1. INTERNATIONAL MARKETING Krista Duniach Université d’Angers [email_address]

5. EPRG Model - Characteristics Matrix structure Division for each zone International division Structure World headquarters Subsidiary in each country National headquarters Planning center Unifying differences in the world market Taking into consideration differences in foreign markets Searching for identical segments in foreign markets Priority Global vision of the world Each market is unique Centered on the domestic market Vision The world is one common market Each country is relatively independent International operations are secondary Approach Geocentric Polycentric Ethnocentric

6. EPRG Model - Characteristics World market share Local market share Domestic market share Performance measures Strategic alliances Joint-ventures Agent, licensing Partnerships Low-cost sources of supply Local Domestic Production Integrated and interactive Decentralized Centralized Management style Extension, Adaptation, Creation Adaptation Extension Marketing strategy Most qualified Citizens from each market Citizens from the domestic market Staff Geocentric Polycentric Ethnocentric

8. Marketing process Understand the marketplace and customer needs and wants Design a customer-driven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer satisfaction Capture value from customers to create profits and customer quality Create value for customers and build customer relationships Capture value from customers in return Marketing technology Global markets Ethics and social responsibility

10. Introduction International Marketing Decisions Deciding whether to go abroad Deciding which markets to enter Deciding how to enter the market Deciding on the marketing program Deciding on the marketing organization

14. Chapter 1 Culture and international marketing

19. Manifestations of culture Symbols Heroes Rituals Values and Norms Expressions of culture

28. Four levels of culture in marketing DOMINANT CULTURE Non-material consumer culture Material culture of products (market) Non-material culture of the firm (corporate culture)

30. Cultural transfer and change SOCIALIZATION LEARNING BY OBSERVATION ACCULTURATION CULTURAL TRANSFER AND CHANGE, DYNAMIC PROCESS Agents Agents

31. Agents involved in cultural transfer Pleasure, intellect 12 Mass media Ambition, courage 12 Sport, clubs Honesty, peace, salvation, forgiveness 6 Church Courage, social recognition 6 Friends Ambition, capability, logical behavior 6 Schools, teachers Responsibility, social recognition 2 Siblings Obedience, cleanliness, honesty 0 Parents Most important values Age (years) Agents

42. A few examples… US, Germany, Switzerland Japan, China, Middle East Examples Common Infrequent Competitive bidding Proceed quickly Are lengthy Negotiations Monochronic, linear Polychronic, circular Time People maintain a bubble of private space People breathe on each other Space Pushed to the lowest level Taken by the highest level Responsibility for error « Get it in writing » To be trusted A person’s word Very important Less important Lawyers Low-context High-context Factors

47. 5D Model 0 100 100 100 100 100 PDI UAI IDV MAS LTO Work-related values to consumption-related values

53. Examples of Hofstede’s Dimensions

54. Some country examples 50 49 43 65 57 World average 29 62 91 46 40 USA 42 51 86 57 Spain 44 14 80 53 38 Netherlands 80 95 46 92 54 Japan 70 76 75 50 Italy 61 56 48 40 77 India 25 66 89 35 35 Great Britain 31 66 67 65 35 Germany 43 71 86 68 France 16 74 23 18 Denmark 54 75 94 65 Belgium 31 61 90 51 36 Australia LTO MAS IDV UAI PDI Country

55. Comparison of cultural dimensions More information on www.geert-hofstede.com

62. Marketing and cultural differences Source: Usunier Negotiation strategies, process, results, styles… Negotiation Sales force management, PR, corruption, ethics Sales Advertising messages, symbols, adaptation of strategy Advertising Values, visions of the world, communication styles Communication Type of channel, distributor relationships Distribution channels Price-quality ratio, influence of price in decision-making Pricing policy Brand perception, country of origin, “made in” Brand image Adapt or standardize product attributes Product policy Inter-national (regional, global) vs. intra-national Segmentation & targeting Global strategy vs. customized strategy Global marketing strategy Cross-national equivalences Marketing research Decision-making, cross-cultural attitudes, local vs. global Consumer behavior Influence of cultural differences Marketing area

64. Chapter 2 International Marketing Research

68. Marketing process Understand the marketplace and customer needs and wants Design a customer-driven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer satisfaction Capture value from customers to create profits and customer quality Create value for customers and build customer relationships Capture value from customers in return Marketing technology Global markets Ethics and social responsibility

69. Position of marketing research ANALYSIS PLANNING IMPLEMENTATION CONTROL MARKETING RESEARCH MARKETING STRATEGY MARKETING RESEARCH

71. Marketing research process Define problem and research objectives Develop the research plan Collect the information Analyze the information Present the findings

79. Advantages and disadvantages of information sources Costly Difficult to collect Time consuming Incomplete, outdated Inadequate False information Difficult to control Disadvantages Adapted information Recent, up-to-date Not available to competitors Low in cost Diversity Available Problem definition Familiar with market Advantages Primary Secondary

80. Sequence and relationship between different sources of information SECONDARY SOURCES (Desk Research) Internal External PRIMARY SOURCES (Field Research) Qualitative Quantitative

81. Qualitative marketing research

87. Choosing a Type of Interview OPINIONS ATTITUDES MOTIVATIONS / BELIEFS Structured interview Centered or Focus interview Unstructured interview or centered with projective tests Levels of consciousness

89. Unstructured interviewing steps Present research objectives Large opening statement or questions Researcher adopts a non-directive attitude Reformulation techniques (« mirror effect ») Respondent goes further in-depth « auto-exploration »

101. Quantitative marketing research

107. What is sampling? n 70% N 70% + e Sampling is necessary every time the population size is too large to be able to collect information from all elements of the population.

112. Choosing a sampling method Do we have a sample frame? Is SRS too costly? Is the population stratified? SRS Stratified sample Do we have a frame of clusters? Is it too costly? Cluster or area sample Are there frames at different levels? Level random sample Yes No No No Yes Yes Yes No Yes No Yes No

113. Do we know the structure of the population for several variables that explain differences in behavior? Quota sample Yes No Is the population widely dispersed? Random route No Are there mandatory passage points? Judgment or on-the-spot sample Snowball or other convenience sample Yes No Yes

121. Question sequence Knowledge and awareness questions Factual behavior questions Attitude questions Intention questions Classification questions

125. Specific problems in international markets

129. The degree of centralization of international marketing research Low in cost. Travel expenses and use of staff. Excellent. Excellent. Risk in terms of analysis. Language problems. Cultural bias. Limited knowledge of sources in foreign market. Low access. Network problem. Competitive analysis difficult. Internal marketing department Cost Monitoring Adaptation to firm’s problem Quality and reliability of information Information sources Access to information High in cost. Specific project fees. Good. Easy to monitor during the research process. Very good. Easy to clarify if problems. Risk in terms of analysis. Language problems. Depends on the informal network. Excellent in France. Perhaps limited in foreign market. Good if the firm has an important local network. Domestic research firm Variable. Limited. Risk of non-conformity with initial objectives. Limited. The firm may be unknown. Excellent. Excellent in foreign market, but only local. Very good. Low risk of ignoring essential information. Foreign research firm

135. Chapter 3 International Marketing Strategy and Programs

136. Expanded marketing process model Understand the marketplace and customer needs and wants Design a customer-driven marketing strategy Construct a marketing program that delivers superior value Build profitable relationships and create customer satisfaction Capture value from customers to create profits and customer quality Create value for customers and build customer relationships Capture value from customers Research consumers and market Manage marketing information and customer data Select customers to serve: segmentation and targeting Decide on a value proposition: differentiation and positioning Product and service design: build strong brands Pricing: create real value Distribution: manage demand and supply chains Promotion: communicate VP CRM and CEM: build strong relationships with chosen customers Partner relationship management: build strong relationships with marketing partners Create satisfied loyal customers Capture customer lifetime value Increase share of market and share of customer Marketing technology Global markets Ethical and social responsibility

137. Corporate strategy vs. marketing strategy SBU SBU SBU Core market S1 S2 S3 Target segment Positioning Marketing mix Strategic segmentation Strategic positioning Market segmentation Market targeting Market positioning -Sales objectives -Budgets -4 Ps Consumer preferences Competitor positioning Firm advantages

142. Example 1: culture-based segmentation Relatively weak resistance to new products, strong consumer desire for novelty and variety, high consumer regard for “environmentally friendly” marketers and socially conscious firms. Low High Low Small 37 Cluster 3 Denmark, Sweden, Netherlands, Norway Appeal to consumer’s status and power position, reduce perceived risk in product purchase and use, emphasize product functionality. Low-Medium Varied Strong Medium 182 Cluster 2 Belgium, France, Greece, Portugal, Spain, Turkey Preference for “high performance” products, use “successful-achiever” them in advertising, desire for novelty, variety and pleasure, fairly risk-averse market. High Medium-High Medium Small 203 Cluster 1 Austria, Germany, Switzerland, Italy, GB, Ireland Marketing implications MAS IDV UAI PDI Size (million)

144. CEE clusters High Marketization Low Marketization Low Westernization High Westernization Cluster 1 Cluster 2 Cluster 3 Cluster 4 Source: Lascu, Manrai and Manrai Clusters are likely to have common characteristics and share similar consumer needs and purchasing behavior

152. Importance of product differentiation Market segmentation Product differentiation Demand side Heterogeneous markets are divided into homogeneous submarkets ( market segmentation ) Supply side Homogeneous products can be differentiated into products tuned to these homogeneous market segments ( market positioning )

153. Differentiation attributes Different attributes in different markets, cultural influence Value proposition Emotional power Symbols Media Atmosphere Events Coverage Expertise Performance Competence Courtesy Credibility Reliability Responsiveness Communication Ordering ease Delivery Installation Customer training Customer consulting Maintenance Warranty Features Performance Conformance Price Quality Durability Reliability Repairability Style Design Image Channel Personnel Services Product

158. The four P’s of the marketing mix Channels (direct, indirect, exclusive, selective, intensive), coverage, assortments, locations, inventory, logistics, transport… Place Sales promotion, advertising, sales force, public relations, direct marketing… Promotion List price, discounts, payment period, credit terms… Price Product variety, quality, design, features, brand name, packaging, sizes, services, warranties, returns… Product

160. Need for adaptation Degree of cultural grounding High Low Nature of product Industrial/Technology intensive Consumer Source: Czinkota and Ronkainen

167. Elements of a product Core benefit or service Packaging Brand name Quality Styling Features Installation Delivery and credit After-sale service Warranty Augmented product Tangible product Core product Global variations, adapt or standardize?

170. Pricing Select pricing objective Determine demand Estimate costs Analyze competitors’ costs, prices, and offers Select pricing method Select final price

174. Promotion mix – communication platforms Catalogs Websites Mailings Telemarketing On-line sales TV shopping Sales presentations Sales meetings Incentive programs Samples Fairs and trade shows Press kits Speeches Annual reports Sponsorships Publications Community relations Lobbying Company magazine Special events Contests Sampling Gifts Fairs and trade shows Demonstrations Coupons Rebates Entertainment Loyalty programs Tie-ins Print and broadcast ads Packaging Motion pictures Brochures Directories Billboards P-P displays Symbols and logos Direct marketing Sales force Public Relations Sales promotion Advertising

184. Factors in the entry mode decision Entry mode decision Target country market factors Target country environmental factors Target country production factors Home country factors Company product factors Company resource and commitment factors External factors Internal factors

185. Elements of market entry strategies Choice of target product/market Setting objectives and goals Choice of entry mode Design the marketing plan Control systems: monitoring operations / Revising entry strategy Target market Entry operation

187. Entry mode continuum Exporting Contractual modes FDI Commitment, risk, control, profit potential - +

195. International franchising comparative matrix Distance / Adaptation Commitment / Control Strong Weak Weak Strong Area development agreement Direct franchising FDI Master franchising Joint venture Direct franchising     

196. Hierarchical model of entry mode choice International franchising Level of commitment Equity Non-equity Direct or indirect mode FDI Joint venture Direct franchising or ADA Master franchising Environmental factors Organizational factors Environmental factors Organizational factors

197. Determinants of entry mode choice in international franchising Brand image Experience Need for control Type of product/service Degree of standardization Brand recognition Dispersion of units Financial situation of partners Brand protection Local regulations Cultural differences Tax System Geographic distance Franchisor’s national culture Level 2 (direct/indirect) Financial and human resources Management attitudes and orientation Recruiting and training franchisees Price-bonding ratio Economic risk Market size Political risk Competitive situation Level of economic development Level 1 (commitment) Organizational factors Environmental factors

199. Comparing different entry mode options Foreign buying department ITC / distributor Piggy back EMC Agent Branch office Wholly owned subsidiary (M&A) FDI Franchising Licensing Management contract AD / Concessionaire Minority shareholding through partial acquisition Majority JV investment (local partner know-how) Level of ownership Contribution of know-how High Low Low High

200. Choosing the right entry mode All entry modes All feasible entry modes Internal factors External factors Rejected entry modes Comparative profit contribution analysis Comparative risk analysis Comparative analysis for nonprofit objectives Ranking by overall comparative assessment The right entry mode Target market Marketing channels within markets

203. Marketing channel alternatives for consumer goods Consumers M Internet, mail order, door-to-door, house party, etc… M Company-owned, franchising M MSF R M Agents, brokers R M MSF W R M MSF R W

206. Global retailing market entry strategy framework Culturally close Culturally distant Easy to enter Difficult to enter Joint-venture Franchising Chain acquisition Organic growth

207. Concept of multi-channel strategies – franchising and Internet BRICK AND MORTAR CLICK AND MORTAR Coexistence of traditional and virtual marketing channels “brick and click” Antagonostic or complementary?

210. Opportunities and threats of multi-channel strategies (Franchising-Int