1. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. International Marketing

2. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Chapter 4 Objectives 1.Understand the importance of international marketing and its opportunities and challenges. 2.Recognize the effect of the global environment on international marketing activities. 3.Understand the process of international market selection.

3. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Chapter 4 Objectives 4.Recognize the process of internationalization and the different forms of market entry. 5.Comprehend the international adjustment of the marketing mix. 6.Understand the steps necessary to implement an international marketing strategy.

4. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The Nature of International Marketing International marketing—process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and organizations. Four orientations or business philosophies. Objective 1

5. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The Nature of International Marketing 1.How will my product fit into the international market? 2.What marketing adjustments are or will be necessary? 3.What threat from global competition should I expect? 4.How can these threats be turned into opportunities? Objective 1

6. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Opportunities in International Marketing By integrating knowledge from around the globe, an international firm can build and strengthen its competitive position. Objective 1

7. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Challenges in International Marketing Most firms and individuals are affected directly or indirectly by economic and political developments that occur in the international marketplace. Objective 1

8. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The International Marketing Environment Sociocultural Environment –Includes languages, values, and attitudes. –Marketing managers need to account for these cultural factors when developing marketing strategies. Change agents—try to impress on a local consumer the need to adopt a new product. Objective 2

9. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The International Marketing Environment Differences in cultural lifestyle can be accounted for by four dimensions of culture. 1)Degree of individualism 2)Level of equality 3)Uncertainty avoidance 4)Material achievement Objective 2

10. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The International Marketing Environment How culture can be used as a marketing tool (see Figure 4.2) 1.Embrace local culture 2.Build relationships 3.Employ locals to gain cultural knowledge 4.Help employees understand you 5.Adapt products and processes to local markets 6.Coordinate by region Objective 2

11. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The International Marketing Environment Political and Legal Factors –Play a critical role in international marketing activities –World Trade Organization (WTO)—the institution that administers international trade and investment accords. Common Law—based on tradition and depends less on written statutes and codes than on precedent and custom Code Law—based on a comprehensive set of written statutes Objective 2

12. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Selecting an International Market Screening and Identifying International Markets Figure 4.4 –Stage 1: Conduct preliminary screening. –Stage 2: Determine total market potential. –Stage 3: Estimate sales potential. –Stage 4: Select the optimal segment within the target market. Objective 3

13. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Selecting an International Market Choosing a Concentration or Diversification Strategy –Diversification Strategy—market development strategy that involves expansion to a relatively large number of markets –Concentration Strategy—focuses on a small number of markets Objective 3

14. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The Internationalization Process Management’s Role in International Expansion –Managerial commitment is crucial because foreign market penetration requires a vast amount of market development activity, sensitivity toward foreign environments, research, and innovation. Objective 4

15. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The Internationalization Process Motivation to Go Abroad Objective 4 PROACTIVEREACTIVE Profit advantageCompetitive pressures Unique productsOverproduction Technological advantageDeclining domestic sales Exclusive informationExcess capacity Economies of scaleSaturated domestic markets Proximity to customers and ports

16. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Alternative Entry Strategies Indirect Exporting and Importing –International intermediary—deals indirectly with foreign customers or firms Direct Exporting and Importing International Intermediaries –Export management companies (EMCs)— specialize in performing international business services as commission representatives or as distributors –Trading company—marketing intermediary that undertakes exporting, importing, counter trading, investing, and manufacturing Objective 4

17. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Alternative Entry Strategies Licensing –Licensing agreement—one firm permits another to use its intellectual property for compensation, usually a royalty Franchising –Franchising is the granting of the right by a parent company to another independent entity (the franchisee) to do business in a prescribed manner Objective 4

18. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Alternative Entry Strategies Foreign Direct Investment –Involves buying property and businesses in foreign nations Reasons for Foreign Direct Investment –Marketing considerations and corporate desire for growth are major reasons Objective 4

19. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Alternative Entry Strategies A perspective on Foreign Direct Investment –Governments and individuals praise foreign direct investors for bringing capital, economic activity, and employment, as investors are seen as key transferers of technology and managerial skills Objective 4

20. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Alternative Entry Strategies Types of Ownership –Full ownership –Joint ventures –Strategic alliances –Contractual arrangements Objective 4

21. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Tailoring the International Marketing Mix Use one of the three following strategies when determining adjustments to the marketing mix: 1.Standardized approach 2.Multidomestic approach 3.Globalization approach Objective 5

22. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Tailoring the International Marketing Mix Product –Design –Branding –Packaging Distribution Pricing Objective 5

23. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Implementing Marketing Programs Worldwide Management Processes –Globalization requires transfer of information both between the headquarters and country organizations and within the country organizations themselves –Substantial degree of centralization in marketing decision making for globalization Objective 6

24. Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Implementing Marketing Programs Worldwide Organization Structure –Established global or regional product managers and their support groups at headquarters focuses on customers rather than the traditional country to country approach Objective 6