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Export marketing
The international marketing dimension involves marketing across national borders. This is different from domestic marketing because the mere fact of crossing the border confronts with new economic, political, and legal constraints, such as floating exchange rates, boycotts, and international law. These constraints will usually force modification of the firms marketing program as it crosses national boundaries.
Foreign marketing
The foreign marketing dimension involves marketing within foreign countries, as a U.S firm markets in Belgium or Brazil. Such marketing is unlike domestic marketing because that firm faces different kinds of competition, consumer behavior, distribution channels, and promotional possibilities in Belgium or Brazil from what it is familiar with at home. The tasks is further complicated because each country has an individual idiosyncratic marketing environment.
Multinational marketing
The multinational marketing dimension emphasizes the coordination and integration of the firms marketing in many diverse foreign environments. The unique nature of each foreign market fragments the international marketing effort and brings diseconomies of scale. The international marketer must plan and control carefully to maximize the integration and synergy in the global marketing program while minimizing the costs of adapting to each foreign market.
International marketing: the performance of business activities that direct the flow of a companys goods and services to consumers or users in more than one nation for a profit.
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Cultural forces Political/ legal forces
(controllable)
Price Product
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Geography and Infrastructure Promotion Channels of distribution
Economic climate
Level of Technology
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Structure of distribution
Irwin/McGraw-Hill
Copyright2002 by The McGraw-Hill Companies, Inc. All rights reserved.
Evolution of Marketing
Domestic Marketing - ethnocentric Export Marketing- ethnocentric International Marketing - polycentric or multidomestic Multinational Marketing- regiocentric Global Marketing - geocentric
export marketing international marketing multinational global
Domestic
Be prepared and develop active responses. Develop new strategies. New plans are needed. Adaptation to the new environment and markets.
MARKETING-MIX
4 Ps 4Cs 1.Product Customer value 2. Price Cost to the customer 3. Place Convenience 4. Promotion Communication ------------------------------------------------------------5. Probe Customer, consumer 6. Phacilitate (Facilitate) Consumption services 7. Plan Curve 8. People Count
Planning:
Develop a marketing plan which includes a situation analysis, goals and objectives, long-term strategies and short-term tactics, cost and profit estimates, and anticipated changes in organizational structure.
Implementation:
Take actions to put the plan into action. Adjust implementation activities to account for environmental changes in market conditions.
Control:
Use annual planning (sales to forecast), profitability, and efficiency controls to monitor the plans successes and failures.
1. 2. 3. 4.
Population, Income (Per capita income, GNP) 2. Convertibility or possibility of effective utilization of resources; financial stability. 3. Banking facilities available and nature of credit facilities offered, short medium and long-term (conditions, terms, interest rates. etc.) a) Domestic b) foreign c) Governmental or other lending institutions and facilities.
1.
11. Market prospect + Estimated size, trends, and potential of market in the country + Export markets and estimated size + Sources of market information + System of distribution of good 12. Product and product modification
2.SOCIO-CULTURAL ENVIRONMENT
1. The elements of culture Language Nonverbal language Religion Values and attitudes Manners and customs Material elements Aesthetics Education Social institutions Family
2.SOCIO-CULTURAL ENVIRONMENT
2. Adapting to cultural differences Some companies have made special efforts to adapt their products or services to various cultural environments.
Cultural factors
+ Never touch the head of a Thai or pass and object over it. The head is considered sacred in Thailand + Avoid using triangular shapes in Hong Kong, Korea, and Taiwan. + The number 7 is considered bad luck in Kenya and good luck in the Czech republic and Magical connotation in Benin, Africa. + The number 10 is bad luck in Korea + The number 4 means death in China + Red represents death in many African countries. + Red is a positive color in Denmark
Cultural factors
+ In Canada information on products is often provided in English and French. + Swiss chocolate manufactures know that US customers believe Swiss chocolate product are of high quality (value), so that companies emphasize their Swiss origin and thus generate high sales. (attitude) In short, by being aware of the value and attitudes of the people in the culture, a business firm effectively position its product.
Cultural factors
Education influences many aspects of culture. Education also helps to provide infrastructure needed for developing managerial talent. For example, educationally advanced countries like England, France are more likely to be markets for computers and other high tech equipment than poor countries.
2.SOCIO-CULTURAL ENVIRONMENT
3. The authors of Managing Culture Differences (Philip R. Harris and Robert T. Moran, 1987) offer the following ten tips to deflate the stress and tension of cultural shock: Be culturally prepared. Learn local communication complexities Mix with the host and nationals. Be creative and experimental.
2.SOCIO-CULTURAL ENVIRONMENT
Be culturally sensitive Recognize complexities in host cultures. Perceive oneself as a culture bearer. Be patient, understanding, and accepting of oneself and hosts. Be most realistic in expectations. Accept the challenge of intercultural experiences
3. POLITICAL/LEGAL ENVIRONMENT
Role of government Government controls + License requirements + Tariffs + Quotas + Extra taxes + Qualitative controls + Exchange controls Promotional activities Financial activities Information services Export facilitating activities Promotion by private organizations
4. COMPETITION
4.1.Nature of competition + The structure of competition: the number and types of competitors; + The action of competitors: the competitive tools available to marketing executives in the decision areas of product, channel, price, and promotion + Competition in international markets 4.2. Factors influencing competition (1) General business, cultural. Economics, and social conditions; (2) costs; (3) laws and regulations; and (4) The activities and policies of competitors themselves affect competition.
3. 4.
SOURCES OF INFORMATION THE EXPORT MARKETING RESEARCH PROCESS SEGMENTATION FOREIGN MARKET PORTFOLIOS: TECHNIQUE AND ANALYSIS
1.SOURCES OF INFORMATION
1.1. Secondary data + Internal source + External source 1.2. Primary data
+ Internal source Sales and cost records, markets, + External source UN, OECD, EU, IMF, WB, IBRD, IFC Embassy, Consulate; Non -government agencies; Universities and other educational institutions Internet CD-ROM The Business International Market Report.
1.1.Secondary data
Primary data can be collected in four broad ways: + Observation + Focus groups + Surveys + Experiments
Primary data
Observation research: Fresh data can be gathered by observing the relevant actors and settings. EX; The American Airlines researchers might hang around airports, airline offices, and travel agencies to hear travelers talk about the different carriers and how agents handle the flight arrangement process. The researchers can fly on American and competitors planes to observe the quality of in-flight service and hear consumer reactions. This exploratory research might yield some useful hypotheses about how travelers choose their air carriers.
Primary data
Focus groups research: A focus group is a gathering of six to ten persons who spend a few hours with a skilled interviewer to discuss a project, service, organization, or other marketing entity. The discussion is recorded through note taking or Audio or video tape and is subsequently studied to understand consumer belief, attitudes, and behavior.
In American Airlines example, the group interviewer may start with a broad question, such as How do you feel about air travel?
Primary data
Survey research: Survey research stands midway between observational and focus group research, on the one hand. And experimental research on the other hand. Companies undertake surveys to learn about peoples knowledge, beliefs, preferences, satisfaction, and so on, and to measure these magnitudes in the population.
Primary data
Experiments research: the most scientifically valid research is experimental research. Experimental research calls for selecting matched group of subjects, subjecting them to different treatments, controlling extraneous variable, and checking whether observed response differences are statistically significant. The purpose of experimental research is to capture cause-and- effect relationships by eliminating explanations of the observed findings.
Primary data
Research instrument: Questionnaires Contact methods: + The mail questionnaire + Telephone interviewing + Personal interviewing
Problem formulation Research method and design Data collection techniques Sample Data collection Analysis and interpretation Reporting results
1) It is important to note that any decision to segment on particular basis should be evaluated in term of the following: + Measurability + Accessibility + Profitability + Actionability
2) Base of segmentation + Country market level; demographic and population characteristics ; socio-economic characteristics; political characteristics; cultural characteristics. + Customer market level: Demographic characteristics: age, gender, life cycle, religion, nationality, etc; socio-economic characteristics : income, occupation, education, etc. Psychographic characteristics: personality
Invest/grow
3. 4. 5.
ENTRY AS STRATEGY FACTORS INFLUENCING CHOICE OF ENTRY MODE EXPORT ENTRY MODES NON-EXPORT ENTRY MODES SELECTING THE ENTRY MODE
1.ENTRY AS STRATEGY
The elements of entry strategy: + The objectives and goals in target market; + Needed policies and resource allocations; + The choice of entry modes to penetrate the market; + The control system to monitor performance in the market + A time schedule
Target market Product Availability of marketing organization Company considerations Government policies
3.2.Direct export
With direct export, manufacturer of exportable goods undertakes the entire export process without any intermediaries. By becoming a direct export exporter, the firm takes responsibility for the entire range of export activities starting with identifying customers through to collecting payment.
3.2.Direct export
In order to export directly, the firm may have to establish an export department from domestic sale division which could be funded on the basis its requirements. Employees of the department must be trained in foreign trade affaires.
3.2.Direct export
Direct exporting has several advantages such as: 1. The firm is able to control the whole process of export. 2. The firm can increase net profit because of operating without expenditure for intermediary. 3. The firm can develop closed relation with foreign partners. But, the firm is responsible for the following aspects: 1. The firm have to spent time and money to success in foreign market. 2. The firm must suffer directly risks may be occurred.
5.
Naive rule
Pragmatic rule
The strategy rule
2. 3. 4. 5.
PRODUCT PLANNING AND DEVELOPMENT PACKAGING BRANDING ISSUES PRODUCT MIX DECISIONS STANDARDIZATION VS ADAPTATION
3.PACKAGING
4. BRANDING ISSUES
A brand; a brand name; a trademark; label; logo; slogan Brand protection Branding decisions
It should suggest something about the products benefits EX: Beautyrest mattress, Craftsman tools (2) It should suggest product qualities such as action or color. EX: Sunkist oranges, Firebird automobile (3) It should be easy to pronounce, recognize, and remember, short names help. EX: Tide, Crest
(1)
(4) It should be distinctive. EX: Kodak, Exxon. (5) It should not carry poor meaning in other countries and language. EX: Nova Is a poor name for a car to be sold in Spanish-speaking countries; it doesnt go
Brand protection
+ The international Convention for the protection of Industrial Property (Paris Union). + The Madrid Agreement for International Registration of Trademarks.
Branding decisions
+ Selecting a good brand + Determining how many brands should be in the companys product line
Branding decisions
(1) (2) (3)
4. Positioning
In searching for a specific positioning, the business unit should consider the following possible sources: + Attribute positioning: EX: A hotel describes itself as the citys tallest hotel + Benefit positioning: EX: Volvo claims that its cars are safer + Use/application positioning: EX: Nike might describe one of its shoes as the best to wear for racing and another as the best to wear for playing basketball
4. positioning
+ User positioning EX: Apple Computer describes its computers and software as the best for graphic designers + Competitor positioning EX: 7 UP called itself the Uncola + Category positioning EX: Kodak means film; Xerox means copy machines + Quality/price positioning EX: Chanel No 5 is positioned as a very high-quality, high-price perfume.
Least expensive Most prestigious Best designed or style Easiest to use Most convenient.
5.
6.
DETERMINANTS OF AN EXPORT PRICE FUNDAMENTAL EXPORT PRICING STRATEGY RELATION OF EXPORT TO DOMESTIC POLICIES CURRENCY ISSUES SETTING UP EXPORT PRICE? TRANFER PRICING
Costs Market conditions (demand) Competition Legal/political influence Environmental factors ( Exchange rate fluctuations, inflation rates, price controls) Company policies Marketing-mix
Factory Price Domestic Freight Export Documentation Ocean Freight & Insurance Import Duty (12% of landed cost) Wholesale Markup (15%)
Export sale $ 7.50 .70 8.20 .50 8.70 1.20 9.90 1.19 11.09
Importer/Distributor Markup (22%) Retail Markup 50 % Final consumer Price 4.72 14.15 $14.15
EX: In this example the goods are planned to be moved by sea and shipment is not containerized.
Product charges and price ($) Product cist: $10 per unitx100 units Target mark-up: 10% of product cost Oversea agents commissions: 5% 1000 100 50 ------1150 80 100 50 20 1400
Financing costs on production: 8% Export packing charges Labeling and marketing for 100 units Other direct export costs EXW price (ex factory)
EX: In this example the goods are planned to be moved by sea and shipment is not containerized.
Inland freight to port of shipment Unloading, other charges at port of shipment FAS price (port of shipment) Loading charges on ship Export documentation, clearance for export FOB Price (port of shipment) Ocean freight to port of destination CFR price (product costs and freight/port of destination Insurance coverage CIF Price (product costs, insurance, freight/port of destination) 2000
Notice how the CIF price is double the initial product cost. This shows how important it is to work through these costing carefully.
5. TRANFER PRICING
Decentralization and profit centers Transfer pricing to wholly-owned foreign subsidiaries: + The factor: Competitive market price Cost Legal restrictions +Transfer pricing to partially-owned foreign enterprises
5.
CHANNEL STRUCTURE MANAGING THE DISTRIBUTION SYSTEM GAINING ACCESS TO DISTRIBUTION CHANNELS GLOBAL TRENDS IN DISTRIBUTION SYSTEM INTERNATIONAL PHYSICAL DITRIBUTION
1. CHANNEL STRUCTURE
1.1. Indirect export 1.2. Direct export + Home country based department: 1) Built-in department 2) separate export department 3) Export sales subsidiary + Foreign sales branch + Storage or warehousing facilities + Traveling salesperson +Foreign based distributors and agents
Financial incentives Annual conferences Help to the management of distributorship Special programs
3.1. The locked-up channel 3.2. Alternative entry approaches + Piggybacking + Joint ventures + Original equipment manufacturers (OEMs) + Acquisitions + Starting your ventures
Five major trends seem dominant throughout the world: Large-scale retailers International retailers Direct marketing Discounting Information technology
Export restrictions Foreign market import restrictions Export documentation The foreign freight forwarder Export packing
1.Introduction
1.1. Promotion -mix 1.2. Communication barriers 1.3. Export marketing promotion and communication decisions
1.Introduction
1.1. PROMOTION-MIX Advertising Sales promotion Publicity Personal selling
Communication barriers + Language differences + Government regulations + Media availability + Economic differences + Tastes and attitudes + Buying process
2.SALES PROMOTION
+ Foreign catalogs + Samples + House organ and company-published magazines + Films, slides, and personal computers + Trade fairs and exhibitions + Point-of-purchase materials + Consumer promotion materials
3. PUBLICITY AND PUBLIC RELATIONS 3.2. Publicity: Any form of nonpaid, commercially significant news or editorial comment about ideas, products, or institution.
5. PERSONAL SELLING
One of the most expensive marketing communication tools is the companys sales force, especially when out in the field, traveling a lot, and spending considerable time hunting for prospects and keeping existing customers satisfied. The salesperson sees the customer and can take him to lunch, gauge his interest, answer questions and objections, and close the sale. The more complex the product or service, the more necessary it is to use salespeople.
PERSONAL SELLING
Todays salespeople needs a laptop computer, printer, copy machine, fax machine, cellular phone, electronic mail, software, and so on. With their laptop, they can access industry, product, and customer data, download brochures, and print contracts.
PERSONAL SELLING
KEY ACCOUNT MANAGEMENT SYSTEM An increasing number of company are setting up key account management system. Companies know that a few customers account for large share of their sales and profits. The company appoints key account managers to manage their more important accounts, thus increasing the likelihood that important customers will be better served and will remain loyal.
7.DIRECT MARKETING
Direct marketing includes a number of marketing approaches that involve direct access to the customer. Direct mail, door-todoor selling and telemarketing are the primary direct marketing tools used in some countries.
7.DIRECT MARKETING
Many companies posses proprietary databases comprising profiles on thousands or millions of customers and prospects. Consider the following: + General Motors has a database of 12,000,000 names showing everything that these customers charged to their GM credit cards. + Lands End has a database of more than2,000,000 names of people who bought one or more clothing items from Lands End.
2.
Definition of organizational subunits Centralization vs. decentralization Communication and control systems
2. Organizational structures
2.1.Functional export department ( built-in or separate export unit ) 2.2.International division structure 2.3.International organization structure based on product 2.4.International organization structure based on geographic area or customer groupings 2.5.International mixed structure; the matrix organization