and recognised Brand and product selection Start up costs can be high and franchisee pays % of sales every year to franchisor Marketing completed by the FranchisorAll procurement of resources has to be through the franchisor (often expensive) Quick and easy to start tradingBound by the conditions of the franchise agreement Negative publicity towards the brand in anyway could impact the franchisee 7. Franchising – A business allowing others to trade under its name in return for a fee and a royalty payment e.g. McDonalds

Methods of Entering International Markets AdvantageDisadvantage Entering new markets with minimal riskWill the Licensee maintain quality and safety standards. If not Global brand image could be affected. Licensee likely to have knowledge and experience of their market  can adopt appropriate strategy for success given the cultural/societal differences Fraudulent copies e.g. China Licensing can apply to patents and trademarks and can receive through Tend not to get % of sales (just fixed payment for the period of licensing agreement) so could be missing out on potential profits/revenue 8. Licensing – when another firm buys the right to produce the goods of the licensor e.g. Nike, Disney

Methods of Entering International Markets AdvantageDisadvantage Merging with a foreign company can help gauge access to overseas markets and lessen risk of failure Share profits Share lossesPerhaps a Loss of old brand identity/loyalty Combined capital and resourcesClash of cultures  inefficiency, poor communication and diseconomies of scale Economies of scale due to increase in size 9. Mergers – When two businesses decide to integrate into a single organisation e.g. Daimler Chrysler

Methods of Entering International Markets AdvantageDisadvantage Quick way to enter a new overseas marketRequires large capital investment Economies of scale  cost savingsPossible diseconomies of scale if size not managed efficiently Expands product portfolio and spreads riskCan give the firm that takes over a negative image due to reaction of pressure groups or stakeholders e.g. Kraft & Cadbury 10. Acquisitions or Takeovers – When one business buys out another by purchasing a majority stake in the target company

Opportunities for Entering new Markets Increased customer base Economies of scale Increased brand recognition Spread risks Extend Product Life Cycle Gain more profit

Threats for Entering new Markets Legal issues e.g. ? Political issues e.g. ? Social & Demographic issues e.g. ? Pressure groups – e.g. ? Economic Issues – e.g. ? Google Doc Time TASK 10 minutes – Research real examples of companies entering overseas markets and identify any factors the company faced relevant to the above threats.

PEST FACTORS REGARDING INTERNATIONAL TRADE

Issues & Problems: Legal Copyright & patent protection differ o Inventions o Ideas, logos, slogans, etc. Consumer protection laws differ o Advertising  Children  Weapons  Smoking & Drinking o Many countries pushing for ban on junk food advertising

Issues & Problems: Political Trade barriers o Quotas o Tariffs o Embargoes o Regulation, licenses, visas o Subsidies Administrative barriers o Visas etc

Issues & Problems: Social & Demographics Different Culture Multicultural nations Differing consumer tastes Internet uptakes Average age within nation Incomes vary within & among countries Pressure Groups o Language

Language barriers - examples In Taiwan, the translation of the Pepsi slogan "Come alive with the Pepsi Generation" came out as "Pepsi will bring your ancestors back from the dead." Also in Chinese, the Kentucky Fried Chicken slogan "finger-lickin' good" came out as "eat your fingers off." When General Motors introduced the Chevy Nova in South America, it was apparently unaware that "no va" means "it won't go." After the company figured out why it wasn't selling any cars, it renamed the car in its Spanish markets to the Caribe. When Parker Pen marketed a ballpoint pen in Mexico, its ads were supposed to say "It won't leak in your pocket and embarrass you." However, the company mistakenly thought the spanish word "embarazar" meant embarrass. Instead the ads said that "It wont leak in your pocket and make you pregnant." In Italy, a campaign for Schweppes Tonic Water translated the name into Schweppes Toilet Water.

Issues & Problems: Economic Things to watch out for: o Transportation costs o Longer Supply Chains o Communications costs o Interest rates o Exchange rate fluctuations

International Marketing Mix How would the marketing mix of the following products have to be adapted for different markets

Price Product Place Promotion Physical Evidence Processes People Packaging

How Can Cultural Differences influence International Marketing Google Doc Time again ;) Task – for a chosen company work in pairs to answer the above question. And add to the doc so we all have as a reference. Give relevant examples.

What are the Implications of Globalisation on International Marketing Google Doc Time again ;) Task – for a chosen company work in pairs to answer the above question. And add to the doc so we all have as a reference. Give relevant examples.

Is the Ansoff’s Matrix Relevant to International Marketing? Market Penetration Consolidation Withdrawal Do Nothing Product Development Market Development Diversification Existing MARKETS New Increasing risk PRODUCTS ExistingNew

International Marketing – CUEGIS? CONCEPTRELEVANCE TO INTERNATIONAL MARKETING THEORY CHANGE CULTURE ETHICS GLOBALISATION INNOVATION STRAETEGY