MAR3023 Exam 3 Material Live Lecture April 8th 2014 Part 1 and 2 International Marketing Outline Entering global markets Different ways of going global How how much to adapt your marketing mix What are firms currently doing P G 2 a Day Project on water scarcity in China in order to understand the needs of the very poor Cleanliness is important to the Chinese but they need water to do so P G is working to help out these poor countries Importance of International Marketing Substantial share of GDP Balance in trade exports vs imports if you export more than you import your trade balance is positive and vice versa Shrinking globe more connections between nations than before to improve communication phone calls nowadays are much cheaper than before Foreign competition US is no longer the sole source of all companies can be a threat or an opportunity Key Decisions re the Global Marketplace Should you enter international markets Which markets should you enter How should you enter them How much if any should you adapt your marketing mix to local conditions Entering Global Markets Consider the benefits helping you capture share of consumers around the world extremely profitable could help you compete better at home Consider the risks operating domestically is easier and safer political instability in a country could cause problems currency instability economic instability will need to redesign your product could be costly need to adapt to that culture for consumers Understand international trade system tariffs and taxes biases against your country more product standards in other countries Things to consider Market size the bigger the market the more potential Market growth want a growing market not just a big one Cost of doing business Competitive advantage Risk level Which Markets Should You Enter Indicators of Market Potential o Demographic factors older vs younger consumers need to think about factors like these o Social cultural factors how people respond to your product India doesn t eat beef o Economic factors inflation GDP o Geographic factors weather o Legal regulatory factors environmental safety pricing regulations Globalscan Survey Trying to find clusters of people in a culture that have similar profiles o 14 countries o 15 000 consumers o Measures beliefs values 1000 brand preferences Globalscan s 5 Key Segments o Strivers young people who are active trying to succeed want o Achievers come closer to making it trend setters o Pressureds mainly women feeling economic pressure o Adapters older pretty content keeping up with changes but not convenience taking lead o Traditionals more resistant to change old school o Concentrations of these segments vary between countries How to Go Global EXPORTING o Producing goods in home country and then sending them abroad Indirect gives middleman a cut Direct doesn t Licensing offering the right to intellectual property for a fee contract manufacturing here s my product you build it and sell it for a fee PART 2 How to Go Global Joint Venturing joining with foreign companies to produce or market products or services Starbucks going into India more hands on than licensing Management Contracting domestic firm supplies know how foreign firm supplies the capital exporting a service low risk because you have a partner downside is you don t own the whole thing Joint ownership where both countries firms share ownership equal partners more potential for profit and clash between partners more hands on than management contracting joint ownership might be required by countries to enter Direct Investment most hands on fully owning the foreign divisions of your company HP owns factories in India riskier but save costs and you get to keep all the profits o Developing foreign based assembly or manufacturing facilities How Much Should You Adapt Your Marketing Mix in Each Market Global marketing approaches perspectives o International Marketing Perspective if what you re doing in the US is working you should extend it into other countries Starbucks anywhere across the world is essentially the same International Marketing Mix o Multinational Marketing Perspective understanding the market for each country before you move in product might have several different brand names o Transnational Marketing Perspective you view the world as one big market and emphasize the similarities between them find something that works everywhere more global perspective than international marketing Coca Cola launched a campaign to make it work around the world o Same principles apply but execution is more complex because you re trying to balance all the cultural differences o Adapting means changing one or more of the 4 P s Product Price Promotion Place o Product straight product extension pure standardization sell same product everywhere o Product adaptation glocialization changing the product to make it more appropriate for local tastes of consumers potato chips flavor might be different for that country s taste o Product invention pure non standardization creating an entirely new product to meet a need o Might also change packaging size brand name to have a better meaning ex Poo is the name of an Argentine curry powder might not sell as well in US o Place how you distribute the product between countries alcohol laws might differ between countries o Promotion how you promote your product might use US celebrities in action filled commercials to promote the product o Pricing might have cost regulations for an item Some Glitches in Going Global Back translation have a native speaker translate it back for you Certain meanings in US might be translated differently in other countries