International Marketing PDF

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About This Chapter INTERNATIONAL MARKETING Dr. Roger J. Best, Author Market-Based Management What Makes This International Marketing Chapter Different? Market-Based Management is a performance-driven approach to marketing management. We continue this approach in this chapter as it allows students and managers to operationalize marketing concepts and strategies to assess their impact on customers, marketing performance and profitability. Several of the international marketing analytics presented in this chapter will be offered online as Marketing Performance Tools to enhance learning and application. Differentiating Features: Unique features not found in other international marketing chapters or books. •  Insights into how global companies span the worldwide market •  Quantitative analysis with respect to international market metrics that correlate with the purchase of products such as cars, televisions, personal computers, the internet, and mobile phones. •  Strategies businesses pursue as they move from a domestic company to international company and eventually a global company. •  International market forces that impact international market attractiveness and a marketing analytic to assess international market attractiveness. •  Estimate international market demand, marketing potential and market development index for an international market. •  Discuss product adaption and customization strategies for well-know brands and companies. •  Demonstrate international cost-based pricing impact on consumer prices vs. international marketbased pricing. •  Present the importance of international digital marketing communications and social media communications. •  Present a marketing analytic to assess the profit impact and risk of an international marketing strategy. Marketing Performance Tools: There are six chapter marketing performance tools along with application questions. These tools can be accessed at www.mbm-best.com. Instructor Support: Please e-mail me ([email protected]) and I can provide chapter PowerPoint slides and answers to end of chapter questions. With your request please provide full name, title, university or company name, location (city, state, and country) and indicate if you have purchased a copy of Market-Based Management or have only downloaded this chapter. This chapter on International Marketing was developed to support students using Market-Based Management, 6th edition. It is available as a free PDF download.

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INTERNATIONAL MARKETING - CHAPTER OUTLINE INTERNATIONAL MARKETS AND GLOBALIZATION………………………………………..………………2 Worldwide Competition Domestic Marketing International Marketing Global Marketing Why Businesses Enter International Markets International Marketing Strategies

INTERNATIONAL MARKET DEMAND & MARKET POTENTIAL…………………………………….…….7 Population Metrics Population and Population Growth Population & Poverty City Population Private Consumption

Economic Metrics Gross Domestic Product Household Expenditures International Market Demand (*) International Market Potential (*) International Market Development Index

BARRIERS TO INTERNATIONAL MARKET SUCCESS………………………………………………………12 Language Non-Verbal Language Religion & Values Political Instability Laws and Government Regulations Market Infrastructure International Marketing Attractiveness Metric (*)

INTERNATIONAL MARKETING MIX…………………………………………………………………..……….16 International Product Positioning Product Adaption & Positioning Product Customization & Positioning

International Pricing International Cost-Based Pricing (*) International Market-Based Pricing (*) Transfer Pricing

International Marketing Channels Indirect International Channels -  Export/Import Agents -  International Wholesalers -  International Retailers Direct International Channels -  Company-Owned -  Franchising -  Licensing -  Company Affiliates Currency Exchange Risk

International Marketing Communications Traditional Marketing Communications Digital Marketing Communications Interactive Marketing Communications & Social Media

THE PROFIT IMPACT OF AN INTERNATIONAL MAKRETING STRATEGY………………………….….27 Market Demand and Market Potential Product-Price Strategy & Share Objective Place-Promotion Strategies and Net Marketing Contribution Profit Potential and Risk Metrics (*)

INTERNATIONAL MARKETING AND SOCIAL RESPONSIBILTY……………………………….…………28 (*) MARKETING PERFORMANCE TOOLS……………………………………….…………………………….31 APPENDIX…………………………………………………………………………………………………..………..33

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International Marketing

International Marketing International marketing is an evolutionary process for companies with an appetite for growth and the stomach for risk.- Roger Best

Nike sells 120 million pairs of athletic shoes worldwide each year, representing 31 percent of the worldwide market. Over 60 percent of these sales are in 160 international country markets outside the U.S. This is an amazing feat given the complexity of international markets with respect to differences in consumer needs, language, culture, economies, political environment, government regulations, logistics and retail market infrastructures. Nike also designs, contract manufactures, distributes and sells sports apparel and equipment. In the soccer photo on the left, Nike makes the shoes, apparel (jersey, shorts & socks) and equipment (golf clubs, soccer balls). The story is even more complex when one considers all Nike products are designed and managed in the U.S., but manufactured outside the U.S., as shown in Figure 1. While product and brand tend to get the credit for success, a big part of Nike’s success is in management of the supply chain. This includes everything from sourcing materials utilized by outsourced manufacturers to the global distribution of products. Moving 120 million pairs of athletic shoes from Asian manufacturers to consumers in 160 different countries requires an incredible management of transportation, warehousing, currency, financing, and management of unique country requirements for market entry and sale of these products. Nike relies predominately on retailers that operate approximately 25,000 locations in the U.S. and 27,000 locations outside the U.S. Retailers account for roughly 90 percent of Nike sales (1) as shown in Figure 1. The other 10 percent of sales are obtained through 384 Nike-owned stores in the U.S. and 442 outside the U.S. With 63 percent of its sales outside the U.S., Nike is truly a global company that has managed its brand with incredible success worldwide. FIGURE 1 NIKE WORLDWIDE MARKETING SYSTEM & REGIONAL PERFORMANCE

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Product"Strategy"" (Beaverton,"OR." " Brand%Strategy% Product%Design% Sustainability% Sourcing%&%CosLng% Demand%CreaLon%

Nike%Performance (billions) Footwear Apparel Equipment Total%Sales Direct>Sales Indirect>Sales Operating>Income Retun%on%Sales

North Amercia $5.88 $2.48 $0.47 $8.83 24.0% 76.0% $2.00 22.7%

Global" Manufacturing" 97%%Asia% 3%%Other% "

Western Europe $2.53 $1.38 $0.24 $4.15 14.2% 85.8% $0.60 14.5%

Nike"Distribu...