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DESIGNING GLOBAL MARKET OFFERINGS
www.aeunike.ub.ac.id
Your company does not belong in markets where it cannot be the best.
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Competing on a Global Basis
• Global industry
• Global firm
Major Decision in International Marketing
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Deciding Whether To Go Abroad
• Factors drawing companies into the international arena: – Some international markets present higher profit
opportunities than the domestic market. – The company needs a larger customer base to achieve
economies of scale. – The company wants to reduce its dependence on any
one market. – The company decide to counterattack global
competitors in their home markets – Customers are going abroad and require international
service.
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Deciding Whether To Go Abroad
• Before going abroad, the company must weigh several risk: – The company might not understand foreign customer
preferences and fail to offer a competitively attractive product. – The company might not understand the foreign country’s
business culture. – The company might underestimate foreign regulations and incur
unexpected costs. – The company might lack managers with international
experience. – The foreign country might change its commercial laws, devalue
its currency, or undergo a political revolution and expropriate property.
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Deciding Whether To Go Abroad
• Four stages of internationalization process:
1. No regular export activities
2. Export via independent representatives (agents)
3. Establishment of one or more sales subsidiaries
4. Establishment of production facilities abroad
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Deciding Which Markets to Enter
• How many markets to enter
– The company must decide how many country to enter and how fast to expand
– Typical entry strategies:
• Waterfall approach
• Sprinkle approach
– Country’s attractiveness is influenced by the product and by geography, income and population, and political climate
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Deciding Which Markets to Enter
• Developed versus Developing Markets
• Regional free trade zones – The European Union
– NAFTA
– MERCOSUL
– APEC
– ASEAN
• Evaluating potential markets – Psychic proximity
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Deciding How to Enter the Market
Five Modes of Entry into Foreign Markets
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Deciding How to Enter the Market
• Indirect and direct export
– Domestic-based export department or division
– Overseas sales branch or subsidiary
– Traveling export sales representatives
– Foreign-based distribution or agents
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Deciding How to Enter the Market
• Using a Global Web Strategy
• Licensing
– Management contracts
– Contract manufacturing
– Franchising
• Joint ventures
• Direct investment
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Deciding on the Marketing Program
• Standardized marketing mix
• Adapted marketing mix
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Deciding on the Marketing Program
The company should review the following elements which add more revenue than cost:
• Product features
• Labeling
• Colors
• Materials
• Sales promotion
• Advertising media
• Brand name
• Packaging
• Advertising execution
• Prices
• Advertising themes
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Deciding on the Marketing Program
• Hoftede identifies four cultural dimensions that differentiate countries:
– Individualism vs. Collectivism
– High vs. Low power distance
– Masculine vs. Feminine
– Weak vs. Strong uncertainty avoidance
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Deciding on the Marketing Program
• Product
– Straight extension
– Product adaptation
– Product invention
– Backward invention
– Forward invention
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Five International Product and Promotion Strategies
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Deciding on the Marketing Program
• Promotion (Communications) – Communication adaptation – Dual adaptation
• Price – Price escalation – Companies have three choices
• Set a uniform price everywhere • Set a market-based price in each country • Set a cost-based price in each country
– Transfer price – Dumping – Arm’s-length price – Gray market
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Deciding on the Marketing Program
• Place (distribution channels)
– Seller’s international marketing headquarters
– Channels between nations
– Channels within foreign nations
Whole-Channel Concept International Marketing
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Country-of-Origin Effects
• Building Country Images
• Consumer Perceptions of Country of Origin
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Deciding on the Marketing Organization
• Export department
• International division
– Geographical organizations
– World product groups
– International subsidiaries
• Global organization
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Reference
• Kotler, Philip, and Kevin Keller. Marketing Management. 13th ed. Prentice Hall, 2008.