Part Six Managing International Operations

1. Part Six Managing International Operations Chapter Sixteen Marketing Globally

2. Chapter Objectives • To understand a range of product policies and the circumstances in which they are appropriate internationally • To grasp the reasons for product alterations when deciding between standardized versus differentiated marketing programs among countries • To appreciate the pricing complexities when selling in foreign markets • To interpret country differences that may necessitate alterations in promotional practices • To comprehend the different branding strategies companies may employ internationally • To discern complications of international distribution and practices of effective distribution • To perceive why and how emphasis in the marketing mix may vary among countries

3. Marketing Orientations • International marketing strategies depend on companies’ orientations that include: • Production • Sales • Customer • Strategic marketing • Societal marketing

4. Production Orientation • Companies focus primarily on production - either efficiency or high quality - with little emphasis on marketing. • Used internationally for certain cases: • Commodity sales • Passive exports • Foreign-market segments or niches

5. Other Orientations • Sales orientation: a company tries to sell abroad what it can sell domestically and in the same manner on the assumption that consumers are sufficiently similar globally. • Customer orientation: the product and method of marketing it are varied • Strategic Marketing orientation: combines production, sales, and customer orientations • Social Marketing orientation: Companies consider effects on all stakeholders when selling or making their products.

6. Segmenting and Targeting Markets • The most common way of segmenting markets is through demographics and psychographics • Three basic approaches to international segmentation: • By country • By global segment • By multiple criteria

7. Why Firms Alter Products • Legal factors are usually related to safety or health protection. • Examination of cultural differences may pinpoint possible problem areas. • Personal incomes and infrastructures affect product demand. • Although some standardization of products would eliminate wasteful alterations, there is resistance because: • A changeover would be costly. • People are familiar with the “old.”

8. Potential obstacles in International pricing • Government intervention • Market diversity • Export price escalation • Fluctuations in currency value • Fixed versus variable pricing • Relations with suppliers

9. The Push-Pull Mix • Promotion may be categorized as push, which uses direct selling techniques, or pull, which relies on mass media. • For each product in each country, a company must determine its promotional budget as well as the mix between push and pull • Factors in Push-Pull Decisions: • Type of distribution system • Cost and availability of media to reach target markets • Consumer attitudes toward sources of information • Price of the product compared to incomes

10. Standardization of Advertising Programs • Advantages of standardized advertising include: • Some cost savings. • Better quality at local level. • Rapid entry into different countries. • Major problems for standardizing advertising among countries are: • Translation • Legality • Message needs

11. Branding Strategies • A brand is an identifying mark for products or services. • Global branding is hampered by: • language differences • expansion by acquisition • nationality images • laws concerning generic names • Global brands do help develop a global image

12. Distribution Strategies • Distribution is the course - physical path or legal title - that goods take between production and consumption. • Distribution reflects different country environments: • It may vary substantially among countries. • It is difficult to change.

13. Choosing Distributors and Channels • Distribution may be handled internally: • When volume is high. • When companies have sufficient resources. • When there is a need to deal directly with the customer because of the nature of the product. • When the customer is global. • To gain a competitive advantage. • Some evaluation criteria for distributors include their: • Financial capability. • Connections with customers. • Fit with a company’s product. • Other resources. • Trustworthiness. • Compatibility with product image.

14. The Challenge Of Getting Distribution • Distributors choose which companies and products to handle. Companies: • May need to give incentives. • May use successful products as bait for new ones. • Must convince distributors that product and company are viable. • Five factors that often contribute to cost differences in distribution are infrastructure conditions, the number of levels in the distribution system, retail inefficiencies, size and operating-hour restrictions, and inventory stock-outs.

15. The Internet and Electronic Commerce • Although the Internet offers new opportunities to sell internationally, using the Internet does not negate companies’ needs to develop sound programs within their marketing mix

16. Managing the Marketing Mix • The difference between total market potential and companies’ sales is due to gaps: • Usage - less product sold by all competitors than potential. • Product line - company lacks some product variations. • Distribution - company misses geographic or intensity • coverage. • Competitive - competitors’ sales not explained by product line and distribution gaps.