INTERNATIONAL

MARKETING
KristaDuniach
UniversitdAngers
krista.duniach@univangers.fr

BIBLIOGRAPHY
CzinkotaandRonkainen(2002),InternationalMarketing,
ThomsonSouthWestern.
DeMooij(2003),GlobalMarketingandAdvertising,
UnderstandingGlobalParadoxes,Sage.
KeeganandGreen(2005),GlobalMarketing,Prentice
Hall.
KotlerandArmstrong(2006),PrinciplesofMarketing,
PrenticeHall.
PrimeetUsunier(2004),Marketinginternational,
Dveloppementdesmarchsetmanagementinterculturel,
Vuibert.
Usunier(2000),MarketingacrossCultures,PrenticeHall.
Periodicals:MOCI,HBR,JIBS,JM,JMR

Introduction
Whatisinternationalbusiness?

Widerangeofactivitiesinvolvedinconductingbusinesstransactionsacrossnationalboundaries

Describedasbeingheterogeneous,universalandsequential

Comprehensiveapproachtooperationsofbothlargeandsmallfirmsengagedinbusinessabroad

Concernsallactivitiesofthefirm(selling,procurement,outsourcing)

Aboutseizingglobalopportunities(marketexpansionordiversification)

Drivingforces(regionaleconomicagreements,convergingneedsandwants,communication
improvements,quality,leverage)andrestrainingforces(managementmyopia,corporate
culture,nationalcontrols,globaphobia)

Orientations:Export,Internationalization,Globalization

Introduction
EPRGModel
Ethnocentric:everythingiscenteredonthe
domesticmarket.
Polycentric:severalimportantforeignmarkets
exist.
Regiocentric:themarketiscomposedofseveral
largeeconomicregions.
Geocentric:theworldisonelargeglobalmarket.

EPRGModelCharacteristics
Ethnocentric

Polycentric

Geocentric

Approach

International
operationsare
secondary

Eachcountryis
relatively
independent

Theworldisone
commonmarket

Vision

Centeredonthe
domesticmarket

Eachmarketis
unique

Globalvisionof
theworld

Priority

Searchingfor
identical
segmentsin
foreignmarkets

Takinginto
consideration
differencesin
foreignmarkets

Unifying
differencesin
theworldmarket

Subsidiaryin
eachcountry

World
headquarters

Divisionfor
eachzone

Matrixstructure

Planningcenter National
headquarters
Structure

International
division

EPRGModelCharacteristics
Ethnocentric

Polycentric

Geocentric

Staff

Citizensfrom
thedomestic
market

Citizensfrom
eachmarket

Mostqualified

Marketing
strategy

Extension

Adaptation

Extension,
Adaptation,
Creation

Management
style

Centralized

Decentralized

Integratedand
interactive

Production

Domestic

Local

Lowcost
sourcesof
supply

Partnerships

Agent,licensing

Jointventures

Strategic
alliances

Performance

Domesticmarket Localmarket

Worldmarket

Introduction
Whatismarketing?
Marketingisasocialandmanagerialprocess
bywhichindividualsandgroupsobtainwhat
theyneedandwantthroughcreating,offering,
andexchangingproductsofvaluewithothers.
(Kotler)

Process, exchange, value

Marketingprocess
Capture
value from
customers
in return

Create value for customers and

build customer relationships

Understand
the
marketplace
and customer
needs and
wants

Design a
customerdriven
marketing
strategy

Construct a
marketing
program that
delivers
superior
value

Build profitable
relationships
and create
customer
satisfaction

Capture
value from
customers to
create profits
and
customer
quality

Marketing

Global

Ethics and

technology

markets

social responsibility

Introduction
Whatisinternationalmarketing?
Internationalmarketingistheprocessofplanningandconducting
transactionsacrossnationalborderstocreateexchangesthatsatisfy
theobjectivesofindividualsandorganizations(Czinkotaand
Ronkainen)
Internationalmarketingfocusesitsresourcesonglobalmarket
opportunitiesandthreats(KeeganandGreen)
Internationalmarketingisthemotoroftheinternationalization
processofthefirm(Usunier)
Itisatoolusedtoobtainimprovementofthefirmspositioninthe
globalmarket
Strategyandaction,globalandlocal

Introduction
InternationalMarketingDecisions
Decidingwhethertogoabroad
Decidingwhichmarketstoenter
Decidinghowtoenterthemarket
Decidingonthemarketingprogram
Decidingonthemarketingorganization

Introduction
Whatarethesimilaritiesanddifferencesbetween
internationalmarketinganddomesticmarketing?
Similarities:basicconcepts,practicesandtoolsare
almostidentical,keysuccessfactorsarethesame
Differences:morestrategic,morevariables,more
complex,culturaldifferences,legalconstraints,
informationsources,managingdistances,entrymode
choice

Introduction
Internationalmarketingconcept
Export
marketing

Global
marketing

Inter-cultural,
multi-cultural
marketing

CourseOutline
Cultureandinternationalmarketing
Internationalmarketingresearch
Internationalmarketingstrategyandprograms

Chapter1
Cultureand
internationalmarketing

Cultureandinternationalmarketing
Conceptsofculture
Dimensionsandmodelsofculture
Examplesandinternationalmarketingconsequences

Whatisculture?
Cultureistheintegratedsumtotaloflearnedbehavioral
traitsthataresharedbymembersofasociety(Hoebel)
Cultureistheentiretyofsocietalknowledge,normsand
values(AntonidesandVanRaaij)
Cultureisthecollectivementalprogrammingofthepeople
inanenvironment.Cultureisnotacharacteristicof
individuals;itencompassesanumberofpeoplewhowere
conditionedbythesameeducationandlifeexperience
(Hofstede)
Culturebothaffectsanddescribeshumanbehavior,
itisessentialininternationalmarketing

Fundamentalsofculture
Cultureisatotalpatternofbehaviorthatisconsistent
andcompatibleinitscomponents.Itisnotacollection
ofrandombehaviors
Cultureisalearnedbehavior.Itisnotbiologically
transmitted.Itdependsonenvironment,notheredity.
Cultureisbehaviorthatissharedbyagroupof
people,asociety.Itisadistinctivewayoflife.

Culturevs.personality
Personalityistheindividualsunique
personalsetofmentalprogramsthathe/she
doesnotsharewithanyotherhumanbeing.
Cultureiswhatmembersofagrouphavein
common.Itisthegluethatbindsgroups
together(DeMooij)
Human nature depends on culture: ideas, values, acts, emotions are
cultural products. Cultural patterns help people to live together in a society.

Manifestationsofculture
Symbols
Heroes
Rituals
Values
and
Norms

Expressions
of culture

Symbols
Symbolsarewords,gestures,pictures,orobjectsthat
carryaparticularmeaningrecognizedonlybythose
whoshareaculture.
Thisisthemostsuperficialmanifestationofculture.
Newsymbolsareeasilydevelopedandoldones
quicklydisappear.
Symbolsfromoneculturalgroupareregularlycopied
byothers.

Heroes
Heroesarepeople,aliveordead,realor
imaginary,whopossesscharacteristicsthatare
highlyprizedinasociety.
Theyserveasrolemodelsforbehavior.
Theycanbecomegloballyknown,buttheir
storiesoftenbecomelocal.

Rituals
Ritualsarethecollectiveactivitiesconsidered
sociallyessentialwithinaculture.
Theyarecarriedoutfortheirownsake.
Theyareeasilyobserved,butnotalways
understood.

Values
Valuesareatthecoreofculture.
Valuesarestablebeliefsregardingdesiredbehaviororend
states.
Theyoftenhaveareligious,ideologicalorhumanistic
background.
Goalsarederivedfromvalues.
Valuesareamongthefirstthingschildrenlearn,not
consciouslybutimplicitly.
Corevaluesareresistanttoglobalization;theyvaryacross
culturesandarenotlikelytochangefrequently.

Norms
Normsandvaluesarepartofthenonmaterial
culture.
Normsarebeliefsregardinghowtobehaveandhow
nottobehave(dosanddonts).
Peopledifferintheextenttowhichtheyacceptand
complywithnorms.
Theycreateexpectationsandcriteriaregardingthe
conductofothers.

Explicitvs.implicitculture
Explicitculture:languages,behavior,
knowhow,institutions(directly
observable)
Implicitculture:moralvalues,learning
process,beliefsandrepresentations
(subconscious)

AccordingtoHoebel
Thereare3typesofculturalnormsintermsof
behavior:

10%ofnormsaretechnical:
explicit,logicalandtransferable;writtennormsofasociety(laws,
technicalmanuals,rules,etc)

30%ofnormsareformal:
explicit,moralandtransmissible;traditionsofaculture;learned
througheducation(manners,courtesy)

60%ofnormsareinformal:
implicit,instinctiveandimitated;sunkenpartoftheiceberg(facial
expressions,bodylanguage,culturalperspectiveontimeandspace)

How do these cultural norms influence

international business and marketing?

Twolevelsofculturaldiversity
ininternationalbusiness
Externalculturaldiversity
Culturaldeterminantsinfluencingpurchasingandconsumption
behaviors(Whobuys?What?Where?How?Why?)
Culturaldeterminantsinfluencingnegotiations(relationships
withsuppliers,buyers,partners)
Internalculturaldiversity
ObservedwithinallMNCs(identityandcorporateculture)
Culturaldifferencesthataffectthewaysubsidiarieswork
together

Fourlevelsofcultureinmarketing
DOMINANT CULTURE

Non-material
consumer culture

Material culture of
products

Non-material culture
of the firm

(market)

(corporate culture)

Transferofculture
Twomainculturaltransferprocesses:
Socialization:transferofculturetonewgenerations;
oldergenerationtoyoungergeneration;education.
Acculturation:transferofculturetoadultswho
havegrownupindifferentcultures,whohavebeen
socializedindifferentcultures;ethnicminorities;
multiculturalsocieties.

Culturaltransferandchange
SOCIALIZATION

Agents

LEARNING BY
OBSERVATION

Agents

ACCULTURATION

CULTURAL
TRANSFER AND
CHANGE,
DYNAMIC
PROCESS

Agentsinvolvedinculturaltransfer
Agents

Age(years)

Mostimportantvalues

Parents

Obedience,cleanliness,honesty

Siblings

Responsibility,socialrecognition

Schools,teachers

Ambition,capability,logicalbehavior

Friends

Courage,socialrecognition

Church

Honesty,peace,salvation,forgiveness

Sport,clubs

12

Ambition,courage

Massmedia

12

Pleasure,intellect

Processesofculturalchange
Socializationandacculturationusuallyimplya
gradualculturalchangebecausetransferagentstend
tofavorculturalcontinuityratherthanjeopardize
theirpowerfulposition.
Incontrast,innovativeforcesarelessconservative
andmaychallengethestatusquo.
4processes:cohorteffects,ageeffects,
democratizationandexclusivation.

Cohorteffects
Acceptanceofnewvaluesandbehaviorsbeginsata
youngage.
Thesevaluesandbehaviorsareretainedoverthe
years.
Theyarespreadinsocietybecauseyoungpeople
growolderandtheoldvaluesgraduallydisappear
withtheextinctionoftheoldercohorts.
Impliesaslowculturalchange.

Ageeffect
Certainvaluesorbehaviorsareassociatedwitha
particularagegroup.
Behaviorsaremodifiedasagegroupschange.
Ageboundconsumerbehavior.
Possiblereversesocialization.

Democratization
Culturallevelingorspreading
Culturaldifferencesacrosssocialclassesdecrease.
Resultsfromanincreasinglevelofgeneral
welfare,theinfluenceofmassmediaandthestress
ontheequalityideal.
Mechanismsofdemocratization:trickledown,
trickleup,trickleacross.

Exclusivation
Reverseofdemocratization
Occurslessfrequently
Implieslimitedsocialspreadingofvalues,goodsand
behavior.
Culturalchangeislimitedtoacertaingroup(elite,
leadingedge).

Dimensionsofculture
Whatmakesoneculturedifferentfromanother
culture?
Howcanwecompareculturesorclustercultures
accordingtobehavioralcharacteristics?

Stereotypesvs.culturaldimensions
Differentcultureshavedifferentstereotypesofother
cultures.
Ethnocentrism and SRC

Culturaldimensionmodels
HallHighcontextvs.lowcontextcultures
KluckhohnRelationshiptonature
HofstedeFivedimensionsofculture

Hallsculturalmodel
Focusesoncommunicationpatternsfoundwithin
cultures
Fouressentialdimensionsintermsofcommunication
patterns:

Context
Time
Space
Informationflow

Highcontextvs.lowcontextcultures

Lowcontextandhighcontextcultures
Lowcontext

Messagesareexplicit
Wordscarrymostoftheinformationincommunication(facts,
data)
Effectiveverbalcommunicationisexpectedtobeexplicit,
direct,andunambiguous

Highcontext

Lessinformationiscontainedintheverbalpartofthemessage
Muchmoreinformationresidesinthecontextofcommunication
(background,associations,symbols,basicvaluesofthe
communicators)
Verbalmodeisonlyonepartofcommunication,nonverbalis
oftenseenashavinggreaterimportance

Degree of context of cultures: comparison of law (US and France)

Time
Differentcultureshavedifferentconceptsoftime.
Thiscanexplaindifferencesinbehavior.
Dimensionsoftime:
Closure:ataskmustbecompleted,ifnotperceivedas
wasted
Longtermvs.shorttermthinking
Orientationtowardpast,presentorfuture
Linearorcircular(tangibleorintangible)
MtimeandPtime
Causeandeffect
Timeassymbol(timeismoney,efficiency,waiting,
discretionarytime)

Afewexamples
Factors

Highcontext

Lowcontext

Lawyers

Lessimportant

Veryimportant

Apersonsword

Tobetrusted

Getitinwriting

Responsibilityforerror

Takenbythehighestlevel Pushedtothelowestlevel

Space

Peoplebreatheoneach
other

Peoplemaintainabubble
ofprivatespace

Time

Polychronic,circular

Monochronic,linear

Negotiations

Arelengthy

Proceedquickly

Competitivebidding

Infrequent

Common

Examples

Japan,China,MiddleEast US,Germany,
Switzerland

Kluckhohnsculturalmodel
3typesofrelationshipsbetweenhumanityand
nature:
Masteryovernature(manistoconquernature)
Harmonywithnature(manistoliveinharmonywith
nature)
Subjugationtonature(manisdominatedbynature)

Further developed with: nature of people, duty, mode of activity,

privacy of space, temporal orientation

HumanityandNature
Masteryovernature
Humanityisseparate
fromnature
Natureshouldbe
controlled

Harmonywithnature
Nodistinctionbetween
humanity,natureand
supernatural
Communion,exchange,
subtleintimacy

Subjugationtonature
Peoplearedominatedby
nature
Supernaturalforcesplay
adominantrolein
religion

Tomoveamountain
Identificationwithnature Nothingcanbedoneto
controlnature
Westernworld,

Asia,Japan

NorthAmerica

Use in international marketing?

Africa,SouthAmerica

Hofstedesculturalmodel

Hofstedes4Dor5Dmodel

Quantitativeandlongitudinalstudyofculturaldifferencesbetween
countries

Whysomeconceptsofmotivationdonotworkinallcountriesinthesame
way

CulturesConsequencesandCulturesandOrganizations:Softwareof
theMind

Scoresforeachcountryexplainwhypeopleandorganizationsinvarious
countriesdiffer,comparativedata.

Reference in international business and international marketing

Howdowemeasureculturaldistance?
GeertHofstedesCulturalIndex
Nationalcharactersurvey
116.000IBMemployees
72countriesand20languages

Original scores
for 56 countries,
extended to
nearly 90

Fivedifferentpolesmakeuptheculturalindex:
Powerdistance
Uncertaintyavoidance
Individualism
Masculinity
(Longtermorientation)

5DModel
PDI
100
LTO

UAI
100
100
Work-related values
to consumptionrelated values

100
MAS

100
IDV

Powerdistance(PDI)

HighPDIvs.LowPDI

theextenttowhichlesspowerfulmembersofasocietyacceptand
expectthatpowerisdistributedunequally

Reflectedinthevaluesofboththelesspowerfulandmorepowerful
membersofsociety

Influencesthewaypeopleacceptandgiveauthority

Showsclassorsocialstructure

Focusesonthedegreeofequality,orinequality,betweenpeopleinthe
countryssociety

Uncertaintyavoidance(UAI)

HighUAIvs.LowUAI

theextenttowhichpeoplefeelthreatenedbyuncertaintyand
ambiguityandtrytoavoidthesesituations

StrongUAI=needforrulesandformalitytostructurelife,searchfor
truthandbeliefinexperts

Conflictandcompetitionarethreatening

Higherlevelofanxiety,showofemotionsisaccepted

Individualism(IDV)
Individualisticvs.Collectivistic
peoplelookingafterthemselvesandtheirimmediatefamilyonly,versus
peoplebelongingtoingroupsthatlookaftertheminexchangeforloyalty
Iconsciousandweconscious
Focusesonthedegreethesocietyreinforcesindividualorcollective
achievementandinterpersonalrelationships
Distinguishesbetweensocietieswherethegroupandbeingamemberis
important(collectiveness)andsocietieswherethegroupislessimportant
(individualism)

Masculinity(MAS)
Masculinevs.Feminine
thedominantvaluesinamasculinesocietyareachievementand
success;thedominantvaluesinafemininesocietyarecaringfor
othersandqualityoflife
Focusesonthedegreethesocietyreinforces,ordoesnotreinforce,
thetraditionalmasculineworkrolemodelofmaleachievement,
performance,controlandpower
Showstheimportanceofstatusinsocieties
Indicatesthedegreeofgenderdifferentiationandtheimportanceof
masculinevalues(assertiveness,money,materialgoods,success)

Longtermorientation(LTO)
Longtermvs.Shorttermorientation
Chinesevaluesurvey,Confuciandynamism
theextenttowhichasocietyexhibitsapragmaticfutureoriented
perspectiveratherthanaconventionalhistoricorshorttermpointofview
HighLTO=perseverance,orderingrelationshipsbystatus,thrift,senseof
shame,familyties,longtermthinking,paternalism
Focusesonthedegreethesocietyembraces,ordoesnotembrace,long
termdevotiontotraditional,forwardthinkingvalues
Indicateswhetherthecountryprescribestothevaluesoflongterm
commitmentsandrespectfortradition

ExamplesofHofstedesDimensions

Somecountryexamples
Country

PDI

UAI

IDV

MAS

LTO

Australia

36

51

90

61

31

Belgium

65

94

75

54

Denmark

18

23

74

16

France

68

86

71

43

Germany

35

65

67

66

31

GreatBritain

35

35

89

66

25

India

77

40

48

56

61

Italy

50

75

76

70

Japan

54

92

46

95

80

Netherlands

38

53

80

14

44

Spain

57

86

51

42

USA

40

46

91

62

29

World
average

57

65

43

49

50

Comparisonofculturaldimensions

More information on www.geert-hofstede.com

Americanculture
Classicaldimensions:Mtimeculture,lineartime
pattern,lowcontext,lowPDI,individualistic,high
MAS,lowUAI,shorttermorientation
Otherdimensions:success,obsessionwithchange
(newandbetter),creditcardculture,educationfor
competitiveness,independence,ethnocentrism,strong
roledifferentiation,innovativeness,creativity,private
opinionsexpressed,educationteachesstudentstobe
critical(askwhynothow),manmustconquer
nature,(DeMooij)

Japaneseculture
Classicaldimensions:Ptimeculture,circulartime
concept,highcontext,highPDI,collectivistic,
masculine,strongUAI,longtermorientation
Otherdimensions:pressuretobehavelike
neighbors,shamebasedsociety,avoidjoltingsocial
harmony,dependence,privateopinionsnot
expressed,statusisimportant(success)butavoid
standingoutinacrowd,cashculture,thriftand
perseverance,strongroledifferentiation,education
(howinsteadofwhy),educationhasanintrinsic
value,obsessionwithcleanliness,harmonywith
nature(DeMooij)

LimitstoHofstedesmodel
Generalization,reductive,simplistic(unprovenandunprovable,
flawedassumptions,storytelling)
Originalobjective:howvaluesintheworkplaceareinfluencedby
culture
Threediscretecultures
Organizational
Occupational
National

Questionnairequantitativedata
Differencesinlocationintraculturaldifferences,subcultures

Intraculturaldifferences
Fewculturesarehomogeneousintermsofcultural
traitsandnorms
Consequenceofglobalization?
Intraculturaldifferences(nationality,religion,
race,languageorgeographicareas)resultinthe
emergenceofdistinctsubcultures
Existenceofcrossculturalandintracultural
differences:opportunitiesandthreats

Tosummarizeonculture
Cultureiscomplexandmultidimensional,butclassification
isimportantinbusiness
Culturaldistanceisessentialininternationalmarketing
Cultureinfluencesperceptionsanddriveshowwe
communicateandwhatwecommunicate
SRCandethnocentrismcanexplainthefailureofmany
companiesintheinternationalarena
Acculturation(adjustingandadaptingtoaspecificculture
otherthanonesown)isoneofthekeystosuccessin
internationaloperations

Howdoescultureaffect
internationalmarketing?
Languagesandtheuseoflanguageincommunicating,
advertising,negotiating
Marketingresearchismuchmoredifficulttoconductfroma
methodologicalperspective
Buyingpatternsandbehaviorswillvaryindifferentcultural
contexts
Marketingmixwillbeperceiveddifferentlyfromonecountry
toanother
Managementstyleswillbedirectlyrelatedtoculture

Marketingandculturaldifferences
Marketingarea

Influenceofculturaldifferences

Consumerbehavior

Decisionmaking,crossculturalattitudes,localvs.global

Marketingresearch

Crossnationalequivalences

Globalmarketingstrategy

Globalstrategyvs.customizedstrategy

Segmentation&targeting

International(regional,global)vs.intranational

Productpolicy

Adaptorstandardizeproductattributes

Brandimage

Brandperception,countryoforigin,madein

Pricingpolicy

Pricequalityratio,influenceofpriceindecisionmaking

Distributionchannels

Typeofchannel,distributorrelationships

Communication

Values,visionsoftheworld,communicationstyles

Advertising

Advertisingmessages,symbols,adaptationofstrategy

Sales

Salesforcemanagement,PR,corruption,ethics

Negotiation

Negotiationstrategies,process,results,styles

Source: Usunier

Culturesconsequenceson
internationalmarketing
Marketingresearch(understandingconsumers)
Segmentation(classifyingconsumers)
Productpolicy(satisfyingconsumers)
Distributionchannels(reachingconsumers)
Advertising(communicatingwithconsumers)

Chapter2
InternationalMarketing

Research

Internationalmarketingresearch
Reviewofmarketingresearchtechniques
Specificproblemsininternationalmarkets

Reviewofmarketingresearchtechniques
Generalprinciplesofmarketingresearch
Qualitativeresearch
Quantitativeresearch

Whatismarketingresearch?
Marketingresearchisthelinkbetweenthemarketerand
themarket
Itisthestartingpointofmarketing
Marketingresearchisthesystematicdesign,collection,
analysis,andreportingofdataandfindingsrelevanttoa
specificmarketingsituationfacingthecompany.
MIS:consistsofpeople,equipment,andproceduresto
gather,sort,analyze,evaluate,anddistributeneeded,
timely,andaccurateinformationtomarketingdecision
makers.

Marketingprocess
Capture
value from
customers
in return

Create value for customers and

build customer relationships

Understand
the
marketplace
and customer
needs and
wants

Design a
customerdriven
marketing
strategy

Construct a
marketing
program that
delivers
superior
value

Build profitable
relationships
and create
customer
satisfaction

Capture
value from
customers to
create profits
and
customer
quality

Marketing

Global

Ethics and

technology

markets

social responsibility

Positionofmarketingresearch
ANALYSIS
PLANNING

MARKETING
RESEARCH
MARKETING
STRATEGY

IMPLEMENTATION

CONTROL

MARKETING
RESEARCH

Marketingresearchgoals

UNDERSTAND
DESCRIBE
EXPLAIN
MEASURE
FORECAST
VERIFY

Product, consumer, distributor, competitor,

environmental analysis

Marketingresearchprocess
Defineproblemand
researchobjectives

Developtheresearchplan

Analyzetheinformation

Collecttheinformation

Presentthefindings

Researchdesign
Theresearchdesignformallydescribesthecharacteristicsofthe
surveyandtheproceduresusedtoconductthestudy.
Itisthemethodologicalframeworkoftheresearch.
Contents:
Goals
Informationsources
Variables
Surveymethod
Samplingmethod
Dataanalysis
Calendar
Budget

Internalvalidity
Externalvalidity

Typesofmarketingresearch
Documentary
EXPLORATORY

DESCRIPTIVE

CAUSAL

Qualitative

Documentary
Quantitative

Experimentation
Observation

Researchmethods
Observationalresearch
Audit:inventories,facing,pantrycheck
Mechanical:scanning,EDI,eyecamera
Experimentalresearch
Product/concepttests:prototype,comparativeornot
Market/storetests:laboratorystores,catalogsales,
mobilestores,instoretests,citytests
Adhocresearch
Qualitativeresearch:interviews,focusgroups
Quantitativeresearch:surveys,opinionpolls

Qualitativeandquantitativeresearch
Thedistinctionbetweenqualitativeand
quantitativeresearchdependsonthenature
oftheresearchproblem.
Ifwhy?orhow?
QUALITATIVERESEARCH
Ifhowmany?orhowmuch?
QUANTITATIVERESEARCH

InformationSources
Secondarysources:Existingdata.Allformsof
documentaryresearch.
DESKRESEARCH

Primarysources:Datacollectedforaspecific
situationatcompanysrequest.
FIELDRESEARCH,ADHOC
Thesesourcescanbeinternalorexternal.
Thechoicewilldependonthemarketingproblem,
objectives,resources

DocumentaryResearch
Firststeptomarketingresearch
4steps

Definethetopic(clear,feasible,pertinent)
Identifykeywordsassociatedtothetopic
Searchforavailablesourcesofinformation
Consult,sortandsummarizeinformation

Questionstoask

Doesthedatacorrespondtothesituation?
Isthereariskofobtainingbiasedinformation?
Wastheresearchdesigntechnicallycoherent?
Arethefindingsclear,precise?

Researchandpollinginstitutes
Theseinstitutescollectinformationfor
resale.
Theycangive2typesofinformation:
Standardizedperiodicinformation:panels,
longitudinalstudies.Firmssubscribetothis
information.Thisisasecondaryinformation
source.
Onorderstudies:reservedsolelyforone
companyoromnibusstudies.Thisisaprimary
informationsource.

Advantagesanddisadvantagesof
informationsources
Secondary

Primary

Advantages

Lowincost
Diversity
Available
Problemdefinition
Familiarwithmarket

Adaptedinformation
Recent,uptodate
Notavailableto
competitors

Disadvantages

Incomplete,outdated
Inadequate
Falseinformation
Difficulttocontrol

Costly
Difficulttocollect
Timeconsuming

Sequenceandrelationshipbetween
differentsourcesofinformation
SECONDARYSOURCES
(DeskResearch)
Internal

External

PRIMARYSOURCES
(FieldResearch)

Qualitative

Quantitative

Qualitativemarketingresearch

Whatisqualitativemarketingresearch?
Collectingandanalyzingpsychosociological
elementswhichexplainfacts,attitudes,opinions,
motivationsandbehaviorsofallpeopleinvolved
inagivenmarketingsituation
Qualitativeresearchmethodsareusedforindepth
exploratorystudiesofthedecisionmakingprocess
andpsychologicalmechanismsthataffect
individualorgroupbehavior

Whyusequalitativeresearch?
Qualitativeresearchstudiesleadtounderstanding
thecausesorthebasisforbehaviors,attitudesand
opinions.
Theyareoftenbasedonanalyzinghowaproduct
orcompanyisperceivedbyindividualsor
consumers.
However,resultscannotbeextrapolated.They
cannotbeconsideredasbeingrepresentativeof
theentirepopulation.Samplesize=1070

Qualitativeresearchisusedinthefollowingcases:
Definingthemarketingproblemisdifficult
(exploremarket)
Findingcauses,decisionmakingcriteriaof
consumerbehavior
Secondaryinformationisinsufficient
Constructingquestionnaireforasurvey
Explainingsurprisingresultsofquantitative
research
Promotingcreativity

Advantagesanddisadvantagesof
qualitativeresearch
Advantages
Quickandflexible
(maximum70people)
Lesscostly
Allowsexploration
Attitudes,motivations,
opinionsarestudied
Revealsdeepfeelings
andthoughts

Disadvantages
Nonrepresentative
sample
Researchdesignis
difficulttoplan
Qualityofthestudy
dependsonresearcher
skills

Differenttypesofqualitativeresearch
Twowaysofclassifyingqualitativestudies:
Degreeofinduction(levelofconsciousness)
Unstructuredinterview(pureexploration)
Centeredorfocusinterview(explorationandindepth
analysis)
Structuredinterview(identificationandverification)

Numberofpeoplebeinginterviewed
Individual
Group

ChoosingaTypeofInterview
OPINIONS

Levelsof
consciousness

Structuredinterview

ATTITUDES

CenteredorFocus
interview

MOTIVATIONS/
BELIEFS

Unstructured
interviewor
centeredwith
projectivetests

Unstructuredinterviews
Conductedinafacetofacesituation
Large,ambiguousopening
Funnelapproach
Therespondentisfreetoexpresshisfeelingsas
wishesandforaslongashewishes
Nondirective,butreformulationtechniques
Useinmarketing

Unstructuredinterviewingsteps
Presentresearch
objectives

Largeopening
statementorquestions

Reformulationtechniques
(mirroreffect)

Researcheradoptsa
nondirectiveattitude

Respondentgoesfurther
indepth

autoexploration

Centeredorfocusinterviews
Samegeneralstructureandbasicprinciplesastheunstructured
interview
However,aninterviewguideisused
Thisguideiscomposedoftopicsorquestionstobeaddressed
duringtheinterview
Theinterviewerwillbringuptopicifandonlyifrespondent
doesnotspontaneouslyaddressissues
ThisisNOTaquestionnaire(noorder,modificationspossible,
differentversionsallowed)
Thisisthemostpopularformofqualitativeresearch

Projectivetechniques
Usedtoavoidpsychologicalobstacles(taboos,reluctance,
courtesybias,subconscious)ortogofurtherindepth
Visualorwrittenstimuli
Therespondentwillovercomehesitations
Difficulttoanalyze,ambiguous
Differenttests

Wordassociation
Sentencecompletion
Storycompletion
Frustrationorcartoontest
TAT(ThematicApperceptionTest)
Hairetest

ExampleNescaf(Hairetest)

List1
1lb.ofcarrots
Roastbeef
1canofDelmontecorn
Heinzketchup
Folgersgroundcoffee
Tidelaundrydetergent
3onions

List2
1lb.ofcarrots
Roastbeef
1canofDelmontecorn
Heinzketchup
Nescafinstantcoffee
Tidelaundrydetergent
3onions

Structuredinterviews
Mostdirectivemethodinqualitativemarketingresearch
Aquestionnaireisused
However,thequestionnaireisonlycomposedofopenend
questions
Questionnairefacilitatestheresearchprocessaswellas
analysis
Confusionbetweenqualitativeandquantitativeresearch
Itistheoreticallyincorrecttoextrapolateorgeneralizethe
findings

Focusgroups
Nearlyalwaysusethecenteredapproach(interview
guide,groupdiscussionisdirectedbyinterviewer)
About7to10participantspergroup
Theroleoftheinterviewerisveryimportant
Interviewermustmanagethegroupintermsof
participation,conflict,domination,summaries,etc
Organizationandlogisticalaspects

Focusgroupphases
Threephasesduringthegroupinterview:
Presentation(warmingup):explanations,rulesofthe
game,individualintroductions,anonymous
responses
Exchange:eachparticipantgiveshisorheropinions,
thoughts,groupdialogue,tests
Summarize:verifyalltopicsofinterviewguide,
repeats,startechnique(circept),gift

Comparingdifferenttypesofinterviews
Unstructured:largeopeningstatementandnon
directiveattitude(500to800)
Centered:interviewguidetocenterdiscussion
(250to500)
Structured:qualitativequestionnaire(150to
200)
Focusgroup:centeredinterview,7to10
participantspergroup(5000to8000)

Comparingindividualinterviews
andfocusgroups
Advantages
Individual Personal,indepthquestions
interview Lowercostperrespondent
Onlysolutioninsomecases
(BtoB,competitors)
Focus
Moreinformationduring
groups
discussion
Quickertoconduct
Possibletostudyinteractions
andinfluencesduringthe
decisionprocess
Stimulateideasandcreativity

Disadvantages
Researchertraining
Analyzingfindings
Longtoconduct
Noindepth
motivations
Riskofconformity,
stronggroupinfluence
Organizationaland
logisticdifficulties

Qualitativesampling
Norepresentativesample,butvarietyofindividuals
isimportant
Noimportantprofilesshouldbeexcluded
Sequentialprocedure(arborescence)isused:

Listofcriteriaexplainingdifferencesofbehavior
Rankcriteriafrommostimportanttoleastimportant
Listpossibilitiesforeachcriteria
Buildarborescence
Verifycoherencyofarborescence

Samplinginfocusgroups
Samebasicprinciples(arborescence)
Allparticipantsmustfeelequal
However,therearetwoimportantrules:
Groupmustbeheterogeneous(coverallofthe
profilesofthepopulations)
Groupmustbehomogeneous(forcriteriathat
mayleadtoanunbalancedgroup)
Many groups may be need to be organized in order to
avoid unbalanced groups or inter-group pressure

Qualitativedataanalysis
Twodifferentmethodscanbeused:
Summariesofinterviews,verbatims
Contentanalysis

Requiresretranscribingofallinterviews
Specializedsoftware
Quantification,scientificrigor
Timeandbudget

Quantitativemarketingresearch

Differencescomparedto
qualitativeresearch

Associatedwithdescriptiveresearch
Objectivesaredifferent:verify,measure,estimate...
Samplingmethodsaredifferent
Largesamplesize(3001000+)
Methodsofadministrationchange
Precisionofanestimation,marginoferror
Dataanalysisismoresophisticated

Advantagesanddisadvantagesof
quantitativeresearch
Advantages
Deliversprecisenumerical
estimations(forecasting,
marketshare,intentions)
Extrapolationpossible
Representativesample
Superiorobjectivity
Statisticaltechniques
Intergroupcomparisons
Longitudinalstudies

Disadvantages
Doesnotexplainwhyorhow
Precisiontool,nota
discoverytool
Selfreportdata
Broadbutshallowdata
Longandcostly
DifficultinBtoB
Participationisunrewarding
(directmarketing)

Categoriesofquantitativeresearch
Census

Collectinformationfromeachmemberofthepopulation
Completecanvassofthepopulation
Dependsonthesizeofthetargetpopulation

Survey

Mostfamiliarofallmarketresearchmethodologies
Collectinformationfromaportionofthepopulation
Procedureinwhichafixedsetofquestionsisaskedofa
sampleofrespondents
Onthebasisofinformationcollectedonthesubset,itis
possibletoinfersomethingaboutthelargergroup
Inferencedependsonthesamplingmethod

Censusvs.Survey
Census:n=N
Survey:n/N=subsetofthepopulation,
surveyrateorsamplingrate
Exhaustiveornonexhaustivesurvey

Generalizationandextrapolationoffindings

Validityofquantitativeresearch
Representativesamplesamplingmethodand
responserate
Precisionsamplesizeandmarginoferror
Qualityofquestionnaireandadministration
Researchertrainingandexperience
Qualityofinformationprocessing
Qualityofdataanalysis

Whatissampling?

70%

70%+e

Sampling is necessary every time the population

size is too large to be able to collect information
from all elements of the population.

Probabilityvs.nonprobabilitysampling
Probability

Eachpopulationelementhasaknown,nonzerochanceofbeing
includedinthesample
Finalelementsareselectedobjectivelybyaspecificprocess
Equalprobabilitiesarenotnecessary
Allowanassessmentoftheamountofsamplingerrorlikelyto
occur
Requiresanexhaustivesampleframe

Nonprobability

Nowayofestimatingthatprobabilitythatanypopulationelement
willbeincludedinthesample
Relyonpersonaljudgmentsomewhereintheprocess
Statistically,precision(samplingerror)cannotbeevaluated

Quantitativesamplingmethods

PROBABILITY

NONPROBABILITY

SAMPLES

SAMPLES

Simplerandomsample
Clustersample
Areasample
Levelrandomsample
Stratifiedrandom
sample

Quotasample
Randomroutesample
Judgmentsample(on
thespotsample)
Conveniencesample

Probabilitysampling
SRS:eachpopulationelementhasaknowandequal
chanceofbeingselected;centrallimittheorem(whennis
large,thesamplemeanwillbenormallydistributed).
Clusterandarea:firstparentpopulationisdividedinto
mutuallyexclusiveandexhaustivesubsets,thenarandom
sampleofthesubsetisselected.
LRS:randomsamplingoccursatseveraldifferentlevels
ofthepopulation.
Stratified:populationisdividedintostrataor
subpopulationsandrandomsamplingoccursineach
stratum(proportionateanddisproportionate).

Nonprobabilitysampling
Quotas:attempttoensurethatthesampleisrepresentative
byselectingsampleelementsinsuchawaythatthe
proportionofthesampleelementspossessingacertain
characteristicisapproximatelythesameastheproportion
oftheelementswiththecharacteristicinthepopulation.
Randomroute:eachfieldworkerisgivenarandomroute
tofollow,leadingtotheselectionofpeopletointerview.
Judgment:sampleelementsarehandpickedbecauseitis
expectedthattheycanservetheresearchpurposeanditis
believedthattheyarerepresentativeofthepopulationof
interest(purposivesamples).
Convenience:sometimescalledaccidentalsamplesbecause
thosecomposingthesampleenterbyaccident(volunteers,
radioshows)

Choosingasamplingmethod
Dowehaveasampleframe?
Yes

No

Dowehaveaframe
ofclusters?

IsSRStoocostly?
Yes

No

Isthepopulation
stratified?
No

SRS

Yes

Stratified
sample

Yes

Isittoo
costly?

No
Yes

No

Clusterorarea
sample

Arethereframesat
differentlevels?
Yes

Levelrandom
sample

No

Doweknowthestructureofthe
populationforseveralvariablesthat
explaindifferencesinbehavior?
Yes

No

Isthepopulation
widelydispersed?

Quotasample

Yes

No

Arethere
mandatorypassage
points?

Random
route

Yes

Judgmentor
onthespot
sample

No

Snowballorother
convenience
sample

Samplesizeandprecision
Withprobabilitysamples,precisionandminimalsample
sizecanbedetermined
Samplesizemustbegreaterthan30
Estimation,confidencelevel,confidenceintervaland
marginoferror
ProbabilitysamplingmethodsorKishcoefficient
Precisionofanestimationisnotproportionaltosample
size,buttothesquarerootofthesamplesize.Todouble
precision,thesamplesizemustbemultipliedbyfour.

Samplesizeandmarginoferror
2

n=tpq
e

Nonexhaustivesample

n=(nxN)/(n+N)
e=tpq
n
n=

budget fixed costs

direct cost per unit

Exhaustivesample
Marginoferrorfor
probabilitysamples
Budget approach

Procedurefordevelopingaquestionnaire
Specifywhatinformationwillbecollected
Determinetypeofquestionnaireandmethodofadministration
Determinecontentofindividualquestions
Determineformofresponsetoindividualquestions
Determinewordingofeachquestion
Determinesequenceofquestions
Determinephysicalcharacteristicsofquestionnaire
Reexamineandrevise
Pretestquestionnaireandreviseifnecessary

Typeofquestionnaireand
methodofadministration
Thesetwodecisionsareinterdependent
Thelengthofthequestionnairewillinfluencethechoiceof
themethodofadministration
Selfadministeredquestionnaires(mail,Internet,
questionnaireinmagazine,etc):responserateis
generallylow(<20%)
Questionnairescompletedwithresearcher(directpersonal
interviewing,phone):longerquestionnaireandhigher
responserate(50%)

Formofresponse

Openended
Dichotomous:2possibleanswers
Multiplechoice:3ormorepossibleanswers
Likertscale:astatementwithwhichtherespondentshowsthe
amountofagreementordisagreement(stronglyagreestrongly
disagree)
Semanticdifferentialscale:ascaleconnectingtwobipolar
words,respondentselectsthepointthatrepresentshis/her
opinion(enthusiasticunenthusiastic)
Importancescale:ratestheimportanceofsomeattribute
(extremelyimportantextremelyunimportant)
Ratingscale:ratessomeattributefrompoortoexcellent
Intentiontobuyscale:describesrespondentsintentiontobuya
productorservice(definitelybuydefinitelynotbuy)
Avoid halo effect (change direction in scales to avoid repetition)

Questionwording
Thephrasingofaquestioncandirectlyaffectthe
responses.
Generalrules:

Usesimplewords
Avoidtechnicalvocabularyinconsumerresearch
Avoiddoublenegations
Avoidambiguouswordsandquestions
Avoidleadingquestions
Avoiddoublebarreledquestions

Examples

Questionsequence
Generalrules:
Questionnaireshouldbeverylogicalandeasyto
respondto.
Usesimple,interestingopeningquestion.
Usethefunnelapproach(startwithbroadquestionsand
progressivelynarrowdowninscope).
Avoidjumpingaroundfromtopictotopic.
Usetransitions.
Designbranchingquestionswithcare.
Placedifficultorsensitivequestionslateinthe
questionnaire.
Askforclassificationinformationlast.

Questionsequence
Knowledge and awareness questions
Factual behavior questions
Attitude questions
Intention questions
Classification questions

Questionnairepretest
Datacollectionshouldneverbeginwithoutan
adequatepretestoftheinstrument.
Canbeusedtoassessbothindividualquestionsand
theirsequence.
Smallsampleof10to30
Questionnairefollowedbyinterviewtoidentify
problemsandmisunderstandings
Pretestresultsarenotincludedinthefinalresultsof
thesurvey
Thepretestisthemostinexpensiveinsurancethe
marketercanbuytoensurethesuccessofthe
questionnaireandtheentireresearchproject

Quantitativedataanalysis
Univariateanalysisdescriptivestatistics
andgraphicalinformation
Multivariateanalysiscrosstabulations,
Chisquaretests,correlationanalysis,
multipleregressionanalysis,clusteranalysis
(perceptualmapping),factoranalysis.

Costfactorsaffectingsurveys

Samplesize
Accessibility
Surveylength
Analysis
100perrespondent

Specificproblemsininternationalmarkets

Generalcontextofinternational
marketingresearch
Globalization,butchangeatdifferentratesindifferentpartsof
theworld
Challengeofconductinghighqualityresearchasquickas
possibleinmultiplediversesettings
Researchconductedsimultaneouslyindevelopedand
developingworld
Unbalancedspreadofmarketingresearchexpenditures
Multifacetedissues(where,how,who,tools,comparisons)
Newtechnologies(CATI,CAPI,scanners,Internet)

3specificproblemsininternational
marketingresearch
Whowillconducttheresearch?
degreeofresearchcentralization
Istheinformationcomparable?
crossculturalresearchequivalences
Whatarethesourcesofbias?
fivebiastypes

Whowillconductinternational
marketingresearch?
Thefirmcanuseinternalorexternalresearchservices.
Theunknowncompetitivesituationanddifferentcultural
backgroundscomplicatethechoicebetweeninternaland
externalresearch.
Problem:exclusivecontractswithmarketingresearchfirms
Towhatdegreeshouldinternationalmarketingresearchbe
centralized?
Threechoices:internalmarketingdepartment,domesticresearch
firm,foreignresearchfirm

Thedegreeofcentralizationof
internationalmarketingresearch
Accessto
information

Information
sources

Qualityand
reliabilityof
information

Adaptation
tofirms
problem

Monitoring

Cost

Internal
marketing
department

Lowaccess.
Network
problem.
Competitive
analysis
difficult.

Limited
knowledgeof
sourcesin
foreign
market.

Riskinterms
ofanalysis.
Language
problems.
Culturalbias.

Excellent.

Excellent.

Lowincost.
Travel
expensesand
useofstaff.

Domestic
research
firm

Goodifthe
firmhasan
important
local
network.

Excellentin
France.
Perhaps
limitedin
foreign
market.

Riskinterms
ofanalysis.
Language
problems.
Dependson
theinformal
network.

Verygood.
Easyto
clarifyif
problems.

Good.Easyto
monitor
duringthe
research
process.

Highincost.
Specific
projectfees.

Foreign
researchfirm

Verygood.
Lowriskof
ignoring
essential
information.

Excellentin
foreign
market,but
onlylocal.

Excellent.

Limited.The
firmmaybe
unknown.

Limited.Risk
ofnon
conformity
withinitial
objectives.

Variable.

Istheinformationcomparable?
Thisquestionisveryimportantincrossculturalor
comparativestudies.
Somewords,ideas,concepts,practices,etcwillhave
differentmeaningsindifferentculturalcontexts.
Researchequivalenceisnecessary,butnotalwayseasy
toachieve.
Equivalencesmustbeverifiedbeforeconducting
researchonforeignconsumerbehavior.

Internationalequivalences
Functionalequivalence:doproductsservethesamefunction?
Conceptualequivalence:dorelevantconceptshavethesamemeaningand/or
importance?
Categoryequivalence:doestheproductbelongtothesamecategoryor
domain?
Translationequivalence:crosscheck,translationretranslation
Metricequivalence:scaling,odd/even,doadjectiveshavethesamestrength
anddistances?
Respondentequivalence:whoshouldanswerquestions?samesocialrole?
samplingunit
Samplingframeequivalence:howwillsamplebechosen?

Sourcesofbias
Bias=distortedresults,incorrectorfalsecomparedto
reality
Biasedresponsesaremorelikelytooccurininternational
marketingresearchthanindomesticresearchandare
hardertoavoid
Importanceofcontrol,pretest,acculturation
Researchplansmustbeadaptedtoreducetheriskof
biasedresponses

5sourcesofbias
Courtesybias:concernsthesocialdesirabilityofanswers,the
respondenthopestopleasetheinterviewer
Subjectbias:concernsthewayasocietyperceivesanissueas
beingmoreorlesssensitive
Culturaltraitbias:agivenculturaltraitcanalterthefindings
(IDV,MAS)
Responsestylebias:someresponsesaremoreorlessextremein
somecultures(scaling,ranking),coefficients
Nonresponsebias:nonresponsestylevariesaccordingto
country,gender,race

Practicalconsequencesin
internationalmarketing

Qualitativeresearchonlyaccountsforlessthan20%ofresearchexpendituresaroundthe
world(emergingmarkets,innovation,brandrenewal),butthisisincreasing

Lengthofinterviewandcompensationwillvaryfromonemarkettotheother
(monochronicandlowcontext=shorterinterviewsandlargercompensation)

Sometechniquesareunknownorunfeasible(projectivetechniques,onlinesurveys,
CAGI/CATI)

Focusgroupsareveryculturebound(collectivisticvs.individualisticsocieties,social
status,disagreement)

Samplingtechniquesarelimited(reliableinformationisnotwidelyavailable,statistics,
samplingbase)

Collectinginformationisdifficult(levelofeconomicdevelopment,illiteracy,local
authorizations)

Crossculturalresearchislimited(comparisonisdifficult,concepts/rituals)

Recentdevelopmentsininternationalmarketingresearch

Chapter3
InternationalMarketing

StrategyandPrograms

Expandedmarketingprocessmodel
Capture value
from customers

Create value for customers and build customer relationships

Understand the
marketplace
and customer
needs and
wants

Research
consumers and
market
Manage
marketing
information and
customer data

Design a
customer-driven
marketing
strategy

Select customers
to serve:
segmentation and
targeting
Decide on a value
proposition:
differentiation and
positioning

Construct a
marketing
program that
delivers
superior value
Product and
service design:
build strong
brands
Pricing: create
real value
Distribution:
manage
demand and
supply chains
Promotion:
communicate VP

Marketing technology

Global markets

Build profitable
relationships and
create customer
satisfaction

CRM and CEM:

build strong
relationships with
chosen
customers
Partner
relationship
management:
build strong
relationships with
marketing
partners

Capture value
from
customers to
create profits
and customer
quality

Create
satisfied loyal
customers
Capture
customer
lifetime value
Increase share
of market and
share of
customer

Ethical and social responsibility

Corporatestrategyvs.marketingstrategy
Strategic
segmentation

SBU

SBU
Core market

Strategic positioning
Market segmentation

SBU

S1

Market targeting

S2

S3

Target segment
Consumer preferences

Competitor positioning

Firm advantages

Market positioning

Positioning
Marketing mix

-Sales objectives
-Budgets
-4 Ps

Marketsegmentation
Whatisit?

Identifyingandprofilingdistinctgroupsofbuyerswho
mightrequireseparateproductsand/ormarketingmixes
Clusteringconsumersintermsofbehavior,needs,
attitudes,opinions

Why?

Buyers/consumersdifferinmanyways
Theydonotrespondtothesamestimuliinthesameway
So,differentoffersfordifferenttypesofbuyers

Marketsegmentationrepresentsanefforttoincrease
acompanystargetingprecision.

Levelsofmarketsegmentation
Massmarketing

Massproduction,distributionandpromotionofoneproductforallbuyers
Largestpotentialmarket,onesizefitsall
Lowestcosts=lowerpricesorhighermargins

Segmentmarketing

Largeidentifiablegroupwithinamarket
Buyersdifferintheirwants,purchasingpower,location,attitudesandhabitsbutthecompany
isnotwillingtocustomizeitsoffertoeachindividualcustomer
Moreappropriateproductsandservices,distributionandcommunicationeasier,fewer
competitors

Nichemarketing

Morenarrowlydefinedgroup,asmallmarketwhoseneedsarenotbeingwellserved
Smallercompaniescanbecomemorecompetitivethroughspecialization
Betterunderstandingofcustomerswhowillinglypayapricepremium

Individualmarketing

Segmentsofone,customizedmarketing,onetoonemarketing
MorefrequentinBtoBthaninBtoC
Newtechnologiesallowmasscustomization;abilitytoprepareonamassbasisindividually
designedproductsandcommunicationstomeeteachcustomersrequirements

Marketsegmentationprocedure
Marketsegmentsandnichescanbeidentifiedbyapplying
successivevariablestosubdivideamarket.3steps:
Researchstage:gaininsightintoconsumermotivations,
attitudesandbehaviorandcollectimportantdata(attributesand
ratings,brandawarenessandrating,productusagepatterns,
attitudestowardproductcategory,customercharacteristics).
Analysisstage:factoranalysistoremovehighlycorrelated
variablesandclusteranalysistocreateaspecificnumberof
maximallydifferentsegments.
Profilingstage:eachclusterisprofiledintermsofits
distinguishingattitudes,behavior,customercharacteristics
Market segmentation must be redone periodically because market
segments change over time, especially in international markets

Segmentationvariables
Consumercharacteristics
Geographic
Nations
States
Regions
Cities
Demographic
Ageandlifecyclestage
VALSorpsychographics
Gender
Income
Generation
Socialclass

Marketingcharacteristics
Consumerresponsestobenefitssought,use
occasionsorbrands
(consumerresponsesegments)
Hierarchyofattributesinchoosingabrand,
shiftsinconsumerpriorities
(marketpartitioning)
Marketingmixvariables:product,price,
placement,promotion
(pricequalitytypedominant)

In international marketing, broader market segments compared to

domestic segments, transnational segments

Example1:culturebasedsegmentation
Cluster1

Size
(million)

PDI

UAI

IDV

MAS

Marketingimplications

203

Small

Medium

Medium
High

High

Preferenceforhigh
performanceproducts,use
successfulachieverthem
inadvertising,desirefor
novelty,varietyandpleasure,
fairlyriskaversemarket.

182

Medium

Strong

Varied

Low
Medium

Appealtoconsumersstatus
andpowerposition,reduce
perceivedriskinproduct
purchaseanduse,emphasize
productfunctionality.

37

Small

Low

High

Low

Relativelyweakresistanceto
newproducts,strong
consumerdesirefornovelty
andvariety,highconsumer
regardforenvironmentally
friendlymarketersand
sociallyconsciousfirms.

Austria,
Germany,
Switzerland,
Italy,GB,
Ireland
Cluster2
Belgium,
France,
Greece,
Portugal,
Spain,
Turkey
Cluster3
Denmark,
Sweden,
Netherlands,
Norway

Example2:segmentationofCEEmarkets
Marketization:

Countriesexposuretoglobalcommunications,increased
productavailabilityandvariety,andoverallattempttoclosethe
livingstandardsgapwithdevelopedcountries
Reflectsasetofinstitutionalvaluesandcultural
requirementsfortheoperationofeffectiveprivatemarkets
(materialisticvaluesasastimulusforgreaterproduction,
competition,freedomofinformation)

Westernization:

CountriesproximitytotheWest
ThedurationandtheextentoftheiropennesstoWestern
influenceandculture

CEEclusters
HighMarketization

Cluster1
Low
Westernization

Cluster3

Cluster4

LowMarketization
Source: Lascu, Manrai and Manrai

High
Westernization

Cluster2

Clusters are likely to have

common characteristics
and share similar
consumer needs and
purchasing behavior

CentralandEasternEuropeanclusters
Cluster1:Highmarketizationandhighwesternization
(Hungary,Poland,CzechandSlovakRepublics,Slovenia)
Geographic:CentralEurope,borderdevelopedcountries,moreurbanized
Cultural:Slaviclanguages(exceptHungary),primarilyCatholicreligion
Economic:moredeveloped

Cluster2:Lowmarketizationandhighwesternization
(Bosnia,Serbia,Croatia,Montenegro,Macedonia)
Geographic:CentralEurope,moreurbanized
Cultural:Slaviclanguages,primarilyEasternOrthodoxandMuslim
Economic:moredeveloped,butlessthancluster1

CentralandEasternEuropeanclusters
Cluster3:Highmarketizationandlowwesternization
(BulgariaandRomania)
Geographic:Balkanpeninsula,urbanizedtoalesserextentthancluster2
Cultural:LatinandSlaviclanguages,EasternOrthodoxreligion
Economic:slowerinthedevelopmentprocess

Cluster4:Lowmarketizationandlowwesternization
(AlbaniaandWesterncountriesoftheformerSovietUnion)
Geographic:Lessurbanizedthancluster3
Cultural:Slaviclanguages(Russianistheprimarycommerciallanguage),Eastern
OrthodoxandMuslim
Economic:formerlyfiercedictatorships,slowerdevelopment

Markettargeting
Afteridentifyingdifferentmarketsand
marketsegments,thefirmmust:
Evaluatethevarioussegments
Decidehowmanyandwhichonestotarget

Evaluatingthemarketsegments
Overallattractivenessofthesegment

Size,growth,profitability,scaleeconomies,lowrisk
Howeasyisittopersuadebuyerstoshifttheir
purchases(consumers,relativenonconsumers,
absolutenonconsumers)?
Brandloyaltyvs.dissatisfiedbuyers

Companysobjectivesandresources

Dosegmentscorrespondtothecompanyslongterm
objectives?
Doescompanypossesstheskillsandresourcesneeded
tosucceedinthesegment?
Thecompanyshouldonlyentermarketsegmentsin
whichitcanoffersuperiorvalue

Selectingmarketsegments
5differenttargetmarketstrategies:
Singlesegmentconcentration

Concentratedmarketing
Strongknowledgeofsegmentsneeds
Strongmarketpositioninsegment
Economiesthroughspecialization=highreturns
Risksarehigherthannormal

Selectivespecialization

Severalsegmentsthatareobjectivelyattractive
Littleornosynergyamongsegmentsbuteachis
profitable
Diversificationoffirmsrisk

Selectingmarketsegments
Productspecialization

Concentrateoncertainproducttoseveralsegments
Strongreputationinspecificproductarea
Riskoftechnology

Marketspecialization

Concentrateonservingmanyneedsofaparticularcustomergroup
Strongreputationwithgroup,channelforallnewproducts
Riskofdecreasedbuyingpowerinthegroup

Fullmarketcoverage

Serveallcustomergroupswithallproductstheyneed
Limitedtoverylargefirms
Undifferentiated:ignoresegmentdifferences,oneofferforentiremarket
Differentiated:operateinseveralsegmentswithdifferentprogramsforeach

Marketpositioning
Marketpositioning:actofdesigningthecompanysoffering
andimagesothattheyoccupyameaningfulanddistinctive
competitivepositioninthetargetcustomersmind;refersto
theconsumersperceptionofaproductorbrandamongst
otherbrands
Objective:attainingaprominentplaceforcompanysbrand
amongstotherbrandsinthemindsofconsumers
Positioningmainlyresultsfrommarketingcommunication
regardingbrands,socialcommunicationandpersonal
experience
Categorizationandpositioningwithincategory
Productdifferentiation,internationalcoherency

Importanceofproductdifferentiation

Market
segmentation

Product
differentiation

Demand side

Supply side

Heterogeneous markets
are divided into
homogeneous
submarkets

Homogeneous products
can be differentiated into
products tuned to these
homogeneous market
segments

(market segmentation)

(market positioning)

Differentiationattributes
Product
Features
Performance
Conformance
Price
Quality
Durability
Reliability
Repairability
Style
Design

Services
Orderingease
Delivery
Installation
Customer
training
Customer
consulting
Maintenance
Warranty

Personnel

Channel

Competence
Coverage
Courtesy
Expertise
Credibility
Performance
Reliability
Responsiveness
Communication

Image
Value
proposition
Emotional
power
Symbols
Media
Atmosphere
Events

Different attributes in different markets, cultural influence

Promotingthedifference
Howmanydifferenceshouldafirmpromote?
USP:bestquality,bestservice,lowestprice,bestvalue,
safest,fastest,mostconvenient,mostadvancedtechnology
Doublebenefitpositioning:iftwoormorefirmsareclaimingtobe
bestonthesameattribute,searchforspecialnichewithinthetarget
segment,twobenefitsmustbecompatible(safestandmost
durable)
Thenumberofdifferencesshouldbelimited(communication,clarity,
credibility)
Coherencyininternationalmarketsisessential,betweenmarketsand
betweensegments

Communicatingthefirmspositioning
Oncepositioningstrategychosen,thefirmmust
communicatethepositioningeffectively
Mentallydistinguishofferings,enterintothe
mindsofconsumers
Communicationthroughphysicalsignsandcues
Marketingmixisusedtocommunicatethe
companyspositioning

Frommarketingstrategyto
marketingprograms
Marketingstrategymustbeimplementedthrough
marketingprograms
Managersmustdecideonmarketingexpenditures,
marketingmix,andresourceallocation
Internalculturaldiversity
Externalculturaldiversity

Marketingmixallowsfirmtocommunicateand
implementitsstrategy,formalizedinmarketingplan

Marketingmix
Marketingmixisthesetofmarketingtoolsthat
thefirmusestopursueitsmarketingobjectivesin
thetargetmarket.
4Ps(McCarthy):
Product
Price
Promotion

Place

4Cs(Lauterborn)
Customerneedsandwants
Costtothecustomer
Communication

Convenience

ThefourPsofthemarketingmix
Product

Productvariety,quality,design,features,
brandname,packaging,sizes,services,
warranties,returns

Price

Listprice,discounts,paymentperiod,credit
terms

Promotion

Salespromotion,advertising,salesforce,
publicrelations,directmarketing

Place

Channels(direct,indirect,exclusive,selective,
intensive),coverage,assortments,locations,
inventory,logistics,transport

Standardizationvs.adaptation
DebateinmarketingsinceBuzzell(1968)andLevitt(1983)
Factorsencouragingstandardization

Economiesofscaleinproduction
EconomiesinR&D
Economiesinmarketing
Globalcompetition
Shrinkingofworldmarket
Converging,homogeneouscultures

Factorsencouragingadaptation

Differinguseconditions
Governmentandregulatoryinfluences
Localcompetition
Differingconsumerbehaviorpatterns
Truetomarketingconcept

Degree of
standardization,
Degree of
adaptation,
global/local
paradox

High

Needforadaptation

Degree of
cultural
grounding

Low
Industrial/Technology intensive

Consumer

Nature of product
Source: Czinkota and Ronkainen

Factorsaffectingadaptation
Consumptionpatterns
Psychosocialcharacteristics
Culturalcriteria

Consumptionpatterns
Patternofpurchase

Istheproductpurchasedbyrelativelythesameconsumerincome
groupfromonecountrytotheother?
Dothesamefamilymembersmotivatethepurchaseordictatebrand
choiceinalltargetcountries?
Domostconsumersexpectaproducttohavethesameappearance?
Isthepurchaseratethesameregardlessofthecountry?
Aremostpurchasesmadeatthesamekindofretailoutlet?
Domostconsumersspendthesameamountoftimemakingthe
purchase?

Patternofusage

Domostconsumersusetheproductforthesamepurpose?
Istheproductusedindifferentamountsfromoneareatoanother?
Isthemethodofpreparationthesameinalltargetmarkets?
Istheproductusedalongwithotherproducts?

Psychosocialcharacteristics
Attitudestowardtheproduct

Arethebasicpsychological,social,andeconomicfactorsmotivating
thepurchaseanduseoftheproductthesameforalltargetmarkets?
Aretheadvantages/disadvantagesoftheproductinthemindsof
consumersbasicallythesamefromonecountrytoanother?
Doesthesymboliccontentoftheproductdifferfromonecountryto
another?
Isthepsychiccostofpurchasingandusingtheproductthesame?

Attitudestowardthebrand

Isthebrandnameequallyknownandacceptedinalltargetcountries?
Arecustomerattitudestowardthepackagebasicallythesame?
Arecustomerattitudestowardpricingbasicallythesame?
Isbrandloyaltythesamethroughouttargetcountriesfortheproduct?

Culturalcriteria
Doessocietyrestrictthepurchaseand/oruseoftheproducttoa
particulargroup?
Isthereastigmaattachedtoaproduct?
Doestheusageoftheproductinterferewithtraditioninoneor
moreofthetargetedmarkets?
Doesthemessageoftheproductcorrespondtocorecultural
values?
Howdothedifferentdimensionsofcultureinfluencethepurchase
anduseoftheproduct?

Product
Aproductisanythingthatcanbeofferedtoamarketto
satisfyawantorneed(Kotler)

Physicalgoods
Services
Persons
Places
Organizations
Ideas

Commonproductproblems:
Developingnewproducts
Managinglifecyclestrategies
Managingproductlines
Managingbrands

Product
policy,
product
mix

Productmix:productlinesandbrands
Productlines

Width:howmanyproductlinesthefirmcarries
Length:howmanyitemsineachproductline
Depth:howmanyvariantsareofferedofeachproductin
theline
Consistency:howcloselyrelatedthevariousproductlines
are(enduse,production,distributionchannels,etc)

Branding

Identifiesthecompanyatsixdifferentlevels:attributes,
benefits,values,culture,personalityanduser
Brandawareness,brandacceptability,brandpreference,
brandloyalty
Globalbrandingandinternationalcoherency
Degree of adaptation in FMCG

Elementsofaproduct
Installation

Tangible
product

Packaging

Delivery
and credit

Brand
name

Augmented
product

Core
product

Features
Core
benefit
or
service

Quality

Aftersale
service
Styling

Warranty

Global
variations,
adapt or
standardize?

Specificinternational
productpolicyproblems
Countryoforigin,madeineffect
Preferencefornationalbrands
Globalbranding(mono,line,umbrella)
Brandequityandextension
Internationalstandards
Productprotection
Productadaptation

Internationalproductpolicy
Existenceofglobalproduct?Internationalstandard?
Threecommonstrategies
Straightextension
Productinvention
Productadaptation
Technicaladaptation
Commercialadaptation

Consumerproductsvs.industrialproducts

Pricing
Select pricing
objective

Determine
demand

Select pricing
method

Select final
price

Estimate
costs

Analyze competitors
costs, prices, and offers

Commonpricingmethods
Markuppricing:addastandardmarkuptotheproductscost
Targetreturnpricing:determinepricethatwouldyielditstargetrateof
return(ROI)
Perceivedvaluepricing:buyersperceptionofvalue,notthesellerscost,is
thekeytopricing
Valuepricing:lowpriceforfairlyhighquality(EDLP)
Goingratepricing:pricesarelargelybasedoncompetitorsprices,rather
thanoncostsordemand
Sealedbidpricing:competitivebasedpricingbasedonexpectationsofhow
competitorswillprice
Yieldpricing:discriminatorypricingdependingoncustomersegmentand
inventorylevel

Internationalpricingpolicy
Internationalpriceescalationproblem
Fourtypesofstrategies
Uniformpriceeverywhere:differentprofitrates,toohighinsome
countries
Marketbasedprice:ignorescosts,parallelimportations
Costbasedprice:standardmarkupeverywhere,toohighinsome
countries
Identicalpricingposition:comparetolocalcompetitionineach
market

Transferpricesanddumping
Graymarketproblem,copies

Promotion
Identifytargetaudience:research,imageanalysis
Determinecommunicationobjectives:awareness,
knowledge,liking,preference,conviction,purchase
Designmessage:content,appeals,structure,format,source
Selectcommunicationchannels:personal,nonpersonal
Promotionbudget:weightofpromotioninmarketingmix
Promotionmix:allocationbetweenadvertising,sales
promotion,publicrelations,salesforceanddirectmarketing
Measureresults:research

Promotionmixcommunicationplatforms
Advertising
Printand
broadcastads
Packaging
Motion
pictures
Brochures
Directories
Billboards
PPdisplays
Symbolsand
logos

Sales
promotion
Contests
Sampling
Gifts
Fairsandtrade
shows
Demonstrations
Coupons
Rebates
Entertainment
Loyalty
programs
Tieins

Public
Relations

Salesforce

Direct
marketing

Presskits
Speeches
Annualreports
Sponsorships
Publications
Community
relations
Lobbying
Company
magazine
Specialevents

Sales
presentations
Salesmeetings
Incentive
programs
Samples
Fairsandtrade
shows

Catalogs
Websites
Mailings
Telemarketing
Onlinesales
TVshopping

Internationalpromotionpolicy
Threedifferentlevelsofcommunication:
Corporatecommunication:informfirmspartners
(shareholders,administrations,suppliers,press,etc)
Institutionalcommunication:communicatethefirms
valuestothepublicandinsidetheorganization
Brandorproductcommunication:image,consumers
desires,technicalcharacteristics,performance,etc
Corporate and institutional communication are
easily standardized, but brand/product
communication is harder to standardize

Communicationandadvertising
Advertisingisaformofcommunication
Aproductspositionordifferenceistransmittedtotarget
segmentthroughcommunication
Communicationstylesvaryfromcountrytocountry,theyare
culturebound
Theroleandimportanceofadvertising/mediaalsovaryfrom
onecountrytoanother
Culturalfactorsaffectingcommunication:

Highcontextvs.lowcontext
Explicitvs.implicit
Directvs.indirect
Informationalvs.emotional

Culturaldimensionsand
advertisingappeals

Powerdistance

High:statussymbols,presenceandimportanceofelders,masterlearnerrelationships
Low:independence,empoweredconsumers

Individualism/Collectivism

IDV:lowcontext,direct,explicit(you,we,I),data,facts
COL:highcontext,indirect,symbols,entertainment,groups

Masculinity/Femininity

MAS:winning,success,domination,persuasion,comparativeadvertising,reversesexism
FEM:lessendorsement,caring,lessroledifferentiation

Uncertaintyavoidance

High:explanations,testing,technology,design,structure,wellgroomed
Low:resultsareimportant,change,subtle

LTO/STO

STO:senseofurgency,directstyle
LTO:buildtrust,nature,entertainment

Advertisingmodelsandculture(1/2)
Salesresponsemodel

Simplestimulusresponsemodel
Verydirect,buynowstrategy,shorttermeffect
LowPDI,IDV,MAS,LowUAI(AngloSaxonmodel)

Persuasionmodel

Shorttermshiftinattitude,buyingintention,andbrandpreference
throughprovidingarguments
Lectureform(presenters,demonstrations,testimonials),persuasive
anddirect
US,UK,Germany,Switzerland,Austria

Involvementmodel

Buildrelationshipsbetweenconsumersandbrandsbycreating
emotionalcloseness
Brandbecomesapersonality,indirectstyle
FEM,IDV(Netherlands,Scandinavia,France)

Advertisingmodelsandculture(2/2)

Awarenessmodel

Createawarenesstodifferentiatebrandsfromsimilarbrands
Associations,metaphors,humor,buildtrust,indirect
LowIDV(Spain,Asia,LatinAmerica...)

Emotionsmodel

Createpositiveattitudeandbrandloyalty
Buildsconnectionsbetweenbrandsandemotions,emotionoftenlinkedwith
productcategory
LowIDV,lowMAS(Spain,LatinAmerica,Africa)

Likabilitymodel

Likingtheadvertisementwillleadtolikingthebrand
Indirect,entertaining/story,makefriendstobuildtrustanddependence
Japan,China

Symbolismmodel

Turnthebrandintoasymbol/code,cohesiontosubculture
Veryculturespecific(symbolsofstatus,success,selfexpression,stability)
HighPDI,HighUAI,LowMidIDV(Asia,France,southofEurope)

PlaceMarketingChannels
Whatisamarketingchannel(ordistributionchannel)?
Marketingchannelsaresetsofinterdependent
organizationsinvolvedintheprocessofmakinga
productorserviceavailableforuseorconsumptionby
theconsumerorbusinessuser(Kotler)
Whataboutinternationalmarketingchannels?
Theseinterdependentorganizationsallowgoodsand
servicestocrossnationalboundaries.
SCM, BtoC and BtoB, IMM

Internationalchannels
Seller

Channels
between
countries

Channels
within
foreign
countries

Final
buyers

1. Channels between countries: gets the products to the borders of

the foreign market; decisions concerning types of intermediaries
(agents, trading companies, etc), types of transport, financing and
risk management
2. Channels within foreign countries: gets the products from entry
point to final buyers and users; decisions concerning types of
retailers (franchising, supermarkets, etc), local channels
Channels of distribution vary considerably among countries.
Distribution, by its nature, is a marketing activity that is
performed close to the market.

Channelmanagement
Channeldesign:typesofintermediaries,numberof
intermediaries(exclusive,selective,intensive),contractual
arrangements
Managingretailing,wholesalingandmarketlogistics
Selecting,motivatingandevaluatingchannelmembers
(cooperation,conflict,competition)
Channeldynamics:traditional,VMS,HMS,multichannel
marketingsystems
Mostdifficultpartofthemixtostandardize

Entrymodechoice
Consideredbymanyasthemostimportant
aspectofafirmsinternationalization
strategy
Entrymodewilldeterminelongterm
successorwithdrawalfromforeignmarkets
Poordecisionscanbeverycostlyforthe
firm

Factorsintheentrymodedecision
Target country
market factors

Target country
environmental
factors

External factors

Internal factors

Company product
factors

Target country
production
factors

Home country
factors

Entry
mode
decision
Company resource
and commitment
factors

Elementsofmarketentrystrategies
Entry
operation

Choice of target
product/market

Setting objectives
and goals

Choice of
entry mode

Control systems:
monitoring operations /
Revising entry strategy

Design the
marketing plan

Target
market

Differenttypesofentrymodes
Exporting(commercialstrategy,commercial
modes)
Foreigndirectinvestment(industrialstrategy,
integratedmodes)
Associatedorcontractualmodes(contractual
strategy,competitivealliances)

Entrymodecontinuum

Exporting

Contractual modes

FDI

+
Commitment, risk, control, profit potential

Typesofexporting
Indirectexporting

Distributor/exportmerchants
Exportagent
EMC

Directexporting

Exportdepartment
Exportsalesrepresentatives
Ebusiness

Cooperativeexporting
Exportgroups
Piggybackexporting

Foreigndirectinvestment(FDI)
Theultimateformofforeigninvolvement
Directownershipofforeignbasedassembly,
manufacturingorsalesfacilities
Thecompanycanbuypartorfullinterestina
localcompany(M&A)orbuilditsownfacilities
(GFI,exnihilo)
Consideredthepreferredmodeofentry

AdvantagesanddisadvantagesofFDI
Advantages

Costeconomies(labor,rawmaterials,incentives,freightsavings,etc)
Betterimageinhostcountry
Deeperrelationshipwithgovernment,customers,localsuppliers,distributors
Betteradaptation
Fullcontrolofinvestments
Longtermobjectives

Disadvantages

Highinitialandoperatingcosts
Highlevelofrisk

FDIoptions
Makeorbuydecision

Greenfieldinvestment/Exnihilo
Mergersandacquisition

Branchorsubsidiary?
Structure
Legalstatus

AnalyzingFDIproject

Assessingprofitability
Discountedcashflowanalysis

Associatedentrymodes
Newest,mostrecentformsofinternationalbusiness
Transferoftechnologyorknowhowbetweentwofirms
Sharedrisks
Onlyoptionincountrieswherethegovernmentrequires
foreignfirmstouselocalcapital
Betteraccesstolocalmarketknowledge

Typesofassociatedentrymodes

Jointventure:foreignandlocalinvestorsshareownershipandcontrolof
localoperations

Licensing:licensorlicensesaforeigncompanytouseamanufacturing
process,trademark,patent,tradesecretorotheritemofvalueforafee

Managementcontracts:firmexportsmanagementservicesinsteadofa
product,separationbetweenownershipandmanagement

InternationalFranchising:contractualassociationbetweenafranchisor
(manufacturer,wholesalerorserviceorganization)andfranchisees
(independentbusinesspeoplewhobuytherighttoownandoperateunitsin
thefranchisesystem).Franchisingisbasedonsomeuniqueproduct,service
ormethodofdoingbusiness.
Industrialfranchising
Distributionfranchising
B.F.F.
Servicefranchising

Exampleofinternationalfranchising
entrymodes
Directmodes
Directfranchising(16%)
Subsidiary(19%)
Areadevelopmentagreements(14%)

Indirectmodes
Jointventure(16%)
Masterfranchising(34%)

Internationalfranchisingcomparativematrix
Strong
Distance /

Master
franchising

Adaptation

Direct franchising

Joint venture

Area
development
agreement

FDI

Direct
franchising

Weak
Weak

Commitment /
Control

Strong

Hierarchicalmodelofentrymodechoice
International franchising
Environmental
factors

Level of commitment
Equity

Environmental
factors

FDI

Organizational
factors

Non-equity

Direct or indirect mode

Joint
venture

Direct franchising
or ADA

Organizational
factors

Master
franchising

Determinantsofentrymodechoicein
internationalfranchising
Level1
(commitment)

Environmentalfactors

Organizationalfactors

Economicrisk
Marketsize
Politicalrisk
Competitivesituation
Levelofeconomicdevelopment

Financialandhumanresources
Managementattitudesand
orientation
Recruitingandtrainingfranchisees
Pricebondingratio

Financialsituationofpartners
Level2
(direct/indirect) Brandprotection
Localregulations
Culturaldifferences
TaxSystem
Geographicdistance
Franchisorsnationalculture

Brandimage
Experience
Needforcontrol
Typeofproduct/service
Degreeofstandardization
Brandrecognition
Dispersionofunits

Entrymodechoicesummary

Entrymodesvaryintermsofresourceorequitycommitmenttoforeign
markets

Lowcommitmentmodescanallowfirmtoreduceriskinhighriskcountries,
culturallydiversecountriesorlimitedpotentialmarkets

Desireddegreeofcontroloverinternationaloperationsinfluenceschoiceof
entrymode

Lossofcontrolyieldslimitedreturns

Nomarketentrystrategyisappropriateinallcircumstances

Mostfirmswillhaveavastportfolioofentrymodes,dependingoneach
specificmarketsituation

Comparativeapproachtoentrymodechoice(commitment,control,risk,
adaptation,contributionofknowhow)

Comparingdifferententrymodeoptions
High

Franchising

FDI

Licensing

Wholly owned
subsidiary (M&A)

Management contract

Contribution
of know-how

Branch office

AD / Concessionaire
EMC
Piggy back

Agent
Minority shareholding
through partial acquisition

ITC / distributor

Low

Foreign buying
department

Low

Level of ownership

Majority JV investment
(local partner know-how)

High

Choosingtherightentrymode
All entry modes
Internal factors
External factors

Comparative profit
contribution analysis

Rejected entry
modes
All feasible entry modes

Comparative
risk analysis

Comparative analysis for

nonprofit objectives

Ranking by overall
comparative assessment

The right entry mode

Target
market

Marketing channels within markets

Localmarketingchannels(withinmarkets)
Whatisamarketingchannelorchannelofdistribution?
anorganizednetworkofagenciesandinstitutionswhich,in
combination,performalltheactivitiesrequiredtolinkproducers
withuserstoaccomplishthemarketingtask(AMA)

Theyperformfunctionsthataddutilitytoaproductor
service:
Placeutility:availabilityofaproductorserviceinalocationthat
isconvenienttoapotentialcustomer
Timeutility:availabilitywhendesiredbyacustomer
Formutility:availabilityoftheproductprocessed,prepared,in
properconditionand/orreadytouse
Informationutility:availabilityofanswerstoquestionsand
generalcommunicationaboutusefulproductfeaturesandbenefits

BtoCvs.BtoBchannels
Businesstoconsumerchannels

Designedtoputproductsinthehandsofpeoplefor
theirownuse
Alternatives:directmarketing,franchising,salesforce,
agents/brokers,internalsalesforce,wholesalers,
retailers

Businesstobusinesschannels

Deliverproductstomanufacturersthatusethemas
inputsintheproductionprocessorindaytoday
operations
Alternatives:internalsalesforce,distributors,
wholesalers

Marketingchannelalternativesfor
consumergoods
M

Internet, mail
order, door-todoor, house party,
etc

MSF

Agents,
brokers

MSF

MSF

Companyowned,
franchising

Consumers

Problemsininternational
marketingchannels
Globalretailing
Caseofhypermarkets

Multichannelstrategies
CaseoffranchisingInternet

Marketspecificchannels
Caseofwinedistribution

Globalretailing
Globalretailingsince1970s,butmanyvariations
Differencesintheimportanceandtypesofretailing
channels:shoppingmalls,departmentstores,
discountstores,wholesaleclubs,categorykillers,
outletcenters,hypermarkets
Factorsaffectingthesuccessofhypermarkets:
culture,income,marketfragmentation,traditional
stores,locations,demography
Globalretailingmarketentry
Wal-mart case

Globalretailingmarketentry
strategyframework
Culturally close

Organicgrowth

Chainacquisition

Easy to
enter

Difficult
to enter

Franchising

Jointventure

Culturally distant

Conceptofmultichannelstrategies
franchisingandInternet
BRICKAND
MORTAR

CLICKAND
MORTAR

Coexistenceoftraditionaland
virtualmarketingchannels
brickandclick
Antagonosticor
complementary?

Somepracticaladvice
Brandstructureratherthanchannelstructure
(reduceriskofnetworkcompetition)
Sellallproductsonline
Ensuremultichannelcoherency
Backofficemotivation
UseInternettoincreasevisits(locations,
maps)
Limituseofemail
Butdoesthisapplytofranchising?

Multichannelstrategiesinfranchising

Franchisingfirmsarepluralformnetworks
Internetisanotherdistributionchannel
Internetseemstobeapriority
Internetisrevolutionizingfranchising

But,franchisorsofferingonlinesalesarelimited
32%intheUS
30%intheUK
Lessthan20%inFrance

Opportunitiesandthreatsofmultichannel
strategies(FranchisingInternet)
Opportunities
Newmarketingchannel
Increasedsales
Networkimage
Positiveinternaleffects

Threats
Cannibalism
Restrictionfranchiseesales
Nonconformitywebsites
Exclusiveterritories
Definitioncatchmentarea
Limitssomeentrymodes

Coexistenceoffranchisesystem
andinternet

Aremixednetworkscomplementary?
Opportunitiesandthreats?
Consequences?
Internetpractices?
ThefutureoffranchisingandInternet?

Someresults
Bettercommunicationwithfranchisees
Major
consequences Reducesdistance
Costeffectiveness,notdissuasive
Promotionaltoolforservices
Recruitingandtrainingfranchisees
Activities

2005:80%website,23%onlinesales
2010:98%website,54%onlinesales

Interpretations

Optimistic,franchiseInternetarecomplementary
Opportunities>Risks
BtoBadvantages>BtoCadvantages
Betterfranchisorfranchiseerelationship
Servicefranchising>Distributionfranchising
Communicationstrategy>Salesstrategy
Internalsaleofwebsitebeforeexternalsale
Bricktoclickvs.Clicktobrick
Internetexplainsevolutionofentrymodes

Marketspecificchannels
winedistribution
Winedistributionvariesenormouslyfromonemarketto
thenext,distributionmustbeperformedcloseto
market
Why?...
Tradition,OldWorldvs.NewWorld
Transportationviafreightforwarderorshippingagent,
physicaldistribution,complexregulatoryrequirements,
complexchoiceofdistributor/broker

Winedistributionchoices
Fourpossibilitiesforexporting

Importdistributor(ngociant)
Broker(courtier,agent)
Exportgroups
Directsales

Endofchannel(offpremise,onpremise)

Supermarkets/Hypermarkets(FMCG)
Specializedwineshops
Dutyfree
HORECA
Estate,ecommerce

Bottlevs.bulk

Brandimage,packagingBtoCapproach
Unbranded,supplychainBtoBapproach

Winedistributionsystems
Regulatoryframework,levelsofmarketingand
marketaccess
Threetypesofsystemsaroundtheworld:
Regulatedopenmarket:normalFMCG
Controlledmarkets:governmentinterventionin
nearlyallaspectsofwinemarketing
Mixedsystems:bothopenandcontrolled

U.S.winedistributionsystem
18thAmendment(1919Prohibition),21st
Amendment(1933authoritytostates),FAAAct
Aim:separatesuppliersandretailoutlets(tiedhouse
relationship)
Result:threetiersystemofdistributionwith
independentlicensedwholesalerinbetweentheretailer
andthesupplier/exporter
31openstates,19controlormonopolystates

Threetiersystem
Control States

Open States
Winery, Supplier

Tier I

Winery, Supplier

Distributor /
Wholesaler

Tier II

Control States

Supermarkets, wine
shops, HORECA, bars,
transportation, etc
Consumers

Tier III

State
controlled
retail stores

HORECA,
clubs,
etc

Consumers

Comparingwineretailoutlets
Outlet

Characteristics

Advantagesto
Disadvantagesto
producer
producer
Highvolumesales,low
Quantitypurchases,
Lackoffreedom,
Supermarket
marginsandlowretail
highbrand
lowlevelofinterest
/
inexperimental
Hypermarket prices,usuallylowlevelof awareness,helpwith
wineknowledgeofstaff
massappeal,
stylesandvarieties
convenienceof
location
Independent/
specialist

Tendstocatertowine
consumerswithhigher
levelofknowledge,high
levelofservice,small
producers

State
monopoly
retailer

Overallaimistopromote
healthydrinking,high
levelofwineknowledge,
accesstoawiderangeof
suppliers

Hall and Mitchell, 2007

handselling,
Eachoutletmustbe
strongservicefocus
servicedand
andCRM,interested
supplied
inexperimental
individually,small
stylesoruncommon
volumes
varieties
Highvolume
purchasescanbe
made,nationalor
regionalaccessto
market

Importanceofbeing
stocked,ifnot,
excludedfrom
market

Conclusion
7RulesofInternationalDistribution
Selectdistributors.Dontletthemselectyou.
Lookfordistributorscapableofdevelopingmarkets,rather
thanthosewithafewgoodcustomercontacts.
Treatlocaldistributorsaslongtermpartners,nottemporary
marketentryvehicles.
Supportmarketentrybycommittingmoney,managers,and
provenmarketingideas.
Fromthestart,maintaincontrolovermarketingstrategy.
Makesuredistributorsprovideyouwithdetailedmarket
andfinancialperformancedata.
Buildlinksamongnationaldistributorsattheearliest
opportunity.
Source:D.Arnold,HBR,2005

Conclusion:SRCandculturalrisk
Culturalriskisthemostsubjectiveofinternationalbusiness
risks;itisthemostdifficulttoassess
SRC:theunconsciousreferencetoonesownculturalvalues
SRCistherootofmanyinternationalmarketingproblems
RecognizingandadmittingSRCisquiteoftendifficult

Analyticalapproachtoreducetheinfluenceofonesown
culturalvalues(A.C.Samli)

4stepprocesstoreducingSRC
1.Definetheproblemorgoalintermsofdomesticcultural
traits,habitsornorms.
2.Definetheproblemorgoalintermsofforeigncultural
traits,habitsornorms.Makenovaluejudgments.
3.IsolatedeSRCinfluenceintheproblemandexamineit
carefullytoseehowitcomplicatestheproblem.
4.RedefinetheproblemwithouttheSRCinfluenceandsolve
fortheoptimalgoalsituation.