Selected issues on
international marketing
programme
Focused
on Product and Services
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The opportunities for international marketers of consumer goods and
services today have never been greater
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New consumers are springing up in many emerging markets, which
promise to be huge markets in the future
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In the more mature markets consumers´ tastes become more
sophisticated and complex due to increase in purchasing power
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The difference between tangible products and services
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The difference between business-to-consurmer and business-tobusiness markets
Product policy:
Analyzing Product Components
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A product is multidimensional, and the sum of all its features
determines the bundle of satisfaction (utilities) received by the
customer
The many dimensions of products can be divided into three distinct
components:
– Core components
– Packaging components
– Support services components
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These components include all a product´s tanglible and intangible
elements and provide the bundle of utilities the market receives from
use of the product.
Which products for
international markets?
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The same as for home market
Adapted products
Standardized products
New products
Define the reasons
for each option!
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 strategies
• Cost-plus.
• Strategic pricing: penetration pricing, skimming
(including strategies for pricing a new product)
• Experience curve pricing
• Demand-based pricing
• Pricing across products (product line pricing)
• 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.
Influences on international
pricing
Desired brand position
Overall
corporate
strategy
Government
price controls
Responsiveness
of sales to price
changes
Consumer
characteristics
Supply costs
Selling points
of the product
Price
Local credit periods
Nature of local
competition
Stability of exchange rates
Rate of market
growth
Consumer response to promotional
activities
Local
inflation rates
Distributors’
markups
Factors affecting
the price setting in international marketing
• Environmental factors
• Market factors
External factors???
• Firm-level factors
• Product factors
Internal factors???
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
20 %
in price differences
Highest price
Future
European price corridor
A.
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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.
• 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
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Entry mode
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Physical distribution
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INCOTERMS
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Distribution channels
Distribution
and external environment
Distribution decision
Channel decisions – external factors
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–
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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
Wrigley and distribution channel in China
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It may be that no other US product, save perhaps Coca-Cola, is as widely available and in
China as Doublemint gum. The company has extended its reach into almost every corner
of the country.
In fact, Wrigley has probably the widest distribution and sales network of any food
manufacturing and consumer packaging company in China, with a staggering one million
sales outlets - 30,000 in Shanghai alone.
Wrigley's share of China's chewing gum market is an astounding 60 percent. Although the
company has competitors - primarily South Korea's Lotte and Italian company Perfetti Van
Melle - no other gum company, foreign or domestic, comes close to Wrigley's market share
or sales volume.
Since 1999, China has become Wrigley's second-largest market, behind only the United
States. If ever there was a US company that has actually cashed in on the mythic slogan,
``if every one of China's billion people bought just one ...,'' it is Wrigley's.
As a matter of fact, they buy more than one: Chinese, on average, buy 10 sticks of gum a
year. That's far behind the American average of 160 or Taiwan's 70-80. But with China's
population five times that of the United States, there is a lot of room for growth.
The Doublemint brand is the top-selling gum in China, and Wrigley's has enjoyed
consistent double-digit sales growth there.
Wrigley entered China in a big way in 1989, when it built its first wholly owned chewing
gum factory in Guangzhou. Last October, Wrigley opened a 50,000 square-foot factory to
make gum base - the material that gives gum its chewiness - in Shanghai.
Since the opening of the Shanghai plant, the company has been able to produce all the
ingredients for chewing gum on the mainland.
In recognition of Wrigley's unassailable position in China, Spanish food conglomerate
Agrolimen last year sold its Joyco confectionery division's operations in China and India
and several other countries to Wrigley for 220 million euros (HK$2.1 billion).
Wrigley Brand
China versus SR
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Cool Air
• Doublemint
• Extra
Juicy Fruit
•Pim Pom
• Sugus
• TaTa
• Wrigley's Coffee
• Wrigley's
Spearmint
•
Airwaves
• Doublemint
• Hubba Bubba
• Juicy Fruit
Orbit
• Solano
• Winterfresh
• Wrigley's
Spearmint
Distribution channel and local market:
Wrigley Doublemint v Číne
• Výrobný závod GUANGZHOU – juhovýchodné pobrežie Číny
• Cieľ: 10-ročný chlapec na ulici v meste Shanghai
• Podmienka: trvanlivosť 8 mesiacov
Distribučný kanál:
• Guangzhou – výrobný závod
• Pobrežná nákladná loď: náklad 960 000 balíčkov žuvačiek
• Námorná hliadka nakladá na loď pašované autá
• Colná kontrola v prístave
• Nákladné auto v prístave Shanghai
Distribučný kanál a lokálny trh:
Wrigley Doublemint v Číne
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Nútené zastávky (banditi,
provinční úradníci)
Veľkoobchodník Mr. Chen
Tuping (štátny obchodný
podnik)
Obchodní zástupcovia firmy
Wrigley hľadajú odberateľov –
veľko a maloobchodníkov
(osobné kontakty, podpora
predaja, pozitívne referencie)
Distribution channel and local market:
Wrigley Doublemint v Číne
• Mr. Meili – veľkoobchodník (Beautiful&Rich Wholesale Market)
na trojkolke si dovezie žuvačky do svojho veľkoobchodu)
• Malý obchod na ulici v meste Shanghai (dopravný prostriedok
bycikel)
• Spotrebiteľ Zhang Xiaomei
Wrigley a Singapur
• Wrigley's is slowly working its way back into Singapore after having
been shut out, along with every other gum maker, after the island
country famously banned the import and sale of chewing gum for
sanitary reasons in 1992. The company was deeply involved in
negotiations leading to the city-state's 2003 Free Trade Agreement
with the United States. Two issues dominated the negotiations:
Singapore's participation in the Iraq coalition, and chewing gum. Of
the two, gum was the stickiest.
• Singapore finally compromised, agreeing to allow the importation
and sale of what it called ``therapeutic'' gum. The deal opened the
way for sales of Wrigley's Orbit brand of sugar-free gum, which
contains calcium lactate, intended to strengthen tooth enamel.
• But Wrigley's gum can only be bought through a licensed
pharmacist, and the buyer must provide his name and identity card
number.
International communication:
Objectives of international
advertising
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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
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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
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Gives the foreign firm a local image.
Closer links between agency and media.
More commitment to the market.
Local flair and creativity.
Objectives of international
advertising
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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
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Cultural differences between markets.
Language differences.
Differences in educational backgrounds.
Non-availability of some media.
Different attitudes towards advertising.
Legal requirements in different markets.
International media planning
problems
• Differing definitions of terms such as
circulation and readership.
• Differing segmentation of media.
• Large number of possible media to screen.
• Absence of reliable information on ‘passalongs’ of magazines.
Advantages of using a local
agency
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Gives the foreign firm a local image.
Closer links between agency and media.
More commitment to the market.
Local knowledge and creativity.
International media planning
problems
• Differing definitions of terms such as
circulation and readership.
• Differing segmentation of media.
• Large number of possible media to screen.
• Absence of reliable information on ‘passalongs’ of magazines.
Objectives of international PR
• Establish a brand image.
• Create awareness of the enterprise.
TOOLS OF PR
• Sponsorship.
• Press releases.
• Publicity stunts.
• Brochures and reports.
• Media events.
Factors contributing to the
growth of Public Relation
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Ability to contact opinion leaders.
Large-scale privatizations.
Escalating costs of advertising.
General increase in promotion.
Rising interest in corporate image.
Wider share ownership.
High cost of bad publicity.
Drivers for growth in direct
marketing
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New technology.
Escalating costs of mass media.
Availability of good-quality lists.
Developments in IT.
Improved mail infrastructure.
Improved telecomms infrastructure.
Elements in the export plan versus
fundamental decisions
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Reasons for exporting.
Markets to be entered.
Competitive situation in the target markets.
Products to be offered.
Research methods.
Promotional methods.
Export formalities.
Organization.
Human resource requirements.
Transport and distribution.
Objectives and budgets.
Contingency plans.