Chapter 07

Designing Global
Market Offerings
by

Course Title: Marketing Management

Presented By:
S.M. Misbauddin
Lecturer, Management
BBA (KU), MBA (Leipzig Uni, Germany)
 Chapter Objectives
!! In this chapter, we focus on the following
questions:
!! What factors should a company review before
deciding to go abroad?
!! How can companies evaluate and select foreign
markets to enter?
!! What are the major ways of entering a foreign
market?
!! To what extent must the company adapt its
products and marketing program to each foreign
country?
!! How should the company manage and organize its
international activities?
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Competing on a
Global Basis

Figure 1: Major
Decisions
in International
Marketing

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Factors driving firm To Go Abroad
!! Factors drawing companies into the
international arena:
!! The company discovers that some foreign markets
present higher profit opportunities than the domestic
market.
!! The company needs a larger customer
base toachieve economies of scale.
!! The company wants to reduce its dependence
on any one market.
!! The company’s customers are going abroad
and need servicing.

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Risks in going Abroad
!! Before going abroad, the company must weigh
several risk:
!! The company might not understand foreign
customer preferences and fail to offer a
competitively attractive product.
!! The company might not understand the foreign
country’s business culture or know-how to deal
effectively with foreign nationals.
!! The company might underestimate foreign
regulations and incur unexpected costs.
!! The company might realize that it lacks managers
with international experience.
!! The foreign country might change its commercial
laws, devalue its currency, or undergo a political
revolution and expropriate property.
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 Table 1: Blunders in International Marketing
Hallmark cards failed when they were introduced in France. The
French dislike syrupy sentiment and prefer writing their own
cards.

Philips began to earn a profit in Japan only after it had reduced the
size of its coffeemakers to fit into smaller Japanese kitchens and
its shavers to fit smaller Japanese hands.

Coca-Cola had to withdraw its two-liter bottle in Spain after

discovering that few Spaniards owned refrigerators with large
enough compartments to accommodate it.

General Foods’ Tang initially failed in France because it was

positioned as a substitute for orange juice at breakfast. The
French drink little orange juice and almost none at breakfast.

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Deciding How to
Enter the Market

Figure 1:
Five Modes of
Entry into Foreign
Markets

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Deciding How to Enter the Market (Indirect
Exporting)

!! Indirect export
!! Occasional exporting
!! Active exporting
!! Indirect exporting
!! Domestic-based export agents
!! Cooperative organizations
!! Export-management companies

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 Deciding How to Enter the Market
(Direct Exporting)

!! Companies can carry on directexporting

in several ways
!! Domestic-based exportdepartment
or division
!! Overseas sales branch or
subsidiary
!! Traveling export sales
representatives
!! Foreign-based distributors or agents

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 Deciding How to Enter
the Market
!! Licensing
!! Management contracts
!!!! Contract manufacturing
!! Franchising

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 Licensing
Licensing is a way to enter a
foreign market with a limited
degree of risk. Under
international Licensing, a
firm in one country permits
a firm in another country to
use its intellectual property
(Patents, trade marks etc).
 Advantages of Licensing
A license allows the
licensee to use, make and
sell an idea, design, name
or logo for a fee. They are
advantageous for
licensors because they
allow them to expand
their business’ reach
without having to invest
in new locations and
distribution networks.
 Franchising
Franchising is a business model
in which many different
owners share a single brand
name. A parent company
allows entrepreneurs to use
the company's strategies and
trademarks; in exchange, the
franchisee pays an initial fee
and royalties based on
revenues. The parent company
also provides the franchisee
with support, including
advertising and training, as
part of the franchising
agreement.
 Licensing & Franchising
Licensing is similar to
franchising except that
the franchising
organisation tends to be
more directly involved in
the development and
control of the marketing
programme.
 Example
• Examples of franchises
include KFC, McDonalds,
Subway, 7-11 and Dunkin
Donuts., Pizza Hut
• Examples of licenses include a
company using the design of a
popular
character, e.g. Mickey
Mouse, on their
products.
 Deciding How to Enter
the Market
!! Joint ventures
!! Direct investment

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Pricing strategy in international business
!! Price
!! Price escalation
!! Companies have threechoices
!!!!Set a uniform price everywhere
!! Set a market-based price in each country
!! Set a cost-based price in each country
!! Transfer price: Transfer pricing is the setting of the price for
goods and services sold between controlled (or related) legal entities within an
enterprise. For example, if a subsidiary company sells goods to a parent company,
the cost of those goods paid by the parent to the subsidiary is the transfer price.
!! Dumping: Dumping is a term used in the context of international trade.
It's when a country or company exports a product at a price that is lower in the foreign
importing market than the price in the exporter's domestic market. Japan was accused
of dumping steel, television sets, and computer chips in the United States, and
Europeans of dumping cars, steel and other products.
Most industrial nations (especially those of European union) have tendency of
persistently dumping surplus agricultural commodities arising from their farm support
programs.
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THANK YOU

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