International marketing and
management
4. ENTRY STRATEGIES
2010 – SOCRATES PROGRAM
Major International Marketing Decisions
2
Marketing aims and objectives?
Strategic decision process:
• Country selection
• Target product/market
• Goals of the target market
• The mode of entry
• Time of entry
• Marketing strategy
• Marketing mix plan
• Control systems to monitoring the
performance in the entered market
Marketing aims and objectives?
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Build up market position for product
Increase market share
Defense of the market
Introduction of new product
Harvesting from declining
Max. profit from product line
Market entry with product on new market
– but HOW?
Marketing strategy
• Strategy is:
• a plan - action agenda, an integrated course of action
(strategy for restructuring)
• a pattern of apparent behavior that emerges from a
series of action (Quality is No. 1 = Ford's strategy)
• a position or match between an organization & a
product-market area (product differentiation strategy)
• describes perspective of an organization – concept
(company is customer-driven or an innovator)...
• Strategy includes ability to decide WHERE, WHEN and
HOW to compete. These decision require knowledge of
market trends, competition & competitive advantage of
corporation.
What is strategy?
• Imagination about the way how to achieve
objectives.
- who? – how markets, how customers (needdemand) - position
- HOW? (M. mix – supply, M operations, intensity of
operations, relation to competition...)
• „Game plan - design“ – mix of
manoeuvres, which give possibility to firm
achieve and keep projected position and
objectives. (What to do when will be change?
Strategic marketing decisions
• Strategic – long time and resources
• Sometimes creation of add slogan is strategic
decision
• Strategic tasks in marketing planning:
environmental analysis, identification of
opportunity and threats, objectives formulating,
definition of market position, USP, creation of
marketing plans, organizing and marketing
management, selection of people, SBU,
financing, creation of distribution channels,
branding... To identify competition advantage
Market. strategy & competition advantage
• Competition advantage – why customer will buy
our product, not other.
• Question: How we compete? By what tool? –
customers needs are without borders
• We must have unimitated advantage (None
competitive advantage is permanent.)
• Competition - me too
• Sometime is enough lower price – but not for
long time and not for all customers.
• Better is non price competition (based on
product – beer alcohol free, on services,
communication, people, innovation...)
Market.strategy & competition advantage
• How & where (market) and when... to
compete?
• Company resources and market supply for
consumer needs – possibility for competiting
– ground for marketing strategy
• How to?
• Exploitation of resources:
– Cost increasing? Decreasing?
– Focus of resources for actual supply? Supply
new product? New market? Now? Later? If yes
– how resources?
– Pull down actual supply from market? Now?
When?
– How to entry in foreign market???
Entry strategies
Home
production
Abroad
production
Consultancy
engineering
Direct
exporting
Without
investment
Indirect
exporting
With
investment
Indirect
exporting
Home
production
Specialized
exporter-agent
Export
cooperative
-pyggybacking
Direct
exporting
Without
investment
-agent
-for all customers
-only privileged customers
With
investment
-representation office
- local branches
- daughters:
without stock
with stock
with services
Without direct
invest.
Abroad
production
Licensing
Know-how
Franchising
(master franchising)
Profession
agreement
Agreement
about teach in
Contract
manufacturing
- LCC
Management
contract
With direct
invest.
Joint ventures
- synergy
-minority
-majority
-parity
Ownerships
-montage
-semi product
-full production
- buy (aquistion) or
- establish
Strategic
aliances-types
Market Entry Strategies
Joint Ownership
KFC entered Japan through a joint ownership
venture with Japanese conglomerate Mitsubishi.
WHY joint venture?
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Partner resources availability
Other resources availability
Contacts with local suppliers
Contacts with local customers
Entry to closed markets
Participation on costs
Dividing of risk
Know-how availability
Synergy effect...
RISK
Minimum
Maximum
INSPECTION
Minimum
Maximum
Export
Know-how
Franchising
Licensing
Exclusive representation
Joint venture
Ownership with
own management
Ownership with
foreign management
100%
DAUGHTER
ABROAD
REPRESENTATION
JOINT
VENTURE
FRANCHISING
LICENSING
EXPORT
at home
in abroad
Managerial performance
100%
Selecting a foreign market entry mode
Factor
Risk of losing
proprietary
information
Level
High
Direct investment
Licensing
Medium Joint venture
Resources
Direct investment
Joint venture
Exporting (own staff)
Exporting (own staff) Licensing
Exporting
Exporting
(middlemen) (middlemen)
Low
Direct investment
Control
Direct investment
Exporting (own staff)
Joint venture
Licensing
Exporting
(middlemen)
Approaches to developing
international marketing strategies
Undifferentiated market
Product Promotion
Price
Place
Undifferentiated
Approaches to developing
international marketing strategies
Product Promotion
1
1
Price
1
Place
1
Product Promotion
2
2
Price
2
Place
2
Product Promotion
3
3
Price
3
Market segmentation
Place
3
Target 2
Approaches to developing
international marketing strategies
Product Promotion
1
1
Price
1
Place
1
Product Promotion
2
2
Price
2
Place
2
Product Promotion
3
3
Price
3
Place
3
Market segmentation
Based on:
 Buyer motivations
 Buyer preferences
 Buyer behaviour
 Buyer price sensitivities
Profiled on:
 Religion
 Lifestyle
 Income
 Age
 etc.
Marketing strategy and BCG
?
Invest - development
?
Invest–selective
Selecion of
segments
?
?
Keep position-harvest
Fall back - deinvest
Entry strategies for new product
Promotion
low
Price
high
high
Intensive
marketing
(fast skiming)
Wide invasion
(fast penetration)
low
Select invasion
(slow skiming)
Pasive
marketing
(slow penetration)
Ansoff´s development strategies
Market
old
PRODUCT
new
old
Consolidation
new
Penetration
s50/c100
Market
development
s20/c400
PRODUCT
developmnet
s33/c800
DIVERSIFICATION
s5/c1400
KOMATSU Strategies
Diverzification
Differentiation
Costs
Quality
1000 HP
Remote control
Program at terrene
Reduction
Of components rationalisation
„A“ project
TQC, TQM
For suppliers
too
M – mix strategies
• Product – elimination, diversification, PLC,
• Price – status quo, unique price, upper/lower
competition, penetration, skimming...
• Distribution – intensive, selective, exclusive,
line price, INCOTERMS, complementary
products, two-element...
• Promotion – pull vs. push
Competition strategies
- According position – attack/defend
- Cost leadership – Deavoo, KIA
- Nicher – positionalist - Victorinox
- Challenger
- Me too – to be the 2nd
- Focus – R&R
- Differentiation - McD...
Evaluation of strategies
Criterions:
1. Synergy effect from M-mixu - (1+1=3)
2. Is clear for customer
3. Is helping to company (profit, turnover...)
4. Market share is increasing
5. Possibility to find good market position
6. Feasibility in company condition
(resources, skills...)
Level of export orientation & competition position
Orientation on
foreign market
Weak
exporter
Competion
exportér
Weak competit.
position
Strong competit.
position
Separatist
Home leader
Orientation on
domastic market
Entry strategies to foreign market
Investment & delegation
Minority participation
Care about my money
Joint venture
Investment & supervision
FDI - majority
Daughter I supervise my things
Výrobná pobočka
Local branche
Licensing
Direct exporting
Franchising
Take and care about
I care about you
Technical support
Privileged representation
Managment agreemet
Delegation without investment Supervision without investment
Comparation of JOINT VENTURE & 100 % OWNERSHIP
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Synergy effect
Common financing
Position of home firm
Image of home firm
Better contact with local market
Risk of conflict in firm goals
Agreement is necessary
Availability of inform.& knowhow
Risk of price problems
Better selection of employees
Risk of problems from history relation
Common participation on profit
Participation of home partner
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Independent entrepreneurship
Own financing
Position of foreign firm
Image of foreign firm
Worse contact with local
market
Independent decisions
Explicit decision
Full supervision
Own price policy
Problems with local employees
Risk of management leaving
• Own responsibility for profit/loss
• In some countries prohibition of
100 % ownership