Ch 09 - International
Marketing and counter trade
Domestic Market Extension
Multi-domestic
Global Marketing
Domestic Market
Extension
 Sales of domestic products in int. markets.
 Domestic orientation
 International Market secondary
 Firm seeks markets similar to domestic.
 Little adaptation of product or marketing mix.
 Usually produced domestically
Multi-Domestic Orientation
Separate operations in each country production, marketing etc.
Different strategies and marketing mixes
Very little interaction
Markets could be very different.
Global-Marketing
Orientation
Views the world as one market.
Develop product and marketing strategies
for world markets.
Standardize as far as possible, adapt
where necessary.
Economies of scale, transfer of knowledge
and technology, global image, and better
competitive position.
03/09/98
International vs. Domestic
- Marketing Mix.
 Standardization/Differentiation mainly in terms
of Product and Promotions.
 Product and Promotion Extension
(Standardization)
 Product Extension/Promotion Adaptation
 Product Adaptation/Promotion Extension
 Dual Adaptation (Differentiated)
 Product Invention
Five International Product
and Promotion Strategies
Promotion
Product
Do not change
promotion
Do not change
product
Adapt
product
Straight
extension
Product
adaptation
Develop new
product
Product
invention
Adapt
promotion
Communication
adaptation
Dual
adaptation
Pricing.
 Objectives depend upon company orientation
 Standard worldwide Pricing – Based on average unit costs of fixed,
variable and export related costs.
 Dual Pricing – Domestic and export prices are differentiated.
Cost-plus pricing and marginal cost method.
Cost-plus – full allocation of domestic and foreign
costs.
Marginal cost – Fixed costs for plants, R&D, Domestic
overhead, and domestic marketing are disregarded.
 Market-differentiated pricing – demand–oriented. Marginal costs
and export-related costs considered.
Variables that influence
international pricing
 Taxes and tariffs - Specific duty, Combination.
 Inflation - Time, Payment terms, possible price
control.
 Exchange rate Fluctuation - Prices of products
and profits.
 Middlemen and transportation costs - Longer,
diverse, underdeveloped, smaller order
quantities, could all increase costs.
Creative challenges.
Cultural diversity - Symbols, colors, tastes,
values and beliefs etc. - subcultures.
Production and cost limitations - Poor
quality printing, lack of high grade paper,
film editing and processing facilities, high
comparative cost for quality.
Media - Availability, Audience data,
international media.
Counter trade
Those transactions which have as a basic
characteristic a linkage, legal or
otherwise, between imports and exports
of goods and services in addition to or in
the place of financial settlements.
Reasons for
Countertrades.
Economic Circumstances.
Dispose of excess goods.
Gain entry into new markets or
differentiation.
Growth opportunity.
Growth of Countertrade.
Grown tenfold over the past 20 years.
Used by firms in 100 countries.
In 2000 50% of all international trade
linked to some form of countertrade.
Developing countries or countries with
foreign exchange problems.
Types of countertrades Barter.
 Barter - Direct exchange of goods of
approximately equal value.
 Not used very often because difficult to find
goods of equal value.
 Assessing value and disposing of goods is also a
problem.
 Parallel barter - they sign two separate
contracts that specify the goods and services to
be exchanged at different times.
Types of countertrades Counterpurchase.
 Seller gets paid but agrees to purchase goods
worth the same amount from the buyer.
 More flexibility in selecting goods and in
assessing value.
Types of countertrades Compensation deals
 Part payment in goods and part in cash.
 Some cash involved, flexibility in assessing value
of goods involved.
Types of countertrades Buy-back
 Seller agrees to accept as payment a portion of
the output or buy it back.
 Technology transfer, quality assurance, and
assured payment.
 Usually developing or newly-industrialized
nations.
U.S. Policy
 Strongly against counter trade.
 Not conducive to a competitive market.
 Assessment of taxes is difficult.
 However, Dept. of commerce is supportive and
congress has passed bills that permit and
support counter trade.
Policy of other
governments
 Most emerging market economies have favored
countertrade for economic reasons.
 Newly Industrialized Countries favor for
competitive reasons.
 Western Europe, Japan, New Zealand, and
Australia participate actively.