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INTERNATIONAL MARKETING Semis: [email protected]

TOPIC 1: STEPPING STONES OF INTERNATIONAL MARKETING 1.1. INTRODUCTION TO GLOBAL MARKETING Falta hollsensen ch1 Això és resum Keegan

Ma Marketing: rketing: set of activities/strategies made by companies in order to create value from the point of the consumers. exchanging offerings that have value to the consumer. communication with the customers is essential to make them aware To satisfy consumers needs and wants with products which have a competitive advantage •

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Set of activities: based on the for 4P (Marketing mix: place, price, product, promotion) o For creating: products o Communicating: promotion o Delivering: place o Exchange: price Of offerings that have value for customers at needs The value must be a competitive value.

→types of needs: o Basic: fundamental needs → they cannot be created o Other needs →can be created (creativity, love, self-stem, socialization...) MASLOW pyramid. Top: the least basic: self-stem, creativity... Middle: psychological needs Down: basic needs Cell-phones: need of socialization. →Value: Benefit/price •

Benefit: quality (combination of product, promotion and distribution) o Performance quality/ objective o Perceived quality/ subjective: Brand image (because it is a good brand, then you might be inclined to a higher positive evaluation), packaging, color.

Orange juice A: blue Orange juice: red Cup1: green Cup 2: black

Scenario 1: different drinks are served in the same cup. (the green cup) Scenario 2: same type of drink, in different cups. Perceived quality is more different in scenario 2 rather than in scenario 1.

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Price: o Monetary: money o Non-monetary: time, effort, complexity of usage, risk Reducing non-monetary price may be better. Ture or not? It depends on the elasticity of the consumers… From marketing perspective depends on the customer, so it may be true.

→ We generate value to enjoy the competitive advantage. Increasing the benefits or reducing the price, always through the perspective of the costumer. Competitive advantage: when a company succeeds in creating more value for customers than its competitors. How to identify the needs of the consumer? •

Market research: survey (bredth) (sample must be representative of our “interested” population), focus group (defth) (limited small number of experts…), experiments (controlled environment)

Marketing strategies: 2 orientations: Product orientation: we are focusing on what we are creating. We try to improve the efficiency of our product. we sell what we make. you are good at making wine… so you look demand for it. You focus on how to improve efficiency, reduce costs. Marketing orientation: we make what we could sell. We identify some needs and we try to get some solutions which solve the problem. The degree of competition takes an important role in order to decide the best orientation. Factors that create competition: entry barriers…. Perfect competition: lots types of offerings in the market • • •

Competition is low when supply < demand → product orientation Competition is high when supply>demand → marketing orientation The point between could be → sales orientation

PERFUME Product orientation: It is clear that the smell is important, although… I believe the brand is highly important therefore a marketing orientation is more natural. Marketing orientation: - packaging… -tv ads…

ENERGY (ENDESA) product orientation: -kind of monopoly power Marketing orientation: (if competitive market) -all products are the same: homogeneity therefore should be better marketing orientation in order to make differentiation -offering packages (wifi, water..) - entry barriers are disappearing more and more

SHISEIDO: luxury, expensive, well technology Although it depends a lot on the country

Strateg Strategy: y: Strategy is something we choose in order to achieve a desire in the future Key central questions in strategy: •

Mission and vision (long term objectives)

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Where do we compete? Role of competitors, which consumers are we targeting (B2B, BTC), where is the company located…

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How do we compete? Which are our competitive advantages? Value creation…

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With whom we want to develop relations? Co-opetition (collaboration with competitors) or not

Market MARKET: people or organization that are both able and willing and able to buy. To achieve market success a product or brand must ensure for quality and be consistent with buyer behavior, expectations and preferences.

1.2. MARKETING: global vs. local Global market vs domestic mar market ket Companies try to enter to the global market to face their fierce rivals which have lower costs, more experience, better products for survival purposes. Growth Strategies global market: •

Market development strategy: new markets, existing products

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Diversification: new markets, new products

Globalization: integration of national economies into international economies through trade... (transformation of local industries into global). It presents companies new opportunities Global industry: that which offers potential opportunities to integrate in a worldwide scale. So a company’s industry position in one country is interdependent with its industry position in other countries. Focus: concentration of attention on a core business or competence Value, competitive adv and focus are required to achieve global marketing

WHETHER TO INTERNATIONALIZE AT ALL? •

Situation about the Industry (external environment) (is it a globalized one or not) o Local industries ▪ If the industry is local then it might not be a good idea to go global o Global industries: ▪ Car industry

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Preparedness (internal environment) (does the firm have enough financial resources…)

To what extent do you internationalize: Two factors: -INTERNAL: preparedness (resources: human capital, financial situation, skills, experience (if you have international experience or not), organizational structure of the company, systematic processes , knowledge, whether you have learning capabilities or not) (brand name or brand heritage might or might not contribute you reputation positively, so it might not have influence)) -EXTERNAL: industry globalization (degree of competition, entry barriers, trend, access of suppliers

-if your preparedness is low and the industry is highly globalized, this means you will be out of the business soon

TO WHAT EXTENT? Forces affecting global int integration egration and global ma marketing: rketing: Driving forces have more momentum than restraining forces -Driving forces //MOTIVES. Reactive: → Survival Proactive: → Develop a good brand image (non-monetary price) → Economies of scale → Take advantage of Tax benefits → DEMAND. Product life cycles → seasonality of the products → mitigate the level of risk →diversify ▪ ▪ ▪ ▪ ▪ ▪ ▪

Multilateral trade agreements Converging market needs and wants and the information revolution Transportation and communication improvements Product development costs Quality World economic trends. Leverage o Experience transfers o Scale economies o Resource utilization o Global strategy

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-Restraining forces/BARRIES Early stage of internationalization → Financial resources → Operations and logistics, production capacity (whether will you be able to manage the distribution of the products and produce enough products) → Process of adaptation (culture) → COMPLEXITY & control OF MARKETING CTIVITIES (whether you will be able to execute marketing activities in the different countries and as you extent your degree of activities, you will lose control) Further stage of internationalization → RISK o Political issues (only in this stage, since if you internationalize for the first time you will make sure you don’t enter a country with political issues) (EXAMPLE: Venezuela) o Market and marketing risks (conditions of the market, degree of development of the countries) → coordination of the activities, how you distribute the decision power… (centralized or decentralized decision making…)

o Commercial risk (if different currencies, how will you set up your price…) (adapt it to the purchasing power of consumers…) (exchange rates fluctuations) → De-Globalization ▪ ▪ ▪

Management myopia and organizational culture. National controls Opposition to globalization

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OVER-INTERNATIONALIZATION !!! When disadvantages outweigh the benefits. You must: →de-internationalize (quit from the foreign country markets, to get back to the balance) (remember at the beginning, disadvantages) →profits

benefits

outweigh

the

Global marketing marketing:: Global marketing: is adapted to the world global opportunities and threats, which have to be monitored. The scope of activities is outside home-country. It is essential if a company competes in a global industry or one that is globalizing. Marketing is universal, although, marketing practices will vary from country to country because peoples of the world are different. Customer preferences, competitors, channels of distribution and communication media may differ. Why do firms go global? Because of the benefits: • • • • • • •

Seeking new demand because domestic markets are saturated Better access to resources (labor, raw material…) Knowledge Multiple Learning process Take advantage of Economies of scale and scope In order to have access to better suppliers (high Bargaining power with suppliers) Survival. If not go global, the global players may enter your market and you won’t be able to compete with them, since they have a competitive adv.

Global marketing strategy is based on a combination of global and local marketing mix elements.

HOW TO GO GLOBAL? Single vs. Global marketing strategies

*global market participation: extent to which a company has operations in major world markets *concentration of mkt activities: extent to which marketing activities related to the marketing mix are performed in one or a few country locations *coordination of marketing activities: extent to which marketing activities related to the marketing mix are planned and executed interdependently around the globe

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Adaptation (customize): lot of research… you adapt to consumers

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Standardization: cheaper, less complex

*integration of competitive moves: extent to which firm’s competitive marketing tactics in different parts of the world are interdependent.

GLOBAL BRANDS may be more aware about new trends… they have quick feedback from the market. DOMESTIC BRANDS: are more responsive to the cultural demand

Degree of adaptation depends on: •

Market responsiveness

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Culture (although with globalization most differences are disappearing) o In mandarin number 4 is pronounced as death, so they avoid using that number… Companies may consider that when going to that market!!

CAGE: •

Geographical, demographical, economical…

GLOCAL STRATEGY:

a successful global marketer must have the ability to “think globally and act

locally”. •

Keep both perspectives in mind (standard and non-standard approaches). Find a good balance between standardization= GLOBALIZATION and customization=LOCALIZATION

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A company adopts will depend on industry conditions and its source of competitive advantage o STANDARDIZATION: Avoid complexities, take adv of economies of scale o CUSTOMIZATION: Market responsiveness, take into account culture

Example: McDonalds (tries to customize the set of offerings), Oreo, Nike (different slogan in woman sector). Detergent for black clothes first launched in Arabia and then adapted the packaging in order to be sold in Europe. Example of customization not being important: cell-phone industry… NIVEA: -quality, simplicity (accessibility), endorsement (celebrities…), (color blue for rationality, white: purity) -consistency: the product has not changed that much along the time. Emphasizing the same message and you want to take it as the core element of the brand. -adaptation size of package. In some countries people don’t know it’s a German brand. Image of Germany=quality, so emphasizing that is a German brand could be beneficial (many people believe that its from their country). Standardization: same product (ingredients), (brand image=simplicity and quality) Customization: advertising, packaging size Nivea vital: ant-age product. How should customize the product to launch the product in South-Korea? Ask local models… pick the correct environment… MORE EXAMPLES: -netflix. •

Customization: films and series are country specific, subtitles, advertising (actors, actress)

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Standardization; prices, brand image, logo, web page, netflix exclusive series

-COCACOLA // STARBUCKS •

Customization: packaging, sweetness, flavor, message (happiness)

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Standardization: logo, experience, pricing…

-Zara •

Customization: Store design

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Standardization: price, seasonality, experience, (smell, music…) …

Global marketing is so important because, for example, 75% of world market potential of US is outside the country. Now BRIC (Brazil, Russia, India and China) countries represent a high potential of growth opportunities. China being the first.

Management orienta orientations: tions: How world is perceived by the manager. (it has its own beliefs). EPRG framework: •

Ethnocentric: o The home country is superior to the rest of the world. o Centralized marketing : the manager assumes that prices and products that succeed in the home country will succeed anywhere. Standardized approach. ▪ Domestic companies: Opportunities outside the country are ignored, other markets are considered secondary ▪ International companies: ethnocentric countries that carry on business outside the domestic country. (home products are the best). Although, the difference in customer needs is ignored. o If a company wants to become global, it must overcome the ethnocentrism to succeed.

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Polycentric o o o o

Opposite Each country in which a company does business is unique MULTINATIONAL company structure Localized or adaptation approach ( decentralized marketing)

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Regiocentric: o Region becomes the relevant geographic unit. o Goal: develop an integrated regional strategy (Europe, Asia…)

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Geocentric: o Integrated marketing at global scale. (synthesis of ethnocentrism and polycentrism) o Views the entire world as a potential market and strives to develop integrated global strategies responsive to local needs and wants. o The benefits of this methodology may appear after some time of implementing it. o Global or transnational company structure. ▪ Global: one that pursues either a strategy of serving world markets from a single country, or one that sources globally for the purposes of focusing on select country markets. In addition, global companies tend to retain their association with a particular headquarters country. ▪ Transnational: companies which serve global markets and use global supply chains in a blurring of national identity ▪ At global and transnational companies, management uses a combination of standardized (extension) and localized (adaptation) elements in the marketing program.

▪ Mind-set: decisions regarding extension and adaptation are not based on assumptions, decisions are made on the basis of ongoing research into market needs and wants ▪ One way to assess a company’s “degree of transnationality” is to compute an average of three figures: (1) sales outside the home country to total sales, (2) assets outside the home country to total assets, and (2) employees outside the home country to total employees.

International marketi marketing ng decisions: Important decisions points/ criteria to enforce decisions: Systematic decision process: will help you to address the critical elements that result in a good decision. By taking an organised approach, you're less likely to miss important facts and you can build on the approach to make your decisions better in the future too.

TOPIC 2: IDENTIFYING UNMET NEEDS IN INTERNATIONAL MARKETS 2.1. INTERNATIONAL MARKETING RESEARCH 1 Hollensen, chapter 5

Introduction growing complexity and diversity of international markets, makes it increasingly critical to collect information in relation to these markets what customers require must be assessed through marketing research and/or through establishing a decision support system Marketing research differs from a decision support system (DSS) or marketing information system (MIS), which is information gathered and analysed on a continual basis

Changing role of the international research researcher er can help to reduce the risk in decision-making caused by the environmental uncertainties and lack of knowledge in international markets. It ensures that the manager bases a decision on the solid foundation of knowledge and focuses strategic thinking on the needs of the marketplace rather than on the product although marketing managers are becoming increasingly involved in marketing research. ‘sense and respond’ will increasingly characterize firms’ approach tobusiness. The availability of better decision tools and decision support systems is facilitating the transition of research managers to decision-makers. Senior managers can now directly access internal and external secondary data from computers and internet sites around the world

Linking global market marketing ing research to the d decisionecision-making proce process ss In SMEs the research done is usually less rigorous, less formal and less quantitative than in large-scale enterprises (LSEs). ((SMEs) conduct no international market research before they enter a foreign Market). A major reason that firms are reluctant to engage in global marketing research is a lack of sensitivity to cross-cultural customer tastes and preferences. Both internal (firm-specific) and external (market) data are needed

Two major sources of information: •

Primary data: o Collected first-hand o Generated by original tailor-made to answer specific current research quaestions o Specific, relevant and up to date information

o Costly (time and money) •

Secondary data: (desk research) o Information that has already been collected for other purposes o General data o Low costs

Four categories// Categorization of data assessment of market potential in a country:

*primary and internal data is the data + dificult to obtain, although it provides important information of the firm’s international competitiveness No primary research should be done without first searching for relevant secondary information, and secondary data should be used whenever available and appropriate !! helps to define problems and research objectives

1. SECONDARY RESEARCH Advantages: •

Less expensive and less time-consuming

Secondary data often

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NO contacts have to be made

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Objective data

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It can quickly generate background information to eliminate many countries from the scope of enquiries.

Disadvantages: •

Non-availability of data: scarce data and poor statistical services in many developing countries

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Reliability of data: which may be affected by political considerations. No statistic...