Professional Documents
Culture Documents
International Marketing
Paper 488914
Class Details
LECTURER:
Name Mike Hoffmeister
Title Prof Dr
Room:
Phone:
OFFICE HRS:
1
Objectives
¾ Prescriptor
• The nature and complexity of international marketing are examined.
An appreciation of factors to be considered when developing
international marketing strategies and plans; the making of management
decisions is developed.
¾ Paper aim
• To show the importance of international marketing for New Zealand
business
• To examine the factors to take into account when developing
international marketing strategies and plans
¾ Learning outcome
• Identify and evaluate marketing opportunities for local business in a
global market.
• Develop marketing strategies and plans for exporting to international
markets
Organisation
¾ Assessment
• Assignment
• Weekly formative assessment involving questions and practice
assignments to assist development of understanding of and ability to
apply concepts
2
Weekly Programme (I)
Meaning of culture
WEEK 2: Market Entry Options
Emerging Markets
Global Services
WEEK 5: Global Marketing (II) Price, Distribution and Advertising Strategies
Price Strategy
Discuss selected standardized global Text: Chapter 13-15
marketing mix instruments Case 4.3: United Colors of
Distribution Strategy
Benetton
Advertising Strategy
WEEK 6: Salesforce Management and Marketing Organisation
3
Assignment for International Marketing
Textbook
Paper based on
Global Marketing
Foreign Entry
Local Marketing &
Global Management
Johny K. Johansson
Georgetown University, USA
4
Master of Business Administration
International Marketing
Paper 488914
Part 1
Introduction
Weekly Programme
5
The future is not ahead of us.
It has already happened.
Unfortunately,
it is unequally distributed
among
companies,
industries, and
nations.
What is Marketing?
Marketing
• … is a social and managerial process by which
individuals and groups obtain what they need and
want through creating and exchanging products
and value with others.
(Philip Kotler 2004, Principles of Marketing, p 5)
6
Nike: Superb Marketing
¾ Nike
• Company with a powerful brand and superb marketing skills
- It is not so much the shoe but where they take you:
- Markts a way of life, a sports culture, a “Just Do It!” attitude
- The culture and style is to be a rebel
• Gives customers more than just good athletic gear
• Customers do not wear Nikes, they experience them
Marketing Mix
A set of controllable, tactical marketing tools that the firm blends to produce the
response it wants in the target market. It consits everything the firm can do to
influence the demand for its product.
(Philip Kotler 2004, Principles of Marketing, p 56)
Product Price
Variety; Quality List price
Design; Features
Brand name Target customers Discounts
Allowances
Packaging Payment period
Services Credit terms
Promotion Place
Channels
Advertising
Coverage
Personal selling
Assortments
Sales promotion
Locations
Public relations
Logistics
7
What is INTERNATIONAL Marketing?
International Marketing
8
Export/ Import by Country in NZ
9
Wine Industry in New Zealand
300
250
Wine Export in NZ$000
200
150 281,8
246,4
100 198,1
168,3
125,4
50 97,6
75,9
60,3
41,5 40,8
0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Source: NZ Trade Statistics, June 2003
Wool Exports in NZ
07/1997 – 06/1998
30
25
Wool Export in %
20
15
10
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10
Forestry Exports in NZ
04/2001 – 03/2002
1200
1000
Forestry Export in NZ$000
800
600
400
200
0
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In
Ph
¾ Market
¾ Competition
¾ Technology
¾ Government
11
Market Drivers
¾ Global customers
• Customers that need the same product or service in
several countries
• Therefore, firms follow customers abroad
- Hotel industry
- German Bosch follows Volkswagen
¾ Global channels
• Existence of global distribution and logistic firms
- Federal Express
¾ Tranferable marketing
• Using the the same name packing, advertising, brand
names and other marketing mix elements in various
countries
- Nike: Basket-ball star Michael Jordon
Competitive Drivers
¾ Active
• If competitors go to foreign markets
• Incentive for firms to follow
• Trying to match a competitor´s move
• Example
- Swedish Ericsson and Finnish Nokia both went into the USA market in the
late 1990
- Toyota´s Lexus, Honda´s Acura and Nissan´s Infinity were introduced in the
USA at the same time
¾ Passive
• Presence of foreign competitors in a firm´s domestic market increases
the need for the firm to venture abroad or to counterattack in foreign
country
• Example
- Benetton´s success in the USA has led The Gap and The Limited, two US
competitors, to go abroad
12
Cost Drivers
¾ Economies
• … of Scale
- Spreading activities across multiple product lines of businesses Unit
cost
• … of Scope
- reduction by increased production
• Example
- Volkswagen: over 20 factories in foreign countries
¾ Sourcing advantages
• Supply from a low-wage country
- global sourcing
Technology Drivers
¾ Internet
• Global information and
communication
• Business transactions
• E-commerce
• On-line marketing
• Examples
- Microsoft
- Amazon
- Ryan Air
13
Government Drivers
14
Limits to global marketing
¾ Limits
• Negative industry drivers Leads to
• Lack of resources LOCALIZED
• Localized mix requirements Global Marketing
• Antiglobalization trends
¾ Definition
• Globalise …
- the product strategy by marketing the same
o product lines,
o product designs and
o brand names
every where but
• Localize …
- distribution and marketing communication
15
International management orientation
¾ EPRG
• Ethnocentric
• Polycentric
• Regiocentric
• Geocentric
16
Management Orientation: EPRG-Model*
¾ Ethnocentric orientation
• Home market attitude foreign
- „This works at home; therefore, it
must work in your country“
domestic
• Export company
- Each market is simular
- Focus on home market
- Sourcing, production and marketing foreign
from home market perspective
- Management decisions done locally
- Manager for oversears are sent from
home markets
*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.
¾ Polycentric orientation
• Host market orientation foreign
- „We want to be a good local company“
*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.
17
Management Orientation: EPRG-Model*
¾ Geocentric orientation
• World orientation foreign
• Global company
- Worldwide complex company domestic
structure
- International management
- Standardised, global objectives and
strategies foreign
- Recruitment of managers worldwide
*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.
¾ Regiocentric orientation
• Based on polycentric orientation f f
- Considers increasing regionalisation
of economies ie Europe f f
- Base: not countries but country
groups domestic
- Each country group is different while
each country within a group is simular f f
f f
*Heenan/ Perlmutter 1979, S. 17ff; Kreutzer 1989, S. 12ff.; Hünerberg 1994, S. 114; Becker 1990, S. 270ff.
18
Country Specific Advantages (CSAs)
• Demand Conditions
- The nature of the home demand for the industry’s product or service
¾ Firm-specific advantages
• Patent
• Trademark
• brand name
• Control of raw materials required for the manufacturing of the product
¾ Knowledge-Based FSAs
• Knowledge is recognized as one of the key resources of the firm
• Resource-Based Strategy
- Defines the firm not in terms of the products or services it markets, or in
terms of the needs it seeks to satisfy, but in terms of what it is capable of
• Marketing FSAs
- It is important to recognize that the source of a firm-specific advantage can
depend on specific market know-how
19
Culture
¾ Defined as
• the underlying value framework that
guides an individual’s behavior
¾ Reflected in an individual’s
perceptions
• of observed events, in personal
interactions, and in the selection of
appropriate responses in social situations
¾ Manifests itself
• in learned behavior as individuals grow
up and gradually come to understand
what their culture demands of them
20
Five different “Silent Languages”
¾ Space
• Relates to matters such as the distance between two people conversing
¾ Material Possessions
• Usually describes a person’s station in life
¾ Friendship Patterns
• Reflective of a person’s cultural upbringing
¾ Time
• Studies have documented the cultural problems with time perceptions
21
Hofstede’s Cultural Dimensions
¾ Uncertainty Avoidance
• Rates nations based on the level
¾ Confucianist Dynamics
• Distinguishes the long-term orientation of Asian people; from the more
short-term outlook of Western people
Hofestede´s Classification of
Triad Countries
22
Four stages of business negotiation
Japanese Americans
Nontask Sounding Considerable time and expense Relatively shorter periods are
devoted to such efforts it the typical
practice
Task-Related Exchange of Most important step; high first Information is given briefly and
Information offers with long explanations and in- directly. “Fair” fist offers are more
depth clarifications typical
Concessions and Agreements Concessions are made only towards Concessions and commitments are
the end of negotiations; holistic made throughout; a sequential
approach to decision making. approach to decision making
Progress is difficult to measure for
Americans
DISCUSSION QUESTIONS
23
Weekly Programme
24
Master of Business Administration
International Marketing
Paper 488914
Part 2
Market Entry Options
Lecturer Profile
Prof Dr Mike Hoffmeister
Academic Business
1
Wolfsburg
Hamburg
Wolfsburg Berlin
Amsterdam
Frankfurt Prague
Munic
Wolfsburg
2
German Unification
Weekly Programme
3
Research topics
• Physical environment
• Sociocultural environment
• Economic environment
• Regulatory environment
¾ Level 2: Expropriation
• Nationalisation, contract revocation
¾ Level 3: Operations
• Import restrictions, local content rules, taxes, export requirements
¾ Level 4: Finance
• Repatriation restrictions, exchange rates
4
Unclear legal systems
Top 3
Russia
Indonesia
Kenyo
Thailand
Brasil
selected
Japan
UK
USA
Singapore
0 20 40 60 80 100
Source: Economist, March 3, 2001, p. 100
Contracts in China
¾ Germany ¾ China
• Official check of • No tradition for written
credibility contracts; courts have
• Written Contract no power; judges are not independent
and have to execute orders
• End of negotiation process
• Rely on personal references
• Defines mutual rights and
commitments • Shows mutual interest / relationship
• Written = commitments • Start of co-operation
• Defines mutual purpose
• No lasting regulation for future
• A good and trustful co-operation
implies that under new circumstances
the contract can be newly negotiated
and adopted
5
Piracy/ Counterfeiting in China
McDonald´s in China
6
Gillette Razor Blade in China
¾ 1977 the Indian government decreed that the secret formula for
the cola and 60% of the equity of its Indian subsidiary must be
transferred to local nationals
• Reasons: Indian government wanted to control manufacturing and to
stop the outflow of foreign exchange
¾ Coca-Cola deceided to withdraw from India rather than
jeopardize their firm-specific advantages, giving the secret
formula to domestic imitators
¾ 1990’s: Liberalisation in India
• Less-restrictive investment conditions
¾ Coca-Cola returned to India in 1993
7
Israel boycott list
www.inminds.co.uk/boycott-faq.html
8
Israel boycott list
www.inminds.co.uk/boycott-faq.html
¾ Quoted/Source www.inminds.co.uk/boycott-faq.html
• “McDonalds is a "major corporate partner" of the Jewish United Fund. In its own
words, the Jewish United Fund "works to maintain American military, economic
and diplomatic support for Israel; monitors and, when necessary, responds to
media coverage of Israel." Also, McDonalds chairman and CEO Jack M.
Greenberg is a honorary director of the American-Israel Chamber of Commerce
and Industry”.
• “McDonalds has 80 resturants in israel, providing employment to 3000 israelis.”
• “McDonalds has just announced it is closing down its operation in the middle east
due to loss of revenue as a direct result of the boycott (Oct 2002), and is
replacing Greenberg as its chairman and CEO (Dec 2002). Since the launch of
the boycott campaign, two of Jordan's six McDonald's franchises have closed due
to lack of business. In Egypt, McDonald's decided to change its brand name to
Manfoods this past March, in an attempt to dodge the boycott. It had no effect
and Egyptian police forces were ordered to guard the entrances to McDonald's
restaurants, after stone throwing incidents took place. A total of 175 restaurants
will be closed at a loss of $350 million.”
9
Impact of Media in the USA
Audi and the 60 Minutes Show
10
Impact of Barriers
¾ Globalisation
• research firms expand abroad and beome multi-national as well
• Such as
- AC Nielsen in the USA
- Taylor Nelson Sofres in the UK
- GfK in Germany
• The internet aggregators: cheaper, better, faster
- Profound.com
- AllNetResearch.com
11
AC Nielsen in the USA
¾ ACNielsen is the
world's leading
marketing information
company.
¾ 21,000 employees
worldwide
¾ Offering services in
more than 100
countries
¾ ACNielsen provides
market research,
information, analysis
and insights to the
consumer products
and service industries.
Macrosegmentation
12
Lifestyle Segmentation of the EU Consumer
Foreign
Strategic
Exporting Licensing Direct
Alliance
Investment
13
Foreign Market Entry Modes
Exporting
Foreign
Strategic
Exporting Licensing Direct
Alliance
Investment ¾ Indirect Exporting
• Export management companies work with independent
agents which operate for the firm in overseas markets,
going to fairs, and contacting distributors
indirect direct • Pro
Export market
- firm avoids the overhead costs and administrative burden
involved in managing their own export affairs
- Less risk
Agent - Economies of scale effects (location economies) at home/
learning curve
- High transport cost
• Con
- skills and know-how developed through experiences
abroad are accumulated outside the firm, not in it
Agent
Home market
¾ Direct Exporting
• Pro
- The firm is able to more directly influence the marketing
effort in the foreign market
Export Company
Foreign
Strategic
Exporting Licensing Alliance
Direct
Investment
14
Foreign Market Entry Modes
Licensing: Franchising
Foreign
Strategic
Exporting Licensing Alliance
Direct
Investment
¾ pro
Franchising • Marketing concept is
defined in detail
• Quicker international
expansion possible
¾ Franchising • The local franchisee raises
• More complete form of licensing the necessary capital and
• Franchiser offers a franchisee a manages the franchise
complete brand concept and
operating system ¾ con
• Longer-term commitment
• Careful and continuous
• Franchiser often assists the quality control is necessary
franchisee to run the business
Foreign
Exporting Licensing
Strategic Direct
Alliance Investment
15
Foreign Market Entry Modes
Strategic Alliance: Joint Venture
Foreign
Exporting Licensing
Strategic Direct
Alliance Investment
¾ Pro
• Benefits from local partners knowledge
Joint Venture of host countries
• Sharing development costs and risk
Foreign
Strategic
Exporting Licensing
Alliance
Direct
Investment
¾ Cons
• Large investment
• Blocked or devalued currencies
• Expensive to exit (reduce or close operations
16
Internationalisation stages
¾ Waterfall Strategy
• The firm gradually moves into overseas
markets ¾ Waterfall Strategy
- Advantages of this strategy are that expansion home
can take place in an orderly manner and it is host
relatively less demanding in terms of resource host
requirements
host
- Disadvantage of this strategy it may be too slow
in fast-moving market
¾ Sprinkler Strategy
• The firm tries to enter several country markets
¾ Sprinkler Strategy
simultaneously or within a limited period of time
- Advantages of this strategy are that it is a much home
quicker way to market penetration across the host
globe and it generates first-mover advantages host
host
- Disadvantage of this strategy is the amount of
managerial, financial, and other resources
required
17
Case 2.1 Daloon A/S
¾ DISCUSSION QUESTIONS:
• What are the firm-specific advantages of
Daloon over its competitors? The
country-specific advantages? Any
disadvantages?
• Why was the German market so difficult for
Daloon to enter? What was required to
make entry successful?
• How well did Daloon adapt its marketing
organization to the requirements in the
German market? How did Daloon try to
create a strong relationship with and loyalty
among its customers?
• How did Daloon gain McDonald's Germany
as a customer? How is Daloon leveraging
this foothold into becoming a supplier for
McDonald's in other European countries?
¾ DISCUSSION QUESTIONS:
1. What created the problems
with the existing distribution
strategy in the German
market? Was the distribution
alliance with Hag ill-advised?
2. To what extent do you think
the pan-European strategy
shift well-founded? For
example, one question is
whether the espresso market
is global or multi-domestic.
3. What would be your
recommendation to Mr. Illy?
18
Weekly Programme
Emerging Markets
WEEK 4: Global Marketing (I) Brand and Product Strategies
• BASF, Aldi, Carrefours, Walmart, K-Mart, Ikea, GAP, Toys R Us, McDonalds, Starbuck´s
Coffee Shop, 7-Eleven, Subway, Walt Disney World, Ritz Carlton Hotel, Emirate Airlines,
Lufthansa, Marriott, UPS, Siemens, Caterpillar, Xerox, BASF, Coca Cola, Unilever, Universial
Studios, Harley Davidson, Dell Computers, McKinsey, Boston Consulting, Becks Bier, Fosters
Beer
19
Master of Business Administration
International Marketing
Paper 488914
Part 3
Local Marketing
Weekly Programme
Emerging Markets
WEEK 4: Global Marketing (I) Brand and Product Strategies
1
The beer market
Can Beer be an
international, global
product?
¾ Corona
• Became most popular imported beer in the US in 1999
• Mexicans regard Corona as a relatively low-class beer
• Targets two niche markets
- Mexicans living in the US
- Young American beer drinkers, many of whom vacationed on Mexican
beaches
• Export all over the world
¾ Heineken
• Available in 170 countries
• Most international beer in the world
¾ Germany
• Over 3.500 beer brands
Johanson, Page 225
2
Local Microsegmentation
¾ Segmentation Criteria
• Economic
- the most basic local segmentation criterion is still
economic development
• Demographic
- the age and family structure in different countries
play an important role in determining global
segments
• Culture
- people care about their identify even though a lot
has been said in the media about the emergence of
global segments of people
• Benefits
- the most clearcut segmentation criteria are those
which focus on the benefits sought
• Lifestyle
- consumers start developing their own lifestyle with
buying behavior involving more than simple
necessities
Uniform Nike
The same Ikea
accross countries Young boys and
aspiring athletics
Mobile phones
Positioning
Universal Unique
the same Differs from
across countries country to country
3
Local Marketing in Mature Markets
¾ Local marketing in
• mature markets
• new growth markets
• emerging markets
¾ Mature markets
• Show slow growth apart from some high-technology markets. The
customers in these mature markets are pampered by strong domestic
and global companies who compete intensely for customer satisfaction
¾ Emerging markets
• Characterized by low levels of product penetration, weakly established
marketing infrastructure, relatively unsophisticated consumers with weak
purchasing power, and weak domestic competitors
4
Three Local Marketing Environments
5
Ultra-Heat-Treated Milk
¾ US
• Large refrigerators, therefore buy milk by gallon or half-gallon
• Prefere cold and fresh milk (= healthy)
• Assume technologically sophisticated food must be artificial
• Not well accepted
¾ EU
• Little room in their refrigerators and pantries prefere small cartons
• More accepted
Mature Markets
¾ Competition
• In many mature markets intense competition has produced a
management focus on customer satisfaction
• There exists a need to make sure that existing customers will stay loyal
Two factors make customers satisfied in mature markets
- Product quality including functional performance factors
• Emotional factors or a matter of pleasing the customer
¾ Segmentation
• customers are increasingly particular with well-developed preferences
• The fragmentation of mature markets presents an opportunity that there
will often be a part of the market that has yet to find the kind of product
desired
6
Marketing Mix in Mature Markets
¾ Product Policies
• Many Third World countries tend toward selling a low-cost “me-too” product in a mature market
- A “me-too” product is basically a copy of another product, often with simpler features and at a lower price
• The global marketer introducing a new kind of product to a local market has the advantage of little
or no competition
¾ Pricing
• In mature markets it is common to think of pricing in terms of selecting a target position and then
using temporary deals and offers to attract customers in the short term
¾ Distribution
• In mature markets, the distribution system is usually well developed
• One distribution strategy is “piggybacking”
- An existing network controlled by another company, often a potential competitor, in which the product is
distributed through contracting with the competitor to move products on a fee or commission basis
¾ Promotion
• In many mature markets where market share is the criterion of success s
- Sales promotions are used to break the habitual choice of the loyal customer
Pan-European Marketing
¾ Europe becoming a very
large single market
¾ Approaching 400 million
consumers
¾ Single currency (EURO €)
¾ 15 members
• Belgium, Germany, France,
Italy, Luxembourg,
Netherlands. Denmark,
Ireland, United Kingdom,
Greece, Spain, Portugal,
Austria, Finland, Sweden
¾ New members in May 2004
• Cyprus, the Czech Republic,
Estonia, Hungary, Latvia,
Lithuania, Malta, Poland, the
Slovak Republic, and
Slovenia
• Negotiation process
- Bulgaria, Romania , Turkey.
7
Pan-European Marketing
¾ Competition
• The integration forced large European corporations to start
coordinating previously independent national operations
• For smaller European companies and even the many large firms,
the threat from these foreign entrants has been met by the
creations of larger and stronger companies
• At the corporate level, there seems to be only one strategic
response possible for European firms: Get bigger and go pan-
European
¾ Product Positioning
• There are very few products today that can maintain different
images in different countries of Europe
• In pan-European marketing, product positioning is the same across
countries
Pan-European Marketing-Mix
¾ Product Policies
• The marketing mixes of the European marketers have moved toward uniformity as the
pan-European strategies are implemented
• Most packaged goods in Europe feature packaging in at least four languages: English,
French, German, and Spanish
¾ Pricing
• Pan-European pricing is a particularly complicated issue
• As the single euro currency is introduced and companies have to set a common euro
price throughout the region
• Price differentials on the same product and brand in different countries are being
minimized to avoid inducing customers to buy in a neighboring country
¾ Distribution
• Retail and wholesale distribution is gradually being transformed from locally based
smaller units to large integrated organizations resembling those common in North
America
¾ Promotion
• There is increasing use of pan-European TV advertising, taking advantage of the
satellites beamed across previously closed borders
8
Marketing in North America
¾ Background
• Ethnic Diversity
- A fundamental cultural factor is the region’s
ethnic diversity
• Religion
- In North America, church and state are
separated by law
• Decentralization
- In North American, firms are spread all over the
world and even into small towns
¾ Competition
• The U.S. is one of the most competitive markets in
the world
¾ Market Segmentation
• For segmentation purposes cultural identity can
serve as a useful criterion
¾ Product Positioning
• When positioning in the U.S., premium is placed on
direct and straightforward explanations
• The Canadian approach treats differences in
cultural norms with more sensitivity and more soft
sell
9
Marketing-Mix in North America
¾ Product Policies
• Market size, affluence, and diversity have meant that the
North American market offers a dizzying array of choices
of product and services
¾ Pricing
• The attractiveness of the North American market has
made it a very competitive arena for many domestic and
foreign producers
¾ Distribution
• The great size of the North American continent and the
wide spread of its people seems to be the main cause for
a very efficient distribution system in the U.S.
¾ Promotion
• North American communications media are similar to
media elsewhere, but the use of advertising and
commercials is greater in North America
• More and more consumers are fueling their affluent lifestyles with credit that is
easily available, and accepted, as a normal way of life in the United States.
10
Local Marketing in Growth Markets
Growth Markets
¾ Market Segmentation
• New growth markets are in the growth phase of the PLC
• Market segmentation in these countries differs from that in the developing
countries primarily in the degree to which a core middle class is developed
¾ Product Positioning
• In new growth markets it is easy to observe the attention given to well-known
brand names
11
Marketing-Mix in Growth Markets
¾Marketing Tactics
• Product
- Basic localization to make sure the product functions well is necessary in these
markets, and customers can be as demanding as elsewhere
• Pricing
- Pricing is important but can largely reflect the same considerations as in the
advanced markets—demand, costs, competitive conditions
• Distribution
- Distribution is very important and warrants larger margins and more support
services than elsewhere
• Promotion
- Promotional support, tie-ins with local representatives, and an open mind in
regard to trusting locals will be more justified in the future
Megatrends in Asia
12
Population in New Asian Growth Markets
(year 2000, in millions)
1400
1260
1200
1003
1000
800
600
400 282
211
200 127
82
47 22
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9870
10000
8000
6000
4800
4000
1900
2000 1100
474 457 310
153
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13
Marketing in the New Asian Growth Markets
¾ Market Environment
• Several of these countries are ethnically homogeneous while others are populated by
several racial groups
¾ Market Segmentation
• The economic upswing in the Asian high-growth markets has led to the emergence of a
significant middle class in Thailand known as the “have somes”
• However justified from an economic perspective, avoiding the rural areas where people
tend to be less well off can create some political problems
¾ Product Positioning
• The Asian markets’ desire for global identification has made many multinationals with
more mundane products use global standardization in their positioning strategies
Marketing-Mix in the
New Asian Growth Markets
¾ Product
• Policies: The emphasis on these markets as followers of global mature markets
makes standardized product policies natural
• Design: The Asian consumer is generally more eager to achieve “a harmonious
whole” than Western individuals
• New Products: The buyers in Asian markets are basically eager to get access to
the products they see available in mature foreign markets
¾ Pricing
• In Asia as elsewhere, the global marketer faces a choice between a high
skimming price strategy and a lower penetration price strategy
¾ Distribution
• Many observers agree that the most visible sign of economic growth in the Asian
markets is the dynamism of the urban retail sector
¾ Promotion
• By and large the promotional strategies employed by multinationals in Asian
markets have been only minimally adapted from elsewhere
14
Local Marketing in Emerging Markets
¾ Market Segmentation
• In these markets, income level represents the basic segmentation
criterion
- Effective income measures are defined in terms of access to convertible
currency
15
Marketing-Mix in Emerging Markets
¾ Product Positioning
• product policy a key issue
• Customer needs tend to be basic and domestic alternatives weak
¾ Pricing
• The balance between affordability and upper-end positioning
• The lack of purchasing power means that the marketer often must find
ways of offering a simpler product
¾ Distribution
• Unless effective ways of distributing the product can be found or
created, market entries might be thwarted and economic growth of the
developing countries will not take off
¾ Promotion
• Promotion in developing markets is initially limited because of lack of
broadcast media
Marketing in China
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Entry Barriers in China
¾ Protective Tariffs
• With the entry into the WTO, the government
has promised to continue tariff reductions to
meet the level of the other WTO members
Marketing in China
¾Product Policies
• Chinese consumer buy foreign products
because of no availability of similar products
and the superior quality of foreign products
¾Pricing
• Most Chinese customers are price-oriented
out of habit and are not willing to pay more for
alleged superior quality
¾Distribution
• Most distribution channels are controlled by
the government
• Guanxi: Mutual good feeling and trust
¾Promotion
• Strictly controlled by the government
17
Westernization of Chinese Consumers
¾ Christmas shopping is
becoming more important than
Spring festival
Importance of Guanxi
(good relations or connections)
18
Cultural Differences
19
China … land of extremes
20
The automotive boom will bring
problems
¾ As a consequence
• Pollution
• Traffic jams
• Cities get bigger and cars will be
necessary to travel
0
1990 1992 1994 1996 1998 2000 2002 2003 2008 2019
(est) (est) (plan)
21
Key figures of the Chinese car market
22
Impact of World Trade Organisation
¾ Automotive impact
• Less import tariffs from 80-100% to 25% by 2006
• No import quotas by 2005
- Licensing law: a limited number of license plates are released every month, which must be bid
on at monthly auctions (ie October 2002 3,200 plates for an average price of US$ 3,500)
• Independent sales without Chinese Partners
• Foreign financial institutes are allowed to offer automotive finance
Source: M. Taube, Universität Duisburg-Essen
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Challenges of co-operative
internationalisation strategies in China
Market Management
Source: Mercado Solutions Asia Ltd. 2000; Bennett 1998, p. 190; Posth/ Bergmann 1995
¾ Pros ¾ Cons
• Market entry into • Long starting process
protected market • Difficult to manage and lead
• Lower tariffs • Lack of skilled personnel
• Contact to local • Must buy parts locally
authorities
• Knowledge transfer
• Difficult to control sales and service
network
• Image of locally produced product
• Danger of know-how transfer not only
from foreign joint-venture to chinese
partner but also to other foreign
investors
- FAW: Volkswagen, Toyota, Mazda
- SAIC: Volkswagen, GM, Isuzu
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Case 3.2 Levi Strauss Japan K.K.
Selling Jeans in Japan
¾ DISCUSSION QUESTIONS:
1. What are the key success factors (KSFs) in the
Japanese marketplace?
2. To what extent do the Levi Strauss' FSAs and
CSAs match the KSF's. How has Levi's been
able to leverage its country-of-origin to become
a leading brand? Can other American jeans do
the same?
3. How would you explain the apparent success of
LSJ's advertising campaign stressing American
values in Japan?
4. List the pros and cons of the different
distribution alterna-tives facing LSJ. Which one
do you think has the best chance of
succeeding?
5. Would you retain the premium positioning of
Levi's in Japan? Why/Why not?
Weekly Programme
25