4.7 international marketing 4.8 ecommerce chapter 29

4.7 International 4.7 International MarketingMarketing

4.8 Ecommerce4.8 Ecommerce

Chapter 29Chapter 29

International MarketingInternational Marketing

International MarketingInternational Marketing– Selling products in markets other than the Selling products in markets other than the

original domestic market.original domestic market.

Why sell in international markets?Why sell in international markets?– Saturated home marketsSaturated home markets– Increase profits through rapid sales growth and Increase profits through rapid sales growth and

low costs in emerging marketslow costs in emerging markets– Spread risks between different marketsSpread risks between different markets– Poor trading conditions in home markets may Poor trading conditions in home markets may

make international markets desirablemake international markets desirable

Differences in International Differences in International MarketsMarkets

Conducting business internationally Conducting business internationally may be different:may be different:– Political differencesPolitical differences– Economic and Social differencesEconomic and Social differences– Legal differencesLegal differences– Cultural differencesCultural differences– Business practices differencesBusiness practices differences

Political DifferencesPolitical Differences

Problems that occur for “political” Problems that occur for “political” reasonsreasons

– Government structuresGovernment structures Democracy, socialist governments, Democracy, socialist governments,

communismcommunism

– Political instabilityPolitical instability Acts of terrorism, civil violence, drug warsActs of terrorism, civil violence, drug wars

Economic and Social Economic and Social DifferencesDifferences

Problems that occur due to economic Problems that occur due to economic or social reasonsor social reasons

– Average living standards around the Average living standards around the globe range from $160 (Burundi) to globe range from $160 (Burundi) to $78,559 (Luxembourg) GDP per capita $78,559 (Luxembourg) GDP per capita

– Tax rates, interest ratesTax rates, interest rates– Aging populationAging population– Role of women and marriageRole of women and marriage

Legal DifferencesLegal Differences

Problems that occur due to legal Problems that occur due to legal reasonsreasons

– Some goods illegal to sell in some Some goods illegal to sell in some countries (guns, medications)countries (guns, medications)

– It may be illegal to advertise (children, It may be illegal to advertise (children, tobacco products, birth control)tobacco products, birth control)

– Product labeling and safety requirements Product labeling and safety requirements maybe stricter in some countriesmaybe stricter in some countries

Cultural DifferencesCultural Differences

Problems that occur due to Problems that occur due to cultural reasons and can be cultural reasons and can be difficult to measuredifficult to measure

– Words have different meaning Words have different meaning when translatedwhen translated

– The use of male/female models The use of male/female models may not acceptablemay not acceptable

– Colors can have different Colors can have different meaningmeaning

Business PracticesBusiness Practices

Problems that occur due to different Problems that occur due to different business practicesbusiness practices

– Accounting standards may varyAccounting standards may vary– Setting up a company may face different Setting up a company may face different

requirements and time framesrequirements and time frames

Entry into International Entry into International MarketsMarkets

ExportingExporting– Selling a product directly Selling a product directly

to a foreign customerto a foreign customer– Selling a product to Selling a product to intermediaryintermediary based in a based in a foreign countryforeign country

International FranchisingInternational Franchising– Using a franchise to Using a franchise to

operate your firm’s operate your firm’s activities in a foreign activities in a foreign marketmarket Can be owned by many Can be owned by many

individualsindividuals Can be owned by 1 Can be owned by 1

company operating many company operating many locationslocations


Joint VenturesJoint Ventures– Agreements between at least 2 companies to operate Agreements between at least 2 companies to operate

a new business venturea new business venture

Aera EnergyAera Energy operating in Southern California is a joint operating in Southern California is a joint venture between venture between ExxonMobilExxonMobil and and Royal Dutch ShellRoyal Dutch Shell combined efforts to locate oil in Southern California.combined efforts to locate oil in Southern California.

Japan Nuclear CompanyJapan Nuclear Company is a joint venture between is a joint venture between General Electric, Toshiba Corporation, and HitachiGeneral Electric, Toshiba Corporation, and Hitachi to to manufacture nuclear fuel for Japan’s nuclear energy manufacture nuclear fuel for Japan’s nuclear energy industry.industry.


LicensingLicensing– Allows another firm in a foreign country to produce its Allows another firm in a foreign country to produce its

branded or patented products under license usually branded or patented products under license usually under strictly controlled terms over quality.under strictly controlled terms over quality.

Goods do not have to be exported if produced locallyGoods do not have to be exported if produced locally

Food products are fresherFood products are fresher

No capital costs of setting up production facilitiesNo capital costs of setting up production facilities

NEGATIVES:NEGATIVES: Quality issues and unethical Quality issues and unethical production methods may reflect badly on production methods may reflect badly on the companythe company

– Recent example:Recent example: Apple factories in China Apple factories in China reports mandatory overtime, factory reports mandatory overtime, factory explosions, crowded dormitoriesexplosions, crowded dormitories


Direct Investment in SubsidiariesDirect Investment in Subsidiaries– Company-owned subsidiaries in foreign countries tend to be Company-owned subsidiaries in foreign countries tend to be

more successful than merging with locally based companies.more successful than merging with locally based companies.

– Why:Why: Culture, organizational structure, and technology differences of Culture, organizational structure, and technology differences of

locally acquired business can be too different to overcome.locally acquired business can be too different to overcome.

– Subsidiaries can:Subsidiaries can: Be production or retail operationsBe production or retail operations

Management can be decentralizedManagement can be decentralized– Local managers make most key decisionsLocal managers make most key decisions

Management can be centralizedManagement can be centralized– Controlled from the head office in the home countryControlled from the head office in the home country

– Example: Example: BMW US Manufacturing CompanyBMW US Manufacturing Company located in Spartanburg, SClocated in Spartanburg, SC

International Marketing International Marketing StrategiesStrategies

Globalization is making differences in Globalization is making differences in taste, culture, and fashion less taste, culture, and fashion less obvious.obvious.

If true, companies can take advantage of If true, companies can take advantage of economies of scale by selling the same economies of scale by selling the same product to the entire world.product to the entire world.

If not true, there will always be differences If not true, there will always be differences at the local level that will prevent the at the local level that will prevent the successful global marketing of products.successful global marketing of products.


Pan-global marketingPan-global marketing Adopting a standard product across the globe Adopting a standard product across the globe

as if the whole world were a single market. as if the whole world were a single market. Selling Selling the same goodsthe same goods in in the same waythe same way everywhere.everywhere.

Global localizationGlobal localization Adapting the marketing mix, including different Adapting the marketing mix, including different

products, to meet national and regional tastes products, to meet national and regional tastes and culture. and culture. “Thinking global – acting local”“Thinking global – acting local”


Pan-global MarketingPan-global Marketing– Successful for 2 categories of productsSuccessful for 2 categories of products

Upmarket brands with international appealUpmarket brands with international appeal– Rolex watches, Rolls-Royce cars, Versace DressesRolex watches, Rolls-Royce cars, Versace Dresses

Mass-Appeal brandsMass-Appeal brands– Apple products, Levi’s jeans, Nike shoesApple products, Levi’s jeans, Nike shoes


Global localizationGlobal localization– Thinking global – acting localThinking global – acting local

YUM – the world’s largest food organization YUM – the world’s largest food organization (KFC and Pizza Hut) use this approach(KFC and Pizza Hut) use this approach

– China: sells products not available in other China: sells products not available in other countries to suit local tastescountries to suit local tastes

– Price levels are varied between different countries Price levels are varied between different countries to reflect differences in incometo reflect differences in income

– Advertisements contain local ethnicitiesAdvertisements contain local ethnicities

EcommerceEcommerce Ecommerce: The buying and selling of Ecommerce: The buying and selling of

goods and services on the Internet.goods and services on the Internet.

– B2C:B2C: Selling of goods and services directly to Selling of goods and services directly to the final customer through a website.the final customer through a website.

– B2B:B2B: Selling/buying of goods and services Selling/buying of goods and services to/from another businessto/from another business

– Advertising by using the company’s own Advertising by using the company’s own website or creating a banner or pop-ad on website or creating a banner or pop-ad on another firm’s website to reach target marketanother firm’s website to reach target market

– Sales leads are generated by encouraging Sales leads are generated by encouraging customer t leave informationcustomer t leave information

– Collecting market research data by Collecting market research data by encouraging customers to answer questionsencouraging customers to answer questions

Ecommerce ImpactEcommerce Impact

Businesses and Consumers have been Businesses and Consumers have been impactedimpacted

MusicMusic FilmFilm BankingBanking InsuranceInsurance Travel and TourismTravel and Tourism

– These were once typical retail stores. The These were once typical retail stores. The product delivery system has drastically changed product delivery system has drastically changed due to the Internet.due to the Internet.


Marketing Mix has been impactedMarketing Mix has been impacted– ProductProduct

Consumers can be communicated with Consumers can be communicated with individuallyindividually

Custom services can be easily createdCustom services can be easily created(Airline tickets, hotel reservations, rental cars)(Airline tickets, hotel reservations, rental cars)

Custom products can be easily builtCustom products can be easily built(build your own car or computer)(build your own car or computer)

Larger stocking options because market Larger stocking options because market potential is greaterpotential is greater


Marketing Mix has been impactedMarketing Mix has been impacted

– PricePrice

Prices can be easily comparedPrices can be easily compared Competitive pricing more likely than cost-Competitive pricing more likely than cost-

plusplus Consumers have more controlConsumers have more control



– PromotionPromotion

Banners, pop-ups, text messages, web Banners, pop-ups, text messages, web pages are all NEW ways to promote productspages are all NEW ways to promote products

Promotional opportunities are greaterPromotional opportunities are greater Cost to reach potential customers is lowerCost to reach potential customers is lower



– PlacePlace

The Internet is transforming how we buy.The Internet is transforming how we buy. Will there be a need for store-fronts?Will there be a need for store-fronts?

?

4.7 international marketing 4.8 ecommerce chapter 29

Documents

international marketing4

different requirements

social differencesproblems

foreign countries

foreign marketcan

foreign customerselling

japan nuclear company

tobacco products