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WTO & Trade Issues - International Marketing Introduction.pptx

  1. International Marketing
  2. International Marketing – An Introduction • Marketing refers to activities a company undertakes to promote the buying or selling of a product or service. It includes advertising, selling, and delivering products to consumers or other businesses • International Marketing is the application of marketing principles by industries in one or more than one country • International marketing is based on an extension of a company’s local marketing strategy, with special attention paid to marketing identification, targeting, and decisions internationally • According to the American Marketing Association (AMA) "international marketing is the multinational process of planning and executing the conception, pricing, promotion and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives." Source: Secondary Sources on Google
  3. Scope of International Marketing International marketing has broadened its capacity due to some major factors mentioned below: • Export: Trading of goods and services from one country to another and abiding by the rules and regulation of both the home country and the foreign country. In short, exporting means shipping the products and services from one nation to another • Import: Buying of products and services from an external source across national borders is known as import • Re-Export: It means export of foreign goods which already imported to the country from a foreign country. In other words, if any goods already imported in to a country and the same goods are again exported to either to same country or to some other country, such movement of goods is called ‘Re export’ • Formalities and procedures of marketing: There are a number of laws and policies framed by different countries and these make international marketing more complex, and a time consuming process. The exporters & importers are compelled to abide by all the formalities & procedure related to licensing, foreign exchange, customs duties & goods clearance. These policies, rules and regulations are not static for all participating countries. So, it is important to be well aware of the procedure and formalities and plunge into the vast expanse of international marketing. Source: Secondary Sources on Google
  4. Scope of International Marketing (cont.) • Commercial policies and their impact: The countries participating in the international marketing design their own commercial policies that suit their requirements. Different policies of different nations invoke the commercial environment of international market • International Marketing Research: International market is important, as it deals with marketing on a larger scale and also paves way for productive research. Research requires complete knowledge of the in and out of target market, customers’ needs and requirement, buying behaviour, prevailing market competition and many more. Market research at international level provides base for product planning & development, introduction of sales promotion techniques Source: Secondary Sources on Google
  5. Domestic vs International Marketing • Domestic marketing is when commercialization of goods and services are limited to the home country only • On the other hand, International marketing, as the name suggests, is the type of marketing which is stretched across several countries in the world, i.e. the marketing of products and services is done globally Source: Secondary Sources on Google
  6. Domestic vs International Marketing (cont.) Source: Secondary Sources on Google
  7. Domestic vs International Marketing (cont.) Source: Secondary Sources on Google
  8. Principles of International Marketing • People - Understanding Customer Behaviour in a Different World  The people you are marketing to and the product that you are marketing go hand in hand. However, we’re leading off with the people because if you don’t first and foremost understand who you are marketing to, you may end up trying to sell them a product they don’t want and probably will never buy  For example: Best Buy, an American multinational consumer electronics retailer, has not found much international success, especially in Europe. While their products were something that their target market wanted overseas, the way in which it was distributed was not well executed based on the way consumers shop in Europe  Instead of tailoring their stores to fit the preferred mold of Europeans — which is smaller shops as opposed to large box stores — Best Buy opened up brick and mortars that were much bigger than what Europeans were used to  In this example, had Best Buy done more research to understand their intended target audience, they would have seen that their product offering — tech gadgets in an extremely large one-stop-shop — would not have fared well. Instead, they could have opened up smaller stores to accommodate cultural preference Source: Secondary Sources on Google
  9. Principles of International Marketing (cont.) • Product - Altering to Fit the Needs of Your New Market If you notice that the current offering of your product now won’t play in the new market you want to enter then you can do one of two things:  Decide not to sell in that market  Change your offering to meet the local demand The classic example of this is McDonald’s. The fast-food empire has an astounding 34,480 restaurants in 119 countries. In order to be successful, they had to alter their menu for just about every one of those countries — which led to some pretty interesting entrees. McDonald’s put in the work to understand the people they were about to serve and altered their offering to fit their palate. Overall, this decision is an excellent one to learn from for those looking to branch out to foreign markets. Source: Secondary Sources on Google
  10. Principles of International Marketing (cont.) • Prices - Choosing a Premium or Economy Pricing Strategy  It’s difficult to pull off being associated as a more expensive, premium product in one country, and the complete opposite in another. You may even risk bringing down your brand image as a result  If you have a premium product, it’s likely premium elsewhere.  If you have a more affordable, economically-friendly product, it’ll be the same in your new market  For Example: Imagine if Omega, Swiss luxury watchmaker, was entering the Swiss market for the first time and because they knew Rolex already had a definitive hold on the premium watch market, they decided to pivot to a more economy pricing strategy. While a move like this might help them sell more watches in the short term, the long term effects could make people outside of Switzerland associate them with cheaper products, which is not could negatively impact sales in other regions  However, it is not inconceivable to think Omega could enter the Swiss market with an affordable watch under a different name if they truly wanted to target that segment of the watch market Source: Secondary Sources on Google
  11. Principles of International Marketing (cont.) • Promotion - Choosing Strategies That Work in This New Environment  Figuring out the most effective methods for marketing your product or service abroad is not that much different than doing it domestically  Even if you live where you’re promoting your product, you still have to do some additional research to find out where your target audience is and which mediums they frequent  Take Brazil, China, Japan, Russia, Poland, South Korea, and Vietnam for example. In these countries — at least as of 2011 — Facebook is not the most popular social media site  Instead, Twitter or Orkut and other regional platforms reign supreme  Obviously, this doesn’t mean you shouldn’t be advertising on Facebook, but this information does suggest that perhaps focusing more effort on the leading site in those geographical locations — like Twitter, may be more effective. Especially if that’s where your demographic is hanging out  Does my new target market like coupons? Should I be advertising on television in this part of the world, or is Youtube be more appropriate?  These are just a few of the many questions you should ask yourself prior to starting any big marketing campaigns anywhere in the world Source: Secondary Sources on Google
  12. Principles of International Marketing (cont.) • Place - Finding the Sales Avenue That Your Consumers Use  Defining where you’ll be advertising and marketing your product or service is one thing. But finding the right place to actually sell your offering is another  One of the bigger questions you should look to answer is whether or not you’ll be able to sell your product online  Did you know that there are many European countries where their people prefer to shop in person as opposed to online?  Just like with Best Buy in Europe, the size and layout of your store may need to be altered to fit your consumers. But in addition to that, deciding how much effort to put into online stores — or any effort at all — is another big decision that must be made Source: Secondary Sources on Google
  13. Principles of International Marketing (cont.) • Packaging - Finding the Right Look  The way you package your product or service may vary a lot from country to country. When you determine how to package your offering, color is an important choice. One reason for this is because different areas of the world associate specific meanings to certain colors  For example, in Eastern and Asian cultures, red is a color that is synonymous with happiness, joy, and celebration but in the Middle East, red is considered a warning and brings forth feelings of danger. Some also consider it to be the color of evil  In addition to the design, the copy on the packaging is also important. Example: When KFC tried to translate their tagline “Finger-Lickin’ Good” to fit the Mandarin language, it ended up forming the phrase “We’ll Eat Your Fingers Off.” Not exactly the best message to convey, though one could interpret the slogan to read that KFC’s chicken is so good you’ll accidentally nibble one of your fingers off as you’re scarfing it down. Even then, not the best tagline Source: Secondary Sources on Google
  14. Principles of International Marketing (cont.) • Positioning - Determining Which Messages Will Resonate With The Market  Positioning is absolutely critical when entering a new market  A significant part of your positioning will be evident in the messages you relay in marketing campaigns. The messaging should be derived from your unique value proposition (UVP)  Let’s say you are a toothpaste company that is attempting to enter the market in Brazil. Because you did your research, you discovered that there is an opportunity in the Brazil market for a toothpaste that helps reduce sensitivity. You create a toothpaste that does just that and name it SensePaste. So, your UVP would look something along the lines of this: SensePaste is a toothpaste that helps improve the strength of your teeth and gums so you don’t experience the negative symptoms of sensitive teeth. By using specific ingredients in our toothpaste, SensePaste is able to prevent your teeth from hurting in addition to keeping them clean. Unlike other toothpaste in the market that just clean teeth, SensePaste will keep your mouth healthy and pain-free. As you can see, your UVP will then influence your global marketing strategy. Source: Secondary Sources on Google
  15. Principles of International Marketing (cont.) • Physical Evidence - Getting the Ambiance and Mood Right Attention needs to be paid to the physical evidence in the setting where people will receive your service. The physical evidence can be broken into three separate areas:  Physical Environment: The physical environment is the physical space that surrounds the consumer during the service or experience. So, if you’re selling food, then the restaurant is the physical environment  Ambiance: You can look at the ambiance as a subsidiary of the physical environment, it is about the mood and feeling inside the physical space. Colors, music, and lighting are little details that can make a big difference when it comes to how your service is perceived by your consumers  Spatial Layout: To further illustrate the significance of the actual layout of the space where your service is offered, let’s consider a karaoke bar. In the U.S, karaoke bars typically set up the karaoke machine in an open space, where anyone can see the person performing. However, in Japan, karaoke bars are much different — the majority of them feature private rooms (karaoke bars) for groups of people to rent for a specific amount of time  Once again, the Best Buy example fits this bill as well, where their consumers in Europe found their large stores overwhelming because of how big they were Source: Secondary Sources on Google
  16. Customer Value • What is Customer Value? Virtually all organizations strive to deliver good overall value for both their current and potential customers value. Without providing true customer value firms will be unable to attract and retain customers. And without customers there is no functioning business in the long-term. Customers need to perceive that value exists for them – that is, they will receive more benefits than the costs they incur. Therefore, in simple terms, customer value is when a customer perceives that the range of benefits they receive from a transaction exceeds the cost and effort undertaken to participate in that transaction. In other words, did they get a good deal and did they benefit overall from the purchase? Source: Secondary Sources on Google
  17. Customer Value When considering customer value, it is important to understand that it is much more than simply a price/quantity view Let’s look at an example to understand the concept: Suppose there are two bottles of Coca-Cola; one being a large family size and the other being an individual serving size. In supermarkets, in particular, the family size bottle sits on the shelves at room temperature, whereas the smaller size is in a refrigerator near the checkout. In many supermarkets, the smaller bottle is equal in price and sometimes greater in price than the larger bottle. If we take the view that value is simply how much I get for what I pay, this situation makes no sense at all. It only makes sense when you think about the range of benefits that the consumer will receive from a particular purchase. Source: Secondary Sources on Google
  18. Customer Value Example (cont.) Let’s look at some benefits: 1. In this case, some of the benefits received from the smaller bottle purchase are:  Convenience, easy to carry, easier to fit in a bag,  Less socially conspicuous,  Less wastage  More refreshing Therefore, because the smaller product, in many ways provides a greater range of benefits for an individual, consumers will be willing to purchase such an item, even though on a straight value for money (on a quantity basis) it is not as attractive as the larger family size bottle. Source: Secondary Sources on Google
  19. Customer Value Example (cont.): 2. The family size bottle, sitting at room temperature however, is attractive to the household buyer, who has no need for immediate consumption of the beverage. Instead, they are seeking the benefit of having a suitable beverage available at home when required for the family, or perhaps when catering for a party or a family function. You will note that in these situations the needs of these consumers differ and, as a result, are seeking different benefits – and will see different value in the two product offerings. So the key question, when considering customer value, is: “Which product offering better suits my needs?“ 3. Suppose private-label and generic brands of cola are often also available in the supermarket at a lesser price same in the refrigerator section. However the well-known brands will outsell the generic ones. This situation again highlights another benefit being received by the consumer. In this case the consumer is selecting a product with strong brand equity, which may mean that they are seeking the benefit of social status and/or confidence in knowing that they have tried and already like the taste of that brand Source: Secondary Sources on Google
  20. Customer Value Example (cont.): Let’s look at types of costs: The second part of the customer value equation is the cost and effort involved in acquiring the product. In most cases the most significant costs considered by the consumer will be the actual price they pay for the item However, there are other costs that need to be considered. The time taken to purchase is another key consideration factor. For example, a consumer is willing to pay more for a cola drink at a convenience store, as opposed to going to the supermarket. This is because it is much faster for them to access and purchase via that particular type of retailer. Therefore, the amount of time involved in the purchase transaction will be considered by some consumers. Source: Secondary Sources on Google
  21. Competitive Advantage Introduction: • There is no one answer about what is competitive advantage or one way to measure it, and for the right reason. Nearly everything can be considered as competitive edge, e.g. higher profit margin, greater return on assets, valuable resource such as brand reputation or unique competence in producing jet engines • Every company must have at least one advantage to successfully compete in the market. If a company can’t identify one or just doesn’t possess it, competitors soon outperform it and force the business to leave the market. • A company that is able to achieve superiority in cost or differentiation is able to offer consumers the products at lower costs or with higher degree of differentiation and most importantly, is able to compete with its rivals. • An organization that is capable of outperforming its competitors over a long period of time has sustainable competitive advantage. • A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices Source: Secondary Sources on Google
  22. Competitive Advantage Source: Secondary Sources on Google
  23. Competitive Advantage How a company can achieve it? An organization can achieve an edge over its competitors in the following two ways: • Through external changes. When PEST (political, economic, socio-cultural and technological) factors change, many opportunities can appear that, if seized upon, could provide many benefits for an organization. A company can also gain an upper hand over its competitors when its capable to respond to external changes faster than other organizations. • By developing them inside the company. A firm can achieve cost or differentiation advantage when it develops VRIO (valuable, rare, hard to imitate and organized) resources, unique competences or through innovative processes and products Source: Secondary Sources on Google
  24. Competitive Advantage External Changes • Changes in PEST factors: PEST stands for political, economic, socio-cultural and technological factors that affect firm’s external environment. When these factors change many opportunities arise that can be exploited by an organization to achieve superiority over its rivals. For example, new superior machinery, which is manufactured and sold only in South Korea, would result in lower production costs for Korean companies and they would gain cost advantage against competitors in a global environment Changes in consumer demand, such as trend for eating more healthy food, can be used to gain at least temporary differentiation advantage if a company would opt to sell mainly healthy food products while competitors wouldn’t. For example, Subway and KFC If opportunities appear due to changes in external environment why not all companies are able to profit from that? It’s simple, companies have different resources, competences and capabilities and are differently affected by industry or macro environment changes Source: Secondary Sources on Google
  25. Competitive Advantage External Changes • Company’s ability to respond fast to changes: The advantage can also be gained when a company is the first one to exploit the external change. Otherwise, if a company is slow to respond to changes it may never benefit from the arising opportunities Source: Secondary Sources on Google
  26. Competitive Advantage Internal Environment • VRIO Resources A company that possesses VRIO (valuable, rare, hard to imitate and organized) resources has an edge over its competitors due to superiority of such resources. If one company has gained VRIO resource, no other company can acquire it (at least temporarily). The following resources have VRIO attributes:  Intellectual property (patents, copyrights, trademarks)  Brand Equity  Culture  Know-how  Reputation Source: Secondary Sources on Google
  27. Competitive Advantage Internal Environment • Unique Competences: Competence is an ability to perform tasks successfully and is a cluster of related skills, knowledge, capabilities and processes. A company that has developed a competence in producing miniaturized electronics would get at least temporary advantage as other companies would find it very hard to replicate the processes, skills, knowledge and capabilities needed for that competence • Innovative Capabilities: Most often, a company gains superiority through innovation. Innovative products, processes or new business models provide strong competitive edge due to the first mover advantage Source: Secondary Sources on Google
  28. Competitive Advantage The strategies that Porter suggested are appropriate to seek competitive advantage are summarised in the figure below: Source: Secondary Sources on Google
  29. Competitive Advantage Cost Leadership Cost leadership means companies provide reasonable value at a lower price. Firms do this by continuously improving operational efficiency. That usually means paying their workers less. Some compensate for lower wages by offering intangible benefits such as stock options, benefits, or promotional opportunities. Others take advantage of unskilled labor surpluses. As these businesses grow, they can benefit from economies of scale and buy in bulk Walmart is a good example of cost leadership. This is because they sometimes pay their workers less than the cost of living, but higher minimum wage laws threaten their advantage Source: Secondary Sources on Google
  30. Competitive Advantage Differentiation Differentiation means companies deliver better benefits than anyone else. A firm can achieve differentiation by providing a unique or high-quality product. Another method is to deliver it faster. A third is to market in a way that reaches customers better A company with a differentiation strategy can charge a premium price, which means it usually has a higher profit margin Companies typically achieve differentiation with innovation, quality, or customer service An excellent example of this is Apple. The iPod was innovative because it allowed users to play whatever music they wanted, in any order Source: Secondary Sources on Google
  31. Competitive Advantage Focus Focus means the company's leaders understand and service their target market better than anyone else. They either use cost leadership or differentiation to do that. The key to a successful focus strategy is to choose a very specific target market. Often it's a tiny niche that larger companies don't serve. Cost-focus refers to organisations who seek to develop a lower-cost advantage, but only within a small market segment. These products will generally be basic, vaguely similar to the average market-leading products (though more popular products can be charged at a higher price) and will be acceptable to a sufficient number of customers in order to make a profit. An example would be budget food items or other household tools stocked only by small, local supermarkets. Another would be a low-cost regional airline which focuses only on specific routes. These products are often referred to as "me too's" Source: Secondary Sources on Google
  32. Competitive Advantage Differentiation Focus In a differentiation-focus strategy, the organisation will look to develop product differentiation, but only within one or a smaller number of market segments. As these organisations have identified a smaller consumer group to focus on, they can more specifically appeal to the needs and wants of this group than could an organisation which is attempting to differentiate for a wider population. This approach is the most common niche marketing strategy. Small businesses can use this method to force themselves into a niche, developing unique products which can be sold for higher prices than similar undifferentiated products, often due to specialist knowledge or innovation compared with other businesses. For example, community banks use a focus strategy to gain sustainable competitive advantage. They target local small businesses or high net worth individuals. Their target audience enjoys the personal touch that big banks may not be able to give, and customers are willing to pay a little more in fees for this service. These banks are using a differentiation form of the focus strategy. Source: Secondary Sources on Google
  33. Market Orientations of International Marketing Introduction: Different attitudes towards company’s involvement in international marketing process are called international marketing orientations. EPRG framework was introduced by Wind, Douglas and Perlmutter. This framework addresses the way strategic decisions are made and how the relationship between headquarters and its subsidiaries is shaped. Perlmutter’s EPRG framework consists of four stages in the international operations evolution. Source: Secondary Sources on Google
  34. Market Orientations of International Marketing ETHNOCENTRIC: The ethnocentric orientation of a firm considers that the products, marketing strategies and techniques applicable in the home market are similar to that in the overseas market. In such a firm, all foreign marketing operations are planned and carried out with little or no difference in product formulation and specifications, pricing strategy, distribution and promotion measures. For example, Walmart’s offerings remain the same throughout. Source: Secondary Sources on Google
  35. Market Orientations of International Marketing REGIOCENTRIC: In regiocentric approach, the firm accepts a regional marketing policy covering a group of countries which have comparable market characteristics such as economic, cultural or political similarities and formulates operational strategies based on region instead of countries. For example, countries like Pakistan, India and Bangladesh are very similar. They possess a strong regional identity GEOCENTRIC: In geocentric orientation, the firms accept a worldwide approach to marketing and target “global consumers” with similar tastes. There are similarities between geocentric and regiocentric approaches in the international market except that the geocentric approach calls for a much greater scale of operation. For example, Nokia offers products to a similar kind of consumer worldwide. Source: Secondary Sources on Google
  36. Market Orientations of International Marketing POLYCENTRIC: When a firm adopts polycentric approach to overseas markets, it attempts to organize its international marketing activities on a country to country basis. Polycentric approach works better among countries which have significant economic, political and cultural differences. For example, McDonald’s tailoring its offerings to the country of operation such as Maharaja Mac in India, McItaly in Italy, McLobster in Canada Source: Secondary Sources on Google
  37. MNC’s Multinational corporations function on a large scale and own or control production of goods or services in one or more countries other than their home country These companies produce large amount of wealth. Their operations are so huge that sometimes their sales turnover exceeds the GROSS NATIONAL PRODUCT of some developing nations. For example, the physical assets of IBM crosses 8 billion dollars Some distinct characteristics of MNC’s are as follows − Centralized Control − MNCs have their branches in different countries. These branches are monitored, controlled and managed by centralized offices or the headquarters usually located in the home countries. Professional management − MNCs hire qualified, professional, and skilled people. They make all possible efforts to keep their employees updated by ensuring proper training on a regular basis International operation − MNCs establish their branches, plants, and offices in more than one country. They operate through a network of branches, subsidiaries and affiliates in host countries. For example, Coca Cola, Apple, etc. Sophisticated Technology − MNCs adapt to the latest trends and follow advanced technology to supply world class products. They use capital-intensive technology and innovative techniques of production. Source: Secondary Sources on Google
  38. MNC vs TNC Source: Secondary Sources on Google
  39. MNC vs TNC Source: Secondary Sources on Google
  40. Benefits of International Marketing Source: Secondary Sources on Google
  41. Benefits of International Marketing Source: Secondary Sources on Google
  42. Benefits of International Marketing Source: Secondary Sources on Google
  43. Benefits of International Marketing Source: Secondary Sources on Google