Chapter 14

MarketingInternationally

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Added Complexities of International Marketing

• Basic marketing functions are the same world-wide, but differ in local markets due to these issues:

• Sociocultural• Resource & environmental• Economic & socioeconomic• Legal• Financial• Labor

• Basic marketing functions are the same world-wide, but differ in local markets due to these issues:

• Sociocultural• Resource & environmental• Economic & socioeconomic• Legal• Financial• Labor

LO1

14-2

The Marketing Mix (What to Sell and How to Sell

It)• The Marketing Mix:

– A set of strategy decisions about

• Product• Promotion• Price• Distribution

– Focuses on satisfying target market(s) needs and desires

• The Marketing Mix:– A set of strategy

decisions about• Product• Promotion• Price• Distribution

– Focuses on satisfying target market(s) needs and desires

• The international marketing manager’s question:– “Can we standardize

worldwide, should we make some changes, or should we formulate a completely different marketing mix?”

• The international marketing manager’s question:– “Can we standardize

worldwide, should we make some changes, or should we formulate a completely different marketing mix?”

LO2

14-3

Standardize, Adapt, or Formulate Anew?

• To Standardize:– Use same marketing

mix in all markets– Gains cost savings

because of economies of scale and experience

• To Standardize:– Use same marketing

mix in all markets– Gains cost savings

because of economies of scale and experience

• Benefits:– Consistent global

message– Sales training &

advertising creative work only done once

– Pricing avoids customer getting different quotes

– Product consistency– Easier coordination &

control

• Benefits:– Consistent global

message– Sales training &

advertising creative work only done once

– Pricing avoids customer getting different quotes

– Product consistency– Easier coordination &

control

LO3

14-4

Type of Product• Industrial Products – sold in B-to-B markets, often

unchanged– Adaptation used to meet local legal requirements

• Industrial Products – sold in B-to-B markets, often unchanged– Adaptation used to meet local legal requirements

• Consumer Products – sold to ultimate consumer for personal consumption• Often modified to meet local cultural preferences

• Consumer Products – sold to ultimate consumer for personal consumption• Often modified to meet local cultural preferences

• Services – “Performances” targeted to B-to-B or ultimate consumer• Less complex marketing, but local laws/customs may mandate

adaptations

• Services – “Performances” targeted to B-to-B or ultimate consumer• Less complex marketing, but local laws/customs may mandate

adaptations

LO4

14-5

Foreign Environmental Forces• Sociocultural Forces –

– different cultural patterns often require changes in brand name, color, label translations, package size & price

• Legal Forces – – impact every aspect of marketing mix and pollution,

consumer protection & operator safety

Economic Forces – – income differences impact consumer’s ability to pay

requiring quantity and price changes

• Physical Forces – – climate, terrain, altitude, etc., may demand product

alteration

• Sociocultural Forces – – different cultural patterns often require changes in

brand name, color, label translations, package size & price

• Legal Forces – – impact every aspect of marketing mix and pollution,

consumer protection & operator safety

Economic Forces – – income differences impact consumer’s ability to pay

requiring quantity and price changes

• Physical Forces – – climate, terrain, altitude, etc., may demand product

alteration

LO4

14-6

Promotional Strategies

• 9 possible strategies from 3 alternatives:

1. Marketing same physical product everywhere

2. Adapting physical product to foreign markets

3. Designing new physical product with (a) same, (b) adapted, or different messages

• 9 possible strategies from 3 alternatives:

1. Marketing same physical product everywhere

2. Adapting physical product to foreign markets

3. Designing new physical product with (a) same, (b) adapted, or different messages

• Promotion –– “Communication that

secures understanding between a firm and its publics to bring favorable buying action and long-term confidence in the firm and its products or services”

• Promotion –– “Communication that

secures understanding between a firm and its publics to bring favorable buying action and long-term confidence in the firm and its products or services”

LO4

14-7

6 Commonly Used Promotional Strategies

1. Same product – same message2. Same product – different message3. Product adaptation – same message4. Product adaptation – message adaptation5. Different product – same message6. Different product for the same use – different

message

1. Same product – same message2. Same product – different message3. Product adaptation – same message4. Product adaptation – message adaptation5. Different product – same message6. Different product for the same use – different

message

LO4

14-8

Advertising• Internet Advertising

– Provides affluent, reachable, English-speaking audience

– Cheap, interactive communications

– Customers can determine which messages & information they receive

– Best media choice for select audiences

• Internet Advertising– Provides affluent,

reachable, English-speaking audience

– Cheap, interactive communications

– Customers can determine which messages & information they receive

– Best media choice for select audiences

• Type of Product– Same buying motives

for industrial and luxury goods globally = standardization

– Low-priced products bought & consumed for same reasons globally = standardized appeals & sales arguments

• Type of Product– Same buying motives

for industrial and luxury goods globally = standardization

– Low-priced products bought & consumed for same reasons globally = standardized appeals & sales arguments

LO5

14-9

Advertising• Foreign

Environmental Forces, Especially Sociocultural Forces, Deter Standardization:– Positioning as foreign or

local product– Language & Translation– Laws reflect public opinion– Religious limitations

• Foreign Environmental Forces, Especially Sociocultural Forces, Deter Standardization:– Positioning as foreign or

local product– Language & Translation– Laws reflect public opinion– Religious limitations

• Globalization versus Localization– Product & brand

standardization = cost savings

– Product content standardization + local packaging = manufacturing efficiency

– Local product + local brand = sales, but limited country transferability

• Globalization versus Localization– Product & brand

standardization = cost savings

– Product content standardization + local packaging = manufacturing efficiency

– Local product + local brand = sales, but limited country transferability

LO3

14-10

“Glocal” Advertising • Neither Purely

Global nor Purely Local – “Glocal” Advertising– Best way to handle

international advertising

– Common strategy for large regions = lower costs

• Neither Purely Global nor Purely Local – “Glocal” Advertising– Best way to handle

international advertising

– Common strategy for large regions = lower costs

• Programmed-Management Approach– A middle-ground

advertising strategy between globally standardized and entirely local programs

• Programmed-Management Approach– A middle-ground

advertising strategy between globally standardized and entirely local programs

LO6

14-11

Advertising • Personal Selling

– Importance of personal selling depends on

• Relative cost of advertising

• Funds available for advertising

• Available media• Type of product

– Industrial firms use personal selling more than advertising

– Consumer goods use personal selling in developing markets

• Personal Selling– Importance of personal

selling depends on • Relative cost of

advertising• Funds available for

advertising• Available media• Type of product

– Industrial firms use personal selling more than advertising

– Consumer goods use personal selling in developing markets

• Personal Selling and the Internet– If used to build trust,

Internet can be effective in personal selling

– Internet can be enhanced by face-to-face communication

• Personal Selling and the Internet– If used to build trust,

Internet can be effective in personal selling

– Internet can be enhanced by face-to-face communication

LO5

14-12

Sales Promotion• Sales Promotion

– Any of various selling aids, including displays, premiums, contests, and gifts.

• Standardization is easy – what works in U.S. works abroad, and cultural constraints need be considered.

• Sales Promotion– Any of various selling

aids, including displays, premiums, contests, and gifts.

• Standardization is easy – what works in U.S. works abroad, and cultural constraints need be considered.

• Sociocultural and Economic Constraints– Premiums must be

culturally meaningful– Contests, games &

raffles are successful where people like to gamble

– Point-of-purchase displays must be downsized to fit smaller foreign stores

• Sociocultural and Economic Constraints– Premiums must be

culturally meaningful– Contests, games &

raffles are successful where people like to gamble

– Point-of-purchase displays must be downsized to fit smaller foreign stores

LO3

14-13

Public Relations• Public Relations

– Various methods of communicating with the firm’s publics to secure a favorable impression

• Public Relations– Various methods of

communicating with the firm’s publics to secure a favorable impression

• MNCs need to improve communications to non-business publics because of:• Nationalism• Anti-MNC feelings• Profit from public good• Critics of firm’s motives

and operations Choice: defend or

do nothing

• MNCs need to improve communications to non-business publics because of:• Nationalism• Anti-MNC feelings• Profit from public good• Critics of firm’s motives

and operations Choice: defend or

do nothing

14-14

Pricing, a Controllable Variable• The one

marketing mix element that can be varied to attain marketing objectives.

• The one marketing mix element that can be varied to attain marketing objectives.

• Standardizing Prices– Foreign National Pricing

• Local pricing in another country

– International Pricing• Setting prices of goods for export

for both unrelated and related firms

– Transfer Price• Intracorporate price, or the price of

a good/service sold by on affiliate to another, the office to an affiliate, or vice versa”

• Advantages: 2 profit centers and lower tax environments

• Standardizing Prices– Foreign National Pricing

• Local pricing in another country

– International Pricing• Setting prices of goods for export

for both unrelated and related firms

– Transfer Price• Intracorporate price, or the price of

a good/service sold by on affiliate to another, the office to an affiliate, or vice versa”

• Advantages: 2 profit centers and lower tax environments

14-15

Pricing• The Internet is Redefining Pricing

Options:– Instant access to multiple sellers world wide– Greater global price competition– Instant price comparisons from 100s of sites

• The Results:– National boundaries are less important– World prices are becoming a reality in both

consumer and B-to-B markets

• The Internet is Redefining Pricing Options:– Instant access to multiple sellers world wide– Greater global price competition– Instant price comparisons from 100s of sites

• The Results:– National boundaries are less important– World prices are becoming a reality in both

consumer and B-to-B markets

LO5

14-16