INTERNATIONAL

MARKETING

HO THI HAI THUY

F O R E I G N T R A D E U N I V E R S I T Y,
HO CHI MINH CITY CAMPUS
1
INTRODUCTIONS

Ho Thi Hai Thuy (MS.)

Foreign Trade University, Hochiminh city campus
Email: hothihaithuy.cs2@ftu.edu.vn
Tel: 0987 867 288
Teaching/Research:
Principles of Marketing
Marketing Management
International Marketing
Intellectual Property

2
 COURSE OUTLINE

1 Overview of Marke-ng
2 Interna-onal marke-ng environment
3 Interna-onal market research
4 Interna-onal Product Decisions
5 Interna-onal price decisions
6 Interna-onal distribu-on decisions
7 Interna-onal promo-on decisions
8 Selec-on topics

3
COURSE RESOURCES

Text book:
+ International Marketing: Strategy and Theory, 5th edition, Sak
Onkvisit and John J. Shaw (now refered to as TB1)
+ International Marketing, Philip R. Cateora, Mary C. Gilly,
John L. Graham (now refered to as TB2)
+ Global Marketing, 7th edition, Warren J. Keegan, Mark C.
Green (now referred to as TB3)
Analysis of case studies in lectures
Lecture slides
Individual/Group presentations

4
GRADING

Class attention: 10%

Midterm assignment: 30%
Final Exam: 60%
Bonus marks: individual/group activities

5
class day content Note/prepara-on
1 19/9 Course introduc1on
2 Overview of Marke-ng
3 Interna1onal marke1ng
environment
4 Interna1onal market research
5 Interna1onal Product Decisions
6 Interna1onal Product Decisions
7 Interna1onal price decisions
8 Interna1onal distribu1on
decision
9 Interna1onal promo1on
decisions
10 Interna1onal promo1on
decisions
11 Guest speaker
12 Selec1on topics
6
13 Presenta1on
MIDTERM ASSIGNMENT:
INTERNATIONAL MARKETING COMMENTARY
Team of 4-6 students: Report + Presentation
Due: for soft copy of written commentary sent to my email
Presentations:
Main objective: critically assess the market potential in Vietnam for a foreign product
or service.
- Students are to form groups (4-6 people).
- Students are required to do a market research analysis and recommend an
appropriate marketing strategy for the brand to enter Vietnamese market, using the
theoretical and conceptual frameworks learned.
- Details of the brand will be given in later lessons.
- Students are to present their analysis in groups as well as submit a group written
commentary.

7
INDIVIDUAL/PAIR BONUS MARKS

For session 14th, any individual or pair who want to get

bonus mark can register a topic related to a Contemporary
international marketing issues to present on that day.
Lecturer will choose some outstanding reports to be
presented for 10-15 minutes .
5% of that mark will be added to the midterm mark.
Any contribution of individual/groups to the classs activities
can be considered to bonus marks.

8
CHAPTER 1: Overview of Marketing

9
CONTENT

1.1. Definition 1.2. The IM task

Process of IM Marke1ng Decision Factors

Interna1onal dimensions of Aspects of the Domes1c

Marke1ng Environment
Domes1c marke1ng v.s. Aspects of the Foreign
interna1onal marke1ng Environment

10
H&M TO ENTER VIETNAM

H&M is ranked as the ninth largest fashion retailer in the world with
revenue of US$16 billion, from more than 2472 stores and over 64,000
employees.
H&M could potentially carve out up to a $500 million share of the
Australian fast fashion market based on overseas results in similar
countries.
Some current Australian players are ill-equipped to meet this challenge,
with little point of difference, variable quality of product, poor
presentation, lack of format innovation, and a lack of focus on service.

11
GAP IN VIETNAM

In Vietnam, the first Gap stores opened in October followed by the first
Banana Republic store in 2012
A franchise agreement with Imex Pan Pacific (IPP), one of the largest
conglomerates in Vietnam
The Gap stores will carry products from Gap, GapKids and babyGap, while
Banana Republic will bring its take on affordable luxury apparel and
accessories for women and men to the region.
Targeting . - - class consumer base and young population

12
ZARA IN VIETNAM

Vietnam promises great opportunities for Zara as:

-.
- .

13
DEFINITION OF INTERNATIONAL MARKETING

International marketing is the multinational

process of planning and executing the
conception, pricing, promotion, and
distribution of ideas, goods, and services to
create exchanges that satisfy individual and
organizational objectives.
(AMA, cited in Sak Onkvisit and John J. Shaw
2004)

14
DEFINITION OF INTERNATIONAL MARKETING

International marketing is the performance of business

activities designed to plan, price, promote, and direct
the flow of a companys goods and services to
consumers or users in more than one nation for a
profit.
(Philip R.Cateora, 2012)

15
DEFINITION OF INTERNATIONAL MARKETING

International marketing is the process of planning and

conducting transactions across national borders to
create exchanges that satisfy the objectives of
individuals and the organizations.
(M.R. Czinkota, 2011)

16
INTERNATIONAL DIMENSIONS OF MARKETING

Interna1onal Mul1na1onal Global Marke1ng

marke1ng marke1ng
- Companies treat the world,
- Companies seek markets all including their home market, as
over the world one market.
- Sell products that are a - Market segmenta1on decisions
result of planned produc1on are no longer focused on na1onal
for markets in various borders. Instead, market segments
countries. are dened by income levels,
- This planning generally usage paVerns, or other factors
entails not only the that frequently span countries and
marke1ng but also the regions.
produc1on of goods outside
the home market.
->At this point, a company
becomes an interna1onal or
mul1na1onal marke1ng 17
DEFINITION OF INTERNATIONAL
MARKETING

18
DOMESTIC MARKETING V.S. INTERNATIONAL
MARKETING

Environment ..

Unfamiliar
problems &
Dierent levels ..
of uncertainty

Variety of
strategies
19
OPPORTUNITIES IN INTERNATIONAL
MARKETING

Lowers the risk of insolvency
Firms can learn from their competitors.
Global employee recruitment
Smaller firms are considered major players.
Consumers have more variety of products and
services

20
21
STARBUCKS, ZARA IN VIETNAM?

22
CHALLENGES IN INTERNATIONAL MARKETING
Firms need to be prepared to develop active responses to change.
Developing new strategies involves:
.
.
..
Adaptation to the new environment and markets requires an acute
awareness of global developments.
Social effects of globalization can, at times, be questioned (e.g. G8
protests).
Environmental impact of global transportation

23
NYDC CLOSURE IN VIETNAM

24
1.2. THE INTERNATIONAL MARKETING TASK

25
1.2.1. MARKETING DECISION FACTORS

The marketing manager blends price, product,

promotion, channels-of-distribution, and research
activities (controllable elements) to capitalize on
anticipated demand
The controllable elements can be altered in the long run
and, usually, in the short run to adjust to changing
market conditions, consumer tastes, or corporate
objectives.

26
1.2.2. ASPECTS OF THE DOMESTIC ENVIRONMENT

Domestic environment uncontrollables include home-

country elements that can have a direct effect on the
success of a foreign venture: political and legal
forces, economic climate, and competition.

27
1.2.3. ASPECTS OF THE FOREIGN ENVIRONMENT

Elements in the uncontrollable international

environment include political/legal forces, economic
forces, competitive forces, level of technology,
structure of distribution, geography and
infrastructure, and cultural forces.
These forces constitute the principal elements of
uncertainty an international marketer must cope with
in designing a marketing program.

28
CHAPTER 2:
THE INTERNATIONAL
MARKETING ENVIRONMENT

29
CONTENT

International environment
Trade theories and economic cooperation
Trade distortion and marketing barriers
Country notebook
Modes of entry

30
DEFINITION

The marketing environments are the

actors and forces outside marketing
that affect marketing managements
ability to develop and maintain
successful transactions with its target
customers.

31
INTERNATIONAL MARKETING
ENVIRONMENT

32
TOOLS FOR INTERNATIONAL ENVIRONMENT
ANALYSIS
- PEST/PESTEL
- SWOT -> TOWS
- CAGE
- 5 FORCES
- .

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37
 CAGE MODEL - DIFFERENCES BETWEEN
COUNTRIES
INTERNATIONAL DISTANCE (GHEMAWAT, 2001)

Languages Colonial 1es

Monetary/poli1cal
Ethnici1es associa1on
Religions Poli1cal hos1lity
Social norms Policies
Ins1tu1onal weakness
Cultural Administraion
Distance Distance

Consumer incomes
Costs and quality of: Physical
natural resources remoteness
nancial resources Economic Geographical Common border
human resources Distance Distance Sea/river access
Infrastructure Size of country
Intermediate inputs Transporta1on/
Informa1on/ communica1on
knowledge links
Climates 38
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DISCUSSION

How does the Economic, Cultural,

Administrative, Geographic
Environment Affect International
Marketing Decisions?

39
ECONOMIC DISTANCE

Economic
Distance

Consumer Costs and

incomes quality of:

natural nancial human Intermediate Informa1on/

Infrastructure
resources resources resources inputs knowledge

40
HOW DO INCOME LEVELS OF COUNTRIES
IMPACT MARKETING DECISIONS?
How is country income measured?
GDP (Gross Domestic Product): value of all final goods and
services produced in a country in one year primary indicator of
purchasing power
GDP per capita (GDP / No. habitants)
GDP per/capita (PPP) purchasing power parity (equalizes
purchasing power)
PPP: Purchasing power parities shows how many units of one
currency are needed to buy a good or service in the currency of
another country

41
 HOW DO INCOME LEVELS OF COUNTRIES
IMPACT MARKETING DECISIONS?
Changing consumer spending patterns
- Product diffusion is the percentage of households in a market that own
a particular product (rate of adoption of a new product)
Percentage of Adopters!

Early Majority! Late Majority!

Innovators!

Early ! Laggards!
Adopters! 34%! 34%!

13.5%! 16%!
2.5%!
Early! Time of Adoption! Late! 42
HOW DO INCOME LEVELS OF COUNTRIES
IMPACT MARKETING DECISIONS?
Changing consumer spending patterns
- Engels Law: As family income increases, the
percentage spent on food declines, the percentage
spent on housing remains constant, and the
percentage spent on savings and other categories
(luxury goods) increases.

Eg. For example, a family that spends 25% of their income on

food at an income level of $50,000 will spend $12,500 on food. If their
income increases to $100,000, it is not likely that they will spend
$25,000 (25%) on food, but will spend a lesser percentage while
increasing spending in other areas.

43
 ENGELS LAW
Food/ Clothing/ Households Leisure/educa-on
beverages footware goods/ser

Australia 10.24% 3.90% 5.80% 14.35%

Thailand 27.23% 12.02& 9.22% 4.55%

India 43.44% 4.69% 2.91% 3.74%

44
INFRASTRUCTURE

Availability and quality of infrastructure

rail traffic networks for distribution capabilities
communication systems for marketing
energy (electrical and fuel) consumption
telecommunication
The diffusion of Internet technology
The number of Internet users surpassed one billion in 2005.
Do consumers purchase through the Internet?

45
LOGISTICS INFRASTRUCTURE OF COUNTRIES IN
ASEAN

46
INTERNET USAGES TATISTICS

47
 GEOGRAPHIC DISTANCE
INTERNATIONAL DISTANCE (GHEMAWAT, 2001)

Geographical Distance

Physical Common Sea/river Size of Transporta1on/ Climates

remoteness border access country communica1on
links

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file://localhost/Users/macos/Desktop/A HIEU 71532 CUU 15-2-17/Documents/marketing/mkt quoc te/CAGE model.pdf
 HOW DOES THE GEOGRAPHIC
ENVIRONMENT AFFECT MARKETING
DECISIONS?

49
 ADMINISTRATION DISTANCE

Administra1on Distance

Monetary/
Poli1cal Ins1tu1onal
Colonial 1es poli1cal Policies
hos1lity weakness
associa1on

50
file://localhost/Users/macos/Desktop/A HIEU 71532 CUU 15-2-17/Documents/marketing/mkt quoc te/CAGE model.pdf
 HOW DOES THE ADMINISTRATIVE
ENVIRONMENT AFFECT MARKETING DECISIONS?

51
POLITICAL ENVIRONMENT

Role of government (local, regional, state)

G o v e r n m e n t - t o - g o v e r n m e n t r e l a t i o n s h i p s ,
particularly if they are hostile, affect international
marketing
Political instability

52
 MAJOR REGIONAL TRADE AGREEMENTS

The European Union (EU):

Austria, Belgium, Bulgaria, Cyprus, Czech Republic,
Denmark., Estonia, Finland, France, Germany, Greece,
Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta,
Poland, Portugal, Romania, Slovak Republic, Slovenia, Spain,
Sweden, Netherlands, U.K.
The European Free Trade Association (EFTA):
Iceland, Liechtenstein, Norway, Switzerland
The North American Free Trade Agreement (NAFTA):
Canada, Mexico, United States.
53
MAJOR REGIONAL TRADE AGREEMENTS

The Southern Common Market (MERCOSUR):

Argentina, Brazil, Paraguay, Uruguay
ASEAN Free Trade Area (AFTA)
Brunei Darussalam, Cambodia, Indonesia, Laos,
Malaysia, Myanmar, Philippines, Singapore, Thailand,
Vietnam
Association of Asia Pacific Economic Cooperation
(APEC)
Closer Economic Relations (CER)
trade partnership between Australia and New Zealand
54
KFC OPENS IN IRAN

55
 THE LEGAL ENVIRONMENT

Legal complexities are greater for international trade (2 systems)

No real international law for business activities
WTO, United Nations Commission on International Trade Law
(UNICITRAL)
Marketers need an awareness of
Differences between the written law and common practice/interpretation
Differing laws related to each element of the marketing mix
Product: Laws to protect consumers
Price: Price control mechanisms; dumping; tariffs, profit margins
Distribution: Regulations covering distribution channels
Promotion: prohibition of advertising; use of words/expressions
Impact of laws related to the environment, human resources, and Intellectual
property protection (patents, copyrights, trademarks)
56
LAWS THAT AFFECT INTERNATIONAL
MARKETING
Laws affecting the entry of goods
tariffs and quotas
Anti-dumping laws
A firm cannot export at a lower price than what it charges
in its home market.
Food safety laws
Sanitary and phytosanitary (SPS) regulations govern the
safety of exported foodstuffs from Australia and New Zealand.
Governments are increasingly devising new rules that affect
trade in genetically modified products.
Laws prohibiting deceptive advertising

57
 CULTURAL DISTANCE

Cultural
Distance

Languages Ethnici1es Religions Social norms

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WHAT IS CULTURE?

Culture is the total way of life in a society (Fletcher, 1979)

Culture is the collective programming of the mind (Hofstede, 1980)
Culture is the glue that binds groups together (anonymous)
Overall, culture is an integrated system of learned behaviour patterns
that are distinguishing characteristics of the members of any given
society
Primarily passed on by parents
Provides a code of conduct
Helps give an individual an identity

59
CULTURE

Culture is:
Prescriptive: prescribes form of acceptable behavior
Learned: people are not born with culture
Dynamic: interactive
Subjective: based on peoples shared beliefs
Socially shared: must be based on social interaction and creation,
must be shared by members of a society.
Culture facilitates communication:
Culture is enduring:
Culture is cumulative:

60
 LEVELS AT WHICH CULTURE OPERATES

Global Culture
global values

Na1onal
values in which ins1tu1ons are based

Industrial
values and norms of industry

Organisa1onal
general business paVerns of rms

Group Culture
61
shared values of a group
CULTURAL ELEMENTS

Time-assump1ons
Language-precision
about 1me vary Religion-beliefs
versus ambiguity
across cultures

Consump-on Business/social
Importance of the
paQerns-material customsbribery,
context-verbal /
possessions / e1queVe, status,
non-verbal cues
dress, meal1mes jokes, music.

Rela-onship with
authority Na-onalism
(Hofstede, 1980)
62
LANGUAGE

Local language capabilities play an important role in

international marketing.
aids in information gathering and evaluation
provides access to local society
important for company communications
Verbal language
how words are spoken
gestures made and body position assumed
degree of eye contact
Non-verbal language:
time flexibility and sensibility
personal physical space and personal touching
63
non-verbal gestures and signaling
LANGUAGE BLUNDERS

Mitsubishi realized that Pajero was not the right name for a car
in Spanish speaking countries, so they changed it to Montero.
General Motors tried to sell the Chevrolet Nova in Latin
America, only to find that people found "no va" (doesn't go) a
funny name for a car.
Mazda has a van in Japan called the Laputa, but they made the
mistake of selling it under that name in Spanish-speaking
countries.

64
RELIGION

People find in religion a reason for being, the belief in a

higher power and the belief that they are part of the
bigger picture.
Religion has an impact on international marketing.
seen in a cultures values and attitudes towards
entrepreneurship, consumption and social organisation.
The dominant religions of the world (2007)
Islam 1,600,000,000 1,800,000,000
Christianity 1,300,000,000 1,500,000,000
Hinduism 828,000,000 1,000,000,000
Buddhism 500,000,000 1.5 billion 65
MANNERS AND CUSTOMS/MATERIAL ELEMENTS

Products are used differently according to manners and customers

(examples?)
Material culture is related to the way society organizes its economic
activity.
Economic infrastructure: transportation (e.g. roads), energy (e.g. electrical
power plants), Communications (e.g. landline, mobile and internet)
Social infrastructure: Housing, health, education
Financial and marketing infrastructures: Banks, research firms
Cultural convergence: Globally, consumers are showing a greater
acceptance of equipment for personal use (e.g. mobile phones, personal
computers and Internet use).

66
- Product use differences
For example, appliances in European households tend
to be smaller than those in Australian households.

67
MANNERS AND CUSTOMS/MATERIAL ELEMENTS
(CONT.)
The ability of marketers to reach consumers is
affected by ownership of radios, personal computers
or televisions.
Potential problem areas for marketers arise from an
insufficient understanding of:
different ways of thinking in the host country
the decision-making process and personal relations
the allocation of time for negotiations.
}Example: The number eight in Chinese culture is of
great significance.
68
AESTHETICS

What is good taste?

What is and what is not acceptable?
For example, attitudes towards sex in advertising differ across
cultures.
Colours can have symbolic value (e.g. white is the colour of
mourning in India and Japan).
International firms must be mindful of local tastes and
concerns when designing their facilities.

69
HOW DOES CULTURE IMPACT ON
INTERNATIONAL MARKETING?

Affects needs and wants of potential buyers

Impacts on expectations and preferences
Impacts on the way messages are received and
interpreted (communication and perceptions)
Pervades all elements of the marketing mix.

70
 ADDRESSING CULTURAL DIFFERENCES FOR
INTERNATIONAL MARKETING
Embrace local culture.
Be the best possible corporate citizen.
Build relationships.
Local ties are invaluable in expansion and countering political risk.
Employ locals and gain cultural knowledge.
The best way to understand a market is to grow with it.
Help employees understand you.
Local employees need corporatization to be effective.
Adapt products and processes to local markets.
Constant and consistent product redevelopment efforts are needed.
Coordinate by region.
The transfer of best practice is critical. 71
2.2. TRADE THEORIES AND ECONOMIC COOPERATION

Basis for interna1onal trade

Produc1on possibility curve
Principle of absolute advantage
Principle of rela1ve advantage

Exchange ra1os, trade and gains

Trade theories
factor endowment theory
compe11ve advantage of na1ons
validity of trade theories, limita1ons

Economic coopera1ons

72
2.3. TRADE DISTORTION AND MARKETING
BARRIERS

Protec1on of local industries

Marke1ng barriers: tari and non-tari barriers

Private barriers

WTO

Generalized System of Preference (GSP)

73
2. 4. COUNTRY NOTEBOOK

Cutural analysis

Economic analysis

Market audit and compe11ve market analysis

Preliminary marke1ng plan

74
2.5. MODES OF ENTRY

How can a firm enter a foreign market?

What criteria does a firm use to decide on the mode
of entry?
Each mode of entrys attractiveness to a particular
firm on a particular market depends on:
The firms objectives
A balance of benefits, costs, and risks

75
2.5. MODES OF ENTRY

76
 2.5. MODES OF ENTRY

Exporting:
Firm does business overseas without investing in owned
assets and own human resources in target market.
Sell produced products into foreign markets through local
independent agents or directly to customers
nIndirect export
nDirect exporting

77
2.5. MODES OF ENTRY
Exporting:
Indirect export
nHome agent
nCooperative exporting
Direct exporting
nForeign agent
nEnd-user (internet)
nGreater resources/control than indirect export

78
 2.5. MODES OF ENTRY
Contractual agreement: licensing and franchising
Licensing
nLicensor grants rights to licensee for use of intangible property over a
specified period in return for a fee
nIntangible property: patents, inventions, formulas, processes, designs,
copyrights, trademarks
nLicensing agreement likely allows licensor quality assurance rights over
actual use of intangible asset
Franchising
nFranchisor, grants franchisee use of intangibles under the condition that
franchisee follow strict rules of operating the business
nMode of operation is part of the brand image

79
 2.5. MODES OF ENTRY

Relationship-based mode of entry:

Contract manufacturing
Goods produced by the partner company.
Strategic alliances: form of joint venture where two or
more companies enter a formal or informal
collaborative networking partnership to achieve a
given project or objective.

80
81
 2.5. MODES OF ENTRY
International joint ventures
Firms that are owned jointly by two or more independent firms;
most IJVs are between two firms.
One (or more) parent firms are non-resident in the host market
Ownership % may vary from majority foreign owned, to
50%-50% owned, to minority owned by the foreign firm

82
83
2.5. MODES OF ENTRY

Manufacturing-based entry
Wholly owned subsidiaries
Firms owned 100% by a company in a foreign country
Acquisition or greenfield operation

84
2.5. MODES OF ENTRY

85
Chapter 3: INTERNATIONAL
MARKETING RESEARCH

86
3.1. DEFINITION

The systematic design, collection,

analysis, and report of data
relevant to a specific marketing
situation facing an organization.

Some large companies have their own research department, some

hire outside research specialists, some purchase data collected
by outside firms

87
It can
- Gives MKT insights into customer motivations,
purchase behavior, and satisfaction
- Help them to assess market potential and market
share or measure the effectiveness of pricing,
product, distribution, and promotion activities
- Provide relevant, up-to-date information on market
- Indicate trends
- Take the guess work out of decision-making

88
It can not
- Provide a miracle cure
- Make your decisions for you

89
3.2. BREADTH AND SCOPE OF INTERNATIONAL
MARKETING RESEARCH

The basic difference between domestic and foreign

market research is the broader scope needed for
foreign research, necessitated by higher levels of
uncertainty.

90
3.2. BREADTH AND SCOPE OF INTERNATIONAL
MARKETING RESEARCH (INFORMATION NEEDS)

Research can be divided into three types on the

basis of informa1on needs:

1. General informa1on about the country, area, and/or

market;

2. Informa1on necessary to forecast future marke1ng

requirements by an1cipa1ng social, economic,
consumer, and industry trends within specic markets
or countries;

3. Specic market informa1on used to make product,

promo1on, distribu1on, and price decisions and to
develop marke1ng plans. 91
3.3. MARKETING RESEARCH PROCESS

Step 1: Dene the research problem and establish research objec1ves

Step 2: Determine the sources of informa1on to fulll the research objec1ves

Step 3: Consider the costs and benets of the research eort.

Step 4: Gather the relevant data from secondary or primary sources, or both.

Step 5: Analyze, interpret, and summarize the results.

92
Step 6: Eec1vely communicate the results to decision makers.
STEP 1: DEFINE THE RESEARCH PROBLEM AND
ESTABLISH RESEARCH OBJECTIVES

Marke1ng
decision
problem

Marke1ng
research
problem

Research
objec1ves 93
STEP 1: DEFINE THE RESEARCH PROBLEM AND
ESTABLISH RESEARCH OBJECTIVES

The marketing decision problem: The reason for the

research
- Helps researcher understand what is to be done?
- But defined from management perspective
Eg. Should we change our ad campaign in the Hochiminh
market?
- Critical phase of the marketing research process.
- Inadequate problem definition is a leading cause of
failure of marketing research projects.

94
STEP 1: DEFINE THE RESEARCH PROBLEM
AND ESTABLISH RESEARCH OBJECTIVES

The Market Research Problem (MRP)

- The MRP is a broad and comprehensive
description of the information required
to make the management decision
Eg. To understand the decision making process
of potential university students in their choice
of university .

95
 STEP 1: DEFINE THE RESEARCH PROBLEM
AND ESTABLISH RESEARCH OBJECTIVES
The Market Research Problem (MRP)
- The MRP it should:
Guide the researcher towards all information needed to
address the management decision problem
Assist the researcher in formulating the specific
research objectives
Suggest possible ways the data could be collected (the
research design)

96
THE DISTINCTION BETWEEN THE MDP AND THE MRP

MDP MRP
What informa-on is
What the decision needed and how that
maker (DM) needs to informa-on can be
do) obtained eec-vely and
eciently?

Ac-on oriented
Informa-on oriented
(decisions)

To determine consumer
Should a new product
preferences and
be introduced to
purchase inten-ons for
complement our current
range?
the proposed new 97
product.
98
STEP 1: DEFINE THE RESEARCH PROBLEM AND
ESTABLISH RESEARCH OBJECTIVES

RESEARCH OBJECTIVES

Exploratory Marke1ng research to gather preliminary informa1on

that will help decline problems and suggest hypothesis
research Eg. Observa1onal research

Descrip1ve To beVer describe marke1ng problems, situa1ons, or

markets, such as the market poten1al for a product or

research
the demographics and altudes of customers
Eg. Survey research

Causal Causal research: marke1ng research to test hypotheses

about cause and eect rela1onships.
research Eg. Experimental research 99
STEP 2: DETERMINE THE SOURCES OF INFORMATION TO
FULFILL THE RESEARCH OBJECTIVES

SECONDARY PRIMARY
DATA DATA

100
 STEP 2: DETERMINE THE SOURCES OF INFORMATION
TO FULFILL THE RESEARCH OBJECTIVES

SECONDARY DATA
Information that already exists somewhere,
having been collected for another purpose.
Eg. Companys internal database, commercial data services,
government sources. Eg. The Nielsen company; Cnn,
Factiva, Lexisnexis, internet

101
STEP 2: DETERMINE THE SOURCES OF INFORMATION TO
FULFILL THE RESEARCH OBJECTIVES

SECONDARY DATA

Advantages Disadvantages

Cost Current

Speed Relevant

Accuracy

Impar1al
STEP 2: DETERMINE THE SOURCES OF INFORMATION TO
FULFILL THE RESEARCH OBJECTIVES

SECONDARY DATA
http://www.vietrade.gov.vn
http://www.austrade.gov.au/ http://www.austrade.gov.au/Country/
default.aspx
http://www.pwc.com/
http://www.planetretail.net/
http://www.nielsen.com/
http://www.hsbc.com/
http://www.trademap.org/Index.aspx

103
STEP 2: DETERMINE THE SOURCES OF INFORMATION TO
FULFILL THE RESEARCH OBJECTIVES

PRIMARY DATA

Observa1on

Research
Survey
approaches

Experiment 104
PRIMARY DATA

Observation Involves gathering primary data by

observing relevant people, actions, and
situations.
Researchers often observe consumer behavior to glean customer
insights that they cant simply obtain by asking questions.
In research labs, using high tech cameras and other equipment, or
in in natural environment.
http://www.youtube.com/watch?v=QX_oy9614HQ

105
OBSERVATION

Obtain informa1on that

people are unwilling or
unable to provide

Feelings, altudes,
mo1ves, private behavior
cant be observed; short-
term; dicult to interpret

106
SURVEY RESEARCH

Gathering primary data by asking people

questions about their knowledge, attitudes,
preferences, and buying behavior.

107
SURVEY/QUESTIONNAIRE TYPES

Person administered Self administered

Telephone Direct mail outs
Home On-line
Shopping Mall Shopping Mall


A D V A N T A G E S
A D V A N T A G E S Lower cost
High response rates
More respondent control
Rapport established between researcher
and interviewee Less interviewer bias
Ability to gather data on many respondents in a
small time frame
D I S A D V A N T A G E S
Ability to ask socially sensitive questions
Time consuming
Expensive to administer
May lead to biased responses D I S A D V A N T A G E S
Very time consuming
108
Lower response rates than person administered
surveys
PRIMARY DATA COLLECTION
CONTACT METHODS

Mail Telephone Personal Online

Flexibility Poor Good Excellent Good

Quantity of data Good Fair Excellent Good

collected

Control of Excellent Fair Poor Fair

interviewer effects

Control of sample Fair Excellent Good Excellent

Speed of data Poor Excellent Good Excellent

collection

Response rate Poor Poor Good Good

Cost Good Fair Poor Excellent

PRIMARY DATA COLLECTION
CONTACT METHODS

Talking w people on the

Individual interviewing streets, in their homes,
oces, shopping mall

Personal interviewing Personal interviewing

that involves invi1ng
6-10 people to gather
Focus group for a few hours with a
interviewing trained interviewer to
talk about a product,
service, org, on
important issues.

110
EXPERIMENTAL RESEARCH

Gathering primary data by selecting matched groups of

subjects, giving them different treatments, controlling
related factors, and checking for differences in group
responses.
Experimental research tries to explain cause-and-effect
relationships
Eg. McDonalds, before adding new sandwich to its menu,
might use experiments to test the effects on sales of 2
different prices it might change.

111
PRIMARY DATA COLLECTION
CONTACT METHODS

Online marketing research:

Collecting primary data online through internet
sur veys, online focus groups, web-based
experiments, or tracking consumers online
behavior.
Advantages: cost, speed, more interactive, engaging,
easier to complete, less intrusive than traditional
contact methods.

112
STEP 4: GATHER THE RELEVANT DATA FROM
SECONDARY OR PRIMARY SOURCES, OR
BOTH.

Data collection can be carried out by the

companys marketing research staff or by
outside firms.
The data collection phase of the marketing
research process is generally the most
expensive and the most subject to error.
Researchers should watch closely to make sure
that the plan is implemented correctly.

113
STEP 5: ANALYZE, INTERPRET AND SUMMARIZE
THE RESULTS
The researcher must possess a high degree of cultural
understanding of the market in which research is being
conducted.
At some level, it will be absolutely necessary to have a native
of the target country involved in the interpretation of the results
of any research conducted in a foreign market.
A creative talent for adapting research methods is necessary.
A skeptical attitude in handling both primary and secondary
data is helpful.

114
3.4. ISSUES

Three critical issues construct, measurement and

sample equivalence
- Construct equivalence: the meaning of a concept
may vary across countries (concepts are bound, e.g.
beauty, wealth, trust)

115
3.4. ISSUES

Three critical issues construct, measurement and

sample equivalence
- Measurement equivalence: a method of
measurement that works well in one cultural
environment may not work well in another
-Units of measurement may vary in countries (phone/
email survey)
-Translation of verbal and non-verbal language may
differ
-The meanings respondents attached to each point in
the scale
116
3.4. ISSUES

Three critical issues construct, measurement and

sample equivalence
- Sampling equivalence: the ability to identify an
equivalent population sample to test in two countries.

117
 Other difficulties facing the
international marketing researcher?

118
 3.5. MANAGING THE CULTURAL BARRIER IN
INTERNATIONAL MARKETING RESEARCH

119
Chapter 4: International Product
Decisions

120
CONTENT

4.1. Product classica1on

4.2. Product Standardiza1on v.s. Product adapta1on

4.3. Analyzing Product Components for Adapta1on

4.4. IPLC

4.5. Managing and developing interna1onal product porpolio

121
WHAT IS A PRODUCT?

Anything that can be offered to a market for attention,

acquisition, use, or consumption that might satisfy a want
or need.
Tangible objects
Services
Events
Persons
Places
Organizations
Ideas

122
PRODUCTS

Services are a form of product that consists of

activities, benefits or satisfaction that is
essentially intangible and does not result in the
ownership of anything.

123
4.1. PRODUCT CLASSIFICATION

Consumer products
Convenience: Shopping: Specialty: Unsought:
inexpensive, not as frequently unique features, consumers dont
frequently as convenience premium prices know or dont
purchased, liVle product, costly, Rolex watches, think of buying
eort needed to consumers oqen heart surgery Burial insurance
purchase them do research
Toothpaste, before purchase
hand soap. Camera, Tv,
airlines 1cket

124
4.1. PRODUCT CLASSIFICATION

Industrial products
Materials Capital items Supplies Business
and parts Installa1ons, Maintenance services
Raw materials, equipment and repair Maintenance
manufactured items and repair
materials and Opera1ng services,
parts supplies business
advisory
services

125
4.2. PRODUCT STANDARDIZATION V.S. PRODUCT
ADAPTATION
A firm has 4 basic alternatives in approaching
international markets:
- Selling the product as it is in the international
marketplace
- Modifying products for different countries and/or
regions
- Designing new products for foreign markets
- Incorporating all the differences into one product
design and introducing a global product

126
4.2. PRODUCT STANDARDIZATION V.S. PRODUCT
ADAPTATION
Product standardization means that a product designed
originally for a local market is exported to other countries
with virtually no change, except perhaps for the
translation of words.
(Product standardization strategy refers to a uniform
representation of all aspects of the product such as the quality,
the materials been used, product name, and packaging for all
markets, regardless of location around the world.)

one size fits all approach

127
STANDARDIZATION VERSUS ADAPTATION

Product adaptation is when changes and special

modifications are made in order to adjust to each
market
There are many factors affecting to use adaptation
strategies. Some of them are product, target market,
package & design, ingredients, language, culture,
religion etc.

128
STANDARDIZATION VERSUS ADAPTATION

Factors encouraging Factors encouraging

standardiza1on adapta1on

Economies of scale in produc1on Diering use condi1ons

Economies in product R&D Government and regulatory inuences

Economies in marke1ng Diering consumer behaviour paVerns

economic integra1on Local compe11on

Global compe11on True to the marke1ng concept

129
130
INNOVATIVE PRODUCTS AND ADAPTATION

Any idea perceived as new by a group of people is

an innovation
Knowledge about the diffusion (i.e., the process by
which innovation spreads) of innovation is helpful
in developing a successful product strategy.

131
ADOPTION OF INNOVATIONS
Percentage of Adopters!

Early Majority! Late Majority!

Innovators!

Early !
Adopters! Laggards!
34%! 34%!

13.5%! 16%!

2.5%!

Early! Time of Adoption! Late! 132

4.3. ANALYZING PRODUCT COMPONENTS FOR
ADAPTATION

133
CORE COMPONENT

The core component consists of the physical product

the platform that contains the essential
technologyand all its design and functional
features.

134
PACKAGING COMPONENT

The packaging component includes style features,

packaging, labeling, trademarks, brand name,
quality, price, and all other aspects of a products
package.

135
SUPPORT SERVICES COMPONENT

The support services component includes repair and

maintenance, instructions, installation,
warranties, deliveries, and the availability of
spare parts.

136
4.4. INTERNATIONAL PRODUCT LIFECYCLE

137
4.4. INTERNATIONAL PRODUCT LIFECYCLE

Stage 0 Local
innova1on

Stage 1 Overseas
innova1on

Stage 2 Maturity

Stage 3 Worldwide
imita1on

Stage 4 Reversal

138
4.5. MANAGING AND DEVELOPING
INTERNATIONAL PRODUCT PORTFOLIO

139
4.5. MANAGING AND DEVELOPING
INTERNATIONAL PRODUCT PORTFOLIO

140
Chapter 5
I N T E R N AT I O N A L P R I C E
DECISIONS

141
WHAT IS A PRICE?

Price is the amount of money charged for a product or service.

It is the sum of all the values that consumers give up in order

to gain the benefits of having or using a product or
service.

Price produces revenue;

all other elements in the marketing mix represent costs

142
CONTENT

Approach to interna1onal pricing

5.1

Price Escala1on
5.2

Typical interna1onal pricing

5.3 strategies

143
 FACTORS INFLUENCING INTERNATIONAL
PRICING STRATEGY

Customer Environmental Distribu1on Compe1tor

Firm Factors
Factors factors Channel Factors Factors
Corporate Percep1ons Culture Costs and Comparison
objec1ves, of the value (bargaining, margins in the with
control of the product payos), channel, compe1tor
policies, costs, (bundle), ina1on, length, oerings and
nature of aordability, currency control, subs1tutes,
product, price exchange, poten1al for pricing,
marke1ng sensi1vity/ import du1es, grey market reac1ons and
ac1vi1es elas1city. regula1ons, ac1vi1es. cost base
(extension/ risk, payment
new strategy). condi1ons
(credit).

144
INTERNATIONAL PRICING STRATEGY:
CONSIDERATIONS
International price has to be consistent with positioning and
competitive for target segment.
What segments is our firm concerned with?
Who are our major international and domestic competitors?
What are the competitive strengths of the international and domestic
competitors?
What is the positioning that we want to achieve?
Why and how do the international consumers buy?
What do they value about our augmented product (e.g., delivery)?

145
5.1. APPROACHES TO INTERNATIONAL PRICING

Full-cost vs. Skimming Vs.

Variable-cost Penetra1on
Pricing Pricing

146
 5.1.1. FULL-COST VERSUS VARIABLE-COST
PRICING

Variable-cost pricing

The rm is concerned only with the marginal or incremental cost of

producing goods to be sold in overseas markets.
Such rms regard foreign sales as bonus sales and assume that any
return over their variable cost makes a contribu1on to net prot.
These rms may be able to price most compe11vely in foreign
markets, but because they are selling products abroad at lower net
prices than they are selling them in the domes1c market, they may
be subject to charges of dumping
Nevertheless, variable-cost (or marginal-cost) pricing is a prac1cal
approach to pricing when a company has high xed costs and unused
produc1on capacity. Any contribu1on to xed cost aqer variable
costs are covered is prot to the company.
147
5.1.1. FULL-COST VERSUS VARIABLE-COST
PRICING

full-cost pricing

Companies following the full-cost pricing

philosophy
insist
that
no
unit
of
a
similar

product
is
dierent
from
any
other
unit
in

terms
of
cost
and
that
each
unit
must
bear
its

full
share
of
the
total
xed
and
variable
cost.


This
approach
is
suitable
when
a
company
has

high
variable
costs
rela1ve
to
its
xed
costs.
In

such
cases,
prices
are
oqen
set
on
a
cost-
plus

basis,
that
is,
total
costs
plus
a
prot
margin.

148
5.1.2. SKIMMING VS. PENETRATION PRICING
Skimming:
Setting a high price for a new
product to skim maximum revenues
layer by layer from the segments
willing to pay the high price;
the company makes fewer but
more profitable sales
The products quality & image
must support its higher price,
& enough buyers must want
the product at that price
The cost of producing a smaller
volume cannot be so high that
they cancel (annul) the
advantage of charging more
Competitors should not be
able to enter the market
easily & undercut the
high price
149
5.1.2. SKIMMING VS PENETRATION PRICING
Penetration:
Setting a low price for a new
product in order to attract a large
number of buyers and a
large market share
The market must be highly
price sensitive so that a low
price produces more
market growth
Production & distribution costs
must fall as sales volume
increases
The low price must help
keep out the competition, and
the penetration pricer must
maintain its low-price position
150
5.2. PRICE ESCALATION

Price escalation, is the added costs incurred as a result

of exporting products from one country to another.
Specifically, the term relates to situations in which
ultimate prices are raised by shipping costs,
insurance, packing, tariffs, longer channels of
distribution, larger middlemen margins, special taxes,
administrative costs, and exchange rate fluctuations.
The majority of these costs arise as a direct result of
moving goods across borders from one country to
another and often combine to escalate the final price
to a level considerably higher than in the domestic
market.
151
5.2. PRICE ESCALATION

Approaches to Reducing Price

Escala1on
Using
Foreign
Lowering Lowering
Lowering Trade Zones
Cost of Distribu-on
Taris to Lessen
Goods Costs
Price
Escala-on

152
Discuss how FTZs can be used to help reduce price
escalation.
One free trade zone is in Turkey. Visit
www.esbas.com.tr and discuss how it might be
used to help solve the price escalation problem of
a product being exported from the United States
to Turkey.

153
5.3. TYPICAL INTERNATIONAL PRICING
STRATEGIES

5.3.1. Transfer 5.3.2. Price

pricing dumping

154
5.3.1. TRANSFER PRICING

A common practice is for an MNCs many

subsidiaries to trade among themselves or with
the parent firm

155
5.3.1. TRANSFER PRICING

Methods of transferring
transfer at
direct
employs an
transfers at manufacturing
The use of a arms length
direct cost plus a
market-based price as a basis
manufacturing predetermined
transfer price. for determining
costs. markup to cover
transfer price
addi1onal
expenses

156
5.3.2. PRICE DUMPING

Dumping, a form of price discrimination, is the practice

of charging different prices for the same product in
similar markets. As a result, imported goods are sold
at prices so low as to be detrimental to local
producers of the same kind of merchandise.
Dumping occurs when a company either charges
less than its costs or less than it charges in its
home market.

157
5.3.2. PRICE DUMPING

Types of dumping
Legal
Sporadic Predatory
aspect of
dumping dumping
dumping

158
Chapter 6: International
distribution decisions

159
CONTENT

Interna1onal distribu1on channels

6.1

Tradi1onal v.s. modern distribu1on channels

6.2

Physical distribu1on, Supply Chains and Logis1cs

6.3 management

Global retailing
6.4

160
6.1. INTERNATIONAL DISTRIBUTION CHANNELS

161
6.1. INTERNATIONAL DISTRIBUTION CHANNELS

162
DIRECT CHANNEL

Direct selling is employed when a manufacturer

develops an overseas channel. This channel requires
that the manufacturer deal directly with a foreign
party without going through an intermediary in the
home country. The manufacturer must set up the
overseas channel to take care of the business
activities between the countries. Being responsible
for shipping the product to foreign markets itself, the
manufacturer exports through its own internal export
department or organization.

163
DIRECT CHANNEL

Advantages
ac1ve
greater
market
control
exploita1on

164
DIRECT CHANNEL

Disdvantages
dicult channel
to manage if the
manufacturer is
Time consuming Expensive
unfamiliar with
the foreign
market

165
DIRECT CHANNEL

Foreign
Foreign retailer
distributor

State-controlled
trading End user
company

166
FOREIGN DISTRIBUTOR

A foreign distributor is a foreign firm that has

exclusive rights to carry out distribution for a
manufacturer in a foreign country or specific area
The distributor purchases merchandise from the
manufacturer at a discount and then resells or
distributes the merchandise to retailers and
sometimes to final consumers.
In most cases, the distributor is usually considered as
an importer or foreign wholesaler

167
FOREIGN RETAILER

Manufacturer may contact foreign retailers and

interest them in carrying a product, ranging from
a personal visit by the manufacturer s
representative to mailings of catalogs, brochures
Most large retailers prefer to deal directly with a
manufacturer (in order to obtain price concessions)

168
STATE-CONTROLLED TRADING COMPANY

For some products, a manufacturer must contact

and sell to state-controlled companies, which have
a complete monopoly in the buying and selling of
some kinds of goods.

169
END USER

A manufacturer sells directly to foreign end users

with no intermediary involved in the process.

170
INDIRECT CHANNEL

Indirect selling, also known as the local or domestic

channel, is employed when a manufacturer in the
United Kingdom, for example, markets its product
through another British firm that acts as the
manufacturers sales intermediary (or middleman).
As such, the sales intermediary is just another local
or domestic channel for the manufacturer because
there are no dealings abroad with a foreign firm.

171
INDIRECT CHANNEL

Advantages Disadvantages

simple Less control

inexpensive may not
necessarily be
permanent

172
INDIRECT CHANNEL

Manufacturers
Export
export agent or Coopera-ve
Export broker management
sales exporter
company (EMC)
representa-ve

Country-
Purchasing/
controlled buying Resident buyer Export merchant
buying agent
agent

Export drop
Export distributor Trading company
shipper

173
EXPORT BROKER

The function of an export broker is to bring a buyer and a seller

together for a fee or commission.
The broker may be assigned some or all foreign markets in
seeking a potential buyer. It negotiates the best terms for the
seller but cannot conclude the transaction without the
principals approval of the arrangement.
An export broker does not take possession or title to the goods,
has no financial responsibility
The export broker is useful due to its extensive knowledge of the
market supply, demand, and foreign customers
The broker is a valuable associate for highly specialized goods
and seasonal products that do not require constant
distribution.
174
MANUFACTURERS EXPORT AGENT OR SALES
REPRESENTATIVE
A sales representative can select when, where, and how to work
within the assigned territory. Working methods include
presenting product literature and samples to potential buyers.
An export agent pays his or her own expenses and may represent
manufacturers of related and noncompeting products. The
person may operate on either an exclusive or nonexclusive
basis.
The manufacturers export agent works for commission
An export agent may take possession but not title to the goods
and thus assumes no risk (of loss remains with the
manufacturer)
The manufacturers export agent may present some problems to
the manufacturer because an agent does not offer all services
(Such as advertising, credit assistance, repair, and installation)175
EXPORT MANAGEMENT COMPANY (EMC)
An export management company manages, under contract, the
entire export program of a manufacturer, responsible for all of
the manufacturers international activities (ranging from
promotion to shipping arrangement and documentation)
Identifying itself as the manufacturers export department or
international division, the EMC signs correspondence and
documents in the name of the manufacturer.
This may be an advantageous arrangement for small and
medium-sized firms that lack expertise and adequate human
and financial resources to obtain exports.
The EMC faces a dilemma because of a double risk: it can easily
be dropped by its clients either for doing a poor job or for
making the manufacturers products too successful.
As both agents and merchants, they sometimes act as agents and
rely on the commission arrangement. When acting as 176
merchants, they engage in the buy-and-resell arrangement
COOPERATIVE EXPORTER

A cooperative exporter is a manufacturer with its own export

organization that is retained by other manufacturers to sell in
some or all foreign markets.
To operate as an export distributor for other suppliers, sometimes
acting as a commission representative or broker. Because the
cooperative exporter arranges shipping, it takes possession of
goods but not title.
The cooperative exporters motive in representing other
manufacturers primarily involves its own financial interest.
Having fixed costs for the marketing of its own products, the
cooperative exporter desires to share its expenses and
expertise with others who want to sell in the same markets
abroad.
177
COOPERATIVE EXPORTER

The relationship between the cooperative exporter and its

principal is a long-term one. The arrangement provides an
easy, low-risk way for the principal to start marketing
overseas, and the relationship should ordinarily continue as
long as unrelated or noncompetitive products are involved.
A problem may arise if the principal decides to market a new
product that competes directly with the cooperative exporters
own product or those of the exporters other clients.

178
PURCHASING/BUYING AGENT

A purchasing/buying agent represents a foreign buyer.

By residing and conducting business in the exporters country,
the purchasing agent is in a favorable position to seek a
product that matches the foreign principals preferences and
requirements (seeking the best possible price)
The purchasing agents client pays a fee or commission for the
services rendered.
The purchasing agent is also known by such names as
commission agent, buyer for export, export commission
house, and export buying agent.
This agent may also become an export- confirming house when
confirming payment and paying the seller after receiving
invoice and title documents for the client.
179
COUNTRY-CONTROLLED BUYING AGENT

This kind of agent performs exactly the same function as the

purchasing/ buying agent, the only distinction being that a
country-controlled buying agent is actually a foreign
governments agency or quasi-governmental firm.
The country-controlled buying agent is empowered to locate and
purchase goods for its country.
The country-controlled buying agent is empowered to locate and
purchase goods for its country.
This agent may have a permanent office location in countries
that are major suppliers, or the countrys representative may
make formal visits to supplier countries when the purchasing
need arises.

180
RESIDENT BUYER

The resident buyer is an independent agent that is usually

located near highly centralized production industries.
Although functioning much like a regular purchasing agent, the
resident buyer is different because it is retained by the
principal on a continuous basis to maintain a search for new
products that may be suitable.
The long-term relationship makes it possible for the resident
buyer to be compensated with a retainer and a commission for
business transacted.
It can offer a favorable opportunity for a supplier to maintain a
steady and continuous business relationship as long as the
supplier remains competitive in terms of price, service, style,
and quality.
181
EXPORT MERCHANT

An export merchant seeks out needs in foreign markets and

makes purchases from manufacturers in its own country to fill
those needs.
Usually the merchant handles staple goods, undifferentiated
products, or those in which brands are unimportant.
After having the merchandise packed and marked to
specification, the export merchant resells the goods in its own
name through contacts in foreign markets.
In any case, the export merchant hopes that the price at which
the product is sold will exceed all costs and expenses in order
to provide a profit.
An export merchant may sometimes seek extra income by
importing goods to complement its export activities.
182
EXPORT DROP SHIPPER

An export drop shipper is a special kind of export

merchant.
The mode of operation requires the drop shipper to
request a manufacture to drop ship a product
directly to the overseas customer.
Based on this operational method, the shippers
ownership of the goods may last for only a few
hours.

183
EXPORT DROP SHIPPER

Upon receipt of an order from overseas, the export drop

shipper in turn places an order with a manufacturer,
directing the manufacturer to deliver the product
directly to the foreign buyer. The manufacturer
collects payment from the drop shipper, who in turn
is paid by the foreign buyer.
Use of a drop shipper is common in the international
marketing of bulky products of low unit value (e.g.,
coal, lumber, construction materials).

184
EXPORT DISTRIBUTOR

This distributor is authorized and granted an exclusive right to

represent the manufacturer and to sell in some or all foreign
markets. It pays for goods in its domestic transaction with the
manufacturer and handles all financial risks in foreign trade.
The export distributor, in comparison, is located in the
manufacturers country and is authorized to sell in one or
more markets abroad.
The export distributor operates in its own name or in that of the
manufacturer. It handles all ship- ping details, thus relieving
the manufacturer of having to pay attention to overseas
activities.

185
EXPORT DISTRIBUTOR

The export distributor usually sells the manufacturers product

abroad at the manufacturers list price and receives an agreed
percentage of the list price as remuneration
The export distributor is either paid by commission or allowed a
discount for its purchase

186
TRADING COMPANY

Trading companies have a long and honorable history as

important intermediaries in the development of trade between
nations.
Trading companies accumulate, transport, and distribute goods
from many countries.
Large, established trading companies generally are located in
developed countries; they sell manufactured goods to
developing countries and buy raw materials and unprocessed
goods.
The trading company gathers market information; does market
planning, finds buyers; packages and warehouses
merchandise; arranges and prepares documents for
transportation, insurance, and customs; provides financing for
suppliers and/or buyers; accepts business risks; and serves187
FACTORS AFFECTING CHOICE OF CHANNELS

Capital
Cost Control
Requirements

Coverage Character Con-nuity

188
6.2. TRADITIONAL V.S. MODERN DISTRIBUTION
CHANNELS

189
6.3. PHYSICAL DISTRIBUTION, SUPPLY CHAINS
AND LOGISTICS MANAGEMENT

Order
Warehousing
processing

Inventory
Transporta1on
Management

190
6.4. GLOBAL RETAILING

Trends in
Types of retail
global
opera1on
retailing

191
TYPES OF RETAIL OPERATION
Specialty stores
Narrow product line with deep assortment: spor1ng-goods store, bookstores, orists,
furniture stores

Department stores
Wide variety of product lines: clothing + home furnishing + household goods

Convenience stores
A rela1vely small store located near residen1al areas, Limited line of high-turnover
convenient goods

Supermarkets
A rela1ve large opera1on designed to serve the consumers total needs for grocery and
household products

Discount store
Carries standard merchandise sold at lower prices with lower margins and higher volumes

192
6.4. GLOBAL RETAILING

Trends in global
retailing?

193
Chapter 7
International promotion decisions

194
THE PROMOTION MIX

The promo-on mix is the specic blend of

adver-sing, public rela-ons, sales promo-on,
personal selling, and direct-marke-ng tools that
the company uses to persuasively communicate
customer value and build customer rela-onships.
 INTEGRATED MARKETING
COMMUNICATIONS

Integrated marke-ng communica-ons (IMC) is the

integra1on by the company of its communica1on
channels to deliver a clear, consistent, and compelling
message about the organiza1on and its brands
Integrated marketing communications are composed of
advertising, sales promotions, trade shows, personal
selling, direct selling, and public relations

THE INTERNATIONAL COMMUNICATIONS
PROCESS
INTERNATIONAL ADVERTISING

Adver-sing is any paid form of non-personal
presenta1on and promo1on of ideas, goods, or
services by an iden1ed sponsor.
Broadcast
Print
Internet
Outdoor


INTERNATIONAL ADVERTISING

Major adver-sing decisions/steps

1. Perform marketing research.
2. Specify the goals of the communication.
3. Develop the most effective message(s) for the
market segments selected.
4. Select effective media.
5. Compose and secure a budget based on what is
required to meet goals.
6. Execute the campaign.
7. Evaluate the campaign relative to the goals
specified.
INTERNATIONAL PUBLIC RELATIONS


Public rela-ons involves building good rela1ons
with the companys various publics by
obtaining favorable publicity, building up a
good corporate image, and handling or
heading o unfavorable rumors, stories, and
events

Public rela-ons is a very believable form of
promo1on that includes news stories,
features, sponsorships, and events


INTERNATIONAL PUBLIC RELATIONS
FUNCTION OF PR DEPARTMENT

Press relations or press agency

Product publicity
Public affairs
Lobbying
Investor relations
Development
INTERNATIONAL PUBLIC RELATIONS

OBJECTIVES & ROLE OF PR

Increase awareness of the retailer and its strategy mix

Maintain or improve company image
Show the retailer as a contributor to the publics quality of
life
Demonstrate innovativeness
Present a favourable message in a highly believable
manner
Minimize total promotion costs
INTERNATIONAL PUBLIC RELATIONS
MAJOR PUBLIC RELATIONS TOOLS
News
Speeches
Special events
Publicity: annual reports, brochures, articles, company
newsletters, magazines, DVDs, online video
Corporate identify materials: logos, brochures, signs, bz
cards, uniforms
Public service activities
PERSONAL SELLING IN
INTERNATIONAL MARKETS

Personal selling is the personal presenta1on by the
rms sales force for the purpose of making sales
and building customer rela1onships
Sales presenta1ons
Trade shows
Incen1ve programs
Personal selling is the most effective method at certain
stages of the buying process, particularly in
building buyers preferences, convictions, actions,
and developing customer relationships
Personal selling in international
markets
Role of personal selling sta

Provide adequate levels of customer service

Improve and maintain customer satisfaction
Create awareness for items marketed through the
media: Web, mail, and telemarketing
Persuade customer to make a purchase
Stimulate purchases of impulse items or products
related to customers basic purchases
Complete the sale transactions
Provide feedback
Alternatives and problems of managing
sales and marketing personnel in
foreign countries?

206
Sales Promo-on in interna-onal markets

Sales promotions are short-term efforts directed
to the consumer or retailer to achieve such
specific objectives as:
- consumer product trial/immediate purchase
- consumer introduction to the store or brand
- gaining retail point-of-purchase displays
- encouraging stores to stock the products
- supporting and augmenting advertising and
personal sales efforts.

SALES PROMOTION IN INTERNATIONAL MARKETS
TOOLS

Point-of-Purchase
Contests
Coupons
Frequent-Shopper Programs
Prizes
Samples and any other
Referral Gifts for a limited-time
selling efforts outside of
Specialty Items the ordinary
Special Events promotion routine
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