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Outline
1. 2. 3. 4. 5. 6. 7. 8. 9. Marketing challenges in global corporal activity Data collection und diagnoses in international marketing Market research in international marketing Strategic decisions in international marketing The tools of demand management as operational marketing Product and programme policy Contract and price policy Distribution policy Communication policy

10. The Marketing and Management of Innovation

SS 2011

HS Karlsruhe - HTW

International Marketing

Dr. Philipp Plugmann MSc MBA

5. The tools (TOOL BOX) of demand management as operational marketing

Product and Programme Policy

Communication Policy

Target group or target persons in selected countries on selected markets should be provided with service offerings appropriate to their needs

The challenge lies in directly or indirectly informing or influencing target persons through messages by efficiently using various communication instruments

Distribution Policy

Contract and Price Policy

Decisions are made on which ways the international market will be developed and through which distribution channels products are provided to customers

All elements of the contracts (prices, terms, conditions of credit, conditions of payment and delivery) constitute independent areas of international marketing

SS 2011

HS Karlsruhe - HTW

International Marketing

Dr. Philipp Plugmann MSc MBA

Outline
1. 2. 3. 4. 5. 6. 7. 8. 9. Marketing challenges in global corporal activity Data collection und diagnoses in international marketing Market research in international marketing Strategic decisions in international marketing The tools of demand management as operational marketing Product and programme policy Contract and price policy Distribution policy Communication policy

SS 2011

HS Karlsruhe - HTW

International Marketing

Dr. Philipp Plugmann MSc MBA

Outline
6. Programme and Product Policy 6.1 6.2 6.3 6.4 6.5 6.6 Overview over programme and product policy Topics of programme and product policy Alternatives of decision in programme/product policy Determining factors of product-line decision Innovations Advantages and Disadvantages of various market strategies

Digression: Brand piracy

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International Marketing

Dr. Philipp Plugmann MSc MBA

6.1 Overview over programme and product policy

Service policy includes all elements of decision referring to a market-driven organisation of all services offered on the market by the enterprise. Product policy as part of service policy should be understood as all actions that aim at the development, design, change or elimination of the service package forming the object of business activity. Programme policy as part of service policy should be understood as all actions that aim at the arrangement of the product line. From the supplier`s view, product line (programme) is understood as the sum of all selfproduced or producible and externally procured or procurable service packages offered at a particular time by a supplier to his customers.

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HS Karlsruhe - HTW

International Marketing

Dr. Philipp Plugmann MSc MBA

6.2 Topics of programme and product policy

Product and Programme Policy

Product decisions
(Which particular products?)

Programme decisions

Product shaping
(Which product features?)

Product development Product variation Product elimination

Products and product lines Broadness and depth of product line External procurement or own production

Product quality Product design Product packaging Product marketing

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International Marketing

Dr. Philipp Plugmann MSc MBA

6.3 Alternatives of decision in programme/product policy

Retention

Decision alternatives due to product-line policy

Change of structure

Shifting of weight Product variation Depth of product line Product differentiation Vertical diversification Broadness of product line Horizontal diversification Lateral diversification

Forward integration Backward integration

Extension

Change Narrowing

Depth of product line Broadness of product line


International Marketing

Standardisation Specialisation

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6.4 Determining factors of product-line decision

Determining factors of product-line decision

Technological reasons

Reasons of costs

Reasons of proceeds

Purchase advantage

Utilisation of potentials

Use of demand networks

Targets of growth

Safeguarding of proceeds by balancing risks

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6.5 Innovations
Degree of novelty for the supplier

high

Products are in existence already, but new for the supplier

New introduction of products in product lines already existing on the market

World novelty

medium

Product improvements

Extension of already existing product lines

Country-specific adaptation and new launch of products that are established in other countries

low

Product adaptations (e.g. cost reductions) at existing products low

Repositioning of existing products

Launch of products that are already established on other countries`markets

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medium high Degree of novelty for the customer/country`s market Dr. Philipp Plugmann MSc MBA International Marketing

6.6 Advantages and Disadvantages of various market strategies I

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Individual brand strategy Meaning


For every product area only one brand is planned, only occupying one segment each - High potential for a global brand - Creation of brand identity - Low need of coordination between brands

Multiple brand strategy


Several brands in one product area -Better penetration of the market because of more choice -Keeping off brand switchers -Possibility of cross-national differentiation -Protection of regular brands at launch of campaign brands - Danger of over-segmentation - Danger of cannibalisation - Lower cost-degression effects

Advantages

Disadvantages

- Brand costs must be borne by one product - High need of coordination between countries - Short product life-cycle, often not cost-effective

Example

Nestl with Alete, Maggi, Thomy, Buitoni

Philip Morris with Benson&Hedges and Marlboro, Eckes with Chantr and Mariacron

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International Marketing

Dr. Philipp Plugmann MSc MBA

6.6 Advantages and Disadvantages of various market strategies II


Brand-family strategy
Several brands of related products are offered under one name that is not the company name

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Umbrella-brand strategy Meaning


All products of one company are operated under one umbrella - Transfer of positive image effects on other brands - Brand costs are borne collectively by products - Decreasing risk of flop

Advantages

- Mutual support of the brands leads to better acceptance at commerce and customers - Lower costs for brand establishing because of synergy effects

-Too high diversification weakens brand image - Negative image transfer is also possible - Coordination need among brands Disadvantages - Danger of cross-national inflation of the brand product-line

- Danger of negative image transfer

Example

VW Bora, VW Passat, VW Golf, VW Polo

Beiersdorf with Nivea (shampoo, deodorant, cream, suntan oil) and Hansaplast (patches and spray)

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Dr. Philipp Plugmann MSc MBA

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Digression Brand Piracy


The prohibited imitation and copying of goods and the unauthorized use of protected brand names, trademarks and logos. Estimated annual damage Worldwide approx. 250 thousand million Euro (= 250 American billion Euro) !! In Germany approx.25 thousand million Euro (= 25 American billion Euro) !! Estimated job loss Europewide approx. 300,000 jobs !! In Germany approx. 50.000 jobs !!

Hardware - software - textiles - CDs - watches - medicine -spare parts for cars - cars - toys

Levi Strauss Beispiele


12 million forgeries since the beginning of the 1990th

Ferrari
At least 10 illegal workshops in G and the USA, where (among others) the Ferrari 355 GTS was completely copied

Lego
At least 14 lawyers of the enterprise control and prosecute forgeries in 15 countries

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International Marketing

Dr. Philipp Plugmann MSc MBA

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Digression Brand Piracy - Claims of the Manufacturer Claims of the Affected Brand Manufacturer

Lets talk about :


Replacement Equipment

Injunctive and Damages Claim Claim of Destruction of Pirate Goods

Claim of Disclosure of Origin and Distribution Channels

Claim to Hold the Goods at the Customs


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Digression Brand Piracy - Measures against Product Piracy

Attending to Channels Product Identification Exchange of Experiences Enquiries

Information of distribution partners about forgers`activities, check of distribution channels, selective choice of new market intermediaries Addition of forgery-proof product features,: holograms, microchips, etc

Use of fora, organisation committees, clubs etc for information transfer

Cooperation with authorities, assignment of private investigators, incentives for customers to identify forgeries, tracing of ditribution channels of confiscated forgeries Complaints of offence are possible, if trademark rights have been reserved

Prosecution

Public Relations

Advice about economic damage, hints at safety endangerings (e.g. forged original brake covering at cars) Standardisation of the legal EU-framework, improvements of customs checks at Eu borders, membership in relevant associations

Lobbying

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Dr. Philipp Plugmann MSc MBA

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Outline
1. 2. 3. 4. 5. 6. 7. 8. 9. Marketing challenges in global corporal activity Data collection und diagnoses in international marketing Market research in international marketing Strategic decisions in international marketing The tools of demand management as operational marketing Product and programme policy Contract and price policy Distribution policy Communication policy

SS 2011

HS Karlsruhe - HTW

International Marketing

Dr. Philipp Plugmann MSc MBA

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Outline
7. Contract and price policy 7.1 Position of price policy in the framework of sales marketing 7.2 Price policy in international marketing 7.3 Price strategies in international marketing 7.4 Price elasticities 7.5 Price differentiation 7.6 Price-bundling strategy as a special form of price differentiation Digression: Opening rituals in business negotiations

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International Marketing

Dr. Philipp Plugmann MSc MBA

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7.1 Position of Price Policy in the Framework of Sales Marketing I


As remuneration the price is opposite to the supplier`s service package which is subject to the offer. Apart from the supplier`s service package the price is affected by other market factors (customers, competitors, other environment). Even though these are in interaction with the factors influencing the supplier`s price, the supplier can only exert limited influence on them. The price decision is generally connected with the decision about the amount. The price is the sharpest, but also the most dangerous marketing instrument In the companies, the price decision often is paid too little attention to. Often there is considerable uncertainty about the price decision on the side of the supplier .

Quelle: in Anlehnung an Engelhardt, W. H. (1990): Aktionsparameter des Marketing, Bochum.

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International Marketing

Dr. Philipp Plugmann MSc MBA

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7.1 Position of Price Policy in the Framework of Sales Marketing II At commodities (products that are perceived as of similar type) price has a strong effect on sales. Price-political instruments cause a change of behaviour in the customer that is up to twenty times stronger than that of other instruments (product and communication policy) Compared to other instruments, price policy can be employed at shorter notice and causes comparatively low costs.

SS 2011

HS Karlsruhe - HTW

International Marketing

Dr. Philipp Plugmann MSc MBA

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7.2 Price Policy In International Marketing


Trends of globalisiation Effects on price policy

Increasing standardisation of internationally distributed products

Cut of piece prices and increasing of price transparency and with that increase of price competition

The introduction of the Euro

Higher price transparency in Europe

Decrease of trade barriers and exchange rate risks

Greater difficulty to keep up internationally different price levels

Globally active enterprises increasingly position themselves in the Internet

Possibilities of international price comparisons increase

Quelle: in Anlehnung an Engelhardt, W. H. (1990): Aktionsparameter des Marketing, Bochum.

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HS Karlsruhe - HTW

International Marketing

Dr. Philipp Plugmann MSc MBA

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7.3 Price Strategies In International Marketing I

Skimming strategy High Price Strategy Premium strategy

When entering the market or when launching new products respectively, boarding with high price that is gradually lowered after exhaustion of the demand potential or appearance of several competitors. High price level is permanetly kept: -if market entry is made impossible for others through barriers -if advance of quality is protected by patent -if a uniquie selling proposition is gained by building up a brand image

Penetration strategy Low Price Strategy Promotionprice strategy

Penetration of the market through lower price level and discouraging competitors. Low profit margins are supposed to be profitable through mass effect.

In the course of the product life cycle the lower price level is established

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Dr. Philipp Plugmann MSc MBA

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7.3 Price Strategies In International Marketing II

Advantages High gains on short term possible already in early phases Skimming Strategy Quick amortisation of research and development costs ! Positive quality and prestige effects (High quality assumed at high prices)

Risks Not enough elite consumers might be reached Competitors enter the market too early with campaign prices

Quick increase in sales possible Penetration Strategy Quick decsend to experience curve Reduced flop risk because high acceptance is probable due to low prices

Sales and piece price degression stay behind the planned values Competitors are not discouraged long enough and enter the market with even lower prices -

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7.4 Price Elasticity Of The Demand

15 DM

15 DM 10 DM

Price

10 DM

100 105 Demanded amount per sales period

50

150 Demanded amount per sales period

Low price elasticity, inelastic demand

High price elasticity, elastic demand

Quelle: Kotler/Bliemel: Marketing-Management, 10. Auflage, Stuttgart 2001, S. 827.

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7.5 Price differentiation

In the framework of price differentiation customers demand prices of differing height for identical service packages. Therefore it is an instrument of differentiated market cultivation, the application of which is based on the results of market segmentation Forms of price differentiation personal spatial concerning human resources quantitative Price-bundling as a special form of price differentiation

Quelle: Meffert, H: (2000): Marketing, 9. Aufl., Wiesbaden, S. 550 ff.

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International Marketing

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7.6 Price-Bundling As A Special Form Of Price Differentiation


Buyer composes an individual service package or bundle out of standardised components Example: Buyer arranges various hardware components of different capacities as a complete package and pays less than the sum of the individual prices

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All products can only be bought as part of a bundle, not individually Example.:VW special edition with in-built, particular equipment

When buying a product the customer receives vouchers for the purchase of another product with weaker sales at reduced price. Example: Coca-Cola with voucher for reduction at the purchase of Minute Maid

Price Building Block Cross Vouchers

Pure PriceBundling Mixed Price Bundling


Customer has the choice to buy the individual product or the whole system - Example: Microsoft offers the complete Office as over-all price or individual prices for Word and Excel separately

Linked Business

Supplier offers complementary goods at a lower price Example: Mobile phone contract plus inexpensive mobile phone with 24months contract

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Digression: Opening Rituals In Business Negotiations ( Culture-Management)


Nation Germany Finland USA UK France 5 min 5 min 5 min 15 min 20 min 20 min Introductory Phase Formal introduction, take a seat, begin Formal introduction, take a seat, coffee, begin Casual introduction, jokes, coffee, begin Formal introduction, coffee, biscuits, 10 minutes small talk (weather, sports), begin Formal introduction, 15 minutes small talk (politics, scandals), begin Formal introduction, preliminary talk, seating arrangements, green tea, 15 minutes small talk, abrupt signal of highest executive, begin 20-30 minutes small talk (soccer, family), as long as additional participants arrive. Begin when everybody has arrived.
International Marketing Dr. Philipp Plugmann MSc MBA

Japan

Spain / Italy

30 min

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Outline
1. 2. 3. 4. 5. 6. 7. 8. 9. Marketing challenges in global corporal activity Data collection und diagnoses in international marketing Market research in international marketing Strategic decisions in international marketing The tools of demand management as operational marketing Product and programme policy Contract and price policy Distribution policy Communication policy

SS 2011

HS Karlsruhe - HTW

International Marketing

Dr. Philipp Plugmann MSc MBA

27

Outline
8. Distribution policy 8.1 Distribution entities and channels 8.2 Forms of direct marketing 8.3 Assignment of sales personnel 8.4 E-Commerce as channel of distribution and instrument for customer loyalty

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International Marketing

Dr. Philipp Plugmann MSc MBA

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8.1 Aims and Function of Distribution Policy

Aims and functions of distribution policy lie in - choosing the appropriate marketing intermediaries and distribution entities - determining suitable storage locations and sizes - determining adequate packaging units - choosing the partners involved in the physical distribution.

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8.1 Distribution Entities and Channels I


Distribution Entities

Intra-Corporate Distribution Entities

Extra-Corporate Distribution Entities

Internal Distribution Entities


Members of the executive board Inside-sales people Other employees with customer contact

External Distribution Entities


Travelling salespeople Customer consultants

External Distribution Entities


Sales representatives .. Commission merchants Agents

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International Marketing

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8.1 Distribution Entities and Channels II


The decisions about the distribution channels are concerned with the question, which distribution channels including all persons and organisations involved in the process are to choose . Specific to individual countries, particular attention must be paid to : Restrictions on currency or state control of the economy

In which coutries do those restrictions exist - how far has the state to be engaged as intermediary institution?

Influence of Sogo Shoshas in Japan

These huge universal trade companies (Mitsubishi Corp. and Mitsui & Co. Ltd.) have to be engaged to develop the Japanese market Particular pharmaceutical wholesalers in Austria list German pharmaceuticals only under the condition of exclusive distribution rights in Germany In how far are large supermarkets and their location factors transferable to other indutrial countries, which buying habits are dominant?
International Marketing Dr. Philipp Plugmann MSc MBA

Feedback trials of highly influential wholesalers

Market forms typical for Germany - transferrable to a foreign country?


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8.1 Distribution Entities and Channels Example Japan


In Japan extensive self-service department stores are of much lesser importance than in Europe or Northern America. This is essentially due to two reasons:

Large self-service department stores had to be built outside of the big cities. These are only accessible by car many Japanese do not own a vehicle, because the costs (e.g. parking space) in the big cities such as Tokyo are nearly unaffordable.

Due to the high property prices singles as well as families live in most constricted conditions therefore there is little store room in the flats (deep freezer etc for groceries), so that many Japanese are forced to go shopping several times a week.

The self-service department store Carrefour with 17.000 sqm, recently opened in Tokyo, unfortunately did not yield the demand hoped for Continuative Question Can these tendencies be imagined in European countries as well? In which countries could such a trend take place? What would it depend on?
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8.2 Forms of Direct Marketing


a) b) c) d) e) Authorised Dealer is bound by a contract, sells exclusively products of one manufacturer Branch Offices are legally dependent, therefore part of the manufacturing company Telephone Selling Consumer is served without engagement of location-dependent trade. Advantage: individual, comfortable, low marketing costs. Marketing through catalogue, direct mailing or fax - low marketing costs, but rather impersonal MLM-Marketing (Multi-Level-Marketing) early structured marketing, independently working employees sell products to private persons and recruit additional salespeople by themselves, in whose turnovers they are also participating (amway, tupperware) Factory-Outlet-Center (FOC) Sales locations direktly at the manufacturer for the sale of goods with minor faults or from the early season respectively - has established as one of the leading distribution channels for designer fashion in Germany.

f)

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8.3 Assignment of Sales Personnel


Assignment of sales personnel from the country of origin (Expatriates) Assignment of local sales personnel (Locals) Assignment of sales personnel from third countries (Third-Country-Nationals)

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Advantages:

-Usually particularly high competence at complex, technically demanding products -- Positve omage effects from the view of the foreign customer possible -Good knowledge of the company and the company policies

Advantages: - Best local market knowledge


--Cultural fit between buyer and seller -- Usually more cost-effective than expatriates

Advantages:
-Positive image effects at the customer possible in the sense of a global enterprise --Possibly highest competence, if allocation of sales personnel to a country is carried out independent from nationality but only according to qualification

Disadvantages:
-Very cost-intensive -- Possibly politically or legally conditioned restrictions as regards work possibilities of foreigners in the country (e.g. at high unemployment in the country) -- Low local market knowledge -- Possible low cultural affinity between buyer and seller -- Often low inclination of sales personnel to move abroad

Disadvantages:
-Decision possibly not according to company policies --Often low knowledge about products and their areas of application

Disadvantages:
-Customer might get confused about actual origin or head quarters of the enterprise -Possibly large cultural divergence between buyer and seller -- Possibly politically or legally conditioned restrictions as regards work possibilities of foreigners abroad (e.g. at high unemployment in the country)

Source: Berndt/Fantapi Altobelli/Sander 2005, p. 232.


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8.4 E-Commerce As Channel of Distribution And Instrument For Customer Loyalty


First of all E-Commerce has the advantage of low distribution costs and various possibilities of generous product presentation For this reason, E-Commerce supplements and replaces: - Advertising, sales promotion, product presentation - Price negotiations and carrying out of payments - Service, handling of complaints, consultation E-Commerce also serves to enhance customer loyalty - How does this work? The wealth of information that can be yielded, structured and stored about a customer allows a better diagnosis of the needs structure of this particular customer - This diagnosis becomes the basis of an individual, client-centred direct approach- The technical term for this is eCRM electronic costumer-relationship management Thanks to eCRM conclusions can be drawn from former purchases and on this basis individual offers can be placed the next step is to install customer fora in the Internet (virtual communities), where customers can get into conversation, exchange purchase experiences with each other, communicate latent needs and with this increase their identification with the brand / the manufacturer.

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8.4 E-Commerce As Channel Of Distribution And Instrument For Customer Loyalty Restrictions and Questions in E-Commerce
Language barriers in Internet presence Elimination of local trade intermediaries abroad Safety in payment transactions A various choice of languages is necessary - at luxury consumer goods e.g. English, French, Spanish, Russian, Chinese and Japanese. Not in all cases are Internet prices allowed to lie under the sales prices of local merchants to avoid conflicts and keep up the merchants`favourable attitude. Data security systems or forms of electronic signature are getting increasingly more expensive and complex; additionally there is no international standard in existence yet. Does the customer live in an EU or Non-EU-State? Private or business customer? Can the German exporter prove the foreign customer`s identity? Organisations such as Trustedshop offer certification about confidentiality, safety of order, payment transactions, AGB and data security

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Tax questions can become difficult

Certification as proof of seriosity

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Outline
1. 2. 3. 4. 5. 6. 7. 8. 9. Marketing challenges in global corporal activity Data collection und diagnoses in international marketing Market research in international marketing Strategic decisions in international marketing The tools of demand management as operational marketing Product and programme policy Contract and price policy Distribution policy Communication policy

SS 2011

HS Karlsruhe - HTW

International Marketing

Dr. Philipp Plugmann MSc MBA

37

Outline
9. Communication policy 9.1 Tasks and topics of communication policy 9.2 Advertising in international marketing 9.3 Limitations and possibilities in the international communication policy 9.4 Cultural meaning of colours in different countries 9.5 Marking in international marketing 9.6 Cross-Media-Marketing

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9.1 Tasks and Topics Of Communication Policy


Temporal permanent influencing of target persons and target groups to reach advertising goals, carried out with differing intensity. Promotions, catalogues, competitions, customer clubs, promotional gifts, Price actions, displays, presentations Direct customer communication with individual, personal effect, useful for products with high explanatory need. Activities of image building, not connected with products, but inform about values and norms of the enterprise to build up corporate identity. Representation, use or mentioning of products in films in a way that the brand is recognizable. Immediate approach of selected target persons by telephone, mailing, e-mail, fax

Advertising

Sales Promotion

Personal Marketing

Public Relations Product placement

Direkt Marketing

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9.2 Advertising in international marketing


Content of Advertisement Message

Needs of Target persons

Language, Communicative Knowledge, behaviour, Educational Frequency of use Background, of which Reasonablechannels / ness of medium? technical details for e.g, goods that need explanation
International Marketing

Degree of utilizability of competing products

Basic conditions: -legal -socio-cultural

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Example MedTech

Communication = Presentation

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9.3 Limitations and Possibilities In The International Communication Policy

Cultural particularities are captured in market research and flow into shaping of the advertisement message.

The level of education of a nation determines the degree of abstractness of the advertisement message, the number of pictures in comparison to the text and the selection of technical details.

Offending religious feelings must be avoided The role of man or woman decides who is more likely to be the addressed buyer.

Norms like e.g. beauty ideals also determine the content of advertising A naked shoulder causes a sensation in China, while causing positive associations in Western Europe. A big person might personify a lack of discipline in Western Europe, not in the Middle East, where s/he is associated with wealth.

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9.4 Cultural Meaning of Colours in Different Countries

Lets talk about the meaning of colors :


Black White Red Green Blue Yellow

Switzerland

Pessimism

Anger

China

Tolerance

Japan

Pakistan

Arabian Countries Brasil Peace Purity

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9.5 Marking In International Marketing - Brand Name And Trademark I

Brand Name Trademark Standardisation Standardisation


Global Standardisation e.g. Marlboro Brand name cross-national identical, trademark different

Differentiation
Trademarkn cross-national identical, brand name adapted (Langnese, Iglu, Aldi, Deichmann)

Differentiation

Trademark and brand name adapted for the individual specific country

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9.5 Marking In International Marketing - Brand Name And Trademark II

Langnese in Austria, Hungary, Rumania, Bulgaria und Czech Republic Iglu in UK

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9.5 Marking In International Marketing - Brand Name And Trademark III

Aldi in Austria

The Swiss family enterprise Dosenbach, founded 1865, was taken over by the Deichmann Group in 1973, the name of the enterprise Dosenbach, however, has been kept in Switzerland.

in Germany

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9.6 Cross-Media - Marketing

Crossmedia-Marketing means the use of different, inter-coordinated communication channels to advertise a product or a service. Supplementing the classical communication mix, particularly the new electronic media are employed. The advertising media are networked with each other to use their specific strengths in an ideal way. Therefore a consistent advertising line (CD/CI) is used to gain a high recognition value. (Example: print media plus radio advertising plus Internet plus mobile phone)

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9.6 Cross-Media-Marketing

Lidl, grocery discounter in Austria, advertises with Internet offer, newspaper inserts, advertisements, SMS announcements and personal shopping list in the Internet

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10. The Marketing and Management of Innovation


Course discussion

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Cardiac Pacemaker Innovation


Lets talk about the influence of Innovation and its value for the strategy of an international company

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Out of the Box : Private Equity / Venture Capital Is this important for international marketing ?

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