International Marketing (8 Cfu)

International Marketing

(8 cfu)

Osvaldo Adinolfi
Stefano Pelle
Michele Quintano

17/09/2012

Michele Quintano, 2012

Course objectives

•ꢀ Understand the nature of international marketing strategy and its linkages to corporate strategy vis-à-vis local and national marketing strategy

•ꢀ Develop analytical frameworks in the screening of national markets defining the key factors in the firm’s internationalization process by evaluating the international business environment, stressing particularly the economic and cultural dimensions

•ꢀ Discuss the complexities and paradoxes that are prevalent in so many successful and failing international marketing operations.

•ꢀ Explore the tensions in adopting a global standardized action as opposed to a locally responsive action in international marketing and relate these to the overall corporate strategy of companies

•ꢀ Consider ethical and social responsibility issues, in the development and implementation of an international marketing strategy

Course content

•ꢀ Environment analysis •ꢀ Country evaluation and selection •ꢀ Segmenting international markets •ꢀ Marketing research •ꢀ Marketing in Emerging markets •ꢀ Managing product and brand in international markets •ꢀ Managing communication in international markets •ꢀ Managing distribution in international markets •ꢀ Pricing in international marketing •ꢀ Planning, organisation and control of international marketing

Teaching methodolgy

•ꢀ The case method will be used to illustrate applications of the strategies analysed and simulate decision-making in international marketing

•ꢀ Marketing faculty will lecture on key aspects of international marketing management

•ꢀ Course participants will be divided into groups of fourfive and required to prepare and present the cases

•ꢀ Guest speakers

•ꢀ Case Studies: Mateus, Mango, IKEA, Coca Cola, Louis
Vuitton, Unilever

•ꢀ Text book (one among others): Czinkota & Ronkainen,

“International Marketing”
•ꢀ Readings

Course calendar

•ꢀ Dates

•ꢀ Case studies

•ꢀ SEPTEMBER

•ꢀ Mateus: 18/09

•ꢀ LV in Japan: 08/10 •ꢀ IKEA: 16/10

•ꢀ 17, 18, 24* and 25*

•ꢀ OCTOBER

•ꢀ 1, 2, 8, 9, 15, 16, 22, 23, 29 and

•ꢀ MANGO (mid term):

30

23/10
•ꢀ NOVEMBER

•ꢀ Coca Cola in Brazil:

•ꢀ 5, 6, 12, 13, 19, 20, 26 and 27

19/11

•ꢀ DECEMBER

•ꢀ Unilever: 4/12

•ꢀ 3 and 4

•ꢀ Mon 12.30-14.30

•ꢀ Tue 13.45-15.45

•ꢀ * + 24 Sept 10.30-12.30 / 25 Sept
11.45-13.45

Grading system

•ꢀ Students attending the course will be evaluated on different criteria

•ꢀ The final grade will be based on the following elements

•ꢀ 10% student active participation •ꢀ 25% group presentation of case studies and other group activities

•ꢀ 30% course mid term case study •ꢀ 35% final project (individual)

Introduction to
International Marketing

üꢀWhat is International Marketing? üꢀReasons for internationalisation üꢀStrategic development: options üꢀInternational Marketing orientations üꢀGlobalisation and standardisation

Some definitions….

•ꢀ International Marketing is the process of planning and conducting transactions across borders to create exchanges that satisfy the objectives of individuals and organisations

(Czinkota & Ronkainen, “International Marketing”)

•ꢀ International Marketing Management: The performance of marketing activities in two or more countries

(Jeannet & Hennessey, “Global Marketing Strategies”)

•ꢀ International Marketing: Finding out what consumers want around the world and then satisfying these wants better than other competitors, both domestic and international

ꢀ

(Terpstra & Sarathy, “International Marketing”)

•ꢀ International Marketing: The performance of business activities that direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit

ꢀ

(Cateora, “International Marketing”)

Is it so easy to manage?

Some cliché

Police Cooks Lovers Organizers
English French Italians Germans

Paradise

Hell

Police Cooks Lovers Organizers
French English Germans Italians

Mistakes in int’l marketing

•ꢀ Ronnie McDonald in Japan •ꢀ Two litres Coca-Cola bottles in Spain •ꢀ Philips electric shavers and coffee machines in Japan •ꢀ Kellog’s Pop-Tarts in UK •ꢀ P&G Crest in Mexico using the same US adv •ꢀ Puma and Nike in Europe •ꢀ ...

4 pitfalls handicap global marketing

•ꢀ Insufficient research •ꢀ Overstandardisation •ꢀ Poor follow-up •ꢀ Rigid implementation

(Source: Kamran Kashani, “Beware the Pitfalls of Global Marketing”)

What makes int’l marketing different?

The key difference is the ‘environment’ •ꢀ unfamiliar problems, uncertainty, competition, legal restraints, government controls, consumer behaviour, technology, economic climate,

•ꢀ recognising and adapting to the new environment •ꢀ adapting the controllable elements (the marketing mix) to the uncontrollable elements of the foreign environment

What makes int’l marketing different?

OPERATIONS IN A MULTI-COUNTRY CONTEXT

Different Environments
Economic/Financial Political/Legal Social/Cultural
Differences in Customer Behavior/Market Segments Differences in Competition Different Marketing Infrastructures
Media Distribution Logistics

Therefore, is there a NEED to adjust to these differences?

Balance global efficiency with local responsiveness

Reasons for internationalisation

•ꢀ Opportunistic development •ꢀ Following customers abroad •ꢀ Pursuing geographic diversification •ꢀ Cost reductions: economies of scale and experience curves •ꢀ Better pay-off on R&D investment •ꢀ Incremental profits •ꢀ Taking advantage of different growth rates of economies •ꢀ Exploiting product life cycle differences •ꢀ Defensive reasons •ꢀ Gain leverage from competitive advantages •ꢀ Learning from key success factors abroad •ꢀ Pursuing potential market abroad •ꢀ Improving the company image

The international product life cycle theory

Quantity

Not all countries adopt the products at the

same time or

follow the same

evolution or

Acountries

Time Time
Quantity

t
B

countries

pattern in their product life cycle

Quantity

t’

Ccountries

Time

A framework: growth options

Markets

Old
New

Old

Market penetration Market development

Products

New

Product development

Diversification

Source:Adapted from Ansoff (1965)

A framework: growth options

Markets

New

Domestic

Internationalization Globalization

Old Market development

Products

Vertical integration

New Diversification

Related business Diversification

Unrelated business Diversification

Source:Adapted from Ansoff (1965); Collis and Montgomery, 1997; Strategor, 1995

International Marketing orientations

Export Marketing

Multinational

Global Marketing

Attitude

Ethnocentric

Polycentric

Geocentric

The local market is the priority.
Markets are very different and require independent
Markets converge, demands are more and more similar.

Perspective Extends or

replicates the marketing marketing programs. The world is seen as Products are adapted a single market. activities

•ꢀ Select

•ꢀ Understand different

•ꢀ Find similarities

appropriate

local environments

•ꢀ Design strategies

that work in all countries

Key managerial issues

markets
•ꢀ Find distributors
•ꢀ Find the best fit for each market

•ꢀ Delivery issues
(documentation, shipments,
•ꢀ Solve coordination and resource duplication
•ꢀ Manage global
Marketing:“Think global, act local”

logistics)

problems

“What is good for us is also good for
“When in Rome, do as the Romans do”
“After all, we are all the same”

Source:The author

Focus

everybody”

Globalisation does not mean standardisation
“classics…”

•ꢀ HEINZ ketchup has a less sweet recipe in Belgium and the Netherlands because consumers use ketchup as pasta sauce.

•ꢀ DOMINO’S sells pizzas flavoured with mayonnaise and potato chips in Japan, raindeer-sausages in Iceland and pickled ginger in India.

•ꢀ GREEN GIANT adapts its advertising of canned sweet corn to the consumer habits related to the product: as a hot side dish (EEUU), as a salad ingredient (France), as a sandwich and pizza topping (United Kingdom), as an after-school treat for children (Japan) or as an ice-cream topping (Korea).

•ꢀ PEPSICO CHEETOS are cheeseless in China. The company picked a butter flavour (called American cream), an Asianized barbecue flavour (called Japanese steak) and a seafood flavour. Other flavours tested were Peking duck, fried egg and even dog.

•ꢀ LENOVO has 20 different keyboards in Europe for its personal computers. •ꢀ UNILEVER sells one of its softener products with the same positioning, product image and advertising campaign but under different brand names (Mimosín, Snuggle, Cajoline, Kusheleich, Yumos, Coccolino, Fofo) and in different sizes and packagings.

Barriers to international trade

Driving forces for international trade

•ꢀ Market homogeneity •ꢀ Need to reduce costs
•ꢀ Market heterogeneity •ꢀ National controls •ꢀ Corporate culture •ꢀ Brand history
•ꢀ Spread of technology and reduction of lead time for R&D investment payback

•ꢀ Development of communication and transport systems
•ꢀ Corporate management myopia

•ꢀ Progressive reduction of protectionism

Factors limiting standardisation

•ꢀ Market characteristics: physical environment, stage of economic and industrial development, cultural factors, language

•ꢀ Industry conditions: stage of product life cycle in each market, competition

•ꢀ Marketing institutions: distribution systems, advertising media and agencies

•ꢀ Legal restrictions: tariffs, standards

ꢀ (Adapted from Robert Buzell, “Can you Standardize Multinational Marketing?”)

Local vs. global markets: key differences

Local markets

Global markets

Markets are defined within country borders. Customers and competitors are of local origin.
Markets transcend country borders. Customers and/or competitors cross frontiers to buy and sell.

Market boundaries

Significant differences exist among customers from different countries; segments are defined locally.
Significant similarities exist among customers from different countries: segments cut across geographic frontiers.

Customers Competition

Competition takes place among primarily local firms; even international companies compete on a country-by-country basis.
Competitors are few and present in every major market: rivalry takes on regional or global scope.

Each local market operates in isolation from the rest: competitive actions in one market have no impact elsewhere.
Local markets operate interdependently: competitive actions in one market impact on other markets.

Interdependence

Strategies are locally based: little advantage exists in coordinating activities among markets.
Strategies are regional or global in scope: great advantage exists in coordinating activities within regions or world-wide.

Strategies

(Source: Kamran Kashani,“Managing Global Marketing”)

Globalisation vs. Localisation

Globalisation level of the value chain activities
Global uniformity for elements of marketing mix

Brand name
4.6

3.9 3.3 3.4 3.3 2.7 2.5 2.2
Research
4.7

4.4 3.1 3.2 2.9 2.7 2.9 1.3 1.9 1.8
Developt’
Packaging
Purchasing
Distribution

Raw mater. processing
Relative

pricing
Sub-assembly

Selling
Final assembly

Advertising
Marketing

Selling
Absolute pricing