IM Important Merged

Introduction to International
Marketing
©2013 Pearson Education, Inc. publishing as

Prentice Hall
Welcome to the Course
Course Assessment and Schedule
Overall CLO
Assessment Weightage
Schedule Weightage Number
Component %
%
Quiz-1 10
After 10th, 20th, and
Quiz 2 10 30 1,2
& 30th sessions
Quiz 3 10
Continuous
(Case/Article
Group Assignment 1 15 2,3
Presentations)
30
Group Assignment 2 15 To be given in 20th
2,3
session & Submission
by 34th session
As per Exam. Office
End-Term Exam 40 40 1,2,3
schedule
Group formation guidelines
 Class Coordinator
 Total Students: 59
 Group size: 6 members
 Total number of groups: 10
Expectations
 What do you expect from the course?
International Marketing
 Why Global/International Marketing?
 Survival – Competition in domestic market
 Growth - Market Potential
 What is International Marketing?

 It is defined as ‘ a series of activities leading to an
exchange between a seller and a buyer at a profit‘.
 Marketing activities center on an organization‘s efforts
to satisfy customers needs and wants with products
and services that offer competitive value.
 Marketing Tools: Product, Price, Place, and Promotion
(Marketing Mix)
International and Domestic Marketing
 How does international marketing differ from
domestic marketing?
 Scope of activities – International firms focus its
resources on global opportunties.
 Conduct key marketing activities outside the home
country. E.g. Market research, sales, strategy.
 Involve an understanding of specific concepts/strategies
that must be applied in international market.
Marketing: A Universal Discipline
 The foundation for a successful international marketing
program depends on the sound understanding of the
marketing discipline.
 Marketing is the ‘process of focusing the resources &
objectives of an organization on environmental
opportunities and needs’.
 Marketing is also a ‘set of concepts, tools, theories,
practices, procedures and experiences’.
 Marketing practice varies from country to country due
to different needs, facilities, infrastructure and
regulations.

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Marketing: A Universal Discipline
 Marketing practices in international markets
 Although each market is unique, each market has many
similarities with others – extend elements of marketing
program wherever possible.
 Reconize that a global product can serve needs
worldwide and that product provides better value to
customers at a lower cost.
 Global products are adapted to local markets – due to
difference in language, law, regulation, and physical and
cultural environment.
 However, cost of the adaptation should not exceed the
gain received from the global scale.
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The Marketing Concept
 The concept has chanced dramatically over the
years.
 The old concept:
 Focus: Product (producing better product)
 Means:Telling and Selling
 End: Profit
 Marketing is: Selling through mass media (push
marketing)

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 The New concept (1960’s):
 Focus: Customer
 Means: Integrated Marketing Mix
 End: Profit
 Marketing is: Function

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 The strategic/emerging concept (1990s):
 Focus: Customer in the broader context of external
environment.
 Competition, government policy and regulation
 Economic, social and technological macro forces
 Means: knowledge and experience + Marketing Mix
(4Ps)
 End: Stakeholders benefits and relationships and the
key stakeholder is customer (profit is still important)
 Marketing is: Everything

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 Boundaryless Marketing (Jack Welch)
 Key Aspects:
 Marketing is a set of activities encompassing the
business processes.
 Marketing mix integrate the efforts across the
processes.
 Managing strategic partnerships in the value chain and
creating value for customers.
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The Three Principles of Marketing
 1. Customer Value: Identify the purpose and task of
marketing.
 2. Competitive realities of the marketing
 3. How to achieve the above 2 objective – Focus.
CUSTOMER VALUE
COMPETITIVE ADVANTAGE FOCUS

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Customer Value
 Goal: create customer value that is greater than the
created by competitors
 Customer Value: Benefits/Price
V=B/P
V = Value
B = Perceived Benefits
P = Price
 Strategy:
◦ Expand or improve product and/or service benefits
◦ Reduce the price
◦ Combine these two elements
◦ Can be applied across marketing mix.
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Competitive Advantage
 Goal: Create competitive advantage through
differentiation.
 Advantage can exist in any element of a company’s
offer: product, advertising, sales promotion,
distribution etc.
 One way to penetrate a new international market is
to offer a superior product at a lower price.

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Focus
 Focus is the concentration of attention and resources.
 Requirement to create customer value at a
competitive advantage
 A clear focus on customer needs and wants.
 Apple focuses on the following things:
 1. Product design
 2.Technology
 3. Effective communication
 4. Brand building retail stores

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 Marketing discipline is universal, but markets and
customers are quite different.
 Marketing practice must vary region-to-region and
country-to-country.
 E.g. Nestle received cold response for Iced Tea in
India.
 P&G advertising – ‘washing clothes at all temperature’
in Japan was meaningless.
 Need for “Global Localization:” Think globally but act
locally.
 Understand the similarities and differences across the
global markets.
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Standardization Debate
 A major issue in global marketing involves the extent
of adaptation or standardization of products (and mkt.
program) for diverse market.
 According to Robert Buzzel, dissimilarities among
countries led multinational firms to solve local
problems with local solutions. (Adaptation)
 Buzzel also provided rationale for standardization of
marketing program due to cost saving arising from
uniform marketing elements.
 Leviit advised organization to develop standardized ,
high quality products and market them around the
globe with standard marketing mix. (standardization)
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Standardization Debate
 Global firms can compete based on economies of
scale by offering high quality of products at lower
price.
 Carl, CEO of Spielvogel Bates, argued that
standardization of marketing programme is not
feasible due to differences among market.
(adaptation)
 Coca-Cola is a true global company but its success is
not based on a total standardization of marketing mix
elements.
 In Japan, Coca-Cola got success by developing
infrastructure suitable to local market with its sales
force and vending machines.
 The success of a global firm depends on its ability to
achieve ‘Global Localization’. ©2013 Pearson Education, Inc. publishing as
Prentice Hall
Global Localization
 Global Localization – it means global firms must have
the ability to ‘think globally and act locally’.
 Global marketing should include a combination of
standard product (e.g. actual product) and non
standard (e.g. advertising and distribution)
approaches.
 A global product may be the same product
everywhere and yet different. E.g. Burger, Iphone, coke
etc.
 Global marketers requires to behave in a way that is
global and local at the same time by focusing to
similarities and difference across the markets.

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Global Localization
 Global marketing strategies can also be based on:
 Product Design – Apple, Toyota, and McDonald.
 Brand Name –Coca-Cola, Apple, BMW.
 Product Positioning – Harley Davidson, Apple.
 Packaging – Gillette and Apple.
 Innovation – Apple, Honda, Nike
 Distribution – IKEA, Apple.
 Customer Service – Caterpillar, Dell, Apple.
 The standardization and customization decision

depends on the industry conditions, markets need, and
its sources of competitive advantage.
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Management Orientations
 Management orientation is company personnel
view/belief or assumption about the nature of the
world.
Polycentric
Ethnocentric
Regiocentric Geocentric
 The management response to global market

opportunities depends on their assumptions and
beliefs.

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Management Orientation
 Ethnocentric Orientation:
 Management assume that home country is superior
compare to rest of the world. E.g. Swadeshi
 Management see only similarities in markets and
assume that products and practices that succeed in
the home country be successful anywhere.
 Sometime, ethnocentric orientation means that
outside opportunities are ignored – domestic
companies.
 Ethnocentric companies that do business outside of
the home country can be described as international
companies.
 These companies sell same product without
adaptation in overseas markets.
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 Ethnocentric Orientation:
 Ethnocentric companies view foreign operations as
secondary relative to home market.
 Such companies rely on headquarter knowledge for
marketing strategies and ignore the foreign market
experience.
 Such companies generally use foreign market
opportunities to dispose surplus production through
exporting.
 Ethnocentric companies is centralized in its
marketing practices.

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 Polycentric Orientation:
 It is opposite of ethnocentric orientation.
 Management belief or assumption that each country
in which a company does business is unique.
 Polycentric oriented companies develop unique
business and marketing strategies in order to succeed.
 Polycentric company focuses on difference among
markets and believe that experience is difficult to
transfer across the markets.
 Such companies are decentralized in marketing
decision
 These companies are called ‘multinational firms’.
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 Regiocentric and Geocentric Orientation:
 Management view regions as unique and seek to
develop an integrated regional strategy. E.g. Europe
 Regiocentric companies focus on difference across the
regions and integrate marketing strategies at region
level.
 A company with geocentric orientation view the
entire world as a potential market and strive to
develop integrated world market strategies.
 Geocentric companies believe that there are
similarities and differences in markets.

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 Regiocentric and Geocentric Orientation:
 They create value by recognizing when to extend
marketing efforts and when to adapt to regional,
national, and sub-national differences.
 Such companies are call global or transnational
companies.

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Driving and Restraining Forces
 The growing importance of global marketing stems
from the facts that driving force have more
momentum than the restraining forces.
 Technology
 Crosses national, regional, and cultural boundaries.
 Internet has led to the emergence of the markets for
global products.
 Facebook, LinkedIn, and YouTube are powerful
platform for global marketing.

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Driving Forces
 Regional economic and political agreement
 A number of multilateral agreement has accelerated
the pace of global integration.
 European union
 North Americal Free Trade Agreement (NAFTA) by
Canada, Mexico, and United States.
 WTO

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Driving Forces
 Market Needs and Wants
 Most global markets do not exist in nature, they must
be created by marketing efforts. E.g. fast-food and
soft-drinks.
 Converging customers needs in the markets. E.g.
Middle class across the countries.
 Most of the customers have similar needs e.g. quality
products, convenience, value, affordability, and
discount.

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Driving Forces
 Transportation and communication
 Time and cost associated with distance have fallen
significantly.
 Tourism enable people from many countries to see
and experience new products being sold abroad.
 Physical distribution has declined in terms of cost and
time.
 FedEX offers just-in time delivery of good in China-
US markets.

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Driving Forces
 Product development costs
 Product development time and cost have increase
overtime. E.g. pharmaceutical Industry
Year Costs
1976 $54 Million
1982 $87 Million
1993 $359 Million
2003 $802 Million
 Higher product development costs can be quickly

recovered by expanding sales globally
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Driving Forces
 Quality
 Global companies can generate greater revenues and
higher profit margin, which support the cost of
quality improvement.
 Global firm can learn from their experience of
multiple markets and enable to develop quality
product.
 Global competition has forced all the companies
including domestic firms to improve quality.
 Uniform strategies of global firms can drive down
the cost of research, engineering, design and
production.

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Driving Forces
 World economic trend
 Three reasons why economic growth drive
globalization:
 1. Slow growth in domestic market and high growth in
overseas markets. E.g. USA
 2. Higher growth in emerging markets welcome
foreign firms. E.g. India
 3. Worldwide movement towards deregulation and
privatization.

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Driving Forces
 Leverage
 A global firm can enjoy four advantages due to its
virtue of doing business in multiple markets.
 1. Experience transfer: Global firms can learn from
their experiences from the multiple markets and
implement the best practices in new markets.
 2. Scale economies: Global firms can take advantage of
its greater manufacturing volume to obtain scale of
economies in a single factory.
 The scale of advantage is not limited to production
only. E.g. FMCG firms have achieved economies of
scale in distribution, research, advertising across
product categories and markets.
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Driving Forces
 Leverage
 3. A major strength of the global company is its ability
to scan the entire world to identify and use best
resources. E.g. raw material, production location,
employees etc.
 4. Greatest advantage is the single strategy which
allow to leverage previous mentioned 3 benefits.

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Restraining Forces
 Several restraining forces may slow a company’s efforts
to engage in international marketing.
 1. Management myopia and organization culture –
Companies with ethnocentric orientation simply
ignore the global market opportunities.
 2. National control and Barriers – Every country
protects local companies and interest by maintaining
control over market entry and access.
 E.g. national control over defense, IT, and broadcasting.
 3. Advertising and promotion barrier – Comparative
ads are illegal (India), premium and sweepstakes are
not allowed (Germany).
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Summary
• Global marketing is the process of focusing resources
on global marketing opportunities
• Goal, to create customer value and competitive
advantage by maintaining focus.
• Four classifications of management orientation:
ethnocentric, polycentric, regiocentric, geocentric
• Global marketing importance is shaped by a variety of
driving and restraining forces.

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Thank You
40
Product Strategy
©2013 Pearson Education, Inc. publishing

as Prentice Hall
Introduction
• Product – most crucial element of the marketing program.
• Product defines the business of the company e.g. FMCG, IT and
determine competitive frame of reference. E.g. TV
• Marketing program – price, promotion, and distribution – fit the
product policy.
• Product strategy must balance between market adaptation and
standardization to create competitive advantage.
• What is product?
• A collection of physical, psychological, service, and symbolic
attributes that collectively yield satisfaction or benefits to a buyer
or user.
• E.g. Car – design, length, power, mileage, safety, comfort, status,
after sales service etc.
Product Classification
• Product can be classified in several ways:
• 1. User
– Industrial products e.g. Air compressor, packaging system.
– Consumer products e.g. TV, Refrigerator, Mobile
• 2. Purchase mode
– Convenience products e.g. Toothpaste, detergent, soap.
– Shopping products e.g. Television, Furniture, Clothes etc.
– Specialty products e.g. Luxury goods, rolex, perfume, camera.
– Unsought products e.g. Insurance, fire extinguisher
• 3. Life span
– Durable goods e.g. Car, washing machine, bike etc.
– Nondurable goods e.g. FMCG products
– Disposable goods e.g. news papers, milk etc.
• 4. Customer Value
– Core benefits e.g. quench the thirst
– Basic product e.g. smell, black, carbonated, and sweetened fizzy drink.
– Expected product e.g. taste, cold
– Augmented product e.g. zero calories
– Potential product e.g. discount
• Based on availability and adaptation, products can be classified
as:
• Local and National products
– It is available in a specific portion of a national market or a single national
market.
– Generally, these products are highly customized as per the local needs.
– E.g. KFC offers noodles and rice only in Chinese stores, Coke offers non-
carbonated ginseng flavored beverage only in Japan.
• Limitation:
– It does not provide an opportunity to develop and utilize global leverage in
marketing, R&D, and production.
– It does not allow the transfer of managerial experience from one country
to another.
• International products:
– It is offered in multiple countries or regions.
– It is customized for the requirements of few countries. E.g. Asian
countries, or Europe.
– Renaults had restricted its offering to Europe only for several years.
– GE offers Lullaby warmer and L'Oréal offers Garnier brand for Asian
countries only.
• Global products
– It is offered in global markets.
– Products are designed based on similarities and differences of customers
preferences.
– Global products are generally similar across the markets but have minor
adaptation to legal/other requirements.
– E.g. Apple i-phone, i-pod, Harley Davidson bike, BMW etc.
Product Decision Dilemma
• Global products manager face the dilemma: what kind of product
to offer: standardize or customized?
• Standardization:
– Economies of scale in marketing program and lower costs
– Easy transfer of knowledge and experience across the countries
• Customization
– High marketability and higher market share
• It is not possible to offer fully standardized products due to:
– Different govt. and legal product rules across the markets
– Difference in economic and cultural factors
– Difference in marketing infrastructures
– Different stages of PLC
• What to standardize and what to customize? – need to
understand product components.
Product Component Mix
• It is useful to break a product in to different layers or
components to understand it from the marketing point of view.
• Each component is designed to satisfy the different requirements
of the customers.
• Each component involves tangible and intangible features that
aimed to provide greater customer value.
• All companies generally offer: product and service combination
• Product components:
• 1. Core component
• 2. Packaging component
• 3. Support service component
• 4. Future component
• 1. Core component
– Basic and essential component features of a product
– Provide basic benefits to customers
– Basic foundation must be able to create desired impression.
– Contribute to total value creation process by the company.
– E.g. product platform, design features, functional and legal features.
– Car – engine size, door, hp, RHD/LHD, Breaking system etc.
• 2. Packaging component
– No customers will buy a product that offers only basic benefits – need to
top-up by packaging components.
– Fulfill customers expectation in competitive market
– Built around core components
– Both core and packaging components allow customers to perceive product
as a consolidated offer.
– E.g. Trademark, brand name, legal, price, quality, packaging, styling.
– Car. stereo system, safety system, GPS, AC, Brand name, style/design, price
etc.
• 3. Support service component
– Designed to attract customers and to differentiate product from the
competition.
– Garnish the product to provide unique benefits to customers.
– May operate as a deciding factor in competitive market.
– E.g. Instruction manual, installation and spare parts, delivery, warranty.
– Car - easy maintenance and repair, warranty, availability of spare parts,
after sales service etc.
• 4. Future component
– Company provides updated products to customers e.g. new model or
version.
– Make customers aware about new product launch in the future.
– Company adds new features to improve customers satisfaction.
– E.g. buy back offer, software upgrade etc.
Implications of Product Components
• A specific product component may create value in one country
but may destroy value in another country.
• E.g. Fuel efficiency of car in India: Value creator
• E.g. Fuel efficiency of car in Thailand: Value destroyer (less
driving comfort or less pick-up)
• E.g. Sweden – neither comfort, nor fuel efficiency is important,
car safety is value creator.
• So, as product travel from one country to another, companies
have to make changes in product components – increase cost.
• Implications of adaptation for product components:
– Core components: high cost of adaptation, less preferred by managers.
– Packaging components: moderate cost of adaptation.
– Support service components: very less cost of adaptation and preferred by
managers.
Types of adaptation
• There are two types of broad adaptations:
• 1. Mandatory adaptation
– It is mandatory changes that companies have to made according to rules
and regulation of host country.
– E.g. veg/non veg. mark, FCI approval for food products in India, BEE energy
rating in India, Emission standard BS-VI.
• 2. Discretionary adaptation
– It is forced by competition and customers requirements.
– It is decided by the managers – adapt or not.
– E.g. McDonald offered veg burger than beef burger.
Types of Discretionary adaptation
• 1. Convenience adaptation
– To make the product fit to customers/market.
– Increase consumers convenience while using the product.
– Induce localness in the product to attract customers.
– E.g. Oreo reduce sweetness and packaging size in China.
– E.g. Foreign car mfg. adapt vehicle to sustain against Indian roads.
• 2. Economic adaptation
– Price is the driving force for economic adaptation.
– Most car companies offer fuel efficiency for developing countries and
adapt to driving comfort for developed countries.
– E.g. change in price, payment terms, inputs, and packaging.
– E.g. shampoo, AC
Types of Discretionary adaptation
• 3. Performance adaptation
– Local conditions demands for the change in the performance of product.
– E.g. washing machine – in Germany it takes 120 minutes to wash the
clothes (washing frequency is low-weekly).
– In India – company has reduce it from 120 to 60 minutes (washing
frequency is high-daily)
– Do not bother above complete removal of detergent (wash by maids)
• 4. Social adaptation
– To enhance the social value of products and customers
– E.g. refrigerator – water tap, Ice-cube box, curd making facility – enhance
social value of middle class.
• 5. Aesthetic adaptation
– Different people have different aesthetic sense.
– Localness create pleasure and increase marketability of products.
– E.g. metallic colors, flower design on front door etc.
Product Positioning
• Product positioning: act of locating a brand in customers mind.
• It include emphasizing on product attributes and benefits –
important for customers and not offered by competitors.
• Several way of positioning of the product/brand:
• 1. Positioning by attribute/benefit
• It involves focusing on the product attribute/benefits for
differentiating product from the competition.
• E.g. Volvo – safety and comfort, Visa – Convenience.
• 2. Positioning by quality/price
• It can be though of continuum from high quality/price to low
quality/price.
• E.g. American express card – prestige and service v/s Master card
– low charges and acceptability.
• E.g. Wall mart – low price and assortment v/s Zara – high quality
and premium price.
Product Positioning
• 3. Positioning by user(s)
• It can e achieved by describing how a product is used or class of
users in the market.
• FastTrack's products target ‘young consumers’ and position based
on ‘lifestyle’ associated with them.
• 4. High-tech positioning – more focus on product features and
information.
• It is used for technical and special Interest Products e.g.
computers, and camera.
• 5. High-touch positioning - more focus on product image
• It is used for global Village products and products that solve a
common problem e.g. Soft-drink, music video and Fragrance and
fashion related products.
Product Design
• Product design dilemma: Should company adapt product design for
various markets or offer a single design to the global market.
• Four important factors manager should consider:
• 1. Preferences – what customers want?
– E.g. luxury products have similar design – BMW, Mercedes and fashion
products.
– E.g. Oreo has changed its cookies taste as per the preference of Chinese
customers.
• 2. Costs
• Cost of production, maintenance and repair.
– More the change in product design – more costs.
• 3. Laws and Regulations
– Different packaging and labelling law in different countries.
– E.g. Taxes on car is based on length in India.
• 4. Compatibility
– Compatibility of a product with related products e.g. music system, mobile,
power system, TV, Video games etc.
Attitude towards country of origin
• Stereotyped attitudes toward foreign products can favor or
hinder marketing efforts
• E.g. German – quality engineering, China – poor quality products,
• Italian – style, Japanese electronics and automobile – high
quality.
• If the quality is perceived to be low
– Foreign origin of the product can be disguised e.g. electronic products.
– Foreign identification of the product can be continued and consumer
attitudes towards the product can be changed through advertising.
• In some market segments foreign products have a substantial
advantage because they are foreign. E.g. Sony, Cannon
– Under favourable stereotype, marketer should highlight the associate
country f origin with products through marketing communication. E.g.
Italian tiles, Australian beer, US products.
Global Product Positioning: Strategic Alternatives
• Generally, global companies expand its business from one
geographical market to others.
• To pursue geographical extension effectively, managers can use
the various alternative strategies.
Different
Strategy 2: Product Extension, Strategy 4: Dual Adaptation

Communications
Communications
Example: Greeting Cards

Adaptation
Example: Motorbikes
Strategy 1: Dual Expansion Strategy 3: Product Adaptation,

Communication
Example: Applications Software
Extension
Example: Electrical products
Same
Same Different
Product edlich
• Strategy 1: Product/Communication Extension (Dual Extension)
• It is the easiest strategy and most profitable.
• Companies sell the same products with the same advertising and
promotional appeals. E.g. software, perfume, IPhone.
• It is a cost effective way to approach the global market.
• Companies could leverage the cost advantage through
economies of scale.
• However, it does not work in every market due to large
difference in the markets.
• E.g. Wall Mart traditional practice of team building and customer
service did not work in Germany.
• Wall Mart’s low price positioning did not work against German
discount retailers.
• Strategy 2: Product Extension/Communication Adaptation
• This strategy is used when a product fills a different needs,
appeal to a different segment or to serve a different function.
• Companies sell the same products with the modified advertising
and promotional appeals. E.g. Bicycle, bike.
• Bicycle and Bike – Recreational needs (Developed countries),
Transportation needs (Developing countries)
• The cost of product Extension/communication Adaptation is
relatively low- product is unchanged, promotion is adapted.
• Strategy 3: Product Adaptation/Communication Extension
• This strategy is used when a product preform the same function
across the different market conditions.
• Companies sell the modified products with the same advertising
and promotional appeals. E.g. electrical products
• Electrical products are modified as per the power requirements
of the country but promoted though common advertising.
• Soap and detergent mfg. have changed their product
formulation without changing their marketing communication
strategy.
• Food products are always modified as per customers
requirements in different countries.
• Strategy 4: Dual adaptation
• This strategy is used when company perceive market conditions
or customers preference differ across the countries.
• Companies sell the modified products with the customized
advertising and promotional appeals. E.g. Greeting Cards
• This strategy of dual adaptation is very expensive as companies
cannot take advantage of economies of scale.
• Dual adaptation helps to improve the marketability of the
products and increase market share in the existing market.
• It does not allow to integrate learning from the markets and
transfer experience.
• Strategy 5: Product Invention
• Adaptation strategies are effective approaches to international
and multinational marketing but they may not respond to global
market opportunities.
• It is useful for completely new products about which customers
do not have any information.
• E.g. when Ipod and Ipad were introduced first time in the market,
it can be extended without any modification.
• Customers do not have any pre-existing knowledge about the use
of the product and how to use it.
• Managers can use the global strategy with the focus on educating
customers about new invention.
International Product Consumer Need Product Communication
Product Strategy Example Satisfied Strategy Strategy
Strategy 1
Product and Gillette Disposable, easy Extension Extension
Communication Razor to use product
Extension
Strategy 2 USA: Substitute
Product Wrigley for Smoking Extension Adaptation
Extension Chewing Gum Europe: Dental
Communication benefits
Adaptation
Strategy 3
Product McDonalds Fast-Food Adaptation: Extension:
Adaptation Adding local Using global
Communication products to campaign
Extension range
Strategy 4 Adaptation:
Product and Slim Fast Identical: Consumer Adaptation:
Communication Lose Weight preferences Celebrity in Germany,
Adaptation for different Teacher in UK
flavors
Strategy 5 Non-alcoholic Develop new
Product Buckler Beer beer Invention communication
Invention
Choosing a Strategy
• How to choose a specific product strategy?
• Most companies seek a product strategy that optimize company
profits and competitive position over the long-run.
• It depends on the product-market-company mix.
• Product – few products have high cultural sensitivity than others,
so managers adapt those products and keep others unchanged.
E.g. food products v/s high-tech products.
• Company – they differs in their ability and willingness to adapt
the products to local needs. E.g. Balaj v/s Pepsi
• Market – it depends on the conditions of the market,
competition, customers preference for the products. E.g. upper
class v/s middle class segments.
• Generally, company offers a portfolio of the products to satisfy
the demands of the multiple segments.
Timing of Entry
• How a product moves in the international markets? –
international product lifecycle.
• A product may pass through different stages of the life-cycle in
different countries – bring complexities and challenges.
• 1. In developed countries
• New products are generally originated from developed countries
– higher R&D Capabilities.
• During introduction phase, product is first launched in developed
markets. E.g. microwave oven in 1955 in USA, Europe and Japan.
• Products are refined overtime and becomes more usable for
customers – incremental innovation.
• Marketers focus more on market development as product is new
and customers need to be educated. E.g. Oven – time saving,
convenience.
Timing of Entry
• Production capacity – limited and available in home country first
and later in other similar developed markets. – no demand in
developing markets.
• Price: high due to higher cost of R&D, Marketing, and Production.
• Initial approach to globalization: exporting additional production.
• Overtime, market for new product becomes saturated and
competition will rise – pressure on price.
• Companies will look for opportunities in the developing markets
e.g. Microwave oven in 1990 – India and China.
• Product is in growth or mature phase in developed markets but
in introduction phase in developing markets.
• Generally, marketers adapt to the local market requirements in
developing markets for communication.
• Companies use export mode for developing markets.
Timing of Entry
• 2. In developing countries
• Export will continue till the product reach at the growth.
• Several firms develop production facilities in the developing
markets.
• As product reaches to maturity stage, companies may shift
production to low cost countries from developed countries.
• Low production cost and limited opportunity in developing
markets, encourage firms to enter in less developing countries.
E.g. south Africa – telecommunication and mobile firms.
• Products may require different positioning during the different
phases of life-cycle.
• Managers generally use ‘perceptual map’ to assess the
positioning of competitors brands and decide for its product.
Thank You
Pricing Strategy

as Prentice Hall
Introduction
• Pricing decision – an important element of the marketing mix and
real test of the company.
• Managers face the dilemma for all the products: how much to
charge for the product?
• Marketers generally set the price that
– Cover the cost of the product
– Generate profit for the company
– Create demand in the market, and
– Maintain competitiveness
• Managers should also focus on the other aspects while setting
the price – stage in product lifecycle, affordability etc.
• These factors lead to price variation in the market – things
become more complicated in international markets due to
country specific factors.
Introduction
• In international markets, managers face a host of factors that
results into high price variation.
• E.g. import duty, firm objectives, Free trade agreement, grey
market and exchange rate.
• Price of electronic products varies from 25 to 30% in Dubai and
India.
• Determinants of price in markets:
– Demand of the product
– Competition in the target market
– Cost of products
• These factors interact with each other and make pricing decision
more complex.
Microsoft Xbox Pricing
• Microsoft gaming console in • If price is set at $ 375: Cost
2001 (USA) recovered
• Fixed costs: $500 Million • If price is set at $299: Loss per
• Cost per unit: $375 per unit unit : $76
• Objective: sell 5 million X-Box • If price is set at $199: Loss per
unit: $176
• Sony PlayStation II: $299 per
unit • What price do you suggest to
• Nintendo GameCube: $199 per Microsoft?
unit (expected)
Microsoft Xbox Pricing
• Microsoft priced at $299 per unit
• Sony reduced the price of play station ii to $199 in 2002.
• What to do and How to sustain in the international market?
• Microsoft reduced the priced to $199 per unit.
Factors affecting Pricing in IM
• Country of origin effects
– Related to where the product is originated or headquarter is located.
– Customers infer risk/benefits of products based on their perception about
country of origin.
– Customers perception determines the willingness to pay.
– E.g. India – poor quality of products – not willing to pay premium price.
– U.S. – High quality perception – ready to buy at higher price.
– Tata – Land rover and Jaguar, U.S. – Harley Davidson.
• Country of mfg. effects

– Customers are also concern where the product is manufactured.
– Perception about country of mfg. also affect to pricing.
– E.g. China – less price are paid.
– E.g. Germany – high price for automobiles.
• Stage of product life cycle
– Specific stage in the PLC affects the pricing decision e.g. Introduction and
growth phase (higher price), and maturity and decline phase (lower price).
– Managers charge the different prices to the same products in different

countries due to PLC. e.g. luxury products
– E.g. Majority products in US are in maturity phase and in India, growth

phase. E.g. Maybelline cosmetics
– Marketers may extend the specific stage of PLC via short supply to charge
the higher price.
– e.g. Xiamoi extended introduction phase of mobile, and maintain demand

for several months.
• Competitive Structure
– Competition in the different country markets affects the pricing.
– Competitive analysis is done, objectives are set and then price is set.
– E.g Xiamoi LED TV – Price is set at lower level to gain market share and to
compete with Samsung, LG and Sony (Features are similar)
• Income level
– Per capita income varies across the countries, so purchasing power.
– Companies generally set low price in lower income countries.
– If managers set the same price in all countries – low for rich and high for
poor countries.
– E.g. GE developed ‘Lullaby’ ventilator for Asian markets.

Countertrade
• It is a trade practice in international market where two parties
exchange goods/commodities across international borders
without currency transaction.
• E.g. Saudi Arabian govt. exchanged oil for Boeing aircraft worth
$1 billion in 1984.
• Forms of counter trade
• Barter
– Good and services are exchanged across borders for other types of goods.
– No cash transaction is involved
• Counter purchase
– Combination of purchasing agreement and a reciprocal buying agreement.
– Two contracts are executed with hard currency at different dates
Dumping
• Dumping is done when products that are sold in international
markets below their production cost; or
• Products priced lower in foreign markets than sold in the
company’s domestic markets. E.g. China dumps several products
in India.
• Firms dump products to destabilize the trade/industry in the host
country. E.g. Chemical Industry in 2001.
• GATT (General Agreement on Tariff and Trade) provides
guideline:
– 1. If price is set at less than general/normal value.
– 2. if products are similar to the produced in the local market.
– 3. If imports resulted in material injury to the local industry.
• Response by domestic country : Countervailing duties and
Minimum Access Volume
Grey Marketing
• Grey marketing is taken place when branded products sneak in a
country and make them available to customers at a lower price
without authorization of the brand owner.
• Low price is the key factor for success in the grey market.
• Customers are puzzled
– Same product is available at low price in grey market
– Higher price version is available in legal market
• It happens due to price discrimination by the firm: charge
different price for developed (high price) and developing markets
(low price).
• E.g. Delhi – big grey market for electronic products.
Grey Marketing
Grey Marketing
• How firms can deal with grey marketing?
• 1. Product differentiation
– Customize products as per taste and preference of each country
– Different version of the products: Products exported from one country
may not be attractive to other countries.
– It may backfire due to increase in marketing costs and reduction in
economies of scale
– E.g. electronics products from Thailand, and Dubai
• 2. Strategic pricing
– Standard price across the countries/markets
– It may discourage the channel partners (opp. to premium price)
Grey Marketing
• 3. Relationship marketing
– Develop strong relationship with local distribution partners and ask them
to manage the grey markets.
– Firms can create legal pressure through distributors and stop selling in
grey market.
• 4. Customers communication
– Firms can communicate the disadvantages of buying products from grey
markets.
– E.g. no product warranty, no product updates, non availability of parts and
authorized after sales service etc.
• 5. Anti-grey marketing alliance
– Firm can work jointly together and can reduce the grey marketing efforts.
– Spread awareness about grey marketing through seminars and
conferences.
– E.g. Nokia, LG, and Samsung
Export Pricing
• Two approaches for export pricing:
• 1. Cost-based pricing – focus on the various types of cost
associated with production and export of goods.
• 2. Market based pricing – focus on the market related factors e.g.
competition
• Cost based pricing:
• 1.1 Full cost pricing
• Objective is to cover the full cost of production, export and
generate reasonable profit.
• Costs covered – raw material cost, wages, overhead expenses,
mfg. cost, profit markup, exporting cost, insurance, and fright.
• Exporting cost depends on the agreement between exporter and
importer. FOB – all costs paid by exporter till the discharge of the
goods from the home country port.
Export Pricing
• 1.2 Marginal cost pricing
• It is based on the types of cost and BEP (Break Even Point)
• First, costs are classified as fixed and variable costs
• BEP is calculated: Fixed cost/contribution (selling price – variable
cost)
• E.g. Fixed cost: Rs. 12,00,000, Variable cost: Rs. 40 per unit,
Capacity: 1,20,000 units, Selling price: Rs. 60
• BEP = 12,00,000/(60-40) = 60, 000 units
• If company sells 60,000 units in the domestic market, it can cover
the fixed cost.
• Now for export market, company needs to cover only variable
cost i.e. Rs. 40
• Export price: Min. 40 to maximum X based on market conditions.
Export Pricing
• 2. Market based pricing
• Cost based pricing are set based on the cost of production with
little focus on market conditions.
• Market based pricing takes into account market conditions,
competition, and customers requirements.
• 2.1 Premium pricing strategy
• Exporter exploit the market by fixing the price of the product at a
considerably higher level.
• This strategy focus on both i.e. cost consideration and market
dynamics.
• Marketers create the unique positioning and differentiate the
product from the competition through communication.
• E.g. Apple, Sony TV, Gaming Console, L'Oréal cosmetics.
Export Pricing
• 2.2 Penetration pricing strategy
• Exporter price the product at the lower level, some time below
the production cost, to gain market share and then establish its
position in the long-run.
• Firms initially charge lower price to create the demand, and then
expand its business.
• Firms may incur loss for some time, then as market demand will
increase, make profit (higher volume offset the loss).
• 2.3 Market skimming pricing
• It is a proactive strategy for exporters – first understand the
foreign market competition and market conditions.
• If there is a void in the market and entry of similar products is
expected, then skimming strategy is used.
Export Pricing
• A short window is available for the exporter to maximize revenue
and charge the higher price.
• When products are in the introduction phase of PLC in the
country – early adopters are willing to pay higher price.
• E.g. High-tech products – all mobile phones marketers reduce the
price by 10 to 20% within a year.
Transfer Pricing Strategy
• Prices of goods transferred from a company’s operations or sales
units in one country to its subsidiaries elsewhere.
• It refers to intra-company pricing, may be adjusted to enhance
the ultimate profit of the company.
• E.g. Nike produces its product components in China, assemble it
in India, and sell it in USA.
• Four ways of setting the transfer price
• 1. Sales at the local manufacturing cost plus a standard markup
• 2. Sales at the cost of the most efficient producer in the
industry plus a standard markup
• 3. Sales at negotiated prices
• 4. Arm’s-length sales using the same prices as quoted to
independent customers
Benefits of Transfer Pricing
• For example, US based firm has two subsidiaries: India and
Europe.
• Indian unit produces goods and send it to Europe which in turn
market the products.
• Europe subsidiary has to pay a price to Indian subsidiary.
• In 2012,
• Indian company charged Rs. 10,000 and made a net profit of Rs.
2250 (Tax rate: 25%), and Europe subsidiary made a net profit of
Rs. 4500 (Tax Rate: 50%). Total profit of company: 6750
• In 2013,
• Indian company charged inflated amount Rs. 14,000 and made a
net profit of Rs. 5250 (Tax rate: 25%), and Europe subsidiary
made a net profit of Rs. 2500 (Tax Rate: 50%). Total profit of
company: 7750
Price Escalation
• Price escalation refers to the added costs incurred as a result of
exporting products from one country to another.
• There are several factors that lead to higher prices:
• Costs of Exporting: prices are raised by shipping costs, insurance,
extra packing, and other costs etc.
• Taxes, Tariffs, and Administrative Costs: These costs results in
higher prices, which are generally passed on to the buyer of the
product
• Inflation: Inflation causes consumer prices to escalate that
eventually exclude many consumers from the market
• Middleman and Transportation Costs: Longer channel length, and
higher margins may make it necessary to increase prices
• Exchange Rate Fluctuations : Currency values swing vis-à-vis
other currencies on a daily basis, which may make it necessary to
increase prices.
Price Escalation
The Lower Prices are at Home
New York London Paris Tokyo Mexico City
Aspirin $ 0.99 $ 1.23 $ 7.07 $ 6.53 $ 1.78
Movie 7.50 10.50 7.89 17.29 4.55
18-7 Levi 501 jeans 39.99 74.92 75.40 79.73 54.54
Ray-Ban sunglasses 45.00 88.50 81.23 134.49 89.39
Sony Walkman 59.95 74.98 86.00 211.34 110.00
Nike Air Jordans 125.00 134.99 157.71 172.91 154.24
Nikon camera 629.95 840.00 691.00 768.49 1,054.42
Los Angeles Madrid Stockholm Berlin Rome
Mariah Carey CD 16.22 16.09 17.82 15.31 20.67
Windows 98 117.99 123.94 179.79 211.20 264.46
Diapers 13.52 5.03 5.42 6.86 10.55
SOURCE: Norihiki Shirouzu, “Luxury Prices for U.S. Goods No Longer Pass Muster
in Japan,” Wall Street Journal, February 8, 1996, p. B1; and Elizabeth Fleick, “The
Cost of Europe: Buyer Beware, Europeans Are Getting Mad as Hell about Prices,”
Irwin/McGraw-Hill Time International, December 13, 1999, p. 38.
Price Escalation
• How to Lower the Effects of Price Escalation
1. Lower cost of goods
• Eliminate features or product quality
2. Lower tariffs through
• Persuading foreign country’s government
• Modification of product to fit in another class
3. Lower distribution costs through
• Eliminate or reduction of middlemen
4. Using Foreign Trade Zones
• Special incentives for exporting
Global Pricing Alternatives
• Extension/Ethnocentric
– Price is the same around the world
– Importer absorbs freight and import duties
• Adaptation/Polycentric
– Permits subsidiary to establish price
• Invention/Geocentric
– Consideration of both: local and global factors
– Intermediate approach
Thank You
Communications

as Prentice Hall
Introduction
• Why marketing communication is important?
– Educate the customers (awarness, attributes&benefits, brand
name)
– Differentiate (value compare to competitors)
– Persuade customers to buy (sales)
• Basic communication model
Introduction
• Communication effectiveness depends on:
– Similarity and understanding of customers
– Level of noise or barriers in the communications
– Avaliability of suitable media
• What will happend in the international markets?
– Customers are new
– Similar media may not be available
– Different language
– Different regulatory framework
• Above factors create the noise or act as barriers for the
effective marketing communication.
Micromax: India v/s Africa
• Micromax in India and South Africa in 2011
• Micromax India promoption
– Cricket sponsorshipi (IPL)
– Social media and blog
– Advertising (TV&Print)
– Cobranding with MTV
– Celebrity Endorsement e.g. A.K.
• Micromax South Africa promotion
– Africans were not great entusiastic about cricket
– No local premier league
– TV and Print media were not strong
– Internet penetration was low
– Less developed local film industry
Micromax: India v/s Africa
• Other factors of African market:
– Target market: young customers, age: 18-34
– Unrelaible network service
– Customers generally keep 2 handsets and price sensitive
– Use mobile phone to be updated
• Can Micromax use indian experience in Africa?
– No – Why? - country specific factors (CSF)
• How MM should design communication plan for the African
market?
– Internet based campaign
– Customized communication
• When company enter in forein markets, they need to focus
on those CSF – may act as communication barriers.
Communication Barriers
• What are the communication barriers faced by marketers in
international market?
• 1. Language
– Different language lead to wrong translation and less vocabulary.
E.g. Tagline translation
– Pepsico: ‘come alive with pepsi generation‘ (US, India)
– Pepsi will bring your ancestor back from the dead (Taiwan) –
customers were confused.
– Mcdonald: I am loving it (India), I like you (China)
– Nike logo: Air Max product logo (Multiple countries)
– Arab countries: Allah (customers were furious and company
withdraw the product line)
– Xerox Tagline: We taught the world to copy (Russia)
• 2. Govt. Control and regulatory agencies
– Alcohol beverages, cigarates, and tobbaco products advertisement
prohibited.
– Direct advertisemnet to childern is not allowed (satey and health)
– Comparative advertisemens (CCI)
– Medical and Health related products (only OTC products)
– Food & Beverages – all claims advertise need to be supported by
scientific proof.
– Women: Ad should not portray their derogateory image.
– Advertisemnet – no violation of traffic rules and promote safe
practices
– Advertising agencies association of India – self regulatory body.
• 3. Media availability
– Appropriate media creates the desired impact e.g. TV.
– Availability of TV, Print and Internet media varies.
– E.g. Dove ran a youtube campaign ‘every woman is beautiful‘.
– It was very successful and brand received huge exposure due to
selection of right media – youtube (Internet).
– Campaign did not click and sales did not incereased in countries
where internet penetration or speed was low. E.g. India,
Bangladesh, Middle East, Africa.
• 4. Local norms and sentiments in communications
– Firms may fail to understand the local sentiments and create
advertising mishap.
– HSBC bank used cosmetically enhanced Sumo in advertisement to
commincate the fixed interest rate (Japan).
– Message: Fixed interest rate of the bank is not goining to vary with
time – as strong as Sumo Wrestler.
– Suno wrestling is one of the oldest and most respected sport in
Japan.
– Japanees people‘s sentiment hurt and accused HSBC bank for being
culturally insensitive.
• 5. Economic Difference
– Economic difference in the country affect the types of the media
used, positioing and message strategies.
– E.g. Burkina Faso – poorest country in the world (per capita income:
$300)
– Luxembourg – richest country in the world (per capita income: $81,
800) – high buying power.
– Coca Cola in Faso: only sales promotion, positioing: common soft
drink, Message: quenching the thirst
– Coca Cola in Luxembourg : Sophisticated TV Advertisement,
positioing: Sustanibility and environment, Message: building
awarness about global warming
• 6. Country culture
– Culture of a country has the most significant effects on the
marketing communication.
– E.g. Japan (High context culture) v/s U.S. (Low context culture)
• Japan
– Less information in ad
– Context speaks itself (visuals are important)
– Emotional appeal
– Frequency of ad should be low
• US
– More information is required
– Direct information and discussion about product
– Rational appeal
– Frequency of ad should be high
• 6. Country culture
– E.g. Coca Cola in China – focus on social status and use celebrity to
influence customers. (high power distance score)
• Due to CSFs, managers faced the dilema:
• Standardize communication
– Global Image e.g. Coke
– Economies of scale e.g. Advertising agency, production cost.
• Customized communication
– Reduction in noise (effective communication)
– Localness (high marketability)
Standardization/Customization
• What aspects of advertisement are subject to
standarization/customization?
• 1. Message – same message but local celebrity/character in
the advertisement e.g. Lux, Dove
• 2. Media – Internet/digital – less subject to customization.
• 3. Advertisement appeal – Rational v/s Emotional – based
on the country culture.
• 4. Tagline – do not translet – adapt based on the
requirement e.g. Suzuki – kitana Deti hai, Qatar – make your
life better.
• 5. Art – color, background, organization of ad (print) etc.
Gillette Launches Mach3 Globally
TAG Heuer’s Global Campaign
Coca-Cola Adaptation
International promotion and Positioning
KRONENBOURG
France = mass market TETLEY TEA
UK = up market France = up market
UK = massmarket
BUDWEISER
UK = young, premium HEINZ BAKED BEANS
US = fathers’ drink UK = staple
Russia = luxury
Thank You
Global Marketing Distribution
Introduction
❖ Successful international marketing involves strategic
combination of production – distribution strategy.
❖ Production: countries where production cost is low e.g.
China
❖ Distribution: countries where customers exist e.g. India
❖ Production can be done at any strategic location but
distribution must be close to customers.
❖ E.g. Nike has 700 production units in 51 countries for low
cost advantage.
❖ Microsoft outsource X-box production from China but
have its own efficient distribution system.
❖ Motorola produces semi-conductor in 7 low cost countries,
but have its marketing offices in USA, Canada, and Europe –
where majority of the customers exist.
Introduction
❖ Distribution is very crucial aspect of international
marketing:
❖ It takes long time to establish, specifically in foreign market
❖ It performs multiple functions e.g. flow of information,
goods, payment collection, after sales service etc.
❖ Distribution channel for international markets
❖ Basic objective of distribution is to make products available
to customers in an efficient way than competitors.
❖ Broadly it can be achieved by two ways:
❖ 1. Developing own distribution channel
❖ High investments and better control
❖ 2. Using existing independent channel in host country
❖ Less investments and poor control
Basic Channel Structure
❖ Producer-consumer relationship
❖ Direct channel
❖ No profit margin sharing with channel members
❖ E.g. internet marketing, direct mail, tele-marketing, co. owns
sales force/stores – IKEA, Atlas Cop-o.
❖ Producer-retailer-consumer
❖ Retailers have grown in size and have command over market
❖ No additional intermediaries
❖ E.g. Big Bazar, Walmart, D-Mart, Carrefour etc.
❖ Producer-wholesaler-retailer-consumer
❖ If retailers are small in size, firms need wholesalers to break
assortment.
❖ Wholesalers buy in bulk and distribute to retailers in small
quantities.
❖ Traditional distribution system – e.g. FMCG, Pharma industry.
Basic Channel Structure
❖ Producer-agent/distributor/wholesaler-retailer-consumer
❖ Exporters prefer this type of channel structure.
❖ Agents facilitate the transaction between producer and
distributors.
❖ Marketers do not need to build the distribution system
❖ In case od small firms, agent/distributors use their own brand
name to sell products.
❖ Distributors take the responsibilities of storage, logistic, and
marketing.
Channel Structure: Consumer Products
Channel Structure: Business Products
Channel Options
Channel Options: Foreign Country
❖ Manufacturer - to - Sales Subsidiary
❖ Company can reach to customers through its own subsidiary.
❖ High control over the sales and marketing activities.
❖ Stay close to market and customers
❖ It needs huge investments that is irreversible
❖ E.g. BMW, Mercedes in India
❖ Manufacturer - to - Agent/Merchant
❖ Manufacturer export products from home country to
agent/merchant in the foreign country.
❖ Agent mostly does not take the title of the product but
facilitate the sales.
❖ Agents source products from multiple producers.
❖ Manufacturer - to – Own retail outlets
❖ Large firms with multi-country operations exercise such
option.
❖ High investment is required but it provides full control over
selling process.
❖ Company may have own outlets or franchisee based.
❖ Strong brand name is required for attracting franchisee.
❖ E.g. IKEA, ToysRUs, McDonald, KFC, etc.
❖ Manufacturer - to - Global retailers

❖ Manufacturer sell the product directly through global retailers.
❖ Global retailers generally sell multiple brands and source
products from several suppliers.
❖ E.g. Walmart, Tesco, Carrefour etc.
❖ Manufacturer - to - Trading house
❖ Manufacturer sell the product to export house in the host
country.
❖ Export house sell these products to distributors/retailers.
❖ They take the responsibility of promotion and distribution.
❖ Manufacturers have less control over how products are
marketed in the foreign country.
Channel Options: Home Country
❖ Manufacturer - to - Domestic middle man
❖ Manufacturer sell product to middleman in the home country.
❖ Offload the responsibility of exporting and distribution in foreign
markets.
❖ This option is generally used by small firms – not having resources
and knowledge for international marketing.
❖ Less opportunity to build brand in global market.
❖ Manufacturer - to – Export marketing company (EMC)
❖ Manufacturer sell product to export house in the home country.
❖ Export marketers are expert and buy products from multiple
suppliers.
❖ E.g. Trading houses in India
❖ Manufacturer - to – Broker (via sales force)
❖ Based on commission, brokers facilitate exchange between buyers
and sellers.
❖ J C Penny, USA, buy handicraft products from India through brokers.
Channel Selection Criteria
❖ What type of distribution system international firm should
select?
❖ It depends on several factors:
❖ Desire for marketing control
❖ Sharing of responsibilities
❖ Willingness to invest
❖ Market coverage
❖ Nature of product/service
Channel Structure
❖ Distribution structure of any country evolves overtime to
its present form.
❖ Each country has its own distribution system and structure
that is country specific. E.g. India
❖ Firms while entering in the host markets prefer distribution
structure similar to home country. E.g. US to China.
❖ Firms have three options while entering into host markets:
❖ Develop new distribution system e.g. IKEA
❖ Adapt to existing distribution system e.g. FMCG
❖ Adjust existing distribution system e.g One Plus Mobile
Japanese Distribution System
❖ It is a closed distribution system and had created several
problems for MNCs.
❖ Few US firms exited Japanese market due to its clumsy
and highly inefficient distribution system.
❖ Primary issue: excessive length of the channel
❖ Sogo has full control over the distribution system.
❖ Distributors can not participate in other channels or
trade with new firms without permission of the Sogo.
❖ Japanese have Keirestu – chain of manufacturers,
wholesalers and retailers – operates based on trust
rather than profit.
❖ Domestic manufacturers’ supremacy can not be question
by anyone.
❖ Foreign firms faced several problems in Japanese market
e.g. difficult to access the local distribution system.
❖ Govt. supported Keirestu and did not allow to open large
retail stores – resulted in high profit sharing, and high
distribution costs for foreign firms.
❖ Due to pressure from US govt., Japanese govt. brought
several reforms in the distribution in 1990.
Chinese Distribution System
❖ China is having three tier distribution system.
Producer 1 Producer II
Wholesaler Wholesaler Wholesaler
Whol Whol Whol Whol

Wholesaler
esaler esaler esaler esaler
Retailer Retailer Retailer Retailer Retailer

China Distribution System
❖ Wholesale in tier 1 control the entire distribution system
– state owned enterprises.
❖ Tier 1 wholesalers are responsible for assortment
breaking and assigning specific products to tier ii
wholesalers.
❖ Tier ii wholesalers located in town and small cities
distribute products to retailers.
❖ The distribution system is known as ‘xitong’ – system
driven.
❖ In 1994, due to retail reforms, private firms were allowed
to enter into distribution.
❖ Till 2004, private firms were not allowed to develop its
own distribution system.
❖ Finally, economic development led to modern structure –
supermarket, convenient stores, and departmental stores.
Channel Performance Management
❖ Firm performance largely depends on the performance of
the channel partners.
❖ It is difficult to manage the performance of the channel
members in international markets due to:
❖ Parties have different goals
❖ Competition for the resources at distribution level
❖ Power – difference between producer and global retailers
❖ Cultural difference between home and host country
❖ Performance parameters
❖ Costs
❖ Service level
Channel Performance Management
❖ How to improve channel performance:
❖ Goal alignment through communication
❖ Minimizing channel conflict e.g. Insurance agent
❖ Detail contract that specify the role and responsibilities of
both parties.
❖ Building collaborative relationships and mutual benefits
❖ Regular feedback on market and performance
Thank You
22
Global Entry and Expansion Strategies

as Prentice Hall
Introduction
• When a company decides to expand internationally, it faces
a host of decisions:
– Which countries should it enter and in what sequence? (market selection)
– What criteria should be used to select entry markets? (criteria)
– How should it enter in new markets? (entry modes)
– Should the new market be supplied with imported products from the
home market or third countries or locally manufactured? (product
sourcing)
– Should the offering be customized to meet local demand or be
standardized across market? (marketing program)
• Decisions are not mutually exclusive and combined to improve
firm competitiveness.
Introduction
• How do companies select their country market for
internationalization?
– Mahindra & Mahindra entered in USA to market ‘Scorpio’.
– Company incurred losses and failed.
– Reasons: difference in choice and preference, strict pollution
control norms in the USA.
– Market selection is an important decision for the success of the
firm.
• Objectives of International Market Selection
– Saturated home market and Growth
– Market penetration e.g. Africa, and India
– Cost reduction e.g. special economic zone e.g. Kutch
– Economies of scale e.g. semiconductor business
– TAX Administration e.g. Kutch
– Competitive pressure
Introduction
• Variables affecting market selection
• 1. Economic variables
– Economic growth
– GDP and GNP per capita
– Inflation rate
– Openness to foreign trade
– Disposable income
• 2. Social/cultural variables
– Literacy rate and educational level
– Existence of middle class
– Power distance and individualism presence
– Religious bias
– Outlook towards foreign business
– Similarities and differences towards home market
Introduction
• 3. Political environment related variables
– System of government and political stability
– Government involvement and restrictions in the business
– Development priorities
– Strong opposition parties
– Ease of entry
• 4. Demographical variables
– Population size, growth, and density
– Urban and rural divide
– Port infrastructure and efficiency
– Physical distribution efficiency
– Natural resources
Introduction
• 5. Technological variables
– Internet penetration rate
– R&D activities and institution
– Patent obtained and filed
– Universities with global ranks
Entry and Expansion Decision
• How to enter in the foreign market? – optimum entry mode.
• Objective is not to minimize the risks only (e.g. exit barrier)
but also to provide marketing advantage to firm.
• Factors affecting the company’s entry strategy
• International Factors
– Capability to manage the subsidiary
– Availability of resources
– Knowledge of host country market
– Desire for marketing control
• External Factors
– Entry barriers in host country
– Availability of business partners
– Cost of capital in the host country
– Labour availability and political stability
Entry and Expansion Alternatives
• Possible entry modes or alternatives:
• 1. Export
– Indirect export
– Direct export
• 2. Contractual agreement
– Contract manufacturing
– Licensing
– Franchising
• 3. Joint venture
– JV in production or distribution only
– JV in production and distribution
• 4. Wholly owned foreign enterprise
– By development
– By acquisition
• Indirect export
– Simplest form of internationalization
– Manufacturer does not require any knowledge of the foreign
market/buyer.
– Manufacturer sell the products to intermediaries in the home
market who sell it to merchant/buyer in the foreign market.
– Intermediaries are specialist in marketing of the products in foreign
markets. E.g. export house or merchant.
– It allows manufacturers to focus on production.
– Indirect export does not provide any experience to manufacturer in
cross-border marketing.
– Manufacturers are totally dependents on merchants for feedback,
product modification or development.
• Direct export
– Manufacturer is responsible for all the export related activities,
market selection, buyer, transfer of product, price negotiation,
collection of payment, and feedback.
– Direct export increase risk of mfg. compare to indirect export but
also enhance the profit.
– Direct export provides the rich understanding of the export process
and medium understanding of foreign markets.
– Success in foreign market build strong brand/reputation of the mfg.
and open new opportunities.
– Mfg. have less control over the marketing of products in the foreign
country.
– E.g. Rolls Royce, and BMW were exported to India through
independent agent/distributor.
• Contract Manufacturing
– Popular mode of entry for large firms which do not want to engage
in production.
– Firms outsource production from the contract manufacturers-
located in low production cost countries. E.g. India China
– Firms engage in other important activities e.g. R&D, Marketing.
– Contract manufacturers are specialist in production and have
advanced manufacturing technologies and facilities.
– Firms design detailed contract with contract mfg. specifying every
details, e.g. quality, cost, delivery etc.
– E.g. Coca-Cola, HUL, LG, Microsoft Xbox etc.
– Contract mfg. provides flexibility and cost advantage to the
marketing firm.
– Risk for the marketing firm as providing information about product
design and technology.
• Licensing
– Contractual mode for entering in the foreign market: production +
Marketing.
– Entering firm (licensor) agree to allow a local company (licensee) to
use the relevant technology for commercial production for a
specific time period.
– In return, licensee pay the royalty – fee associated with the license:
one time payment or % of the sales.
– Licensee uses the brand name of the licensor for marketing.
– licensor can enter in the foreign market quickly without much
investments.
– Licensee can become the competitor of the licensor after the expiry
of the contract.
– E.g. Indian pharmaceutical firms
• Franchising
– Useful mode of entry for companies having marketing excellence
better than technological excellence.
– Very popular among hotel and restaurant industries.
– In licensing, technology is licensed but in franchising, entire
business model and marketing techniques are transferred to
franchisee.
– Franchiser develop the franchisee agreement – rights and
responsibilities of both parties.
– Franchisee pay the initial fee and monthly fee based on the sales to
franchiser.
– Franchiser can enter the foreign market without much investment
and can easily windup the business.
– Franchiser has to continuous monitor the marketing and
operational activities of the franchisee.
– E.g. McDonald, KFC, Subway, Pizza Hut etc.
• Joint Venture
– International company enters a new country with equity
participation in a local company.
– A new jointly owned business entity is formed. E.g. Tata Sky
– Foreign company reinforce the new entity with transfer of
technology and management expertise.
– Local company provides the benefits of in-depth understanding of
the local market, and access to channel of distribution. E.g. Sony
and Ericson
• Types of Joint Venture
– Integrated joint venture
– JV in production
– JV in distribution
• Integrated Joint Venture
– Foreign company make equity participation in manufacturing and
production with local partner.
– Manufacturing partnership allows entrant firm to avoid trade
barriers, and get access to production related resources.
– Distribution partnerships provide access to local distribution system
and get the firm close to market.
– Provide instant access to local market knowledge and help to adapt
the marketing program.
– E.g. Hero-Honda, Maruti-Suzuki, Bajaj-Allianz etc.
• JV in Production only
– Equity participation in manufacturing only to join local partner.
– Similar to licensing agreement but entrant firm have equity
ownership.
– Entrant firm take the responsibility of the R&D, marketing, and
distribution.
– Local firm may not have strong distribution network or not found
attractive to entrant firm.
– E.g. Uber and Volvo
• JV in Distribution only
– Equity participation in only sales and distribution to with local
partner.
– It is done when local firm’s distribution is very strong.
– For production, entrant firm can exercise other options: exporting,
contract manufacturing etc.
– Foreign firm maintains higher control over production and
marketing.
– Knowledge and experience is gained through local distribution
partner.
– Selection of right partner is very important.
• Wholly Owned Foreign Enterprise
– It involves greater financial investments to foreign market.
– By development- establishment of production and distribution.
– By acquisition – acquisition of the local firm.
– Development option is very time consuming.
– Acquisition option provides quick start to operation and provide
access to local market knowledge and resources.
– E.g. HUL, P&G acquired several small production firms.
– Walt Disney owned 100% equity stakes of Marvel Entertainment.
• Wholly Owned Foreign Enterprise
Advantages
– Full ownership and no profit sharing
– Desired production and marketing control
– High adaptability to market change
– No sharing of advance technology and marketing techniques with
local firms
Disadvantages
– Huge investments in subsidiary development or acquisition
– Difficulty to bring local flavor in short term
– Govt. may place mandatory local partnerships
Entry mode selection criteria
• How to select a specific entry mode?
– Marketing and production control
– Resource requirements e.g. investments
– Flexibility in entry mode i.e. cost and time required to withdraw
from foreign operation.
– Country barriers in entry mode
– Speed- time required to enter the market
Entry mode selection criteria
• How to select a specific entry mode?
Entry Modes
Criteria Export Contract JV WOFS

Manufacturing
Control Low Medium High Very High
Resources Low Medium High Very High
Flexibility High Medium Low Very Low
Speed Very High High Medium Low/Medium

Thank You
The Global Cultural Environment

as Prentice Hall
Global Cultural Environment
• When a company decides to expand its business in
international markets, marketing managers faced a
dilemma:
• How to design marketing programme?
– Standardize (focus on similarities across the markets)
– Customize (focus on differences across the markets)
– Combination (Standardization + Customization) (focus on
similarities and differences across the markets)
• Managers of the global firms adopt the combination
strategy.
• The degree of adaptation/standardization depends on the
differences and similarities across the market.
• Why managers use the combination strategy?
– Create higher value for customers
– Improve marketability of the products
• How to create value for the customers?
– Understanding customers needs
• Several factors influence customers needs, one of the
important factors is ‘Culture’.
• What is culture?
– Ways of living, Lifestyles, value systems, tradition and belief.
– Collective programming of the mind which distinguishes the
members of one group from another.
– Common values shared by the group of people or society.
• Walt Disney exported US culture based theme park in Japan
and Europe.
• Japan • Europe
• Family entertainment culture like• French do not like US based
US theme park
• Enjoy fairy-tale characters (Disney• Prefer local forms of
characters) entertainment
• Enjoy North-American fast-food • Prefer local food
• Believe in short family trip at any• Prefer long-vacation
time during the year • Paris Disneyland: financial crisis –
• Tokyo Disneyland: successful adopted to the local culture
• Culture has the major impact on marketing activities.
– E.g. Advertisement
– Lux promotion in Japan – sex appeal is considered offensive.
– American Express – Couple (US) and Family (India)
– Colors : white – happiness, Birth (US), Death (China)
– BAGBAN Movie was very successful in India.
• Various marketing activities are associated with festival:
– Movies released during Diwali
– Cadbury advertisement during Rakhi and Diwali
– PK Movie
• Culture and its manifestation on human behavior is very
complex.
• To understand culture, it is important to recognize the
elements of the culture.
• 1. Religion
• Strong influence on people attitude, values and behavior at
individual and society level.
• Different religions have different beliefs that shape the
behavior of people.
• Marketer should ensure that their products and services are
not offensive to those beliefs.
• E.g. Islamic banking, Beef is not consumed by Hindus, Jain
do not consumer root vegetables etc.
• 2. Values and Attitude
• Values are the enduring beliefs that shape human behavior.
• Values set the standards and resolve conflict between
alternatives and decide what is acceptable and what is not.
• Common values at the society level and individual level may
be different. E.g. Honesty v/s corruption
• Deewaar movie – values of the Amitabh Bachchan and
Shashi Kapoor. Value – Attitude – Behavior
• Values also vary from country to country and affects
marketing decisions.
• Values: Freedom (USA), Affection and Belongings (Japan),
and Safety (Arab Countries)
• How to design an advertisement of a car?
• 3. Aesthetics
• The sense of what is beautiful and what is not beautiful.
• What represents good taste as opposed to tasteless?
• Visual–embodied in the color or shape of a product,
label, or package
• Styles–various degrees of complexity, are perceived
differently around the world.
• Red–associated with blood, wine-making, activity, heat,
and vibrancy in many countries but is poorly received in
some African countries.
• White–identified with purity and cleanliness in the West,
with death in parts of Asia.
• Gray–means inexpensive in Japan and China, but high
quality and expensive in the U.S.
• Aesthetics
• Individuals have different sense perceptions, hence they
attach varying level of importance to design and beauty.
• It has implications for the product design, colors, music in
the ad, packaging etc.
• 4. Social Organization
• How social organization is formed and role of different
members in the organization influence decision making.
• In India, father is the head of the family and has the key
responsibilities and decision making power.
• In Kerala, women have higher status than men.
• Structure of the family:
• Nuclear (US)
• Nuclear (Metro) + Joint Family (semi-urban and rural) –
implication for the marketing communication. E.g. Axis Bank
Home Loan.
• Van-Husain Shirt advertisement – focus on both, husband and
wife for decision making.
Culture and Decision-making
Consumer decisions are Language and religion

culturally influenced affects how markets
- husband and wife - communicate
equal roles? - grouping countries by
- what influence from language or religion?
children? - grouping markets within a
core language?
- does one family
- is religion a useful criterion for
member dominate in grouping?
choice?
• 5. Material Culture : Related with several factors.
– Clothing
– Decorative art
– Body adornment
– Homes
• 5. Material Culture
• How people adopt the technology in the material sense?
• Technology gap between develop and developing countries
remain vast.
• India has adopted technology at the lesser rate compare to
US and other developing countries.
– Kiosk at Airport
– Vending Machine for coke and Pepsi
– Online banking
– Online channel for marketing of the products
• 6. Languages
• Countries use different languages, so firms should be capable of
communicating the customers in an effective manner.
• Language has major implication for marketing communication.
• Advertising copy, packaging, product manual etc.
• Brand name: hoover
• Meaning : vacuum cleaner (UK), In India, we don’t understand it.
• Non-Verbal communication – preference is different in India and
Japan.
• India – Strong verbal persuading ability is considered a suitable
quality.
• Japan – customers prefer to be communicated less through
verbal communication and more through non-verbal – posture,
and gesture.
• 7. Education
• The level of education also influence the culture of the
country and has implications for the marketing.
• Highly educated country/customers – rational buyers, look
for the explanation for the claims made by the firm.
• Education level of the women influence:
– Food consumption pattern e.g. prefer nutritious foods
– Advertisement
– Selection of brands
Elements of culture - comparisons & contrasts
Japan  North America

Myth / Hero Group Individual
Emphasis
Attitude Self-Denial Self-Expression

Dependence Independence
Emphasis Obligations Rights
Style Cooperation Competition
Assumptions Interdependence Independence
View of Self Organization Individual

Man With a Skill
• How to measure the culture of any country?
• Hofstede collected data from 70 countries and from 60K
respondents to identify the dimensions of the culture.
• Identified 5 dimensions of national culture, out of which 4
are important for international marketing:
– 1. Power-distance
– 2. Individualism v/s collectivism
– 3. Masculinity v/s femininity
– 4. Uncertainty avoidance
• These dimensions are useful for various marketing
decisions, specifically for designing communication
strategies.
• Power-distance index
• PDI is the extent to which the less powerful members of the
society accept and expect that power is distributed
unequally.
• High PDI society allow the unequal distribution of wealth
and power and is hierarchical in nature.
• They believe that some are there to rule and others are to
be ruled.
• Great deal of respect for those who are in power.
• A low PDI country would emphasize on equality in the
society.
• e.g. VIP lounge, Business Class service, BMW car, celebrity
endorsement.
• Individualism index – extent to which individuals are
integrated into groups.
• High individualism – ties between the individuals are loose,
and everyone is expected to look after him/her self and
immediate family.
• High individualism – focus on self and personal benefits
rather than group.
• High collectivism – people are integrated into strong
cohesive groups and take care of extended family.
• High collectivism – focus on mutual benefits and
relationships are important.
• e.g. car and credit card advertisements.
• Masculinity index – represents the value orientation of the
people.
• High Masculinity– people behave in an assertive and
competitive way.
• High Masculinity – men value such as power, assertiveness,
success, and achievement are more important.
• High Femininity – people behave in modest and caring way.
• High Femininity - blur the lines between gender roles and
focus on the quality of life.
• e.g. luxury products are positioned as symbol of success and
status.
• Uncertainty Avoidance index – deals with society’s tolerance
for uncertainty and ambiguity.
• It shows the extent to which people feel comfortable or
uncomfortable in uncertain situation.
• High Uncertainty Avoidance – people are more emotional,
live in a structured way and are rigid.
• People like formal rules and fixed patterns of life as means
of enhancing security
• Low Uncertainty Avoidance– people are more tolerant of
different opinion, live with few rules and are pragmatics.
• e.g. digest ambiguous advertisement, do not mind late
delivery of products.
Hofstede’s cultural dimensions – scores by
countries
PDI IDV MAS UAI LTO
Arab World 80 38 52 68
Austria 11 55 79 70
Denmark 18 74 16 23
Finland 33 63 26 59
France 68 71 43 86
Germany 35 67 66 65 31
Hong Kong 68 25 57 29 96
India 77 48 56 40 61
Italy 50 76 70 75
Japan 54 46 95 92 80
Mexico 81 30 69 82
Netherlands 38 80 14 53 44
Peru 64 16 42 87
Portugal 63 27 31 104
Sweden 31 71 5 29 33
http://www.geert-hofstede.com/marketing.shtml
Advertising styles
De Mooij, 2004
High and Low Context Culture
Hall’s Classification: Introduced context in the culture and
how does it influence communication.
• High Context • Low Context
– Information resides in context – Messages are explicit and specific
– Emphasis on background, basic – Words carry all information
values, societal status – Reliance on legal paperwork
– Less emphasis on legal paperwork – Focus on non-personal
– Focus on personal reputation documentation of credibility
– Frequency of communication is – Frequency of communication is
less high
– High bonding among people – People are more logical,
individualistic and action oriented.
• Saudi Arabia, Japan, India • Switzerland, U.S., Germany
• E.g. Ads are context based than • E.g. Ads are comparative, rational,
facts e.g. Cadbury, Tanishq. and factual.
High and Low Context Culture
Factor/Dimension High Context Low Context
Lawyers Less Important Very Important

A person’s word Is his/her bond Is not reliable–get it in writing
Responsibility for Taken by highest level Pushed to the lowest level

Organizational error
Space Common or joint space Private space maintained
maintained
Time Take time commitment Take time commitment

seriously casually
Competitive Bidding Infrequent Common
Cultural and Marketing
• Culture and information search
• Customers vary in their information search while buying
products.
• E.g. Americans are less information savvy, while Germans
carry extensive information search.
• Marketers should provide more information to Germans
than Americans.
• Culture and decision-making
• Culture of a country affects the decision making.
• e,g. Individualistic culture – quick decision making (USA)
• Collective culture – slow decision making (India)
• Culture and perceived risk
• Different levels of risk is perceived by the people of different
countries for the same products.
• Place varying level of value on the safety clause attached to
a product.
• E.g. product warranty, terms and conditions of after sales
service, online shopping (high uncertainty avoidance)
• Culture and product perception
• BMW is perceived a luxury car in India.
• Perceived regular car in Netherland.
• American believes that Indian products are of not good
quality.
• Culture and persuasion
• India – Prefer repetitive information about the product from
the sales person.
• Japan – Prefer less verbal and more Non-verbal
communication from sales person.
• Russia – Provide general information first, then help the
customers to arrive at the decision.
• America – sales person provide specific information and ask
to make broader generalization.
• German – prefer to know about the background and
technology first in addition to rich information about
product.
Thank You
Segmentation,
Targeting and Positioning

as Prentice Hall
Introduction
• Segmentation, targeting, and positioning are three the most
powerful tools available to the marketer.
• Segmentation: The process of dividing the world market into
distinct subsets of customers that have similar needs.
• Market segment: It is a subset of a larger market of people who
will respond similarly to a marketing mix.
• A market segment should meet the following criteria:
– Distinct from other segments (different needs)
– Homogeneous within the segment (common needs)
– Respond similarly to a market stimulus
– Reached by a marketing mix
Introduction
• Targeting: The process of selecting a market segment and
addressing that segment with a marketing mix tailored to meet
the needs, wants, and resources of that segment.
• Positioning: It is a process of establishing a place or position of a
company or product in the minds of consumers.
• Automobiles are positioned based on:
– Style, price performance
– Economy v/s luxury
• Challenge: How to make correct decisions regarding STP in the
global market because countries are different in-terms of
– Economic status
– Socio-cultural values
– Leagal rules
– E.g. Mercedes positioning – luxury car (Globally), Taxi (Europe)
– Mcdonald – Fast-Food outlet (Globally), sit-down restaurant (Indonesia)
STP in International market
• A company can not create value with a single marketing program
for all the people in a country or in the global market.
• Different people have different functional, experiential and social
needs.
• Functional needs
– Connected with the product features and its use
– Desire to get benefits in-terms of effectiveness, durability, speed, ease of
use, and cost-saving.
– E.g. India – fuel efficient v/s durable car.
• Experiential needs
– Concerned with consumers feeling for the product
– e.g. Pleasure or displeasure from the features of the product
• Social needs
– Different social accomplishment out of the use of the product
– E.g. Social status through exterior features (refrigrator)
STP in International market
• To create unique value through a tailored marketing mix,
managers need to:
– Understand the segment in terms of education, age, income, and
psychological orientation.
– Size and growth of the market in terms of population for targeting –
resources and revenue
– Understanding customers need and competition for positioning decision
Segments in International market
• 1. Unique Segments
– Country specific
– Have unique needs
– Needs are highly connected with country culture
– E.g. India - food items, apparels
• 2. Regional Segments
– Cross country segments - within a region
– Have similar needs and preference
– E.g. Asia – family car, beauty soap
• 3. Global Segments
– Having presence in multiple countries
– Have similar needs and preference
– E.g. Young Consumers – Mobile, Laptop, softdrink etc.
Basis of Segmentation
• The segmentation process begins with the basis of segmentation:
1. Geographic segmentation
2. Demographic segmentation
3. Psychographic segmentation
4. Behaviour segmentation
5. Benefit segmentation
• Geographic segmentation:
• Dividing the world into geographic subset. E.g. Asia, Europe,
African countries.
• Advantage is proximity: markets are closer to each other and
easy to visit.
• Limitation: close markets are not always similar e.g. Japan
(developed, and high income) and Vietnam (low income and
emerging).
• Demographic segmentation:
• Dividing the world market based on age, population, gender,
income, education, and occupation.
• E.g. Based on national income: market potential (per capita)
• High income countries, e.g. Luxembourg
• Medium income countries
• Low income countries e.g. Burundi
• Demographic segmentation:
• Most affluent markets based on income: Japan, Europe, and
North America.
• Population: for low price or mass products
• E.g. India and China
• Age: global teenagers between the ages of 12 and 19
• Products: fashion, music, and lifestyle related – exhibit similar
behaviour across the countries.
• Teenagers have universal needs and can be targeted with
uniform marketing program. E.g. Coca-Cola, Sony.
• Psychographic segmentation:
• Involve grouping people in terms of their attitude, values and
lifestyles.
• VALS framework can be used to segment the market.
• Focus on the group of customers having similar values and
lifestyles. E.g. healthy, Luxurious, DIY.
• Behaviour segmentation:
• It focuses on the buying behaviour of the customers – whether
people buy and use a product and how often and how much they
use it.
• 1. Usage rate: Heavy, medium, light and non-users
• 2. User status: potential users, non-users, ex-users, regulars, first-
time users, and users of competitors products.
• E.g. Tabaco companies targeting china: Heavy smokers
• E.g. Nestle targets non-users in Pakistan for bottles water.
• Benefit segmentation:
• Focus on the numerator of the value equation – the B in V=B/P
• Customers seek the common benefit across the countries.
• E.g. music system – experience, audio quality, compatibility, easy
to use.
Global Targeting
• Segmenting is the process of dividing market into different
segments based on common needs and wants.
• Targeting is the process of evaluating and comparing the
identified groups and then selecting one or more of them as the
prospect(s) with the highest potential.
• Three criteria are used for assessing the potential of a segment:
• Size of the segment and growth potential
• Is segment large enough to generate the profit?
• Does it have high growth potential in the long-run?
• Global market to provide the opportunity to focus on small
segment in each country – become large globally – e.g. Rolls-
Royces.
• Potential competition
• Highly competitive segment should be avoided.
• Global companies face competition from the local companies.
Global Targeting
• Potential competition
• E.g. Coca-Cola faced competition from local companies – Inca-
Cola (Peru), Crazy-Cola (Krasnoyarsk).
• Generally global companies acquire the local firms.
• Compatibility and feasibility
• Is the segment is compatible with the companies long-term goals
and competitive advantage?
• E.g. economy car – expertise of the firm in luxury car.
• Is it feasible for the firm to spend required resources for the
marketing activities?
• E.g. development of advertising and distribution.
Global Target Market Strategy
• Standardized global marketing
• Mass marketing, the same marketing mix for a broad market of
potential buyers. E.g. Coca-Cola, Pepsi, HUL, P&G.
• Concentrated global marketing
• Targeted at a single segment of the global market. E.g. Apple
• Differentiated global marketing
• Targeting two or more different segments.
Global Product Positioning
• Positioning is the location of a product in the mind of the
consumer.
• Marketers generally look for uniform positioning of the product
for higher profit. E.g. Coca-Cola
• However, it is not possible to have uniform positioning in global
market due to difference among countries.
• It is possible in certain product categories:
• 1. High-tech positioning – more focus on product features and
information.
• Technical Products
– Buyers have specialized needs and
– Require a great deal of product information,
– Share a common language
– E.g. computers, chemicals, tires, financial services etc.
• Special Interest Products
– Shared interest and high involvement among users
– Common language and requirements
– E.g. Canon camera, Fuji bicycles, Adidas sports equipment.
• 2. High-touch positioning - more focus on product image
• Products that solve a common problem:
• E.g. Soft-drink, music video – quenching thirst, fun,
entertainment etc.
• Global Village products
• E.g. Fragrance, fashion, mineral water, Pizza – cosmopolitan
positioning.
• Fragrance and fashion – high price products – status.
• Mineral water and Pizza – price spectrum.
• Products with universal themes
• Some products can be positioned in more than one way.
• E.g. combination of high-tech and high-touch.
• BMW cars
• 1. Positioned based on product information – technical
characteristics – performance.
• 2. Positioned based on product image – lifestyle and status.
Thank You

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Introduction to International

©2013 Pearson Education, Inc. publishing as

 What is International Marketing?

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COMPETITIVE ADVANTAGE FOCUS

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©2013 Pearson Education, Inc. publishing as

©2013 Pearson Education, Inc. publishing as

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 The standardization and customization decision

 The management response to global market

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©2013 Pearson Education, Inc. publishing as

©2013 Pearson Education, Inc. publishing as

©2013 Pearson Education, Inc. publishing as

©2013 Pearson Education, Inc. publishing as

©2013 Pearson Education, Inc. publishing as

©2013 Pearson Education, Inc. publishing as

©2013 Pearson Education, Inc. publishing as

1976 $54 Million

1982 $87 Million

1993 $359 Million

2003 $802 Million

 Higher product development costs can be quickly

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©2013 Pearson Education, Inc. publishing as

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©2013 Pearson Education, Inc. publishing as

©2013 Pearson Education, Inc. publishing

Strategy 2: Product Extension, Strategy 4: Dual Adaptation

Example: Greeting Cards

Strategy 1: Dual Expansion Strategy 3: Product Adaptation,

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• Country of mfg. effects

– Managers charge the different prices to the same products in different

– E.g. Majority products in US are in maturity phase and in India, growth

– e.g. Xiamoi extended introduction phase of mobile, and maintain demand

– Companies generally set low price in lower income countries.

– E.g. GE developed ‘Lullaby’ ventilator for Asian markets.

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❖ Manufacturer - to - Global retailers

Wholesaler Wholesaler Wholesaler

Whol Whol Whol Whol

Retailer Retailer Retailer Retailer Retailer

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Criteria Export Contract JV WOFS

Resources Low Medium High Very High

Flexibility High Medium Low Very Low

Speed Very High High Medium Low/Medium

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Consumer decisions are Language and religion

Japan  North America

Attitude Self-Denial Self-Expression

Emphasis Obligations Rights

Style Cooperation Competition

Assumptions Interdependence Independence

View of Self Organization Individual

Lawyers Less Important Very Important

Responsibility for Taken by highest level Pushed to the lowest level

Time Take time commitment Take time commitment

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