1. Chapter 16:
International Marketing
A. Bricek | L. Bowman | F. Castronovo
L. Corona | M. Vital

2. International Marketing
Marketing
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
Int’l Mktg
Extension of
activities across
national boundaries

3. Int’l Mktg (cont’d)
Expansion  Foreign
Mkts aware of
systems:
Political
Cultural
Legal
Other:
Unfamiliar
economic
conditions
Advertising media
Distribution
channels
Issues:
Regulations (i.e.
TV)
Ads (Nike, Coca-

4. Confront 2 tasks:
1. Capturing synergies
among various nat’l
mkts:
Provide opportunities for
additional revenues and
for growth and cross-
fertilization
2. Coordinating mkt
activities among mkts:
Help lower mktg costs
Create unified mktg
effort

5. Marketing
Operations
Management
Finance
Accounting
HR
Management

6. International Market and
Business Strategies
Marketing
strategy must
support business
strategy
Differentiation
Cost leadership
Focus

7. Differentiation
Strategy
Mtkg managers develop
tactics involving the 4
P’s btwn products and
services of competitors
Product, Price,
Promotion, Place
(Distribution)
Based on perceived
quality, fashion,
reliability, or salient
characteristics
i.e. Brand: Rolex vs.
Target—no price cut for
Rolex

8. Cost Leadership Strategy
Cost reductions in…
Production and
manufacturing
Sales
Acceptance of lower
profit margins
Use of less expensive
mat’ls & components
Concentrate on
promotion (advertising)
Utilize channels of
distribution (i.e. selling
through discounters)

9. Focus Strategy
Concentrate on
segments of
consumer
market/area/regio
n within a market
Esp. target
markets

10. International Market and
Business Strategies (cont’d)
Budget and resource limitations, assessing
country markets then ranking potential
products
Influencing factors:
Culture
Levels of competition
Channels of distribution
Ability to infrastructure

11. Int’l Marketing Management (cont’d)
The Marketing Mix
1. How to develop the firms
productivity?
2. How to price those
products?
3. How to sell those
products?
4. How to distribute those
products to the firm’s
customers?
Product Pricing
Promotion
Place
(Distribution)

12. Int’l Marketing Management (cont’d)
Standardization vs. Customization
Ethnocentric
Approach
Polycentric
Approach
Geocentric
Approach
• Market goods
internationally the same
way it does domestically
• Easy to adopt
• Customize marketing mix
to meet the specific needs
of each foreign market it
serves
• More costly
• Analyze customer needs
worldwide and adopt
standard market mix for all
markets

13. Int’l Marketing Management (cont’d)
Standardization vs. Customization
Standardization
Manufacturing,
distribution, promotional
efficiencies to simple
streamlined operations
Cost reduction focus
Customization
Tailor products to meet
needs of customers in a
given market
Revenue/sales focus
Standardize
product design
(capture
manufacturing
economies of
scale)
Customize ads &
distribution
channels to meet
local market
needs

14. Organizational Structure
Standardization:
centralized power and
control
Customization:
delegation of decision-
making power

15. Issues (adopt 2-step
process):
#1. Decision to
standardize elements
of marketing mix
• Design
• Brand Name
• Packaging
• Product positioning
#2. Critique
global marketing
program and
develop plans
• Implement
customized
elements of
marketing mix
• Promotion
• Distribution

16. Product Policy

17. PRODUCT
1st “P” of marketing mix
 Products consists of tangible and intangible
factors:
 Physical product and its packaging
 Image, installation, warranties, and credit terms
The success of a firm who competes internationally
is based on its ability to develop products with
tangible and intangible features that meet the
needs of its customers in different markets.

18. TOYOTA
 Has success in selling automobiles in Europe,
Asia, and the Americas reflects upon:
 Design and production of mechanically reliable
vehicles
 Offering competitive warranties
 Building a solid brand name for its products
 Providing spare parts and repair manuals
 Furnishing financing to its dealers and retail
customers

19. Standardize or
Customize Products
A key decision when working in international
markets is to decide whether to standardized
products across markets or to customize
products within individual markets.

20. TOYOTA
Like many firms internationally, blend of standardization
and customization
 Standardized
 Corporate commitment to building high quality,
mechanically reliable automobiles and maintaining the
prestige of the TOYOTA name
 Customized
 Products and product mix to meet the needs of local
markets
 Sells LEFT hand drive motor vehicles to Americas and
continental Europe
 Sells RIGHT hand drive motor vehicles to Japan,
Australia, South Africa, and United Kingdom

21. TOYOTA (cont’d)
 Warranties adjust from country to country
based on warranties offered by competitors
 Name under which a product is sold may also
vary:
 United States: Lexus Sports Coupe
 Japan: Toyota Soarer

22. Standardize or
Customize
Nature of the products target customers…
Industrial users or individual consumers?
 Caterpillar’s bulldozers and front-end loaders are
sold throughout the world with only minor
modifications to meet local operating and
regulatory requirements.
 Commodities are typically standardized across
different markets.
 Agricultural products
 Petroleum
 512 MB computer memory chips
 Chemicals

23. Standardize or
Customize (cont’d)
General rule of thumb: closer to a body the
product is, the more likely the need for it to be
customized.
 Eddie Bauer in JAPAN
 Altered style of clothing to stretchy shirts and straight-
legged pants that the Japanese consumers prefer
 Big Boy burger chain
 Added pork omelettes and fried rice to menu
in Thailand to attract local consumers

24. Legal Forces
Laws & Regulations of host countries may
affect the product policies adopted by
international firms.
 Such as imposed detailed labeling
requirements and health standards on
consumer products that both foreign and
domestic firms must follow strictly.
 International firms must adjust the packaging
and even the products themselves to meet
consumer protection regulations.

25. Examples of Legal
Forces Grupo Modelo SA, the brewer of Corona beer had to
reduce the nitrosamine levels of the beer it sells in
Germany, Australia, and Switzerland to meet those
countries’ health standards.
 Saudi Arabia requires electrical connecting cords on
consumer appliances to be 2 meters long.
 GE suffered embarrassment and loss of profits when goods
were turned back at a Saudi port when an inspector
determined GE’s cords were only 2 yards long.
These widely varying technical standards adopted by
countries for such electrical appliances and broadcasting
and telecommunications equipment force firms to
customize their products.

26. Cultural Influences
International firms must adapt their products to
meet the cultural needs of the local markets.
 Change labeling on product’s package into the
primary language of the host country
 Understanding the way a certain cultural thinks
 Japanese consumers are quality conscious
 German consumers are environmentally conscious

27. Cultural Influences
(cont’d)
 Culture may FORCE change in a foreign market
 HBO has to edit its movies before it can be
broadcasted in a culturally conservative country
such as Asia
 Gwen Stefani and Beyonce Knowles had to
change their costuming and artistic elements
when performing in Malaysia

28. Economic Factors
A country’s level of economic performance may
affect the desired attributes of a product.
 Consumers in richer countries often favor
products with loaded extra performance features
 Consumers in poorer countries typically opt for
stripped-down versions of the same products
 Packaging toothpaste in a single use sizes to make
affordable for all local citizens

29. Brand Names
International firms often standardize the BRAND
NAME of their products.
 Firm can reduce cost on packaging, design, and
advertising
 Capture spillover of its advertising messages
from one market to the next
 Avon’s entry into China was made easier by the
fact that millions of consumers had seen its
products advertised on Honk Kong’s television

30. Brand Names (cont’d)
Sometimes legal or cultural factors force a firm
to alter the brand names under which it sells its
products.
 North America
 Diet Coke by Coca-Cola
 Other markets
 Coca-Cola Light by Coca-Cola

31. Pricing Issues &
Decisions

32. PRICING
- Pricing policies directly affect a firms revenue
Shape the competitive environment
Ex. Toys “R” Us : success in Germany, Japan,
the United States, forced competitors to fight for
Asian, European, and North American
consumers according to Toys “R” Us terms
Must develop pricing strategies, international
firms are more complex then a domestic firm
Cost of doing business vary widely by country

33. Pricing Issues
Continued
Exchange Rate Fluctuations
Currency rises in value, exporter must choose
between maintaining its prices in the home currency
or maintain its prices in the host currency
Distribution practices affect the final price
Intense competition among distributors in the U.S.
minimizes the margin between retail prices and
manufacturer’s prices
Ex. Japan

34. Pricing Issues
Broken Down
International firms must consider these factors
when developing their pricing policies
Must decide whether they want to apply
consistent prices across all those markets or
customize prices to meet the needs of each
Must remember that competition, culture,
distribution channels, income levels, legal
requirements, and exchange rate stability

35. Pricing Policies
Three Pricing Policies
1. Standard pricing policy
2. Two-tiered pricing
3. Market pricing

36. Standard Pricing
Policy
Generic approach to international marketing
The firm charges the same price for its products
and services regardless of where they are sold
or the nationality of the customer
Ex. Crude oil (Aramco, Kawaitt Oil, and Pemex)
Charged different prices to any and all
customers at different prices based on supply
and demand

37. Two-Tiered Pricing
Policy
A firm that uses a ethnocentric marketing
approach uses this policy
The firm sets one price for all its domestic sales
and a second price for all its international sales
Often used by domestic firms just beginning to
internationalize

38. Two-Tiered
Continued
Works for the short-run, but not in the long-run
Unlikely to develop the international skills,
expertise, and outlook to compete in the
international market place
Vulnerable to dumping (selling of a firms
products in a foreign market for a price lower
than that charged in the firm’s domestic market)

39. Market Pricing
Follows a polycentric approach
Most complex
Prices are set on a market-by-market basis
Go’s off of the profit-maximizing price

41. Market Pricing
Two conditions must be met to successfully
practice market pricing
1. Face different demand or cost conditions of
the countries where they sell their product
2. Prevent arbitrage

42. Market Pricing
Advantages
Can set higher prices where tolerated and lower
prices where necessary
Directly make relevant costs against local sales
within each foreign market
Closely monitor sales
Willing to delegate authority to local managers to
allow the price adjustments

43. Market Pricing Risks
1.) Damage its brand name
2.) Development of a gray market for its
products
3.) consumer resentment against
discriminatory prices

44. Market Pricing Risks
Continued
Damage its brand name
Any international firm that sells brand name
products and adopts market pricing should
review the prices charged by local managers to
ensure that the integrity of its brand names and
its market images is maintained across all of its
markets

45. Risks Continued
Gray markets
A market that results when products
are imported into a country legally
but outside the normal channels of
distribution authorized by the
manufacturer (parallel importing)
Price in one market is lower than the
price the firm charges in another
market, allowing entrepreneurs to
buy the good in the lower-price
market and resell it for profit in the
higher-price market

46. Risks Continued
Occurs when firms fail to adjust local prices after
major fluctuations in exchange rates
Ex. Coca-Cola & Merck
Products commonly influenced: automobiles,
cameras, computers, ski equipment, and watches
Also happen more in free-market economies
Undermine a firms market pricing policy, lower the
firms profits, cause friction between the firms and
distributors

47. Risks Continued
Consumer resentment
Consumers in high-priced country may feel they
are being gouged by pricing policies
Ex. Estee Lauder & J. Crew
Japanese newspapers and TV stations
highlighted the issue claiming foreign companies
take advantage of the Japanese consumers
Argue the price differences are due to the high
cost of doing business in Japan

48. Promotion Issues &
Decisions

49. PROMOTION:
3rd P of the international marketing mix
Enhance desirability of its products among
potential buyers
PROMOTION MIX:
Advertising
Personal Selling
Sales Promotion
Public Relations

50. Advertising
3 Factors to Consider:
The MESSAGE it wants to convey
The MEDIA available for conveying the message
The extent to which the firm wants to
GLOBALIZE ITS ADVERTISING record

51. I. Message
Facts or impressions the
advertiser wants to
convey to potential
customers
Convey messages of:
Value (low price)
Reliability (quality)
Style (image and
prestige)

52. I. Message (cont’d)
Ex. Coca Cola
Believes products help
consumers enjoy life by
showing worldwide
Ex. Honda & Kawasaki,
Motorcycles
Stress fun & excitement
or riding
Poorer countries stress
reliability &
functionalism

53. I. Message (cont’d)
Ex. Europe & Japan
US goods viewed as
“trendy”
Japanese products
perceived as high quality

54. II. Medium
• Communication channel
used by the advertiser to
convey a message
• May have alterations from
market to market based:
Availability, legal
restrictions, standards
of living, literacy rates,
cultural homogeneity of
the national market, &
other factors
Ex. Nestle
French & German
speaking Swiss
audience

55. II. Medium (cont’d)
Countries level of
economic development
affect media
Less developed
countries have limited
TVs & literacy rates
Ex. Colgate-Palmolive,
rural India
Infomercial on teeth
brushing techniques
“Bringing the World into
Focus” approach
Develop media
customized for local
market

56. III. Global vs. Local
Advertising
Should it be everywhere
or tailored to each local
market the firm serves?
Ex. Unilever & Dove
Soap
TV commercial (same)
but different actors and
use of language of that
specific country when
airing
Regional Strategy
Ex. IBM & Levi Strauss
in European markets

57. Personal Selling
Making sales on basis of
personal contacts
As firms grow and
develop sale basis in
new markets, establishes
its own sales force

58. Advantages to Personal
Selling
Hiring local sales reps are reasonably confident
understanding local culture, norms, and
customs
Promote personal contact with customers
Ease to obtain valuable market information

59. Sales Promotion
Comprises specialized
marketing efforts
Coupons, in-store
promos, sampling,
direct mail campaigns,
cooperative advertising,
and trade fair
attendance
US Dept of Commerce
Helps small US firms to
participate in overseas
trade as part of promo
efforts
Flexible nature of sales
promos make marketing
campaign tailored and
ideal to fit local customs
& circumstances

60. Public Relations
Efforts aimed at
enhancing a firms
reputation and image
with the general public
Opposed to specific
advantages of individual
product or service
Effective PR belief
“Corporate citizen”:
reputable and trusted
However, hard to
quantify
Over time, positive image
and reputation benefit
host country

61. Distribution Issues
and Decisions

62. Distribution Issues
Distribution- process of getting products
and services from the firm into the hands
of customers
Two Issues:
Physically transporting its goods and
services from where they are created to the
various markets in which they are to be sold
Selecting the means by which to
merchandise its goods in the markets it
wants to serve

63. International
Distribution
Main issue- mode of transportation
Faster modes of transportation:
Air freight
Motor carrier
More expensive
Slower modes of transportation:
Ocean shipping
Railroad
Pipeline
Barge
Cheaper

64. Transportation
selected
Affects the firm’s inventory costs and
customer service levels
Product’s useful shelf life
Exposure to damage
Packaging requirements
Slower modes of transportation, increase the firm’s
international order cycle of time: time between the
placement of an order and when the customer
receives it; could cause customer’s to find alternate
supply sources

65. Shelf life, damage,
packaging
Highly perishable items are usually shipped by
air freight
Less perishable items use cheaper
transportation
Goods sent on longer voyages may need special
packaging to protect it

66. Channels of
Distribution
Distribution channel can consist of as
many as 4 basic parts:
The manufacturer that creates the product or
service
A wholesaler that buys products and
services from the manufacturer and then
resells them to retailers
The retailer, which buys from wholesalers
and then sells to customers
The actual customer, who buys the product
or service for final consumption

67. Channel length
The number of stages in the distribution
channel
Direct sales: a firm that sells directly to the final
consumer
Longer channel involves retailers
The longest channels involve the use of
wholesalers

68. Challenge
Finding the optimal distribution channel to
match the firm’s unique competitive strengths
and weaknesses with the requirements of each
national market it serves
Some firms may hire a sales or import agent to
distribute their goods

69. Summary
Marketing vs. International Marketing
International Market and Business Strategies
The Marketing Mix
Product
Price
Promotion
Distribution

70. Any questions?