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CHAPTER FIFTEEN REVIEW MATERIALS (“MARKETING INTERNATIONALLY”) * “International Marketing” is an interesting activity, wherein managers develop marketing strategies by assessing the firm’s potential foreign markets and analyzing the many alternative marketing mixes. Managers must plan and control a variety of marketing strategies, rather than a single unified and standardized one. Then, they must coordinate and integrate those strategies into a single marketing program. * Marketers EVERYWHERE (obviously) must 1. Know their markets, 2. Understand how to satisfy customer needs, and 3. Understand how to price goods and services so that they are acceptable to the market….and competitive in the market. * NOTE: Sometimes there are very little differences between marketing domestically and marketing internationally. At other times these differences can be very large! * Obviously, corporate management would prefer “GLOBAL” standardization of the marketing mix, but this is normally not possible! * International markets that a company works in often differ widely because of great variations in the “uncontrollable “ environmental forces. * The international marketer’s task is more complex than that of the domestic marketing manager because 1. Marketing strategies must be developed by assessing potential markets and analyzing alternated marketing mixes, 2. The international market is larger, and 3. The uncontrollable environment forces vary widely among international countries and markets. * Important differences between the domestic and the international environments may simply make it impossible to transfer overseas all of the successful domestic marketing mix being used. * However, the benefits from “standardization” of the marketing mix (between domestic and international), when possible, are lower costs, easier control by management, and reduction of time in preparing marketing plans. * THE MARKETING MIX: A set of strategy decisions made in the areas of PRODUCT, PROMOTION, PRICING, and DISTRIBUTION in order to satisfy the needs and desires of customers in a target market (whether it be the domestic or international markets). * Obviously, the PRODUCT is the central focus to the marketing mix. * The “Total Product” is KEY to a customer (e.g., the product is more than a physical object). REMEMBER THAT THE “Total Product” includes: 1. Physical product 2. Brand name 3. Accessories 4. After-Sales service 5. Warranty 6. Instructions for use 7. Company image 8. Package * SEE FIGURE 15.1 ON PAGE 371 (“COMPONENTS OF THE TOTAL PRODUCT”) * Generally, CONSUMER PRODUCTS require greater adaption to international markets than do Industrial Products…. * However, often with Industrial Products (as well as for some Consumer Products) drastic modifications in the physical product may be necessary because of two problems which can be prevalent (especially in developing countries)….This relates to 1. some countries having a tendency to “overload” equipment and 2. Companies in some countries give minimal maintenance to industrial equipment. Exporters and Licensors must be sure to be aware of these problems and work to protect their products in some manner. * Also, in order to avoid changing a product to meet local legal requirements, manufacturers frequently design their product to meet the most stringent country laws, even though the product will be over-designed for certain markets. * A few Consumer Products require greater modification to meet local market requirements than do Industrial Products; however, some consumer products can be sold unchanged to certain market segments, for example, automobiles, sporting equipment and perfumes. * NOTE: The marketing of “services” (sometimes called “intangibles”) is similar to the marketing of most Industrial Products, in that these “service” products require little change and are generally easier to market globally than Consumer Products. * SOCIOCULTURAL Forces: Generally speaking, dissimilar cultural patterns in different countries require changes in food and other consumer goods. * INTERNATIONAL “ENVIRONMENTAL” (UNCONTROLLABLE) FORCES AFFECT INTERNATIONAL MARKETING MIX AND PRODUCT OFFERINGS, FOR EXAMPLE: * LEGAL forces: Laws on pollution, consumer protection, and operator safety, for example, are critical in many countries as legal forces that affect marketing programs. * SOCIOCULTURAL forces: These dissimilar cultural patters often require changes, either in the physical product, or in aspects of the total product. * WASHING MACHINES, for example, in France are different than in Germany or Italy (Germans want high-speed machines and Ialians prefer slower spin speeds. The French want top-loading washing machines, but the British want front-loaders, etc. * COLORS of products often must be changed country to country because of color meanings to certain cultures (gold in Latin America is good as it is a symbol of quality; blue is a warm and feminine color for folks in the Netherlands, but the Swedes consider it masculine and cold, etc. * TRADE NAMES/TRADEMARKS often mean something quite different in some countries (One product in Sweden had to have a different name because the US name meant “enema.” And “Nova” the name for a certain Chevrolet car cannot be used in Latin America because it means “no va” or “doesn’t go.” * ECONOMIC forces: Changes in products must be made due to several of these type of specific country forces. * NOTE: The great disparity in income throughout the world is a major factor and definitely prohibits in great part “product standardization.” * PHYSICAL forceslike high altitudes, climate and tough terrain cause products to be changed country by country, thus disallowing “standardization” of products. * PROMOTION: Bottom-line is that promotion (defined) “is any form of communication between a company and its publics.” * Remember: Marketers everywhere must 1. Know their market(s), 2. Satisfy customer needs, and 3. Price goods and/or services so that they are acceptable to the market. * Again….The International Marketing Manager’s task is more complex than that of the domestic marketing manager because: 1. Marketing strategies must be developed by assessing potential markets and analyzing alternate marketing mixes. 2. The International Market is larger. 3. The “Uncontrollable Environmental Forces” vary widely among markets. * Again….management prefers global product standardization because: 1. There can be longer production runs, which lowers costs. 2. Extra research and design expenses can be eliminated. 3. The creative work needed for promotion does not need to be done for each market. 4. A standardized corporate visual identity can help project a consistent image. * BUT, it is VERY hard to standardize because of the various sociocultural, legal, etc. etc. forces at work in international markets. * BOTTOM-LINE: Management would prefer “global standardization” of the Marketing Mix (if possible) because you have significant cost savings, but this is difficult to achieve. * Promotional Strategies need tools to communicate with. These are included in what is termed “The Promotional Mix” including: 1. Advertising 2. Personal selling 3. Sales promotion 4. Public relations 5. Publicity * All of these tools are “equally” effective. Perhaps in some countries others are more used, etc., but they are all effective, generally speaking. Hence, advertising for example cannot be said to be more effective than other promotional mix elements. * However, advertising is the one promotional mix element with the greatest similarities worldwide. * INTERNET advertising is appealing in international because it provides an affluent and reachable audience, and many users in other countries do speak and understand English. Also, internet communications are two-way, rather than one-way (like newspaper ads for example), and it is a very good way of reaching certain customer segments, such as teenagers. * Buyers of consumer goods in international markets act upon different buying motives, from country to country. * Indeed, a basic “cultural” decision for international marketers is whether to position a product as a foreign or local product. Moreover, it is a proven fact that when marketing to youth in international markets, using an “international” or “foreign” strategy is called for normally. * Obviously it would be cheaper if all advertising could be standardized and developed by the home office (the parent company headquarters), but often it is necessary to change the advertising to fit “local” requirements/culture. * “Programmed-Management” approach to advertising is a “middle-ground” approach, i.e., the home office (the parent company) and the subsidiaries around the globe agree on the main approach, but then leave it to the subsidiary to put together the local ad program. So, a “middle-ground” between an ad campaign that is “standardized worldwide” and an entirely “local ad” campaign is called a “Programmed-management “ approach to advertising. * GLOBAL BRANDING (vs. LOCAL or NATIONAL branding) is often used as it has many advantages…..Most importantly, it is a way that a company can make a statement that “OUR COMPANY MAKES A DIFFERENCE.” And, of course, it is less costly. * Remember, however, of all the Promotional Mix Elements, ADVERTISING is the one with the greatest similarities worldwide. * “Standardized” advertising (where possible) in international is attractive because it allows for “ECONOMIES OF SCALE.” * Remember also, that often it is necessary to change COLOR of packaging in foreign countries due to “Cultural” and sometimes “legal” differences, not competition. * PERSONAL SELLING is very important in most countries, but “recruiting” GOOD sales people is just as difficult in foreign countries as it is in the USA. * Manufacturers of industrial products often must depend on PERSONAL SELLING, as opposed to consumer products selling. * SALES PROMOTION: Very important in international, and often a company can “standardize” some of these activities. However, there are some cultural constraints that must be considered when trying to use some sales promotion techniques in international markets * SALES PROMOTION (DEFINED): Any of various selling aids, including displays, premiums, contests, and gifts. * Of course, also included in the Marketing Mix are factors relating to 1. Price and 2. Distribution. We will not discuss these mix elements in this class to any extent as they will be discussed in other classes. But, the are very important to understand * PRICING, for example, can be very complex, so must be given proper consideration. * INTERCOMPANY TRANSFER PRICING STRATEGIES must be given lots of consideration by the finance department, as this is a way in which firms can add to the profit of an exporting company, or a company that is sending products to its subsidiaries. Indeed, in some cases, profits can be hidden from foreign governments with creative transfer pricing policies. * Note, some countries have controls on price mark-ups (e.g., distributor margins), which is a way of having price controls within their countries. Therefore, intercompany transfer pricing strategies are important to firms to be sure to assure suitable profits to be made. * PUBLIC RELATIONS is a firm’s communications and relationships with its various publics, including the governments where it operates. * PUBLIC RELATIONS should be viewed as “the marketing of the firm.” * American companies have been engaged in public service activities for many years. For the past several years, multinational companies are now active in other international countries in public service activities, albeit that they were slower to get involved in these activities in international. P * REMEMBER, THEREFORE, that public relations programs are important in both domestic and international markets. * DISTRIBUTION STRATEGIES (AS A PART OF THE PROMOTIONAL MIX): This is an area where international managers simply must take time to develop proper and meaningful distribution strategies. Distribution decisions are difficult in a firm’s domestic market, but even much more complex and difficult in their international markets! * STADARDIZED DISTRIBUTION IN INTERNATIONAL MARKETS is the preferred pattern of distribution in international, but very difficult for two reasons: 1. The variation in the availability of distribution channel members among the firm’s international markets 2. The environmental forces in international markets often required a different channel or mode of distribution * OEM’s (Original Equipment manufacturers): These are people (customers) who buy components that are incorporated into the products they produce (for example, spark plugs to an automobile manufacturer). Sales to them are made directly to them as the customer. BOTTOM LINE: Marketing in international is more complex than in a firm’s domestic market. Understanding that the “total product” is what must be sold, and then fully understanding how to use the elements of both the “Marketing Mix” and the “Promotional Mix” is critical to success in international marketing.