CHAPTER 21: TAPPING INTO GLOBAL MARKETS

Marketing Management (13th Edition) Philip Kotler . Kevin Lane Keller

Ice Breaker 1:
In your post-it notes, please write at least five brands or company that you wear or you have in your bag right now. Then, please also write down the country-oforigin of that brand or company.

TAPPING INTO GLOBAL MARKETS

We will discuss the following: 1. Factors to be reviewed before deciding to go abroad 2. Evaluation & selection of foreign markets to enter 3. Major ways of entering foreign market

We will address the following questions: 1. To what extent must the company adapt its products and marketing programs to each foreign country 2. How should the company manage and organize its international activities

Competing in Global Basis

Top 10 countries with the most Global 500 companies

Global firm operates in more than one country and captures R&D, production, logistical, marketing and financial advantages not available purely from domestic competitors. In a global industry, competitors strategic positions in major geographic or national markets are affected by their overall global positions.

Source: Fortune 500

Competing in Global Basis

MAJOR DECISIONS IN INTERNATIONAL MARKETING

Deciding whether to go abroad

Deciding which markets to enter

Deciding how to enter the market

Deciding on the marketing program

Source: www.american.com

Deciding on the marketing organization

(1) Deciding whether to go abroad

Factors that draw companies to enter international market: Some international markets present higher profit opportunities than domestic market. The company needs larger customer base to achieve economies of scale. The company wants to reduce its dependence on any one market. The company decides to counterattack global competitors in the home market. Customers are going abroad and require international service.

Risks to consider

(1) Deciding whether to go abroad

The company might Not understand foreign preferences and could fail to offer a competitively attractive product Not understand the foreign countrys business culture. Underestimate foreign regulations and incur unexpected costs. Lack managers with international experience. The foreign country change its commercial laws, devalue its currency or undergo political revolution and expropriate foreign property.

Developed vs Developing Markets

DEVELOPED MARKETS A group of industrialized nations including Australia, Austria, Canada, France, Germany, Italy, Japan, the UK, and the United States. In some contexts such countries are collectively called the North. 20% of the worlds population.

(2) Deciding which markets to enter

DEVELOPING MARKETS Some of the world poorest countries (48 in 1995) designated by the UN as 'least developed' on the basis of health care, literacy, and per capita income. Most of them are in Africa, few in Asia and Pacific, and one (Haiti) in the Caribbean.

(2) Deciding which markets to enter

How many markets to enter? WATERFALL APPROACH Gradually entering countries in sequence
WATERFALL APPROACH

SPRINKLE R APPROACH

SPRINKLER APPROACH Entering many countries simultaneuously

WATERFALL APPROACH WATERFALL APPROACH

4/14/2012

SPRINKLE R APPROACH

WATERFALL APPROACH 10

(3) Deciding which markets to enter Evaluating Potential Markets In general, candidate countries should be rated on three criteria: 1. Market attractiveness 2. Market risk 3. Competitive Advantage

(3) Deciding how to enter the market

Indirect-Direct Export Using Global Web Strategy

Licensing Joint Ventures

Direct Investment

(4) Deciding on the marketing program

Standardized marketing mix Standardization of the product, communication and distribution channels promises the lowest cost.

PROS
Economies of scale in production and distribution Lower marketing costs Power and scope Consistency in brand image Ability to leverage good ideas quickly and efficiently Uniformity of marketing practices

CONS
Ignore differences in Consumer needs, wants and usage patterns for products Consumer response to marketing-mix elements Brand and product development & the competitive environment The legal environment Marketing institutions Administrative procedures

Adapted marketing mix The producer, consistent with the marketing concept, holds the consumer needs vary and tailors marketing program to each target group.

Table 21.2 Global Marketing Pros and Cons

(4) Deciding on the marketing program

Company should review the following elements and determine which add more revenue than cost: Product features Labeling Colors Materials Sales Promotion Advertising Media Brand Name Packaging Advertising execution Prices Advertising themes

PRODUCT

(4) Deciding on the marketing program

STRAIGHT EXTENSION
Introduces the product in the foreign market without any change. (ie. cameras, consumer electronics, machine tools)

PRODUCT ADAPTATION
Alters the product to meet local conditions or preferences. > Regional version > Country version

PRODUCT INVENTION
Creating something new. BACKWARD INVENTION Reintroducing earlier product forms that are well adapted to a foreign countrys need. FORWARD INVENTION Creating new product to meet a need in other country

> City Version

> Retailer version

COMMUNICATION
DIAMOND IS FOREVER De Beers CONNECTING PEOPLE TRULY ASIA

(4) Deciding on the marketing program

COMMUNICATION ADAPTATION A process when companies can run the same marketing communications programs they use in the home market or change them for each local market.
DUAL ADAPTATION If it adapts both the product and the communications

ALWAYS I WANT MY.

Blunders in International Marketing Communication

Scandinavian vacuum manufacturer Electrolux used this campaign in America: Nothing Sucks like an Electrolux. Coors put its slogan, Turn It Loose, into Spanish, where it was read as Suffer From Diarrhea. Pepsis Come Alive With the Pepsi Generation translated into Pepsi Brings Your Ancestors Back From the Grave in Chinese. Colgate introduced a toothpaste in France called Cue, the name of a notorious porno magazine. When American Airlines wanted to advertise its new leather first class seats in the Mexican market, it translated its Fly In Leather campaign literally, which meant Fly Naked (vuela en cuero) in Spanish. The Coca-Cola name in China was first read as Kekoukela, meaning Bite the Wax Tadpole or Female Horse Stuffed with Wax, depending on the dialect. Coke then researched 40,000 characters to find a phonetic equivalent kokoukole, translating into Happiness in the Mouth. The Dairy Associations huge success with the campaign Got Milk? prompted them to expand advertising to Mexico. It was soon brought to their attention the Spanish translation read Are You Lactating?

PRICE
Pricing challenges when selling abroad:

PRICE ESCALATION Changes in the cost or price of specific goods or services in a given economy over a period of time

TRANSFER PRICE Refers to the setting, analysis, documentation and adjustment of charges between related parties for goods, services or use of properties.

DUMPING Charging either less than its cost or less than it charges at home in order to enter or win a market

GRAY MARKET Consist of branded products diverted from normal or authorized distribution channels in the country of product origin or across international borders

DISTRIBUTION

Seller

Sellers International marketing headquarters

Channels between nations

Channels within foreign nations

Final buyers

Country of Origin Effects

Country-of-origin perceptions are the mental associations and beliefs triggered by a country.
Can affect consumer decision directly and indirectly. Managing perceptions in the most advantageous way possible is an important marketing priority.

Deciding on the Marketing Organozation

EXPORT DEPARTMENT Consists of Sales Manager and a few assistants

INTERNATIONAL DIVISION Headed by a division president who sets goals and budgets and is responsible for the companys international growth

GLOBAL ORGANIZATION Global operating units report directlt to the chief executive or executive committee, not to the head of international division.