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International Marketing

Today. HousekeepingInternational Marketing functions and strategies. Housekeeping. Marks for wine assignment have been postedIf you have a query, check with your tutor firstYou should be making good progress on your major assignmentDue 21 May. International Marketing functions and strategies .

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International Marketing

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    1. International Marketing Tim Beal Lecture 7 27 April 2004

    2. Today Housekeeping International Marketing functions and strategies

    3. Housekeeping Marks for wine assignment have been posted If you have a query, check with your tutor first You should be making good progress on your major assignment Due 21 May

    4. International Marketing functions and strategies First part of course looked at IM environment The outer ring in our diagram Firm and environment Now moving to inner circle

    5. Branding, communications and pricing Start with presentation by Prof Roger Lewis on Communications and Branding This ties in especially with Zespri case study next week Janet Carruthers will also touch on it 18 May Also bear in mind its relationship with 4 Ps Eg pricing

    6. Communications and pricing Video of discussion with Greg Crump Managing Director of Lighthouse Creative in Seoul Has been involved in marketing in Asia for many years Eg Heineken beer If time, then move to notes on pricing

    7. Pricing Pricing strategies Links with product, distribution, communication Neglected area compared with product, promotion, distribution pricing is complex economic and legal psychological managers loathe to discuss pricing strategies key component of marketing eg Levitt and low prices more important than perceived differences

    8. What is price? Number of definitions and perspectives traditional business approach price = (cost + profit) ‘cost plus approach’

    9. Economics economists: two approaches labour theory of value Ricardo…Marx Value is determined by human labour embodied in it supply and demand price is where supply and demand schedules intersect

    10. Marketing definition price = tangible + intangible value of a product or service tangible: physical characteristics intangible: perceived extra values prestige status newness beauty, etc.

    11. Case of IBM pre INCIS (police computer) ‘no one got fired for buying IBM’ IBM was usually more expensive than competition less performance value for money BUT perceived as safe premium

    12. Where put the emphasis? Tangible value Intangible value may vary with market both

    13. Setting objectives Pricing goals and objectives eg return on investment (ROI) market share Pricing strategies to achieve goals Pricing tactics to achieve objectives

    14. Integration with marketing strategy Pricing objectives and strategy must be integrated with other aspects of marketing strategy product development Communication

    15. Two approaches Financial Marketing

    16. Financial approach Makes sense if cost advantage demand steady market leader (oligopoly) Otherwise results unpredictable

    17. Financial objectives Return on sales income/sales Return on assets earning/assets Return on investment income/(stock+debt) Clearly financial considerations always important, but inadequate

    18. Marketing approach branded product rather than commodity commodity sells on price branded product has enhanced value

    20. Cost-driven pricing product development + manufacturing +promotion and distribution stir in profit requirement =price two problems

    21. two problems may underprice and not deliver optimum profit May overprice and not deliver sales therefore no profit

    22. Marketing analysis Customer price perceptions Competitive and market environment

    23. Customer price perceptions Indicator of quality has to be established in customers’ minds Example of Japnsese exports to US - Lecture 11

    24. Elasticity of demand Elastic demand eg cornflakes, beer drop in prices produces more than proportional increase in demand eg 10% fall in prices produces 20% increase in sales Unit elasticity eg BMWs; 10% drop in prices produces 10% increase in sales

    25. Elasticity of demand Inelastic demand eg essentials (beer, textbooks) not responsive to change in price

    26. If price seen as indicator of value then normal concepts of elasticity of demand may be varied Johnnie Walker Black Label Japanese distributor tried to raise sales by lowering price Sales dropped Why? Price perceptions

    27. Black Label was bought as a gift high price was part of perceived value Price has cultural and contextual attributes (difficult to buy cheap alcohol at Asian airports) Price perceptions

    28. What is perceived as high price in one market may be seen differently in another Customer’s reaction to discounts may vary eg Japanese traditionally not responsive to bulk discount because of shopping habits Country image effect French wines attract premium in Japan because they are French in UK NZ wines are highly priced Price has cultural and contextual attributes

    29. Pricing strategies need to take into account- Costs Competition Customers’ buying behaviour and perceptions Market environment Pricing strategies need

    30. Exchange rates Laws and regulations Market environment

    31. Uncontrollable variable Depreciation (fall) helps exporters Appreciation hinders exporters Complex because effect on costs of imported inputs Desirable to move from commodity to product so less price sensitive Exchange rates

    32. Best practice is to give prices in customer’s currency but seldom done Amazon.com -US$ VUW: NZ$ Need to hedge protection against currency fluctuations Quote customer’s currency

    33. Japanese strategies of 1960s probably no longer tolerated by US Prices lower than domestic competition can lead to dumping charges or other countervailing measures eg US restrictions on Australian and NZ lamb; steel Laws and regulations

    34. Various definitions but usually has two components 1 Selling at a lower price in foreign market than domestic market 2 Causing damage to domestic producers Not used in US lamb case but many other instances eg Kiwifruit Dumping

    35. US producers claimed that NZ was dumping kiwifruit NZ responded by pointing out that price in California was HIGHER than in NZ US said NZ was not a substantial market so could not be used as base Argued that Tokyo was more appropriate Prices higher in Tokyo than California; US won Kiwifruit dumping case

    36. Avoid cost plus pricing Financial strategies should be subordinated to marketing Pricing strategy should be integrated with other aspects of marketing mix Preferable to move to branded product price inelastic premium price Pricing strategies (I)

    37. Be aware of competition Be conscious of customer buying behaviour and perceptions Be aware of legal and political environment Pricing strategies (II)

    38. Integration Pricing strategy needs to be integrated Product Communication How do you communicate premium service if no business class? Staff need to be involved Competition and alliances Market environment

    39. Next week Market and environmental research and analysis Video: Zespri in Korea

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