International Marketing

Aspects of International/Global Marketing : 

Aspects of International/Global Marketing

Product Issues in International Marketing : 

2 Product Issues in International Marketing Standardization versus adaptation Product strategies in foreign markets Timing and sequence of product introductions New product development approaches Global branding Country-of-origin effects

Adaptation versus Standardization : 

3 Adaptation versus Standardization Mandatory Adaptation Differences in standards metric systems left vs. right hand driving Government regulations efficiency standards packaging Discretionary Adaptation Levels of income Differences in consumer tastes Levels of education and technical sophistication

Slide 4: 

4 The Tradeoff Between Standardization and Adaptation Fully standardized Fully adapted Incremental manufacturing cost Combined costs Cost of lost sales

Two Approaches to Standardization : 

5 Two Approaches to Standardization “Domestic” Product as “World” Product Manufacturing economies of scale Marketing economies of scale Lower costs of market and product research Satisfying international customers Maximizes returns during different stages of the product life cycle Proactively Developing a “World” Product World Car approach of Ford (Mondeo, Mystique, Contour) Modular Approach: GM, Volvo Trucks Core-Product/Common Platform Approach: Honda, Toyota

International Product Strategies : 

6 International Product Strategies Whether the product function or the need satisfied is the same or different in a new market? Whether the conditions of product use are the same in a new market? Whether the consumers in the new market have the ability to buy the product?

Alternative Strategies : 

7 Alternative Strategies

Timing of Product Introductions in Foreign Markets : 

8 Timing of Product Introductions in Foreign Markets Waterfall Strategy product is introduced into foreign markets one at a time (IPLC model approach) Useful when: lifecycle of product is long high fixed costs of entry into individual markets foreign markets are not equally developed some customization is needed firms have little foreign experience Sprinkler Strategy simultaneous introduction of the product in multiple markets Useful when: short product life cycle high R&D costs in product development competition is very strong (pre-emption of markets) firms have existing presence in target countries homogenized preferences

New Product Development Approaches : 

9 New Product Development Approaches

New Product Development Costs : 

10 New Product Development Costs U.S. Japan Market Research Market Research Product Characteristics Product Characteristics Design Planned selling price less desired profit Engineering Supplier Pricing COST if cost is too high, return to design phase Manufacturing Periodic Cost Reduction TARGET COST Design Engineering Supplier Pricing Negotiate tradeoffs to meet target costs Manufacturing Continuous Cost Reduction

Branding Issues : 

11 Branding Issues Global/Regional Brands scale economies in brand development and promotion brand awareness and prestige Local Brands legal constraints don’t translate well into local languages avoid negative nationalistic associations Umbrella Brands (corporate pre-fix or multiple product categories under same name) scale economies in building brand recognition easier for adding new products (extensions)

Country-of-Origin Effects : 

12 Country-of-Origin Effects Impact of where the product is manufactured perceived quality? patriotism/nationalism? Country-of-origin versus country-of-manufacture Interaction of country-of-origin and brand name effects Hybrid products (e.g., components manufactured in multiple countries; products via strategic alliances)

Triggers of Internationalization : 

13 Triggers of Internationalization Domestic Market Saturation Trade Deficit Foreign Competition New Market Opportunities Economies of Scale Others

Globalization Forces: Market Drivers : 

14 Globalization Forces: Market Drivers Convergence of per capita income and lifestyles and tastes?? Global Customers due to increased travel and organizational buying Growing global and regional channels Increasing number of world brands and global advertising

Globalization Forces: Cost Drivers : 

15 Globalization Forces: Cost Drivers Continuing push for economies of scale (but offset by flexible manufacturing) Accelerating technological innovation Increasing cost of product development relative to market life Advances in transportation Emergence of newly industrialized countries with productive capability and low labor costs

Globalization Forces: Competitive Drivers : 

16 Globalization Forces: Competitive Drivers More countries becoming key competitive battlegrounds Rise of new competitors intent on becoming global Growth of global networks making countries interdependent in particular industries More companies becoming internationally oriented rather than nationally centered New global alliances

Globalization Forces: Government Drivers : 

17 Globalization Forces: Government Drivers Reduction of tariff barriers Reduction of non-tariff barriers Creation of new trading blocs Decline in the role of government as producers and consumers Market liberalization and privatization Adoption of common standards

Globalization Standardization Philosophy : 

18 Globalization Standardization Philosophy Customer needs and interests are becoming increasingly homogenous worldwide Consumers are willing to sacrifice preferences in product features for lower prices at higher quality Substantial economies of scale in production and marketing can be achieved by developing standardized marketing programs

Constraints to Implementing Global Standardization Strategy : 

19 Constraints to Implementing Global Standardization Strategy External Governmental and trade restrictions Differences in marketing systems Nature of competitive structure Socio-cultural influences on consumer preferences Internal Financial and managerial constraints Local management motivation and attitudes

Terminology : 

20 Terminology Export Marketing International/Multinational Marketing Global Marketing

Roles of International Marketing Manager : 

21 Roles of International Marketing Manager The Foreign Entry Role Country Potential; Barriers to Entry Mode of Entry; Expansion Paths Finding Middlemen; Negotiating with partners Local Marketing Local buyer behavior; Marketing research Localized marketing strategy Global Management Globalization (pros and cons); global customers Formulating global strategies Coordination on a global basis

Framework : 

22 Framework International Customer Product Price Promotion Distribution International Economic Institutions and Agreements Economic Environment Political/Legal Environment Financial Environment Socio-cultural Environment