Summary of each chapter

Week 6 – Price :

The price is the only variable in the marketing mix, which directly impacts the company’s
profits.
In order to decide the international price:
Local and Global coordination issues in international pricing
Identify the price factors in local markets
Price strategies
Organizational and ethical aspects

Factors to consider to calculate the price:

1) Cost of raw materials
2) Product adaptation costs
3) Preparing costs (labelling, packaging, origin marking, shipping packaging)
4) Transportation costs (loading and related costs, storage, shipping)
5) Document related costs (documentation preparation, certification, inspection)
6) Insurance costs (freight insurance, insurance related to the default payment)
7) Customs fees (brockerage and freight forwarder fees, custom fees, fees at the port of
exit, fees at the port of entry, insurance linked to payment default)
8) Financing costs (interests, export credit insurance, protection against fluctuation)
9) Marketing and promotion related costs (advertising, promotion material costs,
travelling costs)
10) Other costs

Price strategy:
 fixed price strategy – standardization ex: US postal service
 variable price strategy – adaptation ex: Mc Donalds
Skimming – market pricing – penetration pricing

Consumer perception:
- Brand, image, brand awareness
- The monetary and non monetary price
- Exclusive technological advantages
- Non technological advantages
- Accessorization of the product
- Scope and completeness of the product

Price positioning:
- Analysis of the direct competitors (market shares, volume)
- Comparison desired prices with those of the market (level and average price of the
product)
- Possible decisions (not entering the market, sell at expected price, change target..)
- Periodic price review
- Price tests to validate the decision (price gathering in the market study)
 - Consumer perception

2 types of fraud:
- Price manipulation
- Dumping

What can make you change the price:

- Inflation
- Raw materials with higher price
- Local taxes and customs

A few techniques to manage the rise of price:

- Reorganize distribution channels
- Eliminate or optimize expensive gadgets
- Downsize the product
- Produce or assemble in a foreign country
- Adapt the product to avoid taxes.. (ex: cars with the emission de CO2)

Local marketing costs:

- Distribution
- Publicity and promotion
- Product listing
- Network support actions
- Marketing research
- Local structure

!!INCOTERMS!!
- EXW (advantageous for the seller)
- DDP (advantageous for the buyer
- FOB (most used for boats)

Terms of payment:
- Consignment (best for the buyer)
- Cash in advance (best for seller)
- Document against document (middle one)

Parallel market  Canon JAPAN to Canon USA

International transfer pricing  not the same price in each selling country and not the sale
company size in each country

Emerging markets and prices  low margins, high quantity, micro financing, gain market
shares by setting the price low
Week 9 – International marketing management :

Indirect export modes:

- Export buying agent
- Broker
- Export management company/export house
- Trading company
- Piggyback (good for short-term)

Direct exports modes:

- Distributor (exclusive to a country)
- Agent (smaller)

The choice of the intermediary goes through the potential customers, using commercial
agencies, the size of the firm, physical facilities, reputation, overall experience, knowledge of
your industry…
The contract
Partner’s evaluation

Intermediate entry modes:

- Contract manufacturing (both for imports and exports – close to the market and
cheap resources)
- Licensing (stronger ties than contract manufacturers)
- Franchising (franchisor gives right the franchisee to use the brand, business
system..McDo le fait beaucoup)
- Joint Venture and strategic alliances (partnership between 2 or more parties)
- Greenfield  acquisition

Week 10 – International Distribution:

Channel decisions :
- External  Customer characteristics (geographic distribution, shopping habits, outlet
preferences), nature of product (low-price/high turnover or luxury), nature of
demand (customer’s perception of the channel), competition (classic or alternative
distribution approach), legal regulations/local business practices (SAQ or door-to-
door sales…)
- Internalmajor decisions, sub decisions

Market coverage:
- Intensive distribution (everybody)
- Selective distribution (a few)
- Exclusive distribution (one or two)
 the channel width will depend on the coverage
Control and cost:
- Higher control = higher costs
(carrying inventory, physical distribution, after-sale service, extending credit to
customers)
- Do yourself or let someone else do it
(trust, channel length, marketing, knowledge)

Multiple channel strategy

 avoiding direct price comparison
 learning to sell niche products
 establishing switching costs

Multi-channel distribution: ex-DELL

- Own salesforce
- Online
- Retailer/outside distributor
- Inside or outside service specialist

Screening and selecting intermediaries:

- Financial and company strengths (financial soundness, ability to finance, product and
market expertise, ability to implement 2/3 years long marketing plans…)
- Product factors (technical know-how at staff level, product complementary, quality,
patent security…)
- Marketing skills (marketing management expertise, experience with target
customers, member of trade association…)
- Commitment (volatility of product, willingness to invest in sales training, positive
attitude towards the manufacturer’s product program, willing to drop competing
product lines)
- Facilitating factors (connections with influential persons, working experience, track
record with past suppliers, government relations, proficiency in English)

Mature market  extremely developed distribution, modern commercialization, varies by

country, channel power
Emerging power  traditional distribution, production and import, costly importation,
distribution and communication, channels poorly developed, counterfeit and corruption
Week 11 – International prospection and promotion:

A trade mission a business trip to a foreign country under the patronage of a government
authority, to promote trade.
It enables a company to develop relationship with foreign companies.
The trade show is also very known to build business relationships with foreign/new
companies. The aims of participating to a trade show are:
- Entering a market
- Find intermediaries
- Promote a product
- Stimulates sales of a existing product

The 3 Ps of a trade show:

1) Preparation: reserve the booth, prepare the promotional material, organize your trip,
invite potential customers and partners, prepare a marketing strategy
2) Participation: be there, visit the show, provide information and promotional material,
participate in related activities
3) Persistence: work on your leads, prepare your next show
 Qualities of a good trade show:
- Site quality
- Quality of the organization
- Quality of exhibitors
- Quality of the visitors

Adapt or standardize the product and the advertising:

▪ Creative challenge
• Image: landscape, people
• Humour
• Information, persuasion, dream
• Animal
• Metaphors
• traditions

Advertising : different channels :

- Television
- Radio
- Newspaper
- Magazines
- Cinema
- Outdoor

Direct marketing:
- Mail, internet, telemarketing
- Mobile and SMS
- Viral marketing
- Guerilla marketing (like explicit and concrete marketing)
Week 12 – International Legal Space:

The importance of a contract:

- Different countries, regions… have different laws and legislations
- Certain conventions can influence contracts (like Vienna pour international sales)
- "The contract is defined as an exchange of wills between two parties who wish to do
business together, influenced or sometimes thwarted by the laws of different legal
systems" (Panet-Raymond et al,. P406).
- Almost all internationalization are contract-based

Sales contract:
- Communication exchanges and invoices are often proof of contract.
- If a contract is made, it is protected by the Vienna Convention...The problem
remains its application.
- Essential clauses of a sales contract
- Name and legal addresses of parties
- Purpose of contract
- Price and currency
- Transport mode
- Terms of sale
- Chosen law and arbitration

Procurement contract:
- Contract duration and renewal (or termination) mechanism
- Contract finalization
- Price changes
- Discounts or price increases related to order size, legal, tax or policy changes
- Pay attention to supplier's priorities

Outsourcing contract:
- The problem of intellectual property
- Production limitation (pirate copies)
- Avoiding the grey market
- Non-delegation
- Guaranteed delivery times and quality
- Obligation to carry out quality controls

Distributor selection:
- Financial capacity
- Product factor
- Marketing
- Facilitating factors
 - Commitment
Elements of the contract:

 Purpose of the contract (role and limits of the partner)

 Product catalog definition
 Territory (sub-distribution, internet, segment)
 Exclusivity in relation to competing products
 Payment terms
 Terms of sale (incoterms)
 Selling price (from seller)
 Confidentiality clause
 Delegation clause (subcontracting)
 Marketing and samples
 Minimum stock
 Returns and warranties
 Intellectual protection and trademarks
 Transmission of sales information
 Contract termination
 Dispute resolution

Agency contract:

- Competitor exclusivity
- Marketing policies (limited)
- Commission conditions
- The agent's obligations
- Beware of agency theory

Dispute settlement:

- Amicable settlement
- Mediation
- Arbitration
- Courts
A few common errors:

- Legal names of parties

- Neglecting taxation
- Bribery and corruption
- Lightning strikes
- Too much exclusivity and territory
- Poorly defined obligations