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chapter 16
International Marketing
International Business, 6th E
dition
Griffin & Pustay
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
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Chapter Objectives
• 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
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Chapter Objectives (continued)
• Identify promotion issues and evaluate promotion decisions in international business
• Discuss the basic kinds of distribution issues and decisions in international business
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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.”Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
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International Marketing
International Marketing is the
extension of these marketing activities
across national boundaries.
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Figure 16.1 International Marketing as an Integrated Functional Area
OperationsManagement
Finance
HumanResource
Management
Accounting
Marketing
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Market Strategy Must Support Business Strategy
Differentiation
Focus
Cost Leadership
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Marketing Mix Issues
• 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
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Figure 16.2 Elements of the Marketing Mix for International Firms
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Key Decision-Making Factors
• Standardization versus customization
• Legal forces
• Economic factors
• Changing exchange rates
• Target customers
• Cultural influences
• Competition
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Standardization versus Customization
Ethnocentric Approach
Polycentric Approach
Geocentric Approach
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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
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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
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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.
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Factors Affecting the Standardization of Products
Legal forcesCultural
influences
Economic factors
Brand names
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Factors Affecting Pricing Policies
Business strategy
Competitive environment
Costs of doing business
Exchange rate fluctuations
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Pricing Policies
Standard PricePolicy
MarketPricing
Two-Tiered Pricing
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Figure 16.3a Determining the Profit-Maximizing Price
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Figure 16.3b Determining the Profit-Maximizing Price
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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
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Risks to Market Pricing Policy
Charges of dumping
Development of a gray market
Consumer resentment
Damage to brand name
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Promotion Mix
Advertising Personal Selling
Sales Promotion Public Relations
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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
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Advertising
Message: the facts or impressions the
advertiser wants to convey to potential
customers
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Advertising (continued)
Medium: the communication channel
used by the advertiser to convey a
message
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Global Advertising
A customer entering
this domino parlor in
Egypt encounters no
language barriers in
knowing that the
establishment
serves Coke.
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Personal Selling
Personal Selling: making sales on the
basis of personal contacts
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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
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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.
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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.
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Distribution Issues
Physicaltransportation
mode
Merchandisingmode
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Table 16.2 Advantages/Disadvantages of Transportation Modes
Mode Advantages Disadvantages Sample Products
Train Safe, reliable, inexpensive
Limited to rail routes, slow
Automobiles, grains
Airplane Safe, reliable, fast Expensive, limited access
Jewelry, medicine
Truck Versatile, inexpensive
Small size Consumer goods
Ship Inexpensive, good for larger products
Slow, indirect Automobiles, furniture
Electronic Media
Fast Unusable for many products
Information
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Basic Parts of a Distribution Channel
Manufacturer
Wholesaler
Retailer
Customer
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Figure 16.4 Distribution Channel Options
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