International marketing

Definition 1. Global industry - It is an industry in which strategic position of competitors in major geographic or national markets are fundamentally affected by their overall global position.

2. Global firm It is a firm that operates in more than one country & captures R&D, production logistical, marketing & financial advantages in its cost & reputation that are not available to purely domestic competitors.

Economic Comparison 2000

GNP

Country
USA Japan

$Billion
9,646 4,337

Rank
1 2

GNP(PPP) $Billion Rank 9,646 3,354 1 3

GNP GNP(PPP) per Capita per Capita 34,260 34,210 34,260 26,460

Germany
UK France Italy China Canada Brazil Spain Mexico India World

2,058
1,464 1,429 1,154 1,065 647 607 590 498 471 31,171

3
5 4 6 7 8 9 10 11 12 --

2,054
1,407 1,440 1,348 4,966 840 1,245 757 864 2,432 44,506

5
7 6 8 2 11 9 12 10 4 --

25,050
24,500 23,670 20,010 840 21,050 3,570 14,960 5,080 460 5,150

25,010
23,500 24,470 23,370 3,940 27,330 7,320 19,180 8,810 2,390 7,350

Global Markets. Regional market. 1. Western Europe.

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23 countries. 460 million population. Physically less than size of Australia. 32% of world income by 2000.

2.
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Eastern & central Europe.

338 million population. 5.5% of world population. 2.5% of world GNP.

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3.
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North America.
407 million population. $9,254 billion GNP.

4.
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Asia Pacific.
30 countries. 52% of world population. 25% of global income. 58% income by Japan.

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5.
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Latin America.
7% of world wealth. 9.5% of population. 510 million population.

6.
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Middle East.
16 countries. 1.9% of world GNP. 260 million population.

7.
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Africa.
730 million population. 1.3% of world wealth. 11.9% of world population.

Five questions to be answered.

1.

2.
3. 4. 5.

Deciding whether to go abroad? Deciding which market to enter? Deciding how to enter the market? Deciding on the marketing program? Deciding on the marketing organization?

I. Deciding whether to go abroad?

Reasons 1. Counter attack the competitors. 2. Higher profit opportunities. 3. To achieve economies of scale. 4. Reduce dependence on one market. 5. Customers go abroad requires international servicing.

Challenges 1. Difficulty in understanding consumer psychology. 2. Huge foreign indebt ness. 3. Unstable government. 4. Foreign exchange problem. 5. Government regulations. 6. Tariff & other trade barriers. 7. Corruption. 8. Technological pirating. 9. High cost of production & communication adaptation. 10. Shifting borders.

II. Deciding which market to enter?

Market in few or many countries 1. Few markets - Reasons. a. Market entry & control costs are high. b. Product & communication adaptation costs are high. c. Population income size & growth are high. d. Dominant foreign firms can establish high barriers to entry.

Types of countries to consider 1. Attractiveness is influenced by product, geography, income, population, political climate. 2. Neighboring countries. 3. Low risk. 4. High competitive advantage.

III. Deciding how to enter the market?

Indirect exporting. Direct export. Licensing. Joint ventures. Direct investment.

Indirect exporting
Occasional exporting. Active exporting. - Types of intermediaries 1. Domestic based export merchant. 2. Domestic based export agent. 3. Co-operative organization. 4. Export management companies.

Advantages 1. Less investment. 2. Does not require export department.

Direct exporting
Domestic based export department or division. Overseas sales branch or subsidiary. Traveling export sales representatives. Foreign based distributor or agent.

Licensing
For use of manufacturing process, trade mark, patent, trade secret or other item of value for a fee or royalty. Disadvantages 1. Less control of licensor over licensee. 2. Creation of new competitors. Types 1. Management contract. 2. contract manufacturing. 3. franchising.

Joint ventures
Share of ownership & control Reasons 1. Necessary or desirable for economic & political reason. 2. Lack of financial, physical or managerial resources. 3. Government may keep the condition for entry. Drawback Partners may disagree over investment, marketing or other policies.

Direct investment
Foreign based assembly or manufacturing facility. Advantages 1. Secure cost economies. 2. Image building by creating jobs. 3. Close relationships with government, customers, local supplier or distributor. 4. Fully control over its investment. 5. Locally purchased goods have domestic contents.

The internationalization process

No regular export. Export via independent representatives. Establishment of one or more sales subsidiaries. Establishing production facilities abroad.

Deciding on the marketing program?

Globally standardized marketing mix. Adapted marketing mix. Marketing mix elements 1. Product - Straight extension. - Product adaptation. a. Regional b. Country. c. City d. Retailer - Product invention. a. Backward b. Forward

2. Promotion - Communication adaptation. a. One message everywhere. b. Same theme globally but adapt the copy to each local market. c. Global pool of ads. d. Media adaptation. e. Sales promotion techniques to different markets.

3. Prices - Three choices a. Setting uniform prices everywhere. b. Setting market based price in each country. c. Setting cost based pricing in each country.

- Problems in pricing a. Price escalation. b. Transfer pricing. c. Dumping charges. d. Gray market. e. Devaluation of currency.

4. Place ( Distributive channels ) - Sellers international marketing headquarter. a. Export department. b. International division. - Channels between nations. a. Agents. b. Trading companies. - Channels within foreign nations.

Deciding on the marketing organization?

Export department 1. Corporate organization. 2. Geographic organization. 3. World product groups. 4. International subsidiaries. Global organization.

Organizational strategies 1. A global strategy treats the world as a single market. 2. A multinational strategy treats the world as portfolio of national opportunities. 3. A glocal strategy standardizes certain core elements & localizes other elements.