International And Global

Marketing
International/global marketing mix

Suhard Amit
MBA RMIT ( Aus )
Dip Business Management ( Aus )
Dip in Marketing
ternational And Global Marketing Content outline

Weekly Content TOPIC

Introduction to the module

Week 01
Global marketing in the firm and the initiation of internationalization

Week 02 International/global marketing research

Internationalization theories and developing of the firms

Week 03
international competitiveness

Week 04 The international/global business environment

International/global market selection process and Export,

Week 05
intermediate and hierarchical entry methods

Week 06 International/global marketing mix

Week 07 International/global marketing mix (continued)

Week 08 Organization and control of the global marketing programme

Week 09 SESSION 9 CASE STUDY

Week 10 SESSION 10 CASE STUDY

Marketing Mix
Place
 Question

What is different about the Marketing Mix

model as we move into this millennium?
 Answer
Over the past three decades, the overwhelming
emphasis in the Marketing Mix has been on:

Product Strategy with

Pricing Strategy
and Promotional Strategy
also being stressed.

But.....
Marketing Channel Strategy

(Place); the fourth P in the Marketing Mix has

been largely neglected

But this is changing....

Marketing Channel Strategy is Growing
in Importance. Why?

(1) Search for Sustainable Competitive Advantage

(2) Growing Power of Retailers in Marketing Channels

(3) The Need to Reduce Distribution Costs

(4) The Increased Role and Power of Technology

(5) The New Stress for consumer connect

Distribution Management
Distribution management focuses on the activities
that are necessary to bridge the gaps (distance and time)
between production and consumption
(Weinhold 1988).

Acquisition Physical
component component
customer acquisition, the right product,
consulting, in the right place
customer care and at the right time,
customer retention in the right quantity,
in the right quality.

Channels Logistics
Logistics & Distribution
Physical distribution is concerned with the ways organizations get the physical product to a
point where it is most convenient for the consumer to buy it.

Logistics takes a wider view: originally based on military terminology, logistics is concerned
with the process of moving raw materials through the production and distribution processes to
the point at which the finished product is needed.

Logistics Distribution

Second Tier First Tier First Tier Second Tier

Suppliers Suppliers Customers Customers
Primary and secondary

End customers
Our
Organization
producers

SUPPLY/BUY SIDE INSIDE DEMAND/SELL SIDE

Continuous stable links

Direct and Indirect Distribution

Compan Compan Compan

y y y

Direct sales Indirect sales

Products going Distributors Products going
directly from the through a channel
producer to the of intermediaries
consumer with out Wholesaler appointed or
the use of any Retailers s existing in the
intermediaries market place

Retailers

Customer Customer Customer

Direct Sales

Compan
y

Direct sales Manufacturer Directly to Consumer

Products going
directly from the Selling products at the production
producer to the site
consumer with out Having a sales force call on
the use of any
intermediaries
consumers
Using catalogs or ads to generate
sales
Using telemarketing
Using the internet to make online
sales
Customer
Direct Sales methods

Direct Marketing: This is a technique by which products are promoted

via medium which allows direct response from the customer. Example
press advertisement which contains a coupon or a mailing which contains
a reply paid order form, E flyers

Vending machines : These allow people to purchase directly from the

machine using coins / credit cards etc. Makes access to where retailers
cant go

Telephone selling: Inbound ( Customers calling in ) and outbound

( Calling out customers ) tele sales

Franchising : A business franchisor offers exclusive rights to a franchisee

to use the corporate brand name within a specific geography. Example
McDonalds

Electronic retailing ; Online retailing is becoming more and more

common as consumers are becoming internet literate
Group Discussion

Discuss 03 advantages and 03 disadvantages of direct sales method to

consumer given a product of your choice
 Channel Members

Distributors and Dealers These are

organizations which contract to buy a
manufactures goods and sell them to
customers. Usually similar to a
wholesalers however they usually offer a
narrower product range. Often promote
products and provide after sales service

Agents Agents differ from distributors

in that distributors buy the manufactures
goods and re sell them at a profit whereas
agents do not purchase the manufactures
goods but earn a commission on what
ever sales they make

Brokers - Negotiate a sell, paid a

commission and look for new customers
Channel Members

Wholesalers

Businesses that buy large quantities

of goods from manufacturers, store
the goods, and then resell them to
other retailers / businesses.

Take title to goods they buy for

resale.

Rack jobbers-wholesalers who

manage inventory and merchandising
for retailers by counting stock, filling
it in when needed and maintaining
store displays.
 Channel Members
Retailers These are traders operating outlets
which sell directly to households. They can be
classified in different ways

Type of goods sold ( Hardware, Furniture )

Type of service ( Self service, Counter service)
Size
Location ( Rural, City centered, Urban)
Independent retailers ( Local butcher shop,
Local corner shop )
Multiple chains, some which are associated with
one class of product while others are variety
chains
Factors to consider in setting up efficient channels of distribution
Customer type

Product & Marketing strategy - Direct or indirect channels ?,

Compan
Single or multiple channels ?
y

Length of the channel ? How many intermediate stages should be

used and how many dealers at each stage ? Distributors

Types of intermediaries used

Wholesaler
s ??
What support should the manufacturer give to the intermediaries ? After
sales service, Repair service, Regular customer visits, Advertising and
promotions
Retailers
To what extent does the manufacturer wish to dominate a channel of
distribution ? A market leader might wish to ensure that its market share
is maintained, so that it could for example offer exclusive distribution
contracts to major retailers
Customer
Factors to consider in channel design decisions

Distributor characteristics

The capability of the distributor to take on the distributive

functions

Competitors channel design

Many consumer goods will sit along side its competitors

products and there is little that the supplier can do

Other products distributor may stock one name or brand only,

example many car dealers stock one brand and are given an
exclusive area

Integrated Marketing effort up to the point of sales with the

consumer ? Combined promotions with retailers, For example would
only be possible if the manufacturer dealt directly with the retailer
rather than through a wholesaler
Distribution strategies
The distribution strategy will depend on the firms marketing
strategy. Marketing strategy Distribution strategy

Mass marketing Intensive distribution

Segment marketing Selective distribution

Niche or concentrated marketing Exclusive distribution

A strategic decision
Choosing the right
channel
based on target market
& product characteristics
Distribution
Physical distribution
(logistics) Tactical decisions involving
transport, warehousing and
financial decisions. Also based
around product characteristics,
Logistics issues include possibility of using multiple infrastructures and market
channels, customer location, compatibility, nature of
goods/services, geography/environment/terrain,
conditions
storage,/distribution/import/export costs
Distribution Intensity

Exclusive Distribution:

Protected territories for

distribution of a product in a
given geographic area

Used mainly for Exclusive

products

Characteristics: prestige, image,

channel control, and high profit
margins

Concentrated marketing effort

Distribution Intensity

Selective Distribution:

A limited number of
outlets in a given
geographic area are
used to sell the product

Select channel
members that maintain
the image of the
product and are good
credit risks, aggressive
marketers, and good
inventory planners.
Distribution Intensity

Intensive Distribution

The use of all suitable

outlets to sell a product

Objective/Goal:
complete market
coverage and to sell to
as many customers as
possible
Group Discussion

Select a product of your choice and discuss the preferred distribution strategy.
Explain why
Break 15 Min
Marketing Mix
Price
A Basic Misconception of Marketing: Forgetting the but

Marketing means ...

... not (only) satisfying
customers needs,

but tapping their willingness to pay.

Source: adapted from Backhaus 1999.

Be a Price Maker, not a Price Taker: Principles of
Added Value Pricing

1. Create customer value (value proposition)!

2. Focus on customers who reward value!

3. Be different!

4. Orient your prices on the customers benefit!

5. Be reliable and consistent!

Focus on valuable consideration: Create a win-win-situation

Source: adapted from Shapiro 1998

Price
The amount of money charged for a product or service, or the sum of the values
that consumers exchange for the benefits of having or using the product or
service.

Its critically important for the firm to set the price right!

It brings together the other elements of the mix and affect each
one
.
Price determines the income and profits for each product in each
market.

Price contributes to the firms financial and business objectives.

It can be used to control demand.

Price can be used as a competitive tool.

What is price?

Price and the Marketing Mix:

Only element to produce revenues

Most flexible element
Can be changed quickly

Common Pricing Mistakes

Reducing prices too quickly to get sales
Pricing based on costs, not customer value
Pricing strategy determinants vs. pressure
elements
Customer
needs: what represents
value to customer
price sensitivity
purchase volume

Competition Corporate objectives

Relevant to our short term and
target customers Price long term
value proposition Profit objectives
Competitor costing

Cost structure
Production cost
According to McKinsey
scale effects
Technological
advances
Group Discussion

Select a product of your choice and discuss the price determinants

Factors to consider when setting price

Internal Factors
Marketing objectives
Marketing mix strategies
Costs
Organizational
considerations
Market positioning
influences pricing strategy
Other pricing objectives:
Product mix
optimization
Organization profit
maximization
Market share / value
share leadership
Product quality
leadership

Taffy Alahakoon 2011

& NEXT School of
Business
Factors to consider when setting price

Internal Factors Pricing must be carefully

coordinated with the other
Marketing objectives marketing mix elements
Marketing mix strategies
Costs Target costing is often
Organizational used to support product
considerations positioning strategies
based on price

Market penetration
PLC stage and strategy
Factors to consider when setting price

Internal Factors Types of costs:

Variable
Marketing objectives
Fixed
Marketing mix strategies
Total costs
Costs
Organizational
considerations How costs vary at different
production levels will
influence price setting
Factors to consider when setting price

Internal Factors
Who sets the price?
Marketing objectives Small companies: CEO
Marketing mix strategies or top management
Large companies:
Costs
Divisional or product
Organizational
line managers
considerations
Price negotiation is
common in industrial
settings where pricing
departments may be
created
Factors to consider when setting price

External Factors Types of markets

Pure competition
Nature of market and
Oligopolistic competition
demand
Pure monopoly
Competitors costs,
Consumer perceptions of
prices, and offers
price and value
Other environmental
Price-demand relationship
elements
Demand and supply
Taxes and other charges
Factors to consider when setting price

External Factors Consider competitors costs,

prices, and possible reactions
Nature of market and
Pricing strategy influences
demand
the nature of competition
Competitors costs,
Low-price low-margin
prices, and offers
strategies inhibit
Other environmental competition
elements
High-price high-margin
strategies attract
competition
Benchmarking costs against
the competition is
recommended
Factors to consider when setting price

External Factors Economic conditions

Economic down turn
Nature of market and
demand Buying power of
consumer segments
Competitors costs,
prices, and offers Reseller reactions to
prices must be considered
Other environmental
elements Government may restrict
or limit pricing options
Social considerations may
be taken into account
Group Discussion

Select a product of your choice and discuss the internal and external factors
affecting the pricing decision.
Methods of Pricing

Penetration pricing: The company sets prices low in order to capture a

larger part of the market before competitors can respond. Risky and can
lead to price war and impact on profitability

Skimming: The company sets the price high initially so as to skim the
consumers who are prepared to pay a premium to be the first own a new
product. Commonly used in consumer electronics market.

Cost plus pricing: calculating the manufacturing costs of the product,

including distributed overhead costs and R&D-costs, then adding a fixed
percentage of profit. Not market oriented
Methods of Pricing

Loss Leader: Some retailers will offer some basic commodities at a price
which will actually lose money in order to lure customers into the store.
Inevitably people will buy other goods while in the store as well as the loss
leader, and the store makes its money on these other purchase Cement,
Paint brushes, Tobacco wholesalers

Promotional Pricing: Used to increase sales / bring sales forward by

means of offering extra discounts, Sale prices. Short term focus

Odd even pricing: Adopts psychological pricing. This is the practice of

ending the price with 99p or 999/-
Methods of Pricing

Demand Pricing: Prices are set at a level which will ensure that demand
for the product is at a point which will meet corporate objectives. The
point at which further increase in price will reduce the production run past
the most economical point or a reduction in price will simply reduce profit
without materially affecting sales

Cost base and marginal costing: Starts from the cost the firm incurs
but in this method the price is set at the point where producing one more
unit of production would not be profitable. Extremely difficult to calculate
and again does not take into account the customers. Not market oriented