23.1.20071jobber, chapter 22 international marketing theory review uli breunig caglar cintuglu deniz...

23.1.2007 1 Jobber, Chapter 22

International Marketing

Theory ReviewUli Breunig

Caglar CintugluDeniz Yarar

23.1.2007 Jobber, Chapter 22 2

Going International?

How to Enterwhich Markets

MarketingStrategy

Structures ofOrganization

Agenda

• Deciding:– whether to go International– which Markets to enter– how to enter

• Developing International Marketing Strategy

• Organizing for International Operations




MarketingStrategy


Seven triggers forInternational expansion:

• Saturated domestic markets

• Small domestic markets

• Low-growth domestic markets

• Customer drivers

• Competitive forces

• Cost factors

• Portfolio balance



Saturated

Small

Low-growth

Cust. drivers

Comp. forces

Cost factors

Portfolio

Seven triggers forInternational expansion:

• Saturated domestic markets

• Small domestic markets

• Low-growth domestic markets

• Customer drivers

• Competitive forces

• Cost factors

• Portfolio balance



Saturated

Small

Low-growth

Cust. drivers

Comp. forces

Cost factors

Portfolio

Saturated domestic marketsSmall domestic markets

• Few opportunities to expand in current domestic (saturated) market

• Serving small national markets is not sufficient to compete against other global competitors



Saturated

Small

Low-growth

Cust. drivers

Comp. forces

Cost factors

Portfolio

Low-growth domestic marketsCustomer drivers

• Recession at home -> new opportunities overseas

• Suppliers with international presence expected

• Customers expanding abroad



Saturated

Small

Low-growth

Cust. drivers

Comp. forces

Cost factors

Portfolio

Competitive forces

• Companies feel obliged to follow others going abroad

• Attacking an overseas competitor, that entered domestic market, in his own home market



Saturated

Small

Low-growth

Cust. drivers

Comp. forces

Cost factors

Portfolio

Cost factorsPortfolio balance

• Low-cost areas (labour: Taiwan, Korea…)

• Gaining economies of scale

• Different growth rates in different areas provide portfolio balance




MarketingStrategy


Deciding which markets to enter

• Macroenvironmental issues– Economic influences– Socio-cultural influences– Political-legal influences

• Microenvironmental issues– Market attractiveness– Company Capability Profile



Macroenvironment

Economic

Socio-cultural

Political-legal

Microenvironment

Attractiveness

Capability profile

Deciding which markets to enter

• Macroenvironmental issues– Economic influences– Socio-cultural influences– Political-legal influences

• Microenvironmental issues– Market attractiveness– Company Capability Profile



Macroenvironment

Economic

Socio-cultural

Political-legal

Microenvironment

Attractiveness

Capability profile

Macroenvironmental issues:Economic influences

• Country‘s size

• Per capita income

• Stage of economic development

• Infrastructure

• Exchange rate stability



Macroenvironment

Economic

Socio-cultural

Political-legal

Microenvironment

Attractiveness

Capability profile

Macroenvironmental issues:Socio-cultural influences

• Psychic distance

• Cultural differences– Attitudes– Social Perspectives– Language



Macroenvironment

Economic

Socio-cultural

Political-legal

Microenvironment

Attractiveness

Capability profile

Macroenvironmental issues:Political-legal influences

• Attitude of foreign governments to– Imports– Foreign direct investment

• Political stability

• Trade barriers



Macroenvironment

Economic

Socio-cultural

Political-legal

Microenvironment

Attractiveness

Capability profile

Microenvironmental issues:Market attractiveness

• Size & growth rate

• Competition

• Costs of serving the market– (distribution and control)

• Profit potential

• Market access (informal ties between existing suppliers)



Macroenvironment

Economic

Socio-cultural

Political-legal

Microenvironment

Attractiveness

Capability profile

Microenvironmental issues:Company capability profile

• Skills– Necessary skills to market

abroad?– Compensation of shortfalls?

• Resources– Financial resources for maybe

higher market servicing costs?– Human resources (local)?



Macroenvironment

Economic

Socio-cultural

Political-legal

Microenvironment

Attractiveness

Capability profile

Microenvironmental issues:Company capability profile

• Product adaptation– Product modifications:

• Local preferences/regulations• Motivation/capability for redesign?

• Competitive advantage– Ability to create a competitive

advantage? Study foreign market!




MarketingStrategy


Deciding how to enter a market

• Exporting– Indirect– Direct

• Licensing

• Joint Ventures

• Direct investment



Exporting

Indirect

Direct

Licensing

Joint Ventures

Direct investment

Deciding how to enter a market

• Exporting– Indirect– Direct

• Licensing

• Joint Ventures

• Direct investment



Exporting

Indirect

Direct

Licensing

Joint Ventures

Direct investment

Indirect exporting

• Domestic-based export merchants – who take title to the products &

sell abroad

• Domestic-based export agents– who sell on behalf of the

exporter but do not take title



Exporting

Indirect

Direct

Licensing

Joint Ventures

Direct investment

Indirect exporting

• Piggy-backing– Exporter uses other producer‘s

overseas distribution facilities

• Co-operative organizations– Act on behalf of a number of

producers, partly controlled by them



Exporting

Indirect

Direct

Licensing

Joint Ventures

Direct investment

Direct exporting

• Foreign-based agents or distributors

• Domestic-based sales representatives

• Overseas sales/marketing office or subsidiary

• The internet



Exporting

Indirect

Direct

Licensing

Joint Ventures

Direct investment

Licensing

• Licensing– Foreign Licensor provides a

local licensee with access to technology

• Franchising– Product & trade name

franchising– Business format franchising



Exporting

Indirect

Direct

Licensing

Joint Ventures

Direct investment

Joint Ventures

• Contractual joint-venture– No new enterprise, share cost,

investment, risk and profit

• Equity joint-venture– New company, foreign & local

investors



Exporting

Indirect

Direct

Licensing

Joint Ventures

Direct investment

Joint Ventures

• Joint Ventures are often the only way to enter a market:– Government restrictions to

market entry– Foreign companies lack the

resources to set up production facilities alone



Exporting

Indirect

Direct

Licensing

Joint Ventures

Direct investment

Direct investment

• Acquisition of foreign producer

• Buying-out joint-venture partner

• Building new facilities

Expensive and risky but quick way of entering new market



Exporting

Indirect

Direct

Licensing

Joint Ventures

Direct investment

Selecting an entry modeControl, Resources, Risk

Level

Factor

Risk of losingProprietaryinformation

Resources Control

LicensingJoint Venture

Exporting (own staff)

Exporting (middlemen)

Direct investment

Direct investment

Joint VentureExporting (own staff)

LicensingExporting (middlemen)

Direct investmentExporting (own staff)

Joint VentureLicensing

Exporting (middlemen)

High

Medium

Low




MarketingStrategy


Developing international marketing strategy

• Standardization or adaption

• International marketing mix decisions– Product– Promotion– Price– Place


MarketingStrategy

Standard/adopt

Product

Int. Marketing mix

Promotion

Price

Place

Developing international marketing strategy

• Standardization or adaption

• International marketing mix decisions– Product– Promotion– Price– Place


MarketingStrategy

Standard/adopt

Product

Int. Marketing mix

Promotion

Price

Place

Standardization or adaptation

• Few totally standardized mixes– Coca-Cola differs sweetness &

carbonization– McDonald‘s: meat in

hamburgers, menu with(out) salad


MarketingStrategy

Standard/adopt

Product

Int. Marketing mix

Promotion

Price

Place

International marketing mixProduct

• Global market to justify huge R&D costs – Pharmaceutical industry

• Authentic national heritage:– Scotch whisky, Belgian

chocolate, French wine


MarketingStrategy

Standard/adopt

Product

Int. Marketing mix

Promotion

Price

Place

International marketing mixPromotion

• Standardized advertising for consistent image identity also for international travellers

• Adaptations:– Language, local taboos,

different use of goods, local culture


MarketingStrategy

Standard/adopt

Product

Int. Marketing mix

Promotion

Price

Place

International marketing mixPrice

• Local competition

• Customers

• Transfer pricing

• Taxes, tariffs, exchange rates

• Counter trade

• Parallel importing


MarketingStrategy

Standard/adopt

Product

Int. Marketing mix

Promotion

Price

Place

International marketing mixPlace

• Distribution channels

In Spain yoghurt was sold through pharmacies

Germany, UK etc. sell some pharmaceuticals in grocery outlets




MarketingStrategy


Organizing for international operations

• Organization

• Centralization vs. decentralization



Organization

Centralization

Decentralization

Organizing for international operations

• Organization

• Centralization vs. decentralization



Organization

Centralization

Decentralization

Organization

• International– Overseas operations are

appendages to a central domestic operation

• Global– Overseas operations viewed as

„delivery pipelines“ to a unified global market



Organization

Centralization

Decentralization

Organization

• Multinational– Regard for overseas operations

as portfolio of independent businesses

– Rather decentralized

• Transnational– Coordination & cooperation in

an environment of shared decision-making



Organization

Centralization

Decentralization

Centralization

• Global integration of international operations

• Reaps economies of scale

• Provides integrated marketing profile



Organization

Centralization

Decentralization

Decentralization

• Delegation of international operations to individual countries or regions

• „Regional responsiveness“

• Maximizes customization of products to regional preferences


Thank youfor your attention

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