chapter eighteen
Marketing Internationally
McGraw-Hill/Irwin
International Business, 11/e
Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
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Explain why there are differences between domestic and
international marketing
Explain why international marketing managers may wish to
standardize the marketing mix regionally or worldwide
Explain why standardizing the marketing mix globally is
often impossible
Discuss the importance of distinguishing among the total
product, the physical product, and the brand name
18-3
Learning Objectives
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Explain why consumer products generally require greater
modification for international sales than do industrial
products or services
Discuss the product strategies that can be formed from three
product alternatives and three kinds of promotional
messages
Explain “glocal” advertising strategies
Discuss some of the effects the Internet may have on
international marketing
Discuss the distribution strategies of international marketers
18-4
International Marketing
• Develop marketing strategies by
assessing the firm’s potential foreign
markets and analyzing the many
alternative marketing mixes
– Must plan and control a variety of marketing
strategies
• Rather than a single unified and
standardized one
• Coordinate and integrate those strategies
into a single marketing program
18-5
Standardize, Adapt, or Formulate
Anew?
• Management would prefer global
standardization of the marketing mix
• Significant cost savings
• Longer production runs
• Standardized advertising, promotional materials,
and sales training
• Standardized corporate image
• Standardized pricing strategies
• Easier control and coordination
• Reduction of preparation time
• Often not possible
18-6
Product Strategies
• Product is central to marketing mix
• Total product includes
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Physical product
Brand name
Accessories
After-sales service
Warranty
Instructions for use
Company image
Package
18-7
Total Product
18-8
Types of Products
• Industrial Products
– Many can be sold unchanged worldwide
(computer chips)
– If changes are required, they may be cosmetic
(printing instructions in another language)
– In developing countries problems with
• Overload of equipment
• Maintenance
– Local legal requirements
18-9
Types of Products
• Consumer Products
– Require greater modification to meet local market
requirements than do industrial products
– Some can be sold unchanged to certain market
segments
• Large automobiles, sporting equipment, and perfumes
– Greater dissimilarity as you go down the economic
strata
18-10
Types of Products
• Services
– Marketing of services similar to that of
industrial products
• Services easier to market globally compared to
consumer products
• Laws and customs may force changes
18-11
Foreign Environmental Forces
• Sociocultural Forces
– Dissimilar cultural patterns generally require
changes in food and other consumer goods
– May require
• Redesign of product
– Different meanings of colors
– Different meanings of brand name
• Translation of instructions or labels
18-12
Foreign Environmental Forces
• Legal Forces
– Laws concerning
• Pollution
• Consumer protection
• Operator safety
– Laws prohibiting classes of imports
• Food and pharmaceuticals influenced by laws
concerning purity and labeling
– Legal forces may prevent use of brand name
worldwide
• In some countries brand may be registered to
someone else
18-13
Foreign Environmental Forces
• Economic Forces
– Great disparity in income throughout world
– Obstacle to product standardization
– Many industrialized country products too expensive for
developing country consumers
• Must either simplify the product or produce a different, less
costly one
18-14
Foreign Environmental Forces
• Physical Forces
– Climate and terrain prevent international product
standardization
• Heat
• High humidity
– Special packaging
• High altitudes
– Baking products and motors
• Rough roads
18-15
Promotional Strategies
• Promotion
– Any form of communication between a firm
and its publics
• To bring about a favorable buying action
and achieve long-lasting confidence in
the firm and the product or service it
provides
18-16
Promotional Strategies
• Distinct promotional strategies based on
combination of three alternatives
– Marketing the same physical product everywhere
– Adapting the physical product for foreign markets
– Designing a different physical product with
• (a) the same message
• (b) adapted message or
• (c) different message
18-17
Six Common Promotional Strategies
• Same product-same message
– Avon, Maidenform
• Same product-different message
– Honda’s campaign in America is different than in Brazil
• Product adaptation-same message
– In Japan, Lever Brothers puts Lux soap in fancy boxes to encourage gift
sales
18-18
Six Common Promotional Strategies cont’d.
• Product adaptation-message adaptation
– In Latin America, Tang is sweetened and promoted as mealtime drink
• Different product-same message
– Product is produced in low cost plastic squeeze bottle for developing
countries, but advertised the same
• Different product for the same use-different message
– Welding torches rather than automatic welding machines are sold in
developing countries
18-19
The Promotional Mix
• Advertising
• Personal selling
• Sales promotion
• Public relations
• Publicity
18-20
Advertising
• Paid, nonpersonal presentation of ideas,
goods, or services by identified sponsor
– Among promotional mix elements,
advertising
• Has the greatest similarities worldwide
• Is formulated and executed through
global ad agencies that have wholly
owned subsidiaries, joint ventures, and
working agreements with local agencies
18-21
Global and Regional Brands
• Reasons for increase in global and
regional brands
– Cost
– Better chance of obtaining one regional source
for high-quality work
– Belief that single image throughout region is
important
– Establishment of regionalized organizations with
many functions centralized
– Growth of global and regional satellite and cable
television
18-22
Top Twenty Brands 2006
18-23
Impact of Culture on Advertising
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Directness vs. indirectness
Comparison
Humor
Gender roles
Explicitness
Sophistication
Popular vs. traditional
Information content vs. fluff
18-24
Advertising
• Branding
– Global, regional or national
• Managers may convert or use a combination
– Private brands
• Serious competitors
• Alliances with international retailers
• Trend common in Europe
18-25
Advertising
• Media
– Satellite TV expands availability of media
– International print media available
• Reader’s Digest has 48 foreign editions
– Cinema and billboards used heavily in Europe
– In developing countries, vehicles equipped with
loudspeakers
18-26
Advertising
• Internet Advertising
• An affluent, reachable audience
• Web contacts feature interactivity, shrinks
distance
• Involve customers in determining which
messages and information they receive
• For some groups, Internet may be among the
best media choices
18-27
Advertising
• Foreign Environmental Forces
– Basic cultural decision for marketer: position
the product as foreign or local
– Depends on the country, the product types,
and the target market
– Language often an issue
• back translation
• plenty of illustrations with short copy
18-28
Advertising
• What should be the approach of the
international advertising manager?
– Think globally, but act locally
– Neither global nor local-”glocal”
– Pan regional approach
• Latin America
• Middle East
• Africa
• Atlantic
18-29
Personal Selling
• Importance of personal selling compared to
advertising depends on
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Relative cost
Funds available
Media available
Type of product
• Manufacturers of industrial products rely on
personal selling
• Marketers may increase use of personal
selling for consumer products in developing
countries
18-30
Personal Selling
• Internet
– Would seem to eliminate the need for personal
selling, but may not be so
– Successful personal selling depends on
establishing trust
• Evolving approaches to trust building in a
virtual environment
18-31
Personal Selling
• International Standardization
– An overseas sales force is similar to the home
country in
• Organization
• Sales presentation
• Training methods
– Recruitment of salespeople in foreign countries
can be difficult
18-32
Sales Promotion
• Any various selling aids, including displays,
premiums, contest, and gifts
• Sociocultural and economic constraints make
some sales promotions difficult to use
– If premium is to fulfill the sales aid objective, it
must be meaningful to the purchaser
– Sales promotion is generally less sophisticated
overseas than in U.S.
18-33
Public Relations
• Various methods of communicating with
the firm’s publics to secure a favorable
impression
– Markets firm
– Improves image and overcomes negative
perceptions
– May work through government agencies
18-34
Pricing
• Important and complex consideration in
formulating marketing strategy
• One of the marketing mix elements that
can be varied to achieve firm’s marketing
objectives
• Made more complex by
– Interaction with the other functional areas
– Environmental forces
18-35
Interaction between Marketing and Other
Functional Areas
• The finance people want prices that are profitable and
conducive to steady cash flow
• Production supervisors want prices that create large
sales volumes, which permit long production runs
• Legal department worries about possible antitrust
violations when different prices are set according to
type of customer
18-36
Interaction between Marketing and Other
Functional Areas
• The tax people are concerned with effects of prices
on tax loads
• The domestic sales manager wants export prices to
be high enough to avoid parallel importing
• The marketer must address all these concerns and
consider
– Legal forces
– Environmental forces
18-37
Standardizing Prices
• Difficult if desirable
– Foreign National Pricing
• Local pricing in another country
– International Pricing
• Setting prices for unrelated and related firms
– Transfer pricing
• Intracorporate price, price of a good or service
sold by one affiliate to another, the home office
to an affiliate, or vice versa
18-38
Distribution Strategies
• Distribution Decisions
– Often interdependent with other marketing
mix variables
• Standardizing Distribution
– Two fundamental constraints
• The variation in availability of channel
members
• The environmental forces present in
these different markets
18-39
Standardizing Distribution
• Disintermediation
– Unraveling of traditional distribution
structures
• Most often the result of being able to
combine Internet with fast delivery
services
18-40
Channel Selection
• Direct or Indirect Marketing
– The first decision: whether to use middlemen
– Export sales may be consummated by local
agents if
• Management believes this is politically expedient
• Country’s laws demand it
• Factors Influencing Channel Selection
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Market
Product
Company
Middlemen
18-41
Foreign Environmental Forces and
the Marketing Mix Matrix
18-42
Foreign Environmental Forces and
the Marketing Mix Matrix
18-43
Foreign Environmental Forces and
the Marketing Mix Matrix
18-44
Foreign Environmental Forces and
the Marketing Mix Matrix
18-45