Importing, Exporting and Sourcing
What’s this chapter about?
Important aspects of importing, exporting and sourcing
Key influencers for import, export and sourcing decisions
Multinational vs. Global Strategy
Companies engaged in international business activities can approach the market using either a multinational or a global strategy.
Export selling vs. Export marketing
Multinational strategy
A strategy of adapting products and their marketing strategies in each national market to suit local preferences.
Global strategy
A strategy of offering the same products using the same marketing strategy in all national markets.
Benefits and Drawbacks
Multinational strategy
Benefits
Drawbacks
Global strategy
Benefits
Drawbacks
Monitor and respond quickly to changes in buyer preferences
Inability to exploit scale economies
Costs savings from scale economies
Knowledge sharing
Only simple modifications to product features can be implemented
The Exporter “Must Do” List
Gain in depth understanding of the target market.
Conduct marketing research and identify market potential.
Make strategic decisions concerning 4Ps (marketing mix).
Expanding the “Must Do” List
Logistics
Packaging, transportation, etc.
Legal Procedures
Contracts, customs procedures, tariffs, etc.
After-sales service
Product discontinuation, parts availability, product repair, etc.
Sales Promotions
Advertising
Foreign Market Intelligence
Competition
Government Influence on Trade
Governments have long intervened in the trade of goods and services for political, economic and cultural reasons.
Encouraging Exports
Subsidies, tax breaks, export financing, etc.
Discouraging Imports
Tariffs, quotas, embargo, local content requirements, etc.
Encouraging Exports (Example)
Encouraging Exports (Example)
Discouraging Imports
Can you think of examples?
Sourcing
What is sourcing?
What makes it so important?
In class discussion!
Factors that Affect Sourcing
Factory costs and conditions (land, labor, etc.)
Logistics
Infrastructure
Political risk
Exchange rates / currency convertibility
On Wednesday
Licensing, Investment, and Strategic Alliances (Part 1)
Segmenting, Targeting and Positioning
What’s this chapter about?
Important aspects of STP marketing
STP Marketing
Segmenting
Dividing a market based on demographics, lifestyles, behavioral measures etc.
Targeting
Selecting the most appropriate market(s)
Positioning
Target marketing messages using the 4Ps
Market Segmentation
Market segmentation is the division of consumer markets into meaningful and distinct groups.
Why is Market Segmentation important?
Marketers can better define consumer needs.
Decision makers can define objectives and allocate resources accurately.
Competitive advantage.
Segmentation Base …
is a group of characteristics that is used to assign segment members.
Demographics
Psychographics
Needs
Behavioral
Demographic ...
Importing, Exporting and SourcingWhat’s this chapter about
1. Importing, Exporting and Sourcing
What’s this chapter about?
Important aspects of importing, exporting and sourcing
Key influencers for import, export and sourcing decisions
Multinational vs. Global Strategy
Companies engaged in international business activities can
approach the market using either a multinational or a global
strategy.
Export selling vs. Export marketing
Multinational strategy
A strategy of adapting products and their marketing strategies in
each national market to suit local preferences.
Global strategy
A strategy of offering the same products using the same
marketing strategy in all national markets.
Benefits and Drawbacks
3. The Exporter “Must Do” List
Gain in depth understanding of the target market.
Conduct marketing research and identify market potential.
Make strategic decisions concerning 4Ps (marketing mix).
Expanding the “Must Do” List
Logistics
Packaging, transportation, etc.
Legal Procedures
Contracts, customs procedures, tariffs, etc.
After-sales service
Product discontinuation, parts availability, product repair, etc.
Sales Promotions
Advertising
Foreign Market Intelligence
Competition
Government Influence on Trade
Governments have long intervened in the trade of goods and
services for political, economic and cultural reasons.
Encouraging Exports
4. Subsidies, tax breaks, export financing, etc.
Discouraging Imports
Tariffs, quotas, embargo, local content requirements, etc.
Encouraging Exports (Example)
Encouraging Exports (Example)
Discouraging Imports
Can you think of examples?
Sourcing
What is sourcing?
What makes it so important?
5. In class discussion!
Factors that Affect Sourcing
Factory costs and conditions (land, labor, etc.)
Logistics
Infrastructure
Political risk
Exchange rates / currency convertibility
On Wednesday
Licensing, Investment, and Strategic Alliances (Part 1)
Segmenting, Targeting and Positioning
What’s this chapter about?
Important aspects of STP marketing
STP Marketing
Segmenting
Dividing a market based on demographics, lifestyles, behavioral
6. measures etc.
Targeting
Selecting the most appropriate market(s)
Positioning
Target marketing messages using the 4Ps
Market Segmentation
Market segmentation is the division of consumer markets into
meaningful and distinct groups.
Why is Market Segmentation important?
Marketers can better define consumer needs.
Decision makers can define objectives and allocate resources
accurately.
Competitive advantage.
Segmentation Base …
is a group of characteristics that is used to assign segment
members.
Demographics
Psychographics
Needs
Behavioral
7. Demographic Segmentation
By 2030, 20% of Americans will be over 65
Half of Japan’s population will be age 50 or older by 2025
Psychographic Segmentation
Needs Segmentation
is the process of grouping customers into market segments
according to the benefits they seek from the product.
Behavioral Segmentation
is the process of dividing the market by the amount of product
bought or consumed.
80 / 20 principle
20% of all customers generate 80% of the demand
Column1
Light Users Heavy Users 0.2 0.8
8. Targeting
Targeting is the process of evaluating the various segments and
then selecting the most viable segment or segments for your
product.
Four Targeting Strategies
Undifferentiated
Differentiated
Niche
Micro
Undifferentiated
This approach views the market as one big market with no
individual segments and thus requires a single marketing mix.
In class discussion!
Differentiated
This approach chooses two or more well-defined market
segments and develops a distinct marketing mix for each.
9. Niche
This approach selects one small segment of a market for
targeting its marketing efforts.
Micro
This approach uses one-to-one marketing which is
individualized, information sensitive, with a long-term
perspective and goal of increasing customer loyalty.
Can you think of examples?
Positioning
Positioning is the placement of a product or service offering in
the minds of a selected target market.
Perceptual Mapping
is the means of displaying or graphing, in two or more
dimensions, the location of products, brands, or groups of
products in consumers’ minds.
Perceptual Mapping cont…
Repositioning
10. Repositioning is changing consumers’ perceptions of a brand in
relation to competing brands.
Starbucks Repositioning
URL: https://www.youtube.com/watch?v=LnA7n9qSB7E
On Wednesday
Segmenting, Targeting and Positioning (Part 2)
Branding and Product Decisions
What’s this chapter about?
Importance of brand and branding
Key influencers of product decision making
11. Brand
A brand is a name, term, sign, symbol, or design, or a
combination of these, that identifies the maker or seller of a
product or service and differentiates them from those of
competitors
Adds value to a product
Communicates product quality, consistency, etc.
Prevents from being copied by competitors
Individual vs. Family Brands
Individual
Creating distinct brand names for the individual products
created by a company
Focused brand strategy for each product
Family
A number of products in a line or mix share same brand name
worldwide
Marketing multiple products under the same brand name
Why Brands Matter?
12. Strong brands build emotional connections with customers
Brand Equity refers to a brand’s value to its organization over
and above the value of the generic version of the product
Brand equity provides competitive advantage
Brand equity results in brand loyal consumers and attachment
Brands and Self
Extended Self
People define themselves through their possessions, brands
Possessions can be integrated within self-concept
Which brands are within your extended self?
A good brand name is …
Easy to say, spell, read and remember
Fits the target market
Fits the customers’ culture
Is in line with legal requirements
Useful Branding Terms
Brand Awareness
Results from marketing efforts that place the brand in a
consumer’s mind
Brand Image
The perceptions consumers have of the brand
Brand Loyalty
A stage in which consumers seek out a specific name and often
are willing to pay a higher price for the product, less likely to
switch
13. Brand Extensions
Brand extensions arise from a firm leveraging brand equity to
sell new products using the same brand name
Co-Branding
Co-branding occurs when two brands agree to work together to
market a new product.
Do brands have personality?
Brand Personality …
is set of human characteristics associated with a brand
allows consumers to connect with the brand
usually is associated with demographics (age, gender, etc.)
Five Major Dimensions of Brand Personality
14. Reference: Aaker 1997
Brand Personality
Sincerity
Excitement
Competence
Sophistication
Ruggedness
Brand Anthropomorphism
Humanization of brands i.e., making brands “human like”
Why do companies do this? Can you think of examples?
15. Brand Anthropomorphism (Volkswagen)
URL: https://www.youtube.com/watch?v=LB_4VkE2mns
Best Global Brands 2019
According to Interbrand, the top ten global brands in 2019 were:
#1 – Apple
#2 – Google
#3 – Amazon
#4 – Microsoft
#5 – Coca-Cola
#6 – Samsung
#7 – Toyota
#8 – Mercedes
#9 – McDonald’s
#10 – Disney
URL: https://www.interbrand.com/best-brands/best-global-
brands/2019/ranking/
How can brands set themselves apart?
16. URL: https://www.youtube.com/watch?v=buH_vs7LFzw
On Monday (following Spring Recess)
Exam Review Day
Marketing Research
What’s this chapter about?
Definition and process of marketing research
Some important aspects of marketing research
What is Marketing Research?
Marketing Research is …
the systematic design, collection, analysis and reporting of
information to help marketers solve specific marketing
problems or take advantage of marketing opportunities.
17. Marketing Research cont…
URL: https://www.youtube.com/watch?v=RC5HNTj3Dag
What are some of the questions that marketing researchers try to
address?
Where are new market opportunities?
How should we segment the market?
How should we position our product?
How are we doing compared to the competition?
What will the expected demand of our product be if our product
is priced at $50 (vs. $60)
What's in store for the future?
18. In-class Exercise
Let’s say that you work for Dutch Bros (corporate office).
Let’s say that Dutch Bros is considering opening coffee shops
in South American locations like Rio de Janeiro, São Paulo &
Buenos Aires.
Before opening the coffee shops, what information would you
want to know and why?
How would you go about getting that information?
If you didn’t collect this information, what mistakes might you
make in expanding your business?
In-class Exercise cont…
Perspective (Self vs. Others)
Whaaaaat?
Not everyone thinks like me?
Uses of Marketing Research
Measure market potential
Determine market characteristics
Analyze market share
19. Study competition
Study the effectiveness of marketing
The Marketing Research Process
Define the problem
Design the research
Conduct the research
Analyze the data
Address the problem
Step 1: Define the problem
What do you want to learn?
Will the results matter?
Is it cost effective to conduct research?
“If I had only one hour to save the world, I would spend fifty
five minutes defining the problem, and only five minutes
finding the solution.”
- Albert Einstein
Step 2: Define the research
Types of research data
Information previously collected
20. Census data and internet sources
Information collected first-hand
Surveys, interviews and experiments
Research Question
Secondary Data
Primary Data
Step 2: Define the research cont…
Types of research design
Sheds light on problem
Ex. Why do consumers purchase brand X?
Determines magnitude
Ex. How often do consumers shop for groceries and where?
Tests hypotheses about cause-and-effect relationships
Ex. What will happen if we increase price?
Research Question
Exploratory
21. Descriptive
Explanatory
Step 2: Define the research cont…
Types of research design
Observation
Interviews
Surveys
Experiments
Field
Lab
Qualitative
Quantitative
Research Question
Exploratory
Descriptive
Explanatory
22. Step 2: Define the research cont…
Open-ended questions
Unstructured, word association, sentence completion, etc.
Closed-ended questions
Dichotomous (ex. true/false, yes/no)
Multiple-choice
Scale response items (ex. Likert scale)
Step 3: Conduct research
Sampling Procedure
Random
Convenience
Snowball
Sample
Probability
Non-probability
Step 3: Conduct research cont…
Valid?
Are the results correct?
23. Reliable?
Is the level of measurement consistent?
Representative?
Is our sample similar to the population we are interested in?
Step 4: Analyze the data
Statistical Analysis
T-tests, ANOVA, Regression, etc.
Descriptive Statistics
Inferential Statistics
Step 5: Address the problem
Write report of findings (for the intended reader)
Interpret the findings
Offer recommendations
When is conducting research a bad idea?
Sufficient information to make a decision already exists
A decision needs to be made immediately i.e., not enough time
for research
Not enough resources are available to conduct research
24. When costs of research are greater than the associated benefits
Researchers vs. Decision-Makers
Researchers
Focus on underlying problem
Like to explore new questions
Not necessarily concerned about costs
Enjoy surprises
Interested in past behavior
Decision-Makers
Focus on symptoms of problem
Want information to confirm decision
Less willing to pay for more information
Dislike & reject surprises
Interested in future performance
On Wednesday
International Marketing Campaign Presentation – Work Day
Licensing, Investment and Strategic Alliances
25. What’s this chapter about?
Important aspects of licensing, investments and strategic
alliances
Key influencers for licensing, investments and strategic
alliances
No Imports / Exports!
What can a company do when it is not possible to exploit
market opportunities using importing / exporting?
Licensing
Licensing is the practice by which one company owning
intangible property (the licensor) grants another firm (the
licensee) the right to use that property for a specified period of
time.
Cross licensing is the practice by which companies use
licensing agreements to exchange intangible property with one
another
Advantages
Licensing can be used to finance international expansion
It reduces international expansion risks
It reduces the likelihood of counterfeit production
Licensees can use licensing as a method of upgrading existing
production technologies
Disney
Licensing cont…
Disadvantages
Licensing may restrict licensor’s future activities
26. It may reduce the global consistency of product’s quality and
marketing
Licensing can also amount to lending strategically important
property to its future competitors
Franchising
Franchising is the practice by which one company (the
franchiser) supplies another (the franchisee) with intangible
property and other assistance over an extended period.
Advantages
Franchising is a low-cost and low-risk entry mode into new
markets
It allows for rapid geographic expansion
It makes use of local managers’ cultural knowledge
Disadvantages
Managing franchisees across several nations can become
cumbersome
Franchising agreements can result in loss of organizational
flexibility for franchisees
McDonald’s
Subway
Wendy’s
Management Contracts
Management Contract is the practice by which one company
supplies another with managerial expertise for a specific period
of time.
Two types of knowledge can be transferred through management
contracts
Specialized knowledge of technical managers
Business-management skills of general managers
27. Management Contracts cont…
Advantages
Management contract doesn’t expose a great deal of its own
physical assets to risk
Nations can finance projects
Nations can use management contracts to develop the skills of
local workers and managers
Disadvantages
Political or social turmoil in a nation can threaten managers’
lives
Management contracts may lead to nurturing a formidable new
competitor in the local market
Turnkey Projects
Turnkey (build-operate-transfer) project is the practice by
which one company designs, constructs, and tests a production
facility for a client firm.
Advantages
Turnkey projects let a firm specialize in its core competency to
exploit international opportunities
It allows for nations to obtain the latest infrastructure from the
world’s leading companies
Disadvantages
Turnkey projects may be awarded for political reasons instead
of technical know-how
They can create future international competitors
Investment Entry Modes
28. Investment Entry Modes entail direct investment in plant and
equipment in a country along with ongoing involvement in the
local operation.
Investment entry modes take a company’s commitment in a
market to a higher level
Three common forms of investment entry include
Wholly owned subsidiaries
Joint ventures
Strategic alliances
Wholly Owned Subsidiaries
Wholly owned subsidiaries are facilities that are entirely owned
and controlled by a single parent company
Advantages
Wholly owned subsidiaries give managers complete control over
day-to-day operations in the target market and access to
valuable technologies, processes, and other intangible
properties
They allow firms to coordinate activities of all of their various
national subsidiaries
Disadvantages
Wholly owned subsidiaries can be expensive undertakings
They involve high risk exposure
Joint Ventures
A joint venture is a separate company that is created and jointly
owned by two or more independent entities to achieve a
common business objective.
29. SONY
ERICSSON
=
SONY ERICSSON
* Please note that while Sony Ericsson started out as a joint
venture between Sony and Ericsson, Sony now wholly owns the
venture.
Joint Ventures cont…
Advantages
Joint ventures can reduce risk by sharing investments with other
parties
They can help penetrate international markets that are otherwise
off-limits
They provide access to another party’s distribution channels
Disadvantages
Joint ventures can result in conflict between partners
Parties may lose all control over a venture’s operations if the
local government participates in the venture
Joint Ventures Configurations
Forward integration joint venture
Parties invest together in downstream business activities.
Backward integration joint venture
30. Parties invest together in upstream business activities.
Buyback joint venture
Each partner provides inputs and absorbs outputs.
Multistage joint venture
One partner integrates downstream while the other integrates
upstream.
Strategic Alliances
Strategic Alliance is a relationship whereby two or more entities
cooperate (but do not form a separate company) to achi eve the
strategic goals of each.
Advantages
Strategic alliances can allow firms to share the cost of an
international investment project
They can allow firms to tap into competitors’ specific strengths
They provide access to partners’ distribution channel s
Disadvantages
Conflict amongst partners may undermine cooperation
Alliances may create future competitors in a target market or
even globally
Strategic Factors in Selecting an Entry Mode
31. The choice of entry mode has many important strategic
implications for a company’s future operations.
Factors that influence a company’s international entry mode
include
Selecting partners for cooperation
Cultural environment
Political and legal environments
Market size
Production and shipping costs
International experience
On Monday
Licensing, Investment and Strategic Alliances (Part 2)
Q1. Please imagine that you work for a Seattle based company
that manufactures high quality hockey pucks locally, i.e., the
pucks are Made in USA, and currently sells them only in the
USA. The company is interested in expanding internationally.
Please use what you learned in class, sources in the library and
the internet, to identify two potential markets. Please justify
your selection. For instance, how did you select the markets,
what further research is necessary, would you export the hockey
pucks to the markets you selected or would you implement a
different market entry mode, etc. Please use APA citation
format.
Q2. We learned about brand extensions in class. Please identify
two examples of “successful” brand extension and two examples
of “failed” brand extension. Please justify why you believe the
brand extensions succeeded/failed.
With regards to the failed extensions, what should have the
firms done differently?
* Please list your source(s) for successful and failed brand