Selected issues on
international marketing
programme
Designing
the marketing programme
• Once the firm has decided how it will enter the
international market, the next issue is how to
desigh the international/global marketing mix.
• There are different forces in the international
environment that may favour either increasing
globalization or increasing adaptation of the firm.
• Supporters of adaptation state that there are
substantial differences between countries and
even between regions in the same countries.
Designing
the marketing programme
It is relevant to discuss
degree of standardization
or so called
„standardization potential profile“
Main decisions
in product policy
• What kind of product?
• Product life cycle
• New product development and innovations
As a product we can consider anything
what can be offered to our customer.
Which products for
international markets?
•
•
•
•
The same as for home market
Adapted products
Standardized products
New products
Define the reasons
for each option!
Factors of adaptation
• Consumer goods for
daily use
• Local competition
Factors of adaptation
• Different conditions of
use
• Intercultural differencies
in consumer behaviour
and purchasing
behaviour
• Differences in
purchasing power
• Different conditions in
supplying with
production inputs
• Different legislation
Factors
of standardization
• Economics of scale
• High costs of adaptation
process
• Industrial and high tech
products
• Entering the similar
markets
• Export
• Global competition
• Strong image of the
country/producer/brand
Branding decisions
Source: Source: adapted from Onkvisit and Shaw, 1993, p. 534.
14-10
Different
degrees of product newness
New to
International
markets
Increasing
risk
High
New to
home
country
Reposition
Existing
products
Newness
to
International
Market
Cost
reductions
Low
Low
New to
regional market
Line
extensions/
improvements
New to
company
Newness to Company
High
14-11
Benefits of strong brand in
local/regional market:
Visegrad opportunities?
• New product in
brand portfolio
• Repositioning the
traditional product
• Seasonal product
for larger market
• Brand partnership
The functions of branding
• To distinguish a company’s offering and
differentiate one particular product from
its competitors
• To create identification and brand
awareness
• To guarantee a certain level of quality and
satisfaction
• To help with promotion of the product
14-13
For discussion (3)
• What are the requirements that must be met so
that a commodity can effectively be transformed
into a branded product?
• Discuss the factors that need to be taken into
account when making packaging decisions for
international product lines.
• When is it appropriate to use multiple brands in
(a) a single market and (b) several markets?
14-14
Four degrees of adaptation:
combinations: product and promotion
Noncustomization
Adapting
the message
Customize
Fully leverage
Marketing
global product
message and
and marketing
language
Adapting
the portfolio
Custom
product design
Customize mix
of product and
Create market
services
specific products
based on
and services
local needs
Branding for international
markets
• Branding dimensions:
– Global brands
– Regional brands
– Local brands
– Producer´s brand
– Private brands
– Brand partnership
– Brand portfolio
International
product
life cycle
The international product life cycle
• Macroeconomic approach:
– Typically, demand first grows in the innovating country.
Production, consequently, takes place first in the innovating
country. As the product matures and technology is diffused
production occurs in other industrialised countries and then
is less developed countries.
• Microeconomic approach:
– Due to different economic levels in different countries, a
specific product can be in different PLC stages in different
countries.
International pricing decisions
and terms of doing business
• Factors influencing international pricing
decisions
• International pricing strategies
• Price escalation
• European pricing strategies
• Terms of sale and delivery
Pricing policy is an important strategic and tactical competitive weapon that, in
contrast to the other elements of the global marketing mix, is highly contrallable and
inexpensive to change and implement.
International pricing strategies
•
•
•
•
•
•
•
•
•
•
Skimming
Market pricing
Penetration pricing
Price change
Experience curve pricing
Demand-based pricing
Pricing across products (product line pricing)
Pricing across countries
Total package price
Psychological pricing
In comparison to domestic pricing strategies, the decisions are much more complex, because they
are affected by a number of additional external factors, such as fluctuations in exchange rates,
accelerating inflation in certain countries and the use of alternative payment methods such as
leasing and barter for instance.
What to add to general pricing strategies?
• Pricing across countries:
– Standardization: internationalization of
competition, homogenization of competitive
structures, international activities of large
retailers
– Differentiation: differences in price segments,
strengths of local competitors, retailer power,
consumer preferences
International pricing taxanomy
1. Global price leader: global market leader,
market and cost-oriented global prices, global
competition but local differences
2. Global price follower .....
3. Multilocal price setter
4. Local price follower
European pricing strategies
Lowest price
VISEGRAD COUNTRIES?
20 %
in price differences
Highest price
Future
European price corridor
A.
•
•
•
•
Reasons for lowering prices in
foreign markets
Lower consumer incomes.
Intense local competition.
R&D costs have already been covered.
Weak demand for the product.
B. Reasons for increasing prices in
foreign markets ????
Price escalation
• Price escalation affects all firms involved in cross-border
transportation. All cost factors in the distribution channel add up and
lead to price escalation. The longer the distribution channel, the
higher the final price in the foreign market.
• Due to additional shipping or other kinds of transportation,
insurance, tarrifs and distribution charges, the exported
product costs more in the export market than at home.
Distribution policy
•
Entry mode
•
Physical distribution
•
INCOTERMS
•
Distribution channels
Distribution decision
Channel decisions – external factors
–
–
–
–
–
Customer characteristics
Nature of product
Nature of demand (location)
Competition
Legal regulations/local business practice
Channel decisions – internal factors
– Decisions concerning structure of the channel
– Managing and controlling distribution channels
– Managing logistics
Considerations in transport and
distribution policy
• Cost vs. speed.
• Nature of the product (weight, perishability,
dimensions).
• Customer preferences.
• Value of the goods.
• Intermediate handling and storage charges.
• Working capital tied up in goods in transit.
International
distribution
channel
The Banana split model
• How much (in percentage of the retail
value in the UK) stays with each chain
actor to cover costs and margin:
– Plantation workers 2 %
– Plantation owners 10 %
– Transnational companiers 31%(including 5
% EU tariffs)
– Distributors 17 %
– Retailers 40 %
International communication:
Objectives of international
advertising
•
•
•
•
Increasing sales.
Attracting new customers.
Altering customer behaviour.
Communicating brand values.
The case for standardization
• Consumer characteristics are becoming
homogeneous across borders.
• Urbanization is increasing.
• Internationalization of media has led to
converging lifestyle choices.
The case for customization
•
•
•
•
•
•
Cultural differences between markets.
Language differences.
Differences in educational backgrounds.
Non-availability of some media.
Different attitudes towards advertising.
Legal requirements in different markets.
Advantages of using a local
agency
•
•
•
•
Gives the foreign firm a local image.
Closer links between agency and media.
More commitment to the market.
Local flair and creativity.