CHAPTER 1.MARKETING AND INTERNATIONAL MARKETING 1. INTRODUCTION 2. THE NATURE OF INTERNATIONAL MARKETING 3. EXPORT MARKETING PLANNING 4. GOALS OF INDIVIDUAL BUSINESS UNITS 1. INTRODUCTION • Internationalization and global marketer Global Marketing Integration International Marketing • Total world trade volume in goods and services is around $8 trillion. • The world’s five exporting countries are the United States ($700 billion), Germany ($560 billion), Japan ($390 billion), France ($320 billion), and Britain ($260 billion), collectively accounting for 42 percent of global trade. International Marketing - Intro • The Triad Regions (North America, Western Europe, and Japan) of the world collectively produce more than 80% of world GDP. • In the next ten to twenty years, Emerging Markets – the Chinese Economic Area (CEA: including China, Hong Kong, region, and Taiwan), India, South Korea, Mexico, Brazil, Argentina, South Africa, Poland, Turkey, and the Association of Southeast Asian Nations (ASEAN: including Indonesia, Brunei, Malaysia, Singapore, Thailand, and the Philippines, and Vietnam) will provide many opportunities in global business. 2.THE NATURE OF INTERNATIONAL MARKETING • What is international marketing? Export marketing Foreign marketing Multinational marketing Global marketing • International marketing Export marketing The international marketing dimension involves marketing across national borders. This is different from domestic marketing because the mere fact of crossing the border confronts with new economic, political, and legal constraints, such as floating exchange rates, boycotts, and international law. These constraints will usually force modification of the firm’s marketing program as it crosses national boundaries. Foreign marketing The foreign marketing dimension involves marketing within foreign countries, as a U.S firm markets in Belgium or Brazil. Such marketing is unlike domestic marketing because that firm faces different kinds of competition, consumer behavior, distribution channels, and promotional possibilities in Belgium or Brazil from what it is familiar with at home. The tasks is further complicated because each country has an individual idiosyncratic marketing environment. Multinational marketing The multinational marketing dimension emphasizes the coordination and integration of the firm’s marketing in many diverse foreign environments. The unique nature of each foreign market fragments the international marketing effort and brings diseconomies of scale. The international marketer must plan and control carefully to maximize the integration and synergy in the global marketing program while minimizing the costs of adapting to each foreign market. International Marketing Defined International marketing: 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. The International Marketing Task Foreign environment (uncontrollable) 1 Political/legal forces Economic forces Domestic environment (uncontrollable) 2 7 Cultural forces Political/ legal forces (controllable) Price Competitive Competitive Forces structure Product 3 6 Promotion Geography and Infrastructure Country market A environment (uncontrollable) Channels of distribution Level of Technology Economic climate 5 Country market C environment (uncontrollable) Country market B environment (uncontrollable) 4 Structure of distribution Irwin/McGraw-Hill Copyright©2002 by The McGraw-Hill Companies, Inc. All rights reserved. Evolution of Marketing • Domestic Marketing - ethnocentric • Export Marketing- ethnocentric • International Marketing - polycentric or multidomestic • Multinational Marketing- regiocentric • Global Marketing - geocentric Domestic export marketing international marketing multinational global The main steps in the marketing management process R – STP – MM – I – C R= research STP= Segmentation, Targeting, Positioning MM= Marketing-mix I= Implementation C=control MARKETING-MIX 4 Ps 4Cs 1.Product Customer value 2. Price Cost to the customer 3. Place Convenience 4. Promotion Communication ------------------------------------------------------------5. Probe Customer, consumer 6. Phacilitate (Facilitate) Consumption services 7. Plan Curve 8. People Count The activities in international marketing include: 1. Detailed analysis of current markets and potential markets; 2. Planning and development of products that the consumers want, clearly defined in suitable package; 3. Distribution of products through channels which provide the services or conveniences demanded by purchases; The activities in international marketing include: 4. Promotion of products to inform and educate consumers about products or services; 5. Setting of prices which reflect both a reasonable value (or utility ) of product to consumers; and 6. Technical and non-technical services given to the consumers-both before and after a sale is made. 3.EXPORT MARKETING PLANNING 3.1. Identifying and measuring market opportunity 3.2. Developing an export marketing strategy 3.3. Making export strategy operational 3.1. Identifying and measuring market opportunity a) b) c) d) Preliminary screening Estimating market potentials Estimating sales potentials Segmenting the market 3.2. Developing an export marketing strategy a) Setting export objectives b) Planning the marketing mix Product, price, channels, promotion. 3.3. Making export strategy operational a) b) c) d) e) f) g) h) i) Sales forecasts Sales budget Sales quotas Production schedules Inventory control Labor requirements Promotional budgets Financial budget Profit budget The Process Stages in the Marketing Process Analysis: • Collect data from sources- primary and secondary, internal and external, formal and informal. Screen data for opportunities to employ company resources for competitive advantage. Planning: • Develop a marketing plan which includes a situation analysis, goals and objectives, long-term strategies and short-term tactics, cost and profit estimates, and anticipated changes in organizational structure. Implementation: • Take actions to put the plan into action. Adjust implementation activities to account for environmental changes in market conditions. Control: • Use annual planning (sales to forecast), profitability, and efficiency controls to monitor the plan’s successes and failures. 4. GOALS OF INDIVIDUAL BUSINESS UNITS 4.1 basis goals Profit or nonprofit( volume of sales, market share, serving customer…). 4.2 specific reasons • Managerial urge • Unique product/technology competence • Risk diversification • Foreign market opportunities • Change agents • Economics of scale • Foreign marketing advantages • Extend sales of seasonal product • Excess capacity of resources GOALS OF INDIVIDUAL BUSINESS UNITS 4.2 specific reasons • Unsolicited foreign orders • Small domestic market • Stagnant or declining home market • Resources • Multinational, global, world companies • Other goals CHAPTER 2. THE INTERNATIONAL ENVIRONMENT 1. ECONOMIC AND FINANCIAL FACTORS 2. SOCIO-CULTURAL ENVIRONMENT 3. POLITICAL/LEGAL ENVIRONMENT 4. COMPETITION ECONOMIC AND FINANCIAL FACTORS 1. Population, Income (Per capita income, GNP) 2. Convertibility or possibility of effective utilization of resources; financial stability. 3. Banking facilities available and nature of credit facilities offered, short medium and long-term (conditions, terms, interest rates. etc.) a) Domestic b) foreign c) Governmental or other lending institutions and facilities. ECONOMIC AND FINANCIAL FACTORS 4. Availability of local and accounting services. 5. Currency, exchange rates and controls 6. Capital repatriation and remittance of profits, licensing and other payments. 7. Availabilities of insurance 8. Situation of the Balance of Payments 9. Communications and transports 10. Urbanization ECONOMIC AND FINANCIAL FACTORS 11. Market prospect + Estimated size, trends, and potential of market in the country + Export markets and estimated size + Sources of market information + System of distribution of good 12. Product and product modification 2.SOCIO-CULTURAL ENVIRONMENT 1. The elements of culture Language Nonverbal language Religion Values and attitudes Manners and customs Material elements Aesthetics Education Social institutions Family 2.SOCIO-CULTURAL ENVIRONMENT 2. Adapting to cultural differences Some companies have made special efforts to adapt their products or services to various cultural environments. Cultural factors + Never touch the head of a Thai or pass and object over it. The head is considered sacred in Thailand + Avoid using triangular shapes in Hong Kong, Korea, and Taiwan. + The number 7 is considered bad luck in Kenya and good luck in the Czech republic and Magical connotation in Benin, Africa. + The number 10 is bad luck in Korea + The number 4 means death in China + Red represents death in many African countries. + Red is a positive color in Denmark Cultural factors + In Canada information on products is often provided in English and French. + Swiss chocolate manufactures know that US customers believe Swiss chocolate product are of high quality (value), so that companies emphasize their Swiss origin and thus generate high sales. (attitude) In short, by being aware of the value and attitudes of the people in the culture, a business firm effectively position its product. Cultural factors Education influences many aspects of culture. Education also helps to provide infrastructure needed for developing managerial talent. For example, educationally advanced countries like England, France… are more likely to be markets for computers and other high –tech equipment than poor countries.