1. Distinguish between marketing research and
marketing intelligence systems.
2. Distinguish between standardization and
adaptation.
3. Describe how new products are developed and
how existing products are managed for
international markets.
4. Explain the four different methods of promoting
international marketing products, and provide
some advantages and disadvantages of each.
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–2
5. Define channels of distribution and physical
distribution, and indicate the role of each of
these for marketing products internationally.
6. Discuss the objectives and decisions involved in
international pricing.
7. Discuss aspects of customer service required for
goods and services that are globally marketed.
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–3
Analyzing International Markets
• Kinds of Markets
– Consumer markets
– The industrial market
– Government markets
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–4
Information Required:
Surveying International Demographics
• Market Potential
– The total number of units of a product that could
possibly be sold by all firms doing business in a
specific international market
• Sales Potential
– The percentage of a market potential
that a specific firm expects to sell in a specific
international market
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–5
EXHIBIT 12.1 PER CAPITA GDPS, 2010 (ESTIMATE)
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–6
Vital Market Potential Information
• Total population of a country
• Income
– GDP (total purchasing power for a country)
– Percentage of population within each income level
• Age distribution of the population
• Ethnic groups within the population
• Degree to which the country is urbanized
• Religions present in population
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–7
Marketing Research vs.
Marketing Intelligence Systems
• Marketing Research
– Information collected at one particular time
• Marketing Intelligence System (MIS)
– Information collected regularly over time
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–8
Types of Information
• Packaging, marketing, and labeling
• Usage of products by category
• Psychographic information
• Aspirations of customers
• Socio-demographic information
• Demographic profile of customers
by country
• Industry data—sales, trends by
product category
• Specific perceptions of products
and career opportunities
• Country market information (i.e.
income, population, female
population)
• Employment opportunities and
salary comparisons
• Daily financial information including
sales, expenses, and so on
• Success of competitors and
specific details about their
marketing and compensation plans
• Political risk analysis and its impact
upon current business and start-up
operations
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–9
EXHIBIT 12.2 TYPOLOGY OF INFORMATION SOURCES FOR MARY KAY
COSMETICS MARKETING INTELLIGENCE SYSTEM—EUROPE
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–10
Making the Standardization
and Adaptation Decision
Standardization
Adaptation
Glocalization
Reverse Strategy
• Marketing
strategies used
in international
markets by a
firm that are
the same as
those used in
its domestic
market
• Marketing
strategies used
in international
markets by a
firm that are
different from
those used in
its domestic
market
• The marketing
strategy which
involves
pursuing a
standardization
strategy in
foreign markets
when possible
and an
adaptation one
when
necessary
• Development
of a new
product first for
emerging
markets then
selling it to
developed
markets
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–11
Developing the International Product Mix
• Options for Marketing Products Overseas:
– Selling the same domestic product overseas
– Modifying products for different countries and regions
– Developing new products for foreign markets
– Incorporating all product differences into one design
and developing a global product suitable for most
world markets
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–12
Steps in Developing New Products
for International Markets
1. Concept Testing
– Presenting the new product idea to a small sample of the
international market to gauge its reaction
2. Business Analysis
– Projecting revenues and profits
for the product
3. Market Testing
– Developing the marketing mix for the product
4. Commercialization
– Finalizing manufacturing processes for the product,
firming up the marketing mix, and introducing the product
to the foreign market
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–13
EXHIBIT 12.3 CHARACTERISTICS AFFECTING RATE OF ADOPTION
& LEVEL OF ADOPTION FOR NEW PRODUCTS
Little
Low
Rate
Inconsistent
Relative Advantage
Compatibility
High
Consistent
of
Adoption
Rate
of
Difficult
Complexity
Simple
and
Low
Rapid
Adoption
and
Cannot
Trialability
Can
High
Level
Level
of
of
Adoption
Difficult
High
Communicability
Easy
Cost
Low
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Adoption
12–14
Managing Existing Products
• Product Life Cycle (PLC)
– A depiction of the sales and profits for a new product
over its life time
• Product Elimination
– A formal, written procedure to determine which of a
firm’s products should be dropped
• Reverse Strategy
– Development of a new product first for emerging
markets then selling it to developed markets
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–15
EXHIBIT 12.4 THE PRODUCT LIFE CYCLE
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–16
Where to Locate Research and
Development Facilities
• Having one facility in the home country
– Reduces R&D costs and exerts more control and
coordination over the R&D program
• Having one facility in the home country and one
or more additional facilities in the foreign markets
– Access to foreign scientists and engineers
– New products developed overseas are more likely
to be attuned to the firm’s overseas markets
– Transfer of technology developed overseas back
to the home country
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–17
Product Counterfeiting
• Problems created by counterfeiting:
– Damage to brand image by inferior
counterfeits
– Sales revenues lost to counterfeiters
– Dangers to customers from defective and
hazardous counterfeits
– Costs of combating counterfeit products
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–18
Developing the International Promotion Mix
• Advertising Media
– Television, radio, newspapers, magazines, direct mail
– Can reach large audiences at low cost per contact
• Types of Magazines
– Vertical publications target specific industries
– Horizontal publications target specific jobs in industries
• Sales Promotions
– Contests and sweepstakes, coupons, end-aisle displays
in stores, sponsorships, and trade shows
• Publicity
– Unpaid stories about a firm, its products or services,
and its executives that appear in the media
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–19
Benefits of Publicity
• Helps firms to prospect for new customers
• Paves the way for sales calls when a favorable
press release is sent to prospects ahead of a
sales call
• Helps sell minor products
• Stretches the promotional budget
• Favorable stories provide objective, unbiased,
third-party endorsement for a firm
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–20
Developing the International Distribution Mix
Indirect Strategy
– Uses existing distribution
channels to market products
and services
– Requires no upfront
investment
– Market knowledge can assist
in introducing products more
quickly
– Channels may also carry
competitive products
– Channel controls marketing
efforts
Direct Strategy
• Bypasses existing channels of
distribution by using marketing
and sales offices located in
foreign countries
• Requires upfront investment in
recruiting and training a sales
force
• Maintains control over
marketing efforts
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–21
International Distribution Channel Partners
• Agent
– A channel of distribution that represents a firm
in a foreign market and is paid by commission
• Distributor
– A channel of distribution that purchases
products from a firm doing business in a foreign
market and then resells them to other buyers
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–22
Physical Distribution
• Physical Distribution
– Storage and transportation operations that are
used in moving products to a foreign market
• Distribution Issues in Overseas Markets
– Access to layers of in-country distribution systems
– Poor logistical infrastructures and security in
developing nations create difficulty in delivering
orders in complete, accurate, and good condition
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–23
International Physical Distribution
• Freight Forwarder
– Agents for firms shipping products overseas who are
chiefly involved with physical distribution activities
and documentation
• Containerization
– Shipping products to overseas markets in trailer-sized
containers—truck, train, airplane, oceangoing vessel
• Intermodal transport
– International shipments using different modes of land,
sea and air transportation
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–24
EXHIBIT 12.5 PRICING OBJECTIVES FOR INTERNATIONAL PRODUCTS
AND SERVICES
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–25
Setting Prices in International Markets
• Price-Setting Factors
– Costs of product
– Attractiveness of competitive products and their
prices
– How competitive the product is
– How much marketing support (promotion budget,
level of customer service, number of sales people
selling the product, etc.) the product will get
– What the demand for the product will likely be
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–26
Approaches to Setting Prices
in International Markets
• Charging the same price in the foreign market
as in the domestic market:
– Recognizes a product’s fixed and variable costs and
includes costs of transportation, storage, and
promotion) required to market the product overseas
• Using a market differentiation approach:
– Recognizes product costs, but places a greater
emphasis upon the demand that exists for products
at various prices.
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–27
Unfair International Marketing Tactics
• Dumping
– Selling at a price in a foreign market that undercuts
the prices of competing local firms by:
• Setting the foreign market price below what is charged the
seller’s home-country (domestic) market
• Setting a price above what is charged domestically, but below the
marginal cost to move and sell the product overseas.
• Gray Marketing (“Parallel Importation”)
– Unauthorized importers selling a product in the
manufacturer’s domestic market for less than what
the manufacturer sells the product in that market
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–28
Setting Prices in International Markets
Transfer
Price
• Is a price a firm
charges its overseas
subsidiaries when
selling them products
that they will resell
• Can be used to
minimize taxes
Arms Length
Price
• The price that an
overseas market is
willing to pay or the
price that is
customarily paid for
the transferred
products in the
overseas market
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–29
Developing the International
Customer Service Mix
• Share Of Wallet
– The percentage of purchases in a category a buyer
gives to one vendor
• Reliability
– The performance of various aspects of customer
service that meets customer expectations
• Empowerment
– The aspect of customer service that allows employees
to take care of customer problems immediately,
without having to consult superiors
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–30
KEY TERMS
market potential
sales potential
marketing research
marketing intelligence system
(MIS)
standardization
adaptation
glocalization
global product
concept testing
business analysis
market testing
commercialization
product life cycle (PLC)
product elimination
reverse strategy
vertical publication
© 2014 Cengage Learning. All rights reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12–31