INTERNATIONAL MARKETING MANAGEMENT COURSE OUTLINE 1 • Overview of Marketing/international marketing 2 • International marketing environment/international marketing strategy 3 • International market research/Modes of entry 4 • International Product Decisions 5 • International price decisions 6 • International distribution decisions 7 • International promotion decisions 8 • Branding COURSE RESOURCES • Text book: + International Marketing, Philip R. Cateora, Mary C. Gilly, John L. Graham (2020) • Reference: + Global Marketing, Svend Hollensen, 8th ed, 2020, Pearson + Marketing Management, Phillip Kotler, Kevin Lane Keller & Alexander Chermev (2020) • Case studies in lectures • Slides GRADING • Contribution on class discussion (individual): 5% Attendance, 5% Contribution • Midterm assignment: 30% • Final Exam: 60% • Bonus marks: group activities, cesim simulation MIDTERM ASSESSMENT: WRITING REPORT & PRESENTATION (10 MINUTES/GROUP) Team of 4-6 students: Report (word limit: 2000) Students are required to produce a comprehensive global marketing report on an international market for a chosen company (chosen by the lecturer) 1. Provide a brief background on the company/product (10% of word count) – make sure the background is relevant to a global marketing report. (Do not provide the history of the company/product) 2. Choose two international markets that the company/ brand/ product are already operating in - Using global marketing model(s) for international market selection, compare both international markets Firstly you must discuss at least one model that could be used when reviewing market selection. Secondly you must justify your market selection criteria, and why this selection criteria supports a comparison of two markets for your chosen company. e.g. consumer spending power, demographics etc. - You must apply your chosen market selection criteria (you may want to use a table to help you compare the two markets), - Summarise why your company choose these markets. (40% of word count) 3. Analyse the method of market entry used by your company/ product to enter one of these markets, and evaluate if this entry method was the best option. Justify your evaluations using academic theory, research and/or evidence. (30% of word count) 4. Review marketing strategies (e.g. product adaptations/ communication mix) that were used to ensure success in an international market. (20% of word count). GROUP BONUS MARKS ▪ Case study ▪ Short presentation CHAPTER 1: Overview of Marketing CONTENT 1. What is Marketing? 2. What is international Marketing? 3. What are the tasks of International Marketing? 4. Why internationalize? CONTENT 1. What is Marketing? DEFINITIONS OF MARKETING AMA, 2013 Marketing is the activity, set of institutions, and processes Offerings is some combination of products, services, for creating, communicating, information, or experiences delivering, and exchanging offered to a market to satisfy offerings that have value for a need or want. customers, clients, partners, and society at large. DEFINITIONS OF MARKETING Philip Kotler, 2017 (Broadly defined) (In narrow business context) •A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others. (Kotler et al, 2017) •Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. CUSTOMER-PERCEIVED VALUE The customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. MARKETING DEVELOPMENT Marketing 4.0 Marketing 3.0 • …..value Marketing 2.0 Marketing 1.0 • Customer’s need • product FUNCTIONS OF MARKETING • Digital/society •… Marketing 5.0 • ….. MARKETING SYSTEM OF COCA COLA VIETNAM Agency BTL Supplier Agency ATL Customer Sales Trade Analysis Brand Media Agency Market Research (Source: Huy Coca Cola) MARKETING MIX CONTENT 2. What is international Marketing? DEFINITION OF INTERNATIONAL MARKETING International marketing is the multinational process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives. (AMA, cited in Sak Onkvisit and John J. Shaw 2004) DEFINITION OF INTERNATIONAL MARKETING International marketing is the performance of business activities designed to plan, price, promote, and direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit. (Philip R.Cateora, 2012) DEFINITION OF INTERNATIONAL MARKETING International marketing is the process of planning and conducting transactions across national borders to create exchanges that satisfy the objectives of individuals and the organizations. (M.R. Czinkota, 2011) INTERNATIONAL DIMENSIONS OF MARKETING International marketing Global Marketing Multinational marketing - Companies seek markets all over the world - sell products that are a result of planned production for markets in various countries. - This planning generally entails not only the marketing but also the production of goods outside the home market. ->At this point, a company becomes an international or multinational marketing firm. - Companies treat the world, including their home market, as one market. Market segmentation decisions are no longer focused on national borders. Instead, market segments are defined by income levels, usage patterns, or other factors that frequently span countries and regions. DEVELOPMENT OF THE GLOBAL MARKETING CONCEPT Ethnocentric • The home country is superior and the needs of the home country are most relevant. • Controls are highly centralized and the organization and technology implemented in foreign locations will be largely the same as in the home country. Polycentric (multidomestic) • each country is unique -> should be targeted in a different way. • there are different conditions for production and marketing in different locations > adapt to those different conditions -> maximize profits in each location. • The control is highly decentralized among affiliates, and communication between headquarters and affiliates is limited. Regiocentric Geocentric (global) • the world consists of regions (e.g. Europe, Asia, the Middle East). The firm tries to integrate and coordinate its marketing program within regions, but not across them. • the world is getting smaller and smaller. The firm may offer global product concepts but with local adaptation (‘think global, act local’). GLOCALIZATION “The development and selling of products or services intended for the global market, but adapted to suit local culture and behaviour. (Think globally, act locally)” Hollensen, S.( 2012) Essential of Global Marketing. Pearsons. 2nd Edition The glocalization framework Hollensen, S.( 2012) Essential of Global Marketing. Pearsons. 2nd Edition BENEFITS OF GLOCALIZATION Combination of globalization and localization -> Optimize the balance between standardization versus adaptation -> Focusing on the differences of consumers in different markets while also maximizing the benefit of the similarities. ▪ Dynamic interdependence between headquarters and subsidiaries ▪ Ensuring local flexibility while exploiting the benefits of global integration and efficiencies (eg. economies of scales) ▪ Ensuring worldwide diffusion of innovation (Product/service developed and distributed globally -> common global technology) ▪ Better product performance in different use conditions ▪ Penetrate closer to the market -> Accommodate user/consumers in local market ▪ Meet local requirements/standards: local laws, customs or consumer preferences ▪ Greater interest to end user ▪ Excellent local image DISCUSSION Are domestic and international marketing similar in nature but not in scope? Is international marketing nothing but domestic marketing on a larger scale? CONTENT 3. What are the tasks of International Marketing? THE INTERNATIONAL MARKETING TASK THE INTERNATIONAL MARKETING TASK Marketing Decision Factors Aspects of the domestic environment Aspects of the Foreign Environment MARKETING DECISION FACTORS The marketing manager blends price, product, promotion, channels-of-distribution, and research activities (controllable elements) to capitalize on anticipated demand The controllable elements can be altered in the long run and, usually, in the short run to adjust to changing market conditions, consumer tastes, or corporate objectives. ASPECTS OF THE DOMESTIC ENVIRONMENT Domestic environment uncontrollable variables include home-country elements that can have a direct effect on the success of a foreign venture: political and legal forces, economic climate, and competition. The marketer must actively evaluate and, if needed, adapt. The adaptation of the marketing mix to these environmental factors determines the outcome of the marketing enterprise ASPECTS OF THE FOREIGN ENVIRONMENT Elements in the uncontrollable international environment include political/legal forces, economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, and cultural forces. These forces constitute the principal elements of uncertainty an international marketer must cope with in designing a marketing program. DEVELOPMENT OF AN INTERNATIONAL MARKETING PLAN DEVELOPMENT OF AN INTERNATIONAL MARKETING PLAN DEVELOPMENT OF AN INTERNATIONAL MARKETING PLAN DEVELOPMENT OF AN INTERNATIONAL MARKETING PLAN CONTENT 4. Why internationalize? INTERNATIONALIZATION MOTIVES Proactive motives Reactive motives •Motives represent stimuli to attempt strategy change, based on the firm’s interest in exploiting unique competences (e.g. a special technological knowledge) or market possibilities. •Indicate that the firm reacts to pressures or threats in its home market or in foreign markets and adjusts passively to them by changing its activities over time. INTERNATIONALIZATION MOTIVES INTERNATIONALIZATION TRIGGERS Internal or external events taking place to initiate internationalization. INTERNATIONAL MARKETING MANAGEMENT CHAPTER 2: THE INTERNATIONAL MARKETING ENVIRONMENT INTERNATIONAL MARKETING ENVIRONMENT MODELS TO ANALYZE INTERNATIONAL MARKETING ENVIRONMENT CAGE PEST PESTLE •Culture •Administration •Geography •Economy •Political •Economic •Socio-Cultural •Technology •Political •Economic •Socio-Cultural •Technology •Legal •Environmental ADMINISTRATIVE/POLITICAL/LEGAL FACTOR ADMINISTRATIVE/POLITICAL/LEGAL FACTOR Home-Country Environment • Promotional activities (sponsored by governmental organizations) • Financial activities • Information services • Export-facilitating activities • Promotional by private organisations • State trading Host-Country Environment • Political risks (Ownership risk, Operating risk, Transfer risk) • Causes: • Import restrictions • Local-content laws • Exchange controls • Market control • Price controls • Tax controls. • Labour restrictions • Change of government party • Nationalization • Domestication ADMINISTRATIVE/POLITICAL/LEGAL FACTOR Trade barriers from home country to host country •Tariffs •Non-tariffs •Quotas •Import quotas •Export quotas •Embargoes •Administrative delays •Local-content requirements Why ADMINISTRATIVE/POLITICAL/LEGAL FACTOR Trade barriers from home country to host country •Tariffs •Non-tariffs •Quotas •Import quotas •Export quotas •Embargoes •Administrative delays •Local-content requirements Why 1. 2. To protect domestic producers To generate revenue ADMINISTRATIVE/POLITICAL/LEGAL FACTOR Laws that affect International Marketing Laws affecting the entry of goods Tariffs and quotas Anti-dumping laws A firm cannot export at a lower price than what it charges in its home market. Food safety laws Sanitary and phytosanitary (SPS) regulations govern the safety of exported foodstuffs from Australia and New Zealand. Laws prohibiting deceptive advertising ECONOMIC FACTOR Exchange rate Classification by income Regional Economic Integration ECONOMIC FACTOR Exchange rate •Devaluation •Revaluation ECONOMIC FACTOR Classification by income •GDP •GNP •GNP per capita •Less developed countries (LDC’s) •Newly industrialised countries (NIC’s) •Advanced industrialised countries ECONOMIC FACTOR Regional Economic Integration ECONOMIC FACTOR European Union ECONOMIC FACTOR BRIC – the new growth markets of the world The emerging markets where we will see high future growth. THE SOCIO-CULTURAL ENVIRONMENT Exchange rate Classification by income Regional Economic Integration CULTURAL FACTOR Characteristics of culture learned interrelated shared CULTURAL FACTOR Parts of culture CULTURAL FACTOR Elements of culture Language: Verbal +Nonverbal Manners and customs Social institutions Education Values and attitudes Aesthetics Religion CULTURAL FACTOR Layers of culture CULTURAL FACTOR High- and low-context cultures CULTURAL FACTOR Hofstede’s model on national cultures (the ‘4 + 2’ dimensions model) Power distance (PDI) Uncertainty avoidance (UAI) Individualism Vs Collectivism (IDV) Masculinity Vs Femininity (MAS) Long term orientation VS Short term Orrientation (LTO) Indulgence GEOGRAPHICAL FACTOR Physical remoteness Common border Sea/river access Size of country Transportation/communicat ion links Climates CAGE MODEL - DIFFERENCES BETWEEN COUNTRIES INTERNATIONAL DISTANCE (GHEMAWAT, 2001) Cultural Distance Administration Distance Geographical Distance Economic Distance file://localhost/Users/macos/Desktop/A HIEU 71532 CUU 15-2-17/Documents/marketing/mkt quoc te/CAGE model.pdf HTTPS://WWW.HOFSTEDEINSIGHTS.COM/PRODUCT/COMPARECOUNTRIES/ PESTLE CONTENT Trade theories and economic cooperation Trade distortion and marketing barriers Country notebook INTERNATIONAL MARKETING F o r e i g n t r a d e u n i v e r s i t y, ho chi minh city campus PART 3: MARKET SELECTION MARKET RESEARCH MARKET ENTRY CONTENT Choosing the target market International market research Mode of entry CONTENT Choosing the target market MARKET SELECTION PROCESS STEPS 1 AND 2: DEFINING CRITERIA AND DEVELOPING SEGMENTS STEP 3: SCREENING OF SEGMENTS (MARKETS/COUNTRIES) Preliminary screening •restrictions in the export of goods from one country to another; •gross national product (GNP) per capita; •cars owned per 1,000 of the population; •government spending as a percentage of GNP; • population per hospital bed. •…. Fine-grained screening •Market/country attractiveness •Competitive strength STEP 3: SCREENING OF SEGMENTS + (MARKETS/COUNTRIES) Preliminary screening Step 3: screening of segments + (markets/countries) Fine-grained screening FINE-GRAINED SCREENING Step 3: screening of segments + (markets/countries) Fine-grained screening CONTENT International market research DEFINITION The systematic design, collection, analysis, and report of data relevant to a specific marketing situation facing an organization. BREADTH AND SCOPE OF INTERNATIONAL MARKETING RESEARCH The basic difference between domestic and foreign market research is the broader scope needed for foreign research, necessitated by higher levels of uncertainty. BREADTH AND SCOPE OF INTERNATIONAL MARKETING RESEARCH (INFORMATION NEEDS) Research can be divided into three types on the basis of information needs: 1. General information about the country, area, and/or market; 2. Information necessary to forecast future marketing requirements by anticipating social, economic, consumer, and industry trends within specific markets or countries; 3. Specific market information used to make product, promotion, distribution, and price decisions and to develop marketing plans. BREADTH AND SCOPE OF INTERNATIONAL MARKETING RESEARCH (INFORMATION NEEDS) Economic Demographic Cultural Social Political Market condition Technological Competitive condition MARKETING RESEARCH PROCESS Step 1: Define the research problem and establish research objectives Step 2: Determine the sources of information to fulfill the research objectives Step 3: Consider the costs and benefits of the research effort. Step 4: Gather the relevant data from secondary or primary sources, or both. Step 5: Analyze, interpret, and summarize the results. Step 6: Effectively communicate the results to decision makers. DETERMINE THE SOURCES OF INFORMATION TO FULFILL THE RESEARCH OBJECTIVES SECONDARY DATA PRIMARY DATA SOURCE OF SECONDARY DATA www.trade.gov/index.asp http://www.vietrade.gov.vn http://www.austrade.gov.au/ http://www.trademap.org/Index.aspx www.wto.org www.oecd.org www.euromonitor.com www.worldbank.org www.worldchambers.com www.worldtrademag.com http://www.pwc.com/ http://www.planetretail.net/ http://www.nielsen.com/ http://www.hsbc.com/ https://www.indexmundi.com/vietnam/ http://data.un.org/ https://unstats.un.org/home/ GLOBALEGDE.MSU.EDU HTTPS://WWW.THEGLOBALECONOMY.COM/ PROQUEST HTTPS://WWW.FITCHSOLUTIONS.COM/ HTTPS://WWW.DOINGBUSINESS.ORG/EN/REP ORTS/GLOBAL-REPORTS/DOING-BUSINESS2020 HTTPS://WWW.STATISTA.COM/ PROBLEM OF SECONDARY DATA Availability reliability comparability validity SOURCE OF PRIMARY DATA Quantitative research Quantitative research PROBLEMS OF GATHERING PRIMARY DATA Ability to Communicate Opinions Willingness to Respond Sampling in Field Surveys Language and Comprehension ISSUES IN INTERNATIONAL MARKET RESEARCH Construct equivalence: the meaning of a concept may vary across countries (concepts are bound, e.g. beauty, wealth, trust) Measurement equivalence: a method of measurement that works well in one cultural environment may not work well in another - Units of measurement may vary in countries (phone/email survey) - Translation of verbal and non-verbal language may differ - The meanings respondents attached to each point in the scale Sampling equivalence: the ability to identify an equivalent population sample to test in two countries. MANAGING THE CULTURAL BARRIER IN INTERNATIONAL MARKETING RESEARCH CONTENT Mode of entry SELECT ENTRY MODE Examples of the different market entry modes in the consumer market EXPORT MODE • Firm does business overseas without investing in owned assets and own human resources in target market. • Sell produced products into foreign markets through local independent agents or directly to customers Figure 9.1 Export modes Distributor (importer/exporter/merchant) • Independent company that stocks the manufacturer’s product. It will have substantial freedom to choose own customers and price. • It profits from the difference between its selling price and its buying price from the manufacturer. Agent • Independent company that sells on to customers on behalf of the manufacturer (exporter). • Usually it will not see or stock the product. • It profits from a commission (typically 5–10 per cent) paid by the manufacturer on a preagreed basis. INTERMEDIATE MODES INTERMEDIATE MODES Contract manufacturing Licensing •Manufacturing is outsourced to an external partner, specialized in production and production technology •The licensor gives a right to the licensee against payment, e.g. a right to manufacture a certain product based on a patent against some agreed royalty Franchising Strategic Alliances/Joint venture •The franchisor gives a right to the franchisee against payment, e.g. a right to use a total business concept/system, including use of trademarks (brands), against some agreed royalty INTERMEDIATE MODES •An equity partnership typically between two partners. It involves two “parents” creating the “child” (the joint venture acting in the market) INTERMEDIATE MODES INTERMEDIATE MODES INTERMEDIATE MODES 2.3. Hierarchy mode The firm owns and controls the foreign entry mode/organization 2.3. Hierarchy mode Establishing wholly owned subsidiaries Acquisition Greenfield investment FACTORS AFFECTING THE FOREIGN MARKET ENTRY MODE DECISION INTERNATIONAL MARKETING F o r e i g n t r a d e u n i v e r s i t y, ho chi minh city campus CHAPTER 4: INTERNATIONAL PRODUCT DECISIONS CONTENT Standardization vs. adaptation Analyzing Product Components for Adaptation Managing and developing international product portfolio Country of origin CONTENT Standardization vs. adaptation Part IV Figure 2 Standardization and adaptation of the international marketing mix Part IV Table 1 Main factors favouring standardization versus adaptation CONTENT Analyzing Product Components for Adaptation WHAT IS A PRODUCT? Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. • • • • • • • • Tangible objects Services Events Persons Places Organizations Ideas …. WHAT IS A PRODUCT? Services are a form of product that consists of activities, benefits or satisfaction that is essentially intangible and does not result in the ownership of anything. Figure 11.2 Scale of elemental dominance Source: Czinkota and Ronkainen (1995) International Marketing, 4th edn, p. 526. CHARACTERISTICS OF SERVICES CATEGORIES OF SERVICE PAMPER IN CHINA CONTENT Managing and developing international product portfolio IPLC BCG GE matrix matrix INTERNATIONAL PRODUCT LIFECYCLE INTERNATIONAL PRODUCT LIFECYCLE Stage 0 – Local innovation Stage 1 – Overseas innovation Stage 2 – Maturity Stage 3 – Worldwide imitation Stage 4 – Reversal BCG MODEL The 4 quadrants of the matrix represent the 4 categories with reference to growth potential and its relative market share and they are called: • Question Mark • Star • Cash Cow • Dog BCG MODEL This model plays the dual role of analysis and helping the organization in deciding the strategy for each of the business unit, through which planners can decide which of them would require more or less investment. – It is also used to help organizations in the management of growth by visually presenting the growth potential + BCG MODEL – The circles in the each matrix represent the different business units or products and they are called SBU – The size of these circles represents the sales turnover of the SBU. The vertical axis is the Market Growth Rate = (Product’s sales this year – Product’s sales last year)/Product’s sales last year The horizontal axis is the Relative Market Share = your firm’s MS (or Revenues) : Largest competitor's market share (or revenue) – The 4 quadrants of the matrix represent the 4 categories of the developmental stage with reference to growth potential and its relative market share and they are called: Question Mark, Star, Cash Cow and Dog BCG MODEL Question marks are the business units operating with low market share in a high-growth market. These products tend to reduce a company’s cash flow initially because they require heavy investment in order to grow. If the unit performs well, question marks have a chance to becomes stars and eventually into cash cows once the industry growth declines. If the product fails to gain traction, the question mark becomes a dog. Question marks must be analyzed thoroughly and carefully to determine whether they are worth the investment required to grow market share. BCG MODEL The Stars are business units with both high market share and a high growth industry. They lead a niche or a market and have monopolistic qualities due to dominant competitive advantages or fortuitous timing. As the stars continue to boom, additional investment generates excess cash, making stars extremely valuable products for a company. The hope is that eventually as the industry growth rate dies down, the stars become cash cows. BCG MODEL Cash cows are the products with high market share in a slow-growing industry. These business units typically generate more cash than what’s needed to maintain them. Because they tend to be in more mature markets, cash cows are more “boring”. While “boring”, they are valuable due to their cashgenerating abilities. They should continue to be “milked” with as little investment as possible given that additional time, capital, and efforts wouldn’t yield much in a low growth industry. BCG MODEL Dogs are the least favorable in the BCG Matrix and are business units with low market share in a mature and slow-growing industry. These products are seen to have little future with the company and typically either break even, generate very little cash, or even reduce a company’s cash flow. Though these products provide employees jobs and possibly result in revenue or cost synergies, the opportunity cost of utilizing resources for other favorable products is too high. Dogs should therefore be divested and sold to another company. BCG matrix’S LIMITATIONS Lack of Profitability Dimension – Some products may be extremely profitable but with both low market share and in a slow growing industry. These products are categorized as dogs but should not necessarily be viewed in a bad light if they are extremely efficient at generating profits. Too Simplistic – The market is not clearly defined in this model. A company’s fast-growing product could dominate a small, high-growth niche but have very low market share in the overall industry. In such a case, the definition of the market would categorize the product as either a star or a question mark. Doesn’t Represent an Entire Business Well – The BCG Growth Matrix separates business units in order to evaluate each independently. However, that is clearly not how businesses work. Sometimes, a dog may be helping companies earn a competitive advantage in a bulk product offering and therefore should not be divested. GE MCKINSEY MATRIX PRACTICE Industry attractiveness factor SBU1 Weigh Rating t SBU2 Weight ed Score Rating SBU3 Weight ed Score Rating SBU4 Weight ed Score Rating Industry growth rate 0.25 3 4 3 2 Industry size 022 3 3 2 5 Industry profitabi lity 0.18 5 1 1 5 Industry structur e 0.17 4 4 2 4 Trend of 0.09 3 3 2 3 Weight ed Score PRACTICE Competitive strength factor SBU1 Weig Rating ht SBU2 Weight ed Score Rating SBU3 Weight ed Score Rating SBU4 Weight ed Score Rating Market share 0.22 2 2 4 4 Relative growth rate 0.18 3 2 4 2 Company’ 0.14 3 s profitabili ty 1 3 3 Brand value 0.11 1 2 3 3 Human 0.20 1 resources 4 4 4 CPM 5 5 5 0.16 2 Revenue (%) SBU1 SBU2 SBU3 SBU4 50 20 20 10 Weight ed Score CONTENT Country of origin COUNTRY-OF-ORIGIN EFFECT Country-of-origin effect ( COE ) can be defined as any influence that the country of manufacture, assembly, or design has on a consumer’s positive or negative perception of a product. A company competing in global markets today manufactures products worldwide; When the customer becomes aware of the country of origin, there is the possibility that the place of manufacture will affect product or brand images. …….. tea, …….. perfume, ……. silk,………leather, ………. electronics, …….. rum CHAPTER 3 INTERNATIONALIZATION THEORIES TABLE OF CONTENT 1 UPPSALA INTERNATIONALIZATION MODEL 4 BORN GLOBALS 2 TRANSACTION COST MODEL 5 SUMMARY 3 NETWORKMODEL UPPSALA INTERNATIONALIZATION MODEL An incremental (organic) approach 2 variables affecting development process: Market commitment (the amount of resources committed & the degree of commitment) Psychic distance (perception of language, culture, political system => disturb the flow of infor between firm and market) UPPSALA INTERNATIONALIZATION MODEL Dimensions of internationalization TRANSACTION COST ANALYSIS (TCA) MODEL Transaction costs The friction between buyer and seller, explained by opportunistic behavior Opportunistic behavior Self-interest with guile-misleading, distortion, disguise and confusion NETWORK MODEL Business network Actors are linked through relationships with technical, economic, legal and personal ties. Network model The relationship of a firm in a domestic network can be used as bridges to other network in other countries BORN GLOBALS SUMMARY ALL MODELS SUMMARY ALL MODELS CHAPTER 4 DEVELOPMENT OF THE FIRM'S INTERNATIONAL COMPETITIVENESS TABLE OF CONTENT 1 OVERVIEW 4 COLLABORATIVE 5 SOURCES MODEL 2 PORTER'S DIAMOND 5 VALUE CHAIN 3 COMPETITION ANALYSIS OVERVIEW OVERVIEW PORTER'S DIAMOND The characteristics of the 'home base' play central role in explaining the international competitiveness of the firm- the explaining elements consists of factor conditions, relates and supporting industries, firm strategy - structure and rivalry, government and chance. COMPETITION ANALYSIS IN AN INDUSTRY Porter's five forces model The state of competition and profit potential in an industry depends on five basic competitive forces: new entrants, suppliers, buyers, substitutes, and market competitors. Marketing myopia The failure of a company to define its organizational purpose from a broad customer orientation COLLABORATIVE FIVE SOURCES MODEL Five-sources model Corresponding to Porter’s five competitive forces, there are also five potential sources for building collaborative advantages together with the firm’s surrounding actors. VALUE CHAIN Customer perceived value Perceived value The customer’s overall evaluation of the product/service offered by a firm. VALUE CHAIN Customer perceived value Change strategy from traditional product to a service-oriented co-creation approach VALUE CHAIN Competitive triangle Consists of a customer, the firm and a competitor (the ‘triangle’). The firm or competitor ‘winning’ the customer’s favour depends on perceived value offered to the customer compared with the relative costs between the firm and the competitor. VALUE CHAIN Competitive benchmarking Resources Basic units of analysis – financial, technological, human and organizational resources – found in firm’s different departments. Competences Combination of different resources into capabilities and later competences – being something that the firm is really good at. VALUE CHAIN Competitive benchmarking VALUE CHAIN The strategy process Model for development of core competencies BLUE OCEAN STRATEGY AND VALUE INNOVATION RED OCEANS Tough head-to-head competition in mature industries often results in nothing but a bloody red ocean of rivals fighting over a shrinking profit pool. BLUE OCEANS The unserved market, where competitors are not yet structured and the market is relatively unknown. Here it is about avoiding head-tohead competition. Blue Ocean Strategy framework => Value innovation: A strategic approach to business growth, involving a shift away from a focus on existing competition to one of trying to create entirely new markets. Value innovation can be achieved by implementing a focus on innovation and creation of new marketspace. CHAPTER 5 GLOBAL MARKETING RESEARCH OVERVIEW OF PART II TABLE OF CONTENT 1 2 LINKING GLOBAL MARKETING RESEARCH TO THE DECISION-MAKING PROCESS SECONDARY RESEARCH 6 MARKETING ON WEB 3.0 7 MIS 3 PRIMARY RESEARCH 8 SUMMARY 4 TRIANGULATION: MIXING QUALITATIVE AND QUANTITATIVE RESEARCH METHODS 9 CASE STUDY 5 PROBLEM WITH USING PRIMARY RESEARCH Linking global marketing research to the decisionmaking process Information for the major global marketing decisions Linking global marketing research to the decisionmaking process Categorization of data for assessment of market potential in a country Primary data Information that is collected first-hand, generated by original research tailormade to answer specific research questions. Secondary data Information that has already been collected for other purposes and is thus readily available. SECONDARY RESEARCH ADVANTAGES + Less expensive and less timeconsuming + Benefit of objectivity + The researcher is not constrained by overseas customs + Quickly generate background information to eliminate many countries from the scope of enquiries DISADVANTAGES + Non-availability of data + Reliability of data + Data classification + Comparability of data SECONDARY RESEARCH INTERNAL DATA SOURCES + Total sales + Sales by country + Sales by products + Sales volume by market segment + Sales volume by type of channel distribution + Pricing information + Communication mix information + Sales representatives’ records and reports EXTERNAL DATA SOURCES + Public library or a university library + The internet SECONDARY RESEARCH PROXY INDICATORS LEAD-LAG ANALYSIS Used when direct measures are hard to obtain. Indirect variables serve as surrogate or proxy Determinants of demand and the rate of diffusion are the same in two countries, but time separates the two. CHAIN RATIO METHOD ESTIMATION BY ANOLOGY Total market demand for a product by using several percentages in order to reduce a base population to the relevant target group and the final realistic demand. A correlation value (between a factor and the demand for the product) for one market is used in another international market. PRIMARY RESEARCH Quantitaty vs qualitative research PRIMARY RESEARCH Triangulation: mixing qualitative and quantitative research methods PROBLEM WITH PRIMARY RESEARCH SAMPLING IN FIELD SURVEYS LANGUAGE BARRIERS + No officially recognized census of population; + Incomplete and out-of-date telephone directories; + No accurate maps of population centres, and therefore no area samples can be made MEASUREMENT NON-RESPONSE + Not being at home + Refusal to respond + Reliability: If the same phenomenon is measured repeatedly with the same measurement device and the results are similar then the method is reliable (the ‘how’ dimension). + Validity: If the measurement method measures what it is supposed to measure, then it has high validity (the ‘what’ dimension). There are three types of validity: construct, internal and external. MARKETING ON WEB 3.0 DATA RESOURCES AND TOOLS AVAILABLE MOBILE DATA USER-GENERATED CONTENT AND TEXT MINING SOCIAL NETWORKS AND ONLINE COMMUNITIES WEB BROWSING CUSTOMER DECISIONMAKING DATA CONSUMER USAGE DATA NEURO MARKETING ARTIFICICIAL INTELLIGENCE (AI) MARKETING INFORMATION SYSTEM (MIS) International marketing information system An interacting organization of people, systems and processes devised to create a regular, continuous flow in information essential to the international marketer’s problem solving and decision making activities around the world. SUMMARY OBJECTIVE OF THE GLOBAL MARKETING RESEARCH FUNCTION + Provide management with relevant information for more accurate decision-making. + The objective is the same for both domestic and global marketing. However, global marketing is more complex because of the difficulty of gathering information about multiple and different foreign environments. DATA FOR RESEARCH + An international marketer should initiate research by searching fi rst for any relevant secondary data. Typically a great deal of information is already available, and the researcher needs to know how to identify and locate the international sources of secondary data. + If it is necessary to gather primary data, the international marketer should be aware that it is simply not possible to replicate the methodology used in one country elsewhere. Some adaptation of the research method to diff erent countries is usually necessary. MIS The firm should set up a decision support system or an international MIS to handle the gathered information efficiently. This system should integrate all information inputs, both internal and external. In addition, an international MIS can support managers in their marketIng decisionmaking by providing interlinkage and integration between functional departments or international divisions. However, in the fi nal analysis, every international marketer should keep in mind that an information system is no substitute for sound judgment. WEB 3.0 Th e Web 3.0 age provides the international marketer with a lot of opportunities to utilize the new online technologies to obtain relevant crossborder customer information and make better international marketing decisions. CASE STUDY CASE STUDY 5.1 (P.200) Teepack spezialmaschinen GmbH: organizing a global survey of customer satisfaction CASE STUDY 5.3 E-bikes in China CHAPTER 6 THE POLITICAL AND ECONOMIC ENVIRONMENT TABLE OF CONTENT 1 THE POLITICAL/LEGAL ENVIRONMENT 2 THE ECONOMIC ENVIRONMENT HOME COUNTRY ENVIRONMENT HOST COUNTRY ENVIRONMENT TRADE BARRIERS THE POLITICAL/LEGAL ENVIRONMENT HOME COUNTRY ENVIRONMENT PROMOTIONAL ACTIVITIES (SPONSORED BY GOVERNMENTAL ORGANIZATIONS) + Lack of motivation, as global marketing is viewed as more time­-consuming, costly and risky, and less profitable, than domestic business; + Lack of adequate information; + Operational/resource­-based limitations. FINANCIAL ACTIVITIES + Granting of subsidies + Credit policy + Export credit insurance INFORMATION SERVICES + Economic, social and political data on individual countries, including their infrastructure; + Summary and detailed information on aggregate global marketing transactions; + Individual reports on foreign firms; + Specific export opportunities; + Lists of potential overseas buyers, distributors and agents for various products in different countries; + Information on relevant government regulations both at home and abroad; + Sources of various kinds of information not always available from the government, e.g. foreign credit information; + Information that will help the company manage its operation, e.g. information on export procedures and techniques. HOME COUNTRY ENVIRONMENT EXPORT-FACILITATING ACTIVITIES + Trade development offices abroad, either as a separate entity or as part of the normal operations of an embassy or consulate; + Government­-sponsored trade fairs and exhibitions – a trade fair is a convenient market place in which buyers and sellers can meet, and in which an exporter can display products; + Sponsoring trade missions of businesspeople who go abroad for the purpose of making sales and/or establishing agencies and other foreign representation; + Operating permanent trade centres in foreign market areas, which run trade shows often concentrating on a single industry. STATE TRADING PROMOTION BY PRIVATE ORGANIZATIONS + Industry and trade associations, national, regional and sectoral industry associations, associations of trading houses, mixed associations of manufacturers and traders, and other bodies; + Chambers of commerce: local chambers of commerce, national chambers, national and international associations of chambers, national chambers abroad and binational chambers; + Other organizations concerned with trade promotion: organizations carrying out export research, regional export promotion organizations, world trade centres, geographically oriented trade promotion organizations, export associations and clubs, international business associations, world trade clubs and organizations concerned with commercial arbitration; + Export service organizations, banks, transport companies, freight forwarders, export merchants and trading companies. HOST COUNTRY ENVIRONMENT GOVERNMENT ACTIONS + Import restrictions + Local-content laws + Exchange controls + Market control + Price controls + Tax controls + Labour restrictions + Change of government party + Nationalization: Takeover of foreign companies by the host government. + Domestication OWNERSHIP RISK OPERATING RISK TRANSFER RISK TRADE BARRIERS TARIFF BARRIERS A tool used by governments to protect local companies from outside competition. The most common forms are specific, ad valorem and discriminatory. + Specific + Ad valorem NON-TARIFF BARRIERS + Quotas + Embargoes + Administrative delays + Local-content requirements + Historical development of barriers THE ECONOMIC ENVIRONMENT CHAPTER 7 THE SOCIOCULTURAL ENVIRONMENT TABLE OF CONTENT 1 CULTURE 2 6 MANAGING CULTURAL DIFFERENCES LAYERS OF CULTURE 7 CONVERGENCE OR DIVERGENCE OF THE WORLD'S CULTURES 3 HIGH- AND LOWCONTEXT CULTURES 8 SUMMARY 4 ELEMENTS OF CULTURE 9 CASE STUDY 5 HOFSTEDE'S MODEL CULTURE DEFINITION The learned ways in which a society understands, decides and communicates. 3 CHARACTERISTICS + It is learned - Interacting with other members of your family; - Eliciting rewards and avoiding punishments; - Negotiating for what you wanted; - Causing and avoiding conflict. + It is interrelated + It is shared THE VISIBLE AND INVISIBLE PARTS OF CULTURE LAYERS OF CULTURE HIGH- AND LOWCONTEXT CULTURES ELEMENTS OF CULTURE LANGUAGE + Verbal language: - Important in information-gathering and evaluation efforts - Provides access to local society - Language capability is increasingly important in company communications, whether within the corporate family or with channel members - Provides more than the ability to communicate; it extends beyond mechanics to the interpretation of contexts. + Non-verbal language: More important in high context cultures: time, space (conversational distance between people), material possessions, friendship patterns and business agreements. MANNERS AND CUSTOMS TECHNOLOGY AND MATERIAL CULTURE SOCIAL INSTITUTIONS EDUCATION VALUES AND ATTITUDES AESTHETICS What is meant by good taste in art, music, folklore and drama may vary a lot from culture to culture. RELIGION HOFSTEDE'S MODEL POWER DISTANCE Refers to the degree of inequality between people in physical and educational terms (i.e. from relatively equal to extremely unequal) UNCERTAINTY AVOIDANCE The degree to which people in a country prefer formal rules and fixed patterns of life, such as career structures and laws, as means of enhancing security INDIVIDUALISM The degree to which people in a country learn to act as individuals rather than as members of groups MASCULINITY The degree to which ‘masculine’ values, such as achievement, performance, success, money and competition, prevail over ‘feminine’ values, such as quality of life, maintaining warm personal relationships, service, care for the weak, preserving the environment and solidarity TIME PERSPECTIVE The way members in an organization exhibit a pragmatic future-oriented perspective rather than a conventional history or short-term point of view MANAGING CULTURAL DIFFERENCES FOUR-STEP APPROACH TO ELIMINATE SELF-REFERENCE CRITERION 4. REDEFINE THE PROBLEM WITHOUT THE SRC INFLUENCE AND SOLVE FOR THE FOREIGN MARKET SITUATION. 1. DEFINE THE PROBLEM OR GOAL IN TERMS OF HOME COUNTRY CULTURE, TRAITS, HABITS AND NORMS 3. ISOLATE THE SRC INFLUENCE IN THE PROBLEM AND EXAMINE IT CAREFULLY TO SEE HOW IT COMPLICATES THE PROBLEM 2. DEFINE THE PROBLEMS OR GOALS IN TERM OF THE FOREIGN CULTURE, TRAITS, HABITS AND NORMS CONVERGENCE OR DIVERGENCE OF THE WORLD’S CULTURES + Youth is becoming more homogeneous across national markets. Youth cultures are more international than national + Younger consumers diff er from adults in emphasizing quality and being both discerning and technically literate YOUTH CULTURE + Generational barriers are now very blurred + The lack of clarity in age-group targeting has to be weighed against a growth in cross border consistencies + Today’s young people have greater freedom than previous generations had + Disillusion with celebrities has led young people to look elsewhere for inspiration SUMMARY HIGH/LOW-CONTEXT CULTURES The difference between high- and low-context communication cultures helps us understand why, for example, Asian (highcontext) and western (low-context) styles are so diff erent, and why Asians prefer indirect verbal communication and symbolism over the direct assertive communication approaches used by westerners. Other dimensions, such as different concepts of time, can also explain major diff erences between east and west. HOFSTEDE’S MODEL + Comparing work-related values, based on data collected in an extensive study. This model also proves useful for comparing cultures with respect to consumption related values => it can explain the variety of values and motivations used in marketing and advertising across cultures. + Explain differences in actual consumption behaviour and product use and can thus assist in predicting consumer behaviour or effectiveness of marketing strategies for cultures other than one’s own CASE STUDY CASE STUDY 7.2 (P.266) The IKEA catalogue: are there any cultural differences? CHAPTER 8 THE INTERNATIONAL MARKET SELECTION PROCESS TABLE OF CONTENT 1 INTERNATIONAL MARKET SELECTION: SMES VS LSES 4 GLOBAL PRODUCT 2 BUILDING MODEL FOR IMS 5 SUMMARY 3 MARKET EXPANSION STRATEGIES 6 CASE STUDY INTERNATIONAL MARKET SELECTION: SMES VERSUS LSES Building a model for international market selection Potential determinants of the firm’s choice of foreign markets Market-screening model International market segmentation Market-screening model International market segmentation STEP 1+2 Market-screening model International market segmentation STEP 3 Market-screening model International market segmentation STEP 3 Market-screening model International market segmentation STEP 4 Market-screening model International market segmentation STEP 4 Market-screening model International market segmentation STEP 4 Market-screening model International market segmentation STEP 4 Market expansion strategies The incremental strategy (waterfall approach) and simultaneous strategy (the shower approach) Expansion strategy for the SME Appropriate global marketing strategies for SMEs Expansion strategy for the SME The market expansion matrix Expansion strategy for the SME International market diversification versus market concentration The global product/market portfolio SUMMARY SELECTION OF RELEVANT SEGMENTATION CRITERIA; In SMEs, in particular, international market selection is simply a reaction to a stimulus provided by a change agent, in the form of an unsolicited order. A more proactive and systematic approach to IMS entails: DEVELOPMENT OF APPROPRIATE SEGMENTS; SCREENING OF SEGMENTS TO NARROW DOWN THE LIST OF APPROPRIATE COUNTRIES (CHOICE OF TARGET) MICROSEGMENTATION: DEVELOPMENT OF SUBSEGMENTS IN EACH QUALIFI ED COUNTRY OR ACROSS COUNTRIES. CASE STUDY CASE STUDY II.1 (P.308) Bajaj Auto: the Indian motorcycle manufacturer internationalizes its business CASE STUDY 8.3 (P.305) Hasbro CHAPTER 9 SOME APPROACHES TO THE CHOICE OF ENTRY MODE TABLE OF CONTENT 1 ENTRY MODES 4 EXPORT MODES 2 THE TRANSACTION COST APPROACH 5 INTERMEDIATE ENTRY MODES 3 FACTORS INFLUENCING THE CHOICE OF ENTRY MODE 6 HIERARCHICAL MODES ENTRY MODE DEFINITION NAIVE RULE An institutional arrangement for the entry of a company’s products and services into a new foreign market. The main types are export, intermediate and hierarchical modes PRAGMATIC RULE STRATEGY RULES THE TRANSACTION COST APPROACH OPPORTUNISTIC BEHAVIOUR FROM THE EXPORT INTERMEDIARY OPPORTUNISTIC BEHAVIOUR FROM THE PRODUCER WHAT CAN THE EXPORT INTERMEDIARY DO TO MEET THIS SITUATION? + Establish personal relations with the producer’s key employees; + Create an independent identity (image) in connection with selling the producer’s products; + Add further value to the product, such as a before–during–after (BDA) service, which creates bonds in the agent’s customer relations Factors affecting the foreign market entry mode decision Export mode Direct export mode - Contact with intermediaries Evaluating international distribution partners Advantages and disadvantages of the different export modes for the manufacturer Intermediate modes Life cycle benefits of licensing Direct and indirect franchising models How licensing and franchising differ Joint ventures/strategic alliances Stages in joint-venture formation Model of joint-venture activity Other intermediate entry modes Other intermediate entry modes Other intermediate entry modes Other intermediate entry modes Other intermediate entry modes Hierarchical mode Resident sales representatives/foreign sales branch/foreign sales subsidiary Region centres (regional HQ) ESTABLISHING WHOLLY OWNED SUBSIDIARIES – ACQUISITION OR GREENFIELD ACQUISITION GREENFIELD INVESTMENT + Rapid entry and oft en provides access to distribution channels, an existing customer base and, in some cases, established brand names or corporate reputation + Ability to integrate operations across countries, and to determine the direction of future international expansion, is oft en a key motivation + Acquire experience in dealing with the local market environment + Include incentives off ered by the host country. + Advantageous for a fi rm with limited international management expertise, or little familiarity with the local market + Incorporate the latest technology and equipment, avoid the problems of trying to change the traditional practices of an established concern. + Shape the local firm to its own image and requirements + Feasible way of establishing a base in the host country in saturated markets +Many forms: horizontal, vertical, concentric, conglomerates Foreign divestment Summary Summary
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