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International MarketingInternational Marketing
Strategies and Marketing mix
ESGMarch 2008
Jean-Philippe Javel
Size and nature of international markets
Niches Local markets Regional markets Global markets
Niche markets
Purely local niches- Limited to a specific geographical area- Often, historical roots, consumer behavior linked to old traditions
Worldwide niches- Small market but potential customers in several countries- Example: Hummer H2
» derived from the military vehicle
» Target: Wealthy « show-off » Mostly urban
Niche in some countries, mass market in others- Example : oil lamp- Decoration item (sailing style) in western countries
Local, regional and global markets
Local markets (country)- Strong cultural links- Specific market conditions- Examples :
» medias (press, radio, TV)» cheese» airlines : state regulations (ex: Morocco)
Regional, multi-country markets- Specific products and marketing mix- Example : cars
» North America, Europe, Poor African countries
Global markets- Rather undifferentiated goods, universal solutions,
not culturally related, commodities» Example : wheelbarrow» Example: vehicle gasoline
- Luxury brands» Strong global brand image» Marketing mix may be adapted locally
Chevrolet Tahoe
The Maharaja Mac is an example of an Adapted Marketing Mix
Click or press spacebar to return
Adapting or standardizing your marketing strategy and/or mix ?
Markets and consumers needs and wants can be different in each country / region
But it is not always optimal to localize the marketing strategy and radically change the whole marketing mix for each country For example : developping a new product
Mainly for cost reasons (economies of scale) and organisational reasons (simplify)
Where is the optimum ?Where is the optimum ?Adapt locally
Standardizeglobally
Consequently, a multinational company has to find out and implement the optimal approach, between global and local, depending on several factors and market screening
Customerneeds and wants
Reduce costsMaximize profits
Strategic Adaptation to Foreign Markets
High
Low
Level ofculturalgrounding
Need foradaptation
Industrial / Technology intensive
Consumer
Nature of product
Marketing : Globalization versus AdaptationFactors encouragingFactors encouraging
GlobalizationGlobalization• It’s sometimes possibleIt’s sometimes possible
Lifestyles and consumer behavior Lifestyles and consumer behavior are converging (more or less)are converging (more or less)
• Cost reductionCost reduction Economies of scale (lower Economies of scale (lower manufacturing & purchasing costs)manufacturing & purchasing costs)
No product adaptation means less No product adaptation means less R&D, Marketing, inventories costsR&D, Marketing, inventories costs
• Simplify managementSimplify management Easier control & coordinationEasier control & coordination
Centralized decisionsCentralized decisions
• Global marketing campaignsGlobal marketing campaigns Communication etc Communication etc
Possible fast worldwide launchPossible fast worldwide launch
Factors encouragingFactors encouraging
Adaptation to local marketsAdaptation to local markets• Different customer needs and wants, Different customer needs and wants, behavior patternsbehavior patterns
cultural backgroundcultural background
use conditionsuse conditions
• Different economic situationDifferent economic situation
• Legal, tax, political barriersLegal, tax, political barriers
• Different competition landscapeDifferent competition landscape
• Specific sales/retail channelsSpecific sales/retail channels
• External growth and acquisition of External growth and acquisition of
foreign local brandsforeign local brands
• Unleash local managers’ initiativeUnleash local managers’ initiative
The 4 Types of International Marketing
Global marketing strategy(same everywhere)
Local marketing strategies(specific to each country or region)
Global tacticsSome tactics
adapted locallyMix of global &
local tactics
Only local tactics &
marketing mix
Pure Global Global « Glocal » Pure Local
Bongrain : cheeses
Strategies and tactics are the same everywhere
2 conditions- Markets adequate for such globalization- Strong brand policy, with no exception
Mostly luxury brandsExamples:- Chanel n°5 perfume- Omega watches
Other examples- La Maison du Chocolat
» same product» same shops (Paris, New York, Tokyo)» same service» same positioning, highest price on the market
- Ikea» same strategy everywhere (developped countries) :
same brand, same positioning, same target» same marketing mix : products and services, pricing,
place, communication» But a flop in China !
Marketing Strategy : Pure global
Marketing Strategy : Global
Same brand, same positioning, same product But the marketing mix can be partially adapted
locally, depending of local market conditions and competition
Example : Air France- Same brand, same planes, same quality of service, maintenance and
security
- Pricing is adapted locally» When Air France has a quasi-monopolistic position (West Indies, some
African countries), prices are very high» When Air France is on a market with fierce competition, especially from low
cost companies such as EasyJet or RyanAir (ex: Europe), prices are much lower and special promotions are proposed
Marketing strategy : « Glocal »
« Think global, act local » Standardizes certain core elements and localizes
some marketing mix elements Example : Honda Accor Same brand and positioning
in Europe and in the USA But the product is not the same everywhere
- In Europe, Accor sales are low, and cars are imported from Japan
- In the US, sales are higher and a special product is manufactured for the US market
» Automatic gearbox» Slightly different style» Different motors» Different interior design and equipment
Since 1986, Honda has developped a new brand, Acura, on the high-end, in the US & Japan, with specific models and a dedicated retail network
Coca Cola marketing is coherent worldwide
and some elements are global Brand Colors Symbols Same major sales channels Some advertising campaigns Sponsoring of major sport events
- Olympic Games since 1928- Football World Cup
But some elements of the products are localized Example: adaptation of the Diet Coke product
« Diet » has a negative meaning in many countries.It was changed to « light »
in South Europe and Japan.(same problem with « coke » in French !)
China Thailand
Cherry flavor for the US market
Packaging, name and formulas can be different
in local markets
USA
Brands, positioning, products and marketing mix are totally specific and adapted to each country
Example: Bongrain, world leader of cheeses- Tastes, preferences and traditions are very different in each country- Presence in 150 countries- Several hundreds of brands and products, with local marketing mix
» France : Caprice des Dieux, Saint Agur, Chavroux etc (28 brands)
» Spain : Burgo de Arias etc
» Hungary: Pannonia etc
» USA : Alouette etc
» India : Le Bon
» China : Pikifou
» Japan: Gerard Selection
Marketing strategy : Pure local
Examples of product adaptation
Depending on needs and wants differences, and local constraints, there are various approaches :
Exactly the same core product worldwide - Natural goods : Evian water
- Manufactured luxury goods : Cartier watches
Partially localized product- Personal Computers : keyboard (20 different types in Europe), electrical
power, software etc
Mainly or totally localized product- Cosmetics : different ethnic skins etc
- Yoghourts :
French and American tastes
are very different
(creamy formula, flavor,
size, number of items)
- Coffee : very different tastes and preferences in the world
International pricing strategies
Main reasons to adapt pricing in local markets
Different strategic goals in each country- Market penetration / high-end
» Example : Bonne Maman jam
Different standards of living- L’Oreal mass market products are less expensive in China
- Coca-Cola prices are lower in India than in Japan
Manufacturing and/or shipping costs- Evian bottle sold in Japan or in the USA (far away from France):
the price includes a rather high transport cost
Tax, custom duties Currency rates Competition
International pricing strategiesLimits of different pricing by country May blur brand image and positioning
- example : Champagne Pommery used to be sold at different prices in Europe, which was confusing some consumers (who travel)
Foreign market price gaps may lead to “gray marketing” and “parallel imports”
- sales of authentic, legally trademarked goods through unauthorized or tolerated channels
- example : Renault cars imported from Spain and sold in France- example of a technological response : DVD zones- same issue with different tax levels :
- blank CD or DVD- cigarettes
Less and less price differences are possible in the European Union because of 2 factors easing price comparisons :
Euro common currency Internet price comparators
leguide.com, Kelkoo, Lycos etc
International pricing strategies Example : Louis Vuitton - Alma bag
Price is around 40% higher in Japan than in France (585 €)
But Louis Vuitton has toimpose purchase limits to Japanese tourists in France
Counterfeiting is also a major concern !
International communication strategiesAdvertising
Choice of medias : a localized approach is usually better- Different audience- Different regulations
» Example: alcohol
Message : a certain level of globalization is usually preferable- Economies of scale- Brand image coherence worldwide
TV commercials, press ads etc often require localization- But most multinational companies choose a advertising agency with offices
worldwide, to enable a global level of coherence in localized campaigns- There are few actual worldwide global advertising campaigns
» Example : Launch of Gillette Mach 3
» Same TV commercial in 19 European countries and in the US
» Only the soundtrack and slogan were translated
» « The best a man can get »: « La perfection au masculin »
» Choice of an international stars : David Beckham
International communication strategies When is globalization of promotion most possible?
Products / brands that can use a primarily visual appeal
Products / brands that can use images associated with rather “universal” appeals
such as sex or wealth
Products / brands that appeal to a market segment with universally similar tastes, interests, needs, and values
Products with a nationalistic flavor if the country has a reputation in that field
High tech products free of cultural bounds
Example : Apple iPodWorldwide advertising campaign
Same campaigns worldwide- Different music soundtracks : Rock, electro / house, hip hop, jazz etc- Characters are presented in shadow style to avoid ethnic issues and to focus
more on the product (contrast effect)
Apple is now a dominant leader on the MP3 player market- 32 million iPods sold in 2005, more than 60% of market share- 900 million songs sold through iTunes Music Stores, nearly 85% of the legal market
International communication issues
In which countries can’t you launch such a campaign ?
A low budget ?
Why not try viral marketing ?
Be creative !
Market entry strategies
Market entry strategies Exporting
Direct- Domestic base
- Overseas sales branch
- Traveling sales representative
- Foreign-based distributors/agent
Indirect-occasional, or active exporting- Domestic-based export merchant
- Domestic-based export agent
- Cooperative organizations
- Export-management company
- Franchising: A contractual arrangement where a wholesaler or retailer (the Franchisee) agrees to make some payment and to meet the operating requirements of a manufacturer or other franchiser in exchange for the right to use the firm’s name and to market its goods or services
- Foreign Licensing: an agreement that grants foreign marketers the right to distribute a firm’s merchandise or to use its trademark, patent, or process in a specified geographic area.
- Subcontracting: a contractual agreement where a firm hires a local company to produce goods or services in a specific geographic area.
Market entry strategiesContractual Agreements
Market entry strategies International Direct Investment
An additional strategy for entering global markets Requires direct investment in foreign firms,
production, and/or marketing facilities Advantages
- cheaper labor cost in some countries
- government incentives
- creates better image
- deeper relationships with government, customers, suppliers and distributors
- full control of operations and marketing
Risks involved:- economic difficulties of the host country
- political instability and negative perception
Comparison of Market Entry Strategies
Form Control Risk Advantage
Export Very limited Low Low cost
Ownership Total High Control
Joint Ventures Shared Moderate Local
expertise
Licensing Limited Moderate Low cost
Internet Total High No physical
presence required
Market Screening
Economic Size and Structure Social and Cultural Factors
LivingStandards
GrowthProspects
Nature ofThe Society
DistinctiveFeatures
Distribution PromotionConsumerBehaviour
Extent ofCompetition
ConsumerGroups
GeographicalFactors
EnvironmentalFactors
MarketingSystems
Segmentation ofThe Market
ImportRestrictions
LegalFramework
PoliticalStability
After International Marketing, Bennett & Blythe, 2002
The 12C framework to analyse international markets
Country - What are the political, legal and economic issues of your potential overseas market, as well as its current market potential and your knowledge and experience of it?
Currency - If foreign currencies fluctuate a lot against your home currency, you may have difficulties in pricing your goods or making a profit. Some countries, like China don’t allow their currency to leave the country, so you may have to work in $
Culture - Every culture is different - even from one European country to another. Your product, advertising and even brand may need to be adapted to suit your new market.
Control & Co-ordination - Trading abroad is not only about selling, but also after sales service. All these people will have to be hired, trained, managed and controled.
Concentration (of markets) – some countries are vast (China, India etc). It may not be so easy or cost effective to sell to different groups in isolated areas. However, there may be opportunities to sell cross-countries to different nationalities with similar cultural/language attitudes
Commitment - Selling abroad seriously requires long term planning, significant financial investment, time and skills of your staff. There are risks and the return on investment may be long to come.
Communication - You need to consider the language skills of you,your staff and your contacts abroad, and what media or information technology they have (advertising, telecommunications, e-mail etc). If it is difficult to communicate, it will slow up and complicate matters. It may also prevent you from developing your business properly.
Choices (of consumers) - It is possible that there are perfectly good products or services available from local suppliers. Yours are likely to be more expensive, so consider what would make your product better or more desirable.
Channels of distribution - Getting goods and services to overseas markets can be difficult. Building an efficient retail network is usually hard and long.
Contractual obligations - Make sure that the contract meets everyone’s needs and that you and your customer are fully aware of the commitments listed. Failure to meet the exact requirements of the contract, can result in non-payment.
Capacity to pay - You should take a look at the customer and their ability to pay as well as the country itself. This will include not only financial health, but also political issues, and currency and banking regulations.
Caveats (laws) Some countries have laws that are very protective of their local traders and do not readily accept imports. There may be restrictions or differences between your country and the foreign market about what can be sold and under what circumstances.
The 12C framework to analyse international markets
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