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Unit1- introduction to Intl mktg.ppt
- 1. Unit -1 Introduction to International marketing Dr.Yogananthan
- 2. CONTENTS Definitions Advantages of international business Domestic business and reasons Internationalization process Evolution of global company International marketing approaches International orientations Mode of entry International culture Entry evaluation process summary
- 3. International marketing is simply the application of marketing principles to more than one country. However, there is a crossover between what is commonly expressed as international marketing and global marketing, which is a similar term. For the purposes of this lesson on international marketing and those that follow it, international marketing and global marketing are interchangeable.
- 4. Definitions .. At its simplest level, international marketing involves the firm in making one or more marketing mix decisions across national boundaries. At its most complex level, it involves the firm in establishing manufacturing facilities overseas and coordinating marketing strategies across the globe. Doole and Lowe (2001) International Marketing is the performance of business activities that direct the flow of a company's goods and services to consumers or users in more than one nation for a profit. Cateora and Ghauri (1999) International marketing is the application of marketing orientation and marketing capabilities to international business. Muhlbacher, Helmuth, and Dahringer (2006)
- 5. Global marketing refers to marketing activities coordinated and integrated across multiple country markets. Johansson (2000) Global/transnational marketing focuses upon leveraging a company's assets, experience and products globally and upon adapting to what is truly unique and different in each country. Keegan (2002) International marketing is simply the application of marketing principles to more than one country.
- 6. GO INTERNATIONAL !!!!! To increase the customer base / to acquire new bases To explore new ventures / increase product width To increase the profit opportunities/ tapping of global market growth To decrease the dependance of one market To reduce the impact of local meltdown / stiff domestic competition To reduce the domestic risks To attack global competitors in their home markets To promote spin off benefits To have advantage on economies of scale To serve customers travel abroad / capture the global mobility of customers To promote strategy long term survival
- 7. Stay Domestic, When?!!!!! Large enough local customer base / market Need not to do Learn foreign business climate / culture Law & legal constraints Volatile nature of currency Political & legal uncertainties
- 8. Stages of internationalisation process Stage 1- No regular export activity Stage 2 Export via independent representatives (agents) Stage 3 Establish 1 or 2 subsidiaries Stage 4 Establish firm / production facilities
- 9. Stages of evolution of global company Pure domestic company Primary domestic company with some foreign business (some foreign arms) International company Mulitinational company Global / transnational company
- 10. Approaches in international marketing Waterfall approach Gradual entry BMW, GE, Benetton, The Body Shop, LG, Samsung.. Sprinkler approach Simultaneous entry Hollywood movies, MS windows
- 11. International Orientations Ethnocentrism home country orientation Polycentrism host country orientation Regiocentrism regional orientation Geocentrism - global orientation
- 12. Ethnocentrism Primary domestic & secondary foreign operations Domestic firm superior shares to foreign arm Extension strategy
- 13. Polycentrism Independent & equal growth of foreign markets Representation augmented Adaptation strategy
- 14. Regiocentrism Viewing different regions as different markets Strategy integration, organised approach and product policy common regional zones
- 15. Geocentrism Considering the whole world as single market International marketing mix
- 16. Mode of entry into international markets Internet, Exporting, Licensing, International Agents, International Distributors, Strategic Alliances, Joint Ventures, Overseas Manufacture and International Sales Subsidiaries. Franchisee, etc Finally we consider the Stages of Internationalization.
- 17. The Internet The Internet is a new channel for some organizations and the sole channel for a large number of innovative new organizations. The eMarketing space consists of new Internet companies that have emerged as the Internet has developed, as well as those pre-existing companies that now employ eMarketing approaches as part of their overall marketing plan.
- 18. Exporting There are direct and indirect approaches to exporting to other nations. Piggybacking whereby your new product uses the existing distribution and logistics of another business. Export Management Houses (EMHs) that act as a bolt on export department for your company. They offer a whole range of bespoke or a la carte services to exporting organizations. Consortia are groups of small or medium-sized organizations that group together to market related, or sometimes unrelated products in international markets. Trading companies were started when some nations decided that they wished to have overseas colonies. They date back to an imperialist past that some nations might prefer to forget e.g. the British, French, Spanish and Portuguese colonies. Today they exist as mainstream businesses that use traditional business relationships as part of their competitive advantage.
- 19. Licensing Licensing includes franchising, Turnkey contracts and contract manufacturing. Licensing is where your own organization charges a fee and/or royalty for the use of its technology, brand and/or expertise. Franchising involves the organization (franchiser) providing branding, concepts, expertise, and infact most facets that are needed to operate in an overseas market, to the franchisee. Management tends to be controlled by the franchiser. Examples include Dominos Pizza, Coffee Republic and McDonald's Restaurants. Turnkey contracts are major strategies to build large plants. They often include a the training and development of key employees where skills are sparse - for example, Toyota's car plant in Adapazari, Turkey. You would not own the plant once it is handed over.
- 20. International Agents and International Distributors Agents are often an early step into international marketing. Put simply, agents are individuals or organizations that are contracted to your business, and market on your behalf in a particular country. They rarely take ownership of products, and more commonly take a commission on goods sold. Agents usually represent more than one organization. Agents are a low-cost, but low- control option.
- 21. Strategic Alliances (SA) Strategic alliances is a term that describes a whole series of different relationships between companies that market internationally. Sometimes the relationships are between competitors. There are many examples including: Shared manufacturing e.g. Toyota Ayago is also marketed as a Citroen and a Peugeot. Research and Development (R&D) arrangements. Distribution alliances e.g. iPhone was initially marketed by O2 in the United Kingdom. Marketing agreements.
- 22. Joint Ventures (JV) Joint Ventures tend to be equity-based i.e. a new company is set up with parties owning a proportion of the new business. There are many reasons why companies set up Joint Ventures to assist them to enter a new international market: Access to technology, core competences or management skills. For example, Honda's relationship with Rover in the 1980's. To gain entry to a foreign market. For example, any business wishing to enter China needs to source local Chinese partners. Access to distribution channels, manufacturing and R&D are most common forms of Joint Venture.
- 23. Overseas Manufacture or International Sales Subsidiary A business may decide that none of the other options are as viable as actually owning an overseas manufacturing plant i.e. the organization invests in plant, machinery and labor in the overseas market. This is also known as Foreign Direct Investment (FDI). This can be a new-build, or the company might acquire a current business that has suitable plant etc. Of course you could assemble products in the new plant, and simply export components from the home market (or another country).
- 24. Internationalization Stages 1. Indirect exporting or licensing 2. Direct exporting via a local distributor 3. Your own foreign presences 4. Home manufacture, and foreign assembly 5. Foreign manufacture
- 25. International Marketing and Culture Culture is the way that we do things around here. Culture could relate to a country (national culture), a distinct section of the community (sub-culture), or an organization (corporate culture). It is widely accepted that you are not born with a culture, and that it is learned. So, culture includes all that we have learned in relation to values and norms, customs and traditions, beliefs and religions, rituals and artefacts (i.e. tangible symbols of a culture, such as the Sydney Opera House or the Great Wall of China).
- 27. The International Market Entry Evaluation Process The five steps are 1. Country Identification, 2. Preliminary Screening, 3. In-Depth Screening, 4. Final Selection and 5. Direct Experience.
- 29. Step One - Country Identification You can choose any country to go into. So you conduct country identification - which means that you undertake a general overview of potential new markets. There might be a simple match - for example two countries might share a similar heritage e.g. the United Kingdom and Australia, a similar language e.g. the United States and Australia, or even a similar culture, political ideology or religion e.g. China and Cuba. Often selection at this stage is more straightforward. For example a country is nearby e.g. Canada and the United States.
- 30. Step Two - Preliminary Screening At this second stage one takes a more serious look at those countries remaining after undergoing preliminary screening. Now you begin to score, weight and rank nations based upon macro- economic factors such as currency stability, exchange rates, level of domestiv consumption and so on. Now you have the basis to start calculating the nature of market entry costs.
- 31. Step Three - In-Depth Screening Now one can deal with not only micro-economic factors but also local conditions such as marketing research in relation to the marketing mix i.e. what prices can be charged in the nation? - How does one distribute a product or service such as ours in the nation? How should we communicate with are target segments in the nation? How does our product or service need to be adapted for the nation? All of this will information will for the basis of segmentation, targeting and positioning. One could also take into account the value of the nation's market, any tariffs or quotas in operation, and similar opportunities or threats to new entrants.
- 32. Step Four - Final Selection The company could look at close competitors or similar domestic companies that have already entered the market to get firmer costs in relation to market entry. Managers could also look at other nations that it has entered to see if there are any similarities, or learning that can be used to assist with decision-making in this instance. A final scoring, ranking and weighting can be undertaken based upon more focused criteria. After this exercise the marketing manager should probably try to visit the final handful of nations remaining on the short, shortlist.
- 33. Step Five - Direct Experience Personal experience is important. Marketing manager or their representatives should travel to a particular nation to experience firsthand the nation's culture and business practices. Now you will need to be careful in respect of self- referencing. Remember that your experience to date is based upon your life mainly in your own nation and your expectations will be based upon what your already know. Try to be flexible and experimental in new nations, and don't be judgemental - it's about what's best for your company - happy hunting.
- 34. International Marketing Environment Environment analysis for international marketing. One of the fundamental steps that needs to be taken prior to beginning international marketing is the environmental analysis. Of course there are many tools on Marketing Teacher that would prove useful at this stage such as lessons on the marketing environment, PEST Analysis, SWOT Analysis, POWER SWOT and Five Forces Analysis. However, the very specific and unique nature of each individual nation needs to be looked into. Below we consider the nature of an international PEST Analysis, and the influence of tariff and non-tariff barriers.
- 35. An International PEST Analysis. International PEST Analysis would consider: How easy will it be to move from purely domestic to international marketing? Would your business benefit from inward foreign investment? What is the nature of competition within each individual market, and how will companies from other nations compete when you meet with them head-to- head in unfamiliar countries? Many other factors that are specific to your organization or industry.
- 36. Political Is there any historical relationship between countries that would benefit or hinder international marketing? What is the influence of communities or unions for trading? E.g. The European Union and its authority over European laws and regulation. What kind of international and domestic laws will your business encounter? What is the nature of politics in the country that you are targeting, and what is their view on encouraging foreign competition from overseas?
- 37. Economic What is the level of new industrial growth? E.g. China is experiencing terrific industrial growth. What is the impact of currency fluctuations on exchange rates, and do your home market and your new international market - share a common currency? E.g. Polish companies trading in Eire will use Euros. There are of course the usual economic indicators that one needs to be aware of such as inflation, Gross Domestic Product (GDP), levels of employment, national income, the predisposition of consumers to spend savings or to use credit, as well as many others.
- 38. Socio-cultural Culture, religion and society are of huge importance. What are the cultural norms for doing business? E.g. is there a form of barter? Will cultural norms impact upon your ability to trade overseas? E.g. Putonghua is very difficult for many Western people to learn.
- 39. Technology Do copyright, intellectual property laws or patents protect technology in other countries? E.g. China and Jordan do not always respect international patents. Does your technology conform to local laws? E.g. electrical items that run on non-domestic currents could be dangerous. Are technologies at different stages in the Product Life Cycle (PLC) in various countries? E.g. versions/releases of software.
- 40. POWER SWOT analysis P = Personal experience. How do you the marketing manger fit in relation with the SWOT analysis? You bring your experiences, skills, knowledge, attitudes and beliefs to the audit. Your perception or simple gut feeling will impact the SWOT. O = Order - strengths or weaknesses, opportunities or threats. Often marketing managers will inadvertently reverse opportunities and strengths, and threats and weaknesses. This is because the line between internal strengths and weaknesses, and external opportunities and threats is sometimes difficult to spot. For example, in relation to global warming and climate change, one could mistake environmentalism as a threat rather than a potential opportunity. W = Weighting. Too often elements of a SWOT analysis are not weighted. Naturally some points will be more controversial than others. So weight the factors. One way would be to use percentages e.g. Threat A = 10%, Threat B = 70%, and Threat C = 20% (they total 100%).
- 41. E = Emphasize detail. Detail, reasoning and justification are often omitted from the SWOT analysis. What one tends to find is that the analysis contains lists of single words. For example, under opportunities one might find the term 'Technology.' This single word does not tell a reader very much. What is really meant is: 'Technology enables marketers to communicate via mobile devices close to the point of purchase. This provides the opportunity of a distinct competitive advantage for our company.' This will greatly assist you when deciding upon how best to score and weight each element. R = Rank and prioritize. Once detail has been added, and factors have been reviewed for weighting, you can then progress to give the SWOT analysis some strategic meaning i.e. you can begin to select those factors that will most greatly influence your marketing strategy albeit a mix of strengths, weaknesses, opportunities and threats. Essentially you rank them highest to lowest, and then prioritize those with the highest rank
- 42. Five force analysis The Five Forces - Michael E. Porter of Harvard Business School in 1979. 1.1 The threat of the entry of new competitors 1.2 The intensity of competitive rivalry 1.3 The threat of substitute products or services 1.4 The bargaining power of customers (buyers) 1.5 The bargaining power of suppliers
- 43. References Rakesh Mohan Joshi, International marketing, first edition. Francis Cherunilam, International marketing, first edition. Doole, I. and Lowe, R. (2001), International Marketing Strategy - Analysis, Development and Implementation, Thomson Learning, 3rd Ed. Johansson, J.K. (2000), Global Marketing - Foreign Entry, Local Marketing, and Global Management, Johansson, International Edition. Cateora, P.R., and Ghauri, P.N. (1999), International Marketing, McGraw-Hill Publishing Company, European Edition. Terpstra, v. and Sarathy, R. (2000) International Marketing, 8th Edition, Dryden Press. Hall, E.T. and Hall, M.R. (1986) Hidden Differences: doing business with the Japanese, Anchor Press.