MKT 340 Topics 7-14

Choosing the Mode of Entry Decision Criteria:
- size and growth
- political & risks
- government
- competitive environment
- cultural distance
- infrastructure
- trade
- costs & resources

Exporting (product ): manufacturing a product in one country and shipping it to other markets for sale

Benefits of Exporting:
- revenues and profitability
- minimize in international business (as compared to licensing and foreign direct investment)
- markets
- product life cycle
- market share overseas

Designing an Export Strategy:
To design an effective export strategy, markets must:
- examine market opportunities and firm
- obtain expert counseling on exporting through both and specialized assistance
- select markets
- formulate and implement an effective strategy

Indirect exporting: goods and services sold to or via a third-party intermediary in the market, who in turn sells them to a customer

Third-party intermediaries: independent firms that international trade transactions by assisting importers and exporters

Direct exporting: good and services sold directly to an party

Export Management Companies (EMCs): an firm acts as the exclusive export sales department for non-competing manufacturers
- can be either or foreign-owned
- can operate on either a or a fee basis
- vary in
- some emcs specialize in certain products and/or focus on selected regions or countries, while other emcs are generalists

EMC can act as an agent: the emc establishes the marketing in foreign markets soliciting orders from foreign customers in the name of the

EMC can act as a distributor: the emc buys from the manufacturer at a set price and to foreign customers at prices established by the emc
-profits are based on how successfully they export. Thus, they're motivated to do a good job.

Functions of EMCs:
EMCs usually have long established sales networks abroad
Main functions:
- stimulate , obtain orders, and prepare quotations, enter orders
- perform investigations and payment-collection activities
- handle foreign details
- select in each foreign market, and manage the distribution network
- evaluate market conditions and sales opportunities constantly

Pros & Cons of Indirect Exporting:
Advantages
- fast access
- allows the exporter to concentrate on production
- low
- export management is , alleviating management pressure

Disadvantages
- little or no over distribution, sales, marketing, etc. as opposed to direct exporting
- wrong choice of EMC may affect the international of the company

Direct Exporting: exporting through ' sales representatives to deal with distributors, foreign retailers, or final end users
- gives exporters greater over the marketing function
- offers exporters the potential to earn profits
- demands a international sales force

Pros & Cons of Direct Exporting:
Advantages
- control over of foreign markets and choice of foreign representative companies
- good feedback from target market, developing better relationships with the buyers
- better of trademarks, patents, goodwill, and other intangible property

Disadvantages
- requires higher of time, resources and personnel
- greater requirements

Cooperative Exporting (Piggyback Exporting)
- a carrier that already in certain foreign markets
- a rider that to export to those markets but lacks or experience
- involves products which instead of

Payment Methods
Consignment
- payment made the goods are sold
- payment risk assumed by the

Letter of credit (L/C)
- a letter issued by the bank of the importer to the bank of the exporter to serve as a for payments made to the exporter as long as certain delivery condition have been met

Payment Methods
Cash in advance: when credit standing of the importer is or uncertain

Open account: credit relationship in which the buyer pays upon the of goods, or on deferred payment basis
- payment is delivery
- exporter assumes payment
- offered to customers in economically stable countries

Licensing: a agreement between a licensor and licensee to rent or lease of an intangible asset, for establishing business in foreign markets without large
Company grants the rights of:
- using of a name
- production processes
- distribution of imported products

Licensing Necessities:
- Patent or trademark
- thorough profitability analysis
- careful selection of licensees
- clear contract

Licensing
Benefits:
- access to the market with a minimum
- rapid of the global markets
- availability of local licensees' and connection
- costs and risk

Disadvantages:
- choosing the partner will create problems
- limited marketing control
- disclosure to licensee
- licensee may become a future

Special Licensing Agreements:
Contract manufacturing (outsourcing)
- company provides manufacturing to a subcontractor or local manufacturer
- allows company to specialize in product design while contractors accept responsibility for manufacturing facilities
- biggest benefit is to save cost of and raw

Select qualified contract manufacturer that can:
- deliver goods on time
- meet quality
- maintain solid financial footings

Special Licensing Agreements
Franchising
- allows the franchisee to operate a service business under the name of the franchisor in return for a and adherence to franchise-wide policies
- especially appropriate when the market is culturally distant in terms of consumer behavior or retailing structures

Tasks of franchising:
- select qualified franchisees
- reliable market
- strong and involvement
- good working ethics and
- provide necessary assistance and
- monitor the of franchisees to ensure the consistency of quality in the new market

Strategic alliances: a business established by or more companies to cooperate out of a objective and to share , information, capabilities and risk in achieving the objective

Strategic alliances
Benefits:
- opportunities to reach markets
- increasing brand
- access to each members skills and expertise
- dividing and costs
- enhancing competitiveness

Disadvantages:
- disclosure
- merged

Building Strategic Alliances
1. set up a vision and shared benefits
2. facilitate the of relationships in different departments
3. demonstrate the full to the alliance and each other
4. manage the inherent in making hard choices
5. learn from each other

Joint venture: a business created by two or more parties, generally characterized by ownership, shared returns and , and shared governance

Different from Strategic Alliance:
- joint venture creates a company blending cultures from the companies in the joint venture
- companies that join together in a strategic alliance will remain as organizations

Joint venture
Benefits:
- appropriate when culturally distant, difficult-to-enter markets are targeted
- higher rate of and more over the operations
- sharing of
- access to network
- contact with officials
- partner's with culture and language

Disadvantages:
- need to resolve potential arising over matters such as strategies, resource allocation, and ownership of critical assets
- costs & risks
- disclosure of , skills & information

Complexities of Joint Ventures
- choice of
- qualities of
- sharing of
- institutional (legal) environments
- experience & cultural gaps
- extent to which is shared across partners

Wholly Owned Subsidiaries
- developing a foreign without the support of a third party

Why own subsidiaries in a foreign market?
- capitalize on low-cost
- avoid import taxes
- reduce costs of to market
- gain access to raw and technology
- gain full over the foreign business

Wholly Owned Subsidiaries
Benefits:
- allow the investor to fully manage and all marketing decisions
- minimize the and technology disclosure
- gain greater of local market

Disadvantages:
- costs and risks
- require more and commitment
- risk of

Wholly Owned Subsidiaries
- quick to the local market
- good way to get access to the brands

Launch a completely new subsidiary
- offer the company more than acquisitions in the areas of human resources, suppliers, logistics, plant layout, and manufacturing technology

Exporting
• Little product required
• Lack of or willingness to undertake more risks
• Minimized and investment
• Fast
• Trade and transportation add to costs
• Limited access to information

Licensing
• Exporting or investment
• Legal available
• risks and investment
• High ROI
• Fast
• Less over use of assets
• Licensee may become

Strategic Alliance
- Aim to access markets with independence
- Reduced risks & costs
- Potential problems from merged

Joint Ventures
• Large cultural
• sales potential
• Government restrictions on ownership
• Combines resources of the
• More over operation
•Knowledge
•Potential conflicts
• cost

Wholly Owned Subsidiaries
• Low risk
• sales potential
• Substantial resource
• Gain knowledge
• Maximum
- cost & risks

Product Types
Consumer products: bought by consumers for consumption

Industrial products: bought by for further processing or for use in conducting a business

Consumer Products
A product is the sum of the attributes and psychological it provides.

Physical attributes of products include:
- form, taste, color, odor, texture
- functions
- package, label, warranty

Psychological satisfactions can generate from:
- symbolic meanings of the brand
- manufacturer's reputation
- manufacturer's and retailer's services
- country of origin

Consumer Services
Products are often classified as , whereas services are .
The intangibility of services results in unique characteristics:
- inseparable: of service cannot be separated from its
- heterogeneous: service is produced and is thus unique
- perishable: once a service is created it cannot be but must be consumed with its creation

Brand
Functions of brand:
- a certification
- between competing products

Brand image: the sum of that consumers have about a brand, integrating all their knowledge and experiences of observing and using a brand

Branding: the process of creating a brand image

Global Brands
- The use of a name, slogan, sign, symbol or design
- global brands have similar image and positioning through the

Global branding strategy - building a strong and brand image

brand extension: using an brand name or trademark on products
- the new products can enjoy the of the existing brand
- enhance efficiency and cost

Global co-branding: strategic partnership with a brand to boost brand and break into markets
- the success of one brand will bring to its partner brand
- the value perceptions, target audience, and promotion channels need to

COO effects: the influence that the country of manufacture, assembly, or design has on a consumer's positive or negative of a product

COO effects would be more when a consumer is:
- educated
- politically conservative
- with the brand name
- lack of on the product category

Strategies to cope with negative COO stereotypes:
- pricing
- use highly respected and retailing channels
- communication
- improve the image
- bolster the brand image

Strategies for core component (function & design):
standardization: offering core component virtually in markets of home country

adaptation: changing the core component according to of different country markets

Standardization:
- works for culturally products
- may be very profitable, simple

Adaptation:
- can influence production processes and may require additional capital

Strategies for external component:
- adapt a product's and label if specific package sizes, measurement units and information are required
- corporate trademarks and packaging should not have symbolic meaning
- attention should be paid to of brand name and colors used in packaging

Strategies for Extended Components:
The extended components:
- installation
- repair and maintenance
- instructions
- warranties
- deliveries

- local is needed for installation, repair, and maintenance
- the literacy rates and levels of a country may require a firm to change a product's instructions
- warranties and deliveries should be adjusted based on local

Service
- becoming increasingly in world economics
- account for the portion of output and employment in advanced industrialized countries
- typically becomes more important as an economy becomes more

Basis of marketing services internationally
labor: service industries are labor-intensive, including both skilled and unskilled
capital: capital requirements might need to to provide excellent services
technology: the ability to offer quality services tends to be linked to excellent technology resources
firm-specific factors: management skills, firm size, firm reputation

Intangibility:
Lead consumers:
- have difficulty in evaluating service
- perceive high levels of
- place great emphasis on personal
- use price as a basis for assessing

Service marketing efforts:
- reducing service
- stressing tangible cues
- facilitating word-of-mouth recommendation
- focusing on service

Inseparability
Leads consumers to:
- be co-producer of the
- be co-consumers of a service w/ the other consumers
- have to to the point of service production

Service marketing efforts:
- manage smooth interaction with consumers
- ensure proper selection and of customer contact personnel

Options of processing international services
1. Outbound: send/locate the service provider to/in the market
2. Inbound: bring customers to the service provider

Barriers for Global Service Marketing
- Business and ownership limitations
- market share limitations
- discriminatory taes
- technical issues such as the use of standards and certifications
- licensing
- restrictions on professional qualifications

Place: the process through which goods move from the to the final iser
- effective supply chain management are the key ingredients to the success of place

Supply chain: includes all the firms that perform support activities to create to consumers by
- generating raw
- converting them into components or finished products
- making them available to customers

Values of Supply Chain for Customers
location: availability of a product or service in a location that is to a potential customer

time: availability of a product or service when by a customer

form: availability of the product processed, prepared, in proper and/or to use

information: availability of answers to and general communication about useful product features and benefits

Channel of Distribution: a chain of businesses or intermediaries through which a good or service passes until it reaches the consumer

Responsibilities of Wholesalers:
Order processing: order , handling, and delivery
Warehousing: storage, inventory management
Transportation: moving products through rail, truck, air and water

Basic functions of retailers
- reduce number of
- more efficient and effective
- increase for consumers

Differences in Retailers
Merchandise offering:
- variety (breadth): wide vs. narrow, number of merchandise
- assortment (depth): deep vs shallow, number of in a category
- services and pricing
- store design and size
- location

Local distributors: carry product lines that , rather than with your products
-act as businesses with you
- share market
- invest in training, information systems, and promotion
- know the distinctive characteristics of the local market
- have connections with local retailers

Guidelines of using local distributors
- select distributors who have great willingness to in long-term market development
- create an agreement with strong for appropriate goals such as customer acquisition or new product sales
- support the distributors by committing money, managers, and proven marketing ideas
- maintain authority and over marketing strategy

Distribution Strategy
Intensive
- Wide spread market coverage, channel acceptance, high volume sales
- consumers
- limited
- mass advertising, items in stocks

Selective
- Moderate Market coverage, solid image, some channel control
- amount of consumers
- sales highly depend on with selective retailer
- pleasant shopping condition, good service

Fewer
- Prestige image, good control, high brand loyalty
- consumers
- limited sales potential
- expensive
- opening and maintaining the stores
- selling

Global Retailing
Environmental Factors
- saturation
- growth
- regulation on store development
- operating costs
- local shopping habits

Internal Factors
- company's resources
- company's experience
- conpany's strategy: intensive vs. selective vs. exclusive

Global Retailing Strategies
- direct involvement - establishing own sales or own retail stores
1. manufacturer-owned stores
2. chain acquisition
3. joint venture

Conditions to use:
- when choosing exclusive distribution strategy: want more and more recognition
- have solid experience and financial

Indirect involvement
1. using local independent retailers
2. franchising

Conditions to use:
- when choosing intensive or selective distribution strategy: want more market
- want to save

Pricing Basics
- the only marketing mix instrument that creates
- monetary a consumer makes
- indicator
- global marketers face the challenges of how to coordinate their pricing across different countries

Questions for Global Pricing
1. Does the price reflect the product's ?
2. Is the price competitive given market conditions?
3. What pricing strategy should be used?
4. Should prices across different markets?
5. Any influences from inflation, governmental control or local competition?

Global Pricing Objectives
- profit
- sales maximization
- oriented
- survival

Premium Pricing
- use a high price where there is a about the product or service
- used where a substantial competitive advantage exists

Price Skimming
- charging a premium price at the stage of product life cycle
- reducing price on the mature product life stage as the market becomes

Penetration Pricing
Charging a low price in order to:
- market quickly
- initiate word of mouth
- expect that customers will switch to the new brand because of price

Target Costing
- understand the prices that customers in the target segment will be willing to
- compute overall cost
- see if price can cover the cost
- purposes: to control costs, save on production expense, and create competitively priced global products

Competitive Pricing
- look at competitors' prices before setting price
- typically the price will be set at the level as the competitors'
- have to attract customers in other ways

cost: the cost to produce, distribute, and a product/service varies by the international market served

Inflation: a persistent change in price levels
- important to manage supply costs from countries that have high inflation rates by:
- modifying components or packaging materials
- finding new suppliers of raw materials
- quoting prices in stable currencies

Government controls & regulations
Foreign governments may:
- require companies to non interest-bearing funds for a long time
- restrict taken out of the country
- restrict price competition
- set price ceilings
- require tariffs, trade barriers, corporate taxes

Competitive behavior: adjust your prices in response to

extension pricing: per-unit price of an item is the no matter where in the world the buyer is located

adaptation pricing: permits managers in each country to establish their own prices depend on factors

Gray Market Goods: trademarked products are exported from one country to another where they are sold by persons or organizations

Occurs when:
- product is in short
- producers use strategies in some markets
- goods are subject to substantial mark-ups

Gray Market Issues
- dilution of
- cause free riding: authorized dealers cut back on customer service and salesperson training
- damage channel relationships
- undermining pricing strategies
- damage company's

Dumping: sale of an imported product at a price than that normally charged
- US antidumping policy legislates that dumping is:
- price represents less than the cost of production plus 8% profit margin
- lower than the price in the producing countries
- US government provides for payment to companies harmed by dumping

Price Fixing: representatives of two or more companies secretly set prices for their products
- illegal act because it is anticompetitive

Horizontal price fixing: occurs when within an industry that make and market the same product conspire to keep prices high

Vertical price fixing: occurs when a conspires with wholesalers/retailers to ensure certain retail prices are maintained

Public Relations
Use all forms of media and communication to:
1. Maintain positive and public image
2. Manage with community and stakeholders

Tools:
- News releases
- Press conferences
- Articles in trade, professional journals
- TV and radio talk show appearances
- Special events

Sales Promotion
- short term tactics to boost sales and brand
- not a method of building long-term customer
- coupons, deals, contests, sweepstakes, samples, point-of-purchase displays, rebates, product placement
- can be to the firm

Benefits of Sales Promotion
- provides a tangible to buyers
- reduces the perceived associated with purchasing a product
- creates word of mouth opportunities
- provides a method of collecting customer data
- grows revenue
- results are easy to

Global Sales Promotion
Need to consider:
- income levels
- market maturity
- local of a particular promotional tool
- governmental encouragement and regulations

Be Glocal
Step 1: Create a global concept that
- addresses a universal human
- travels across countries without being lost in translation
- resonates in any market in the world
Step 2: Locally adapt the concept to respect nuances

Step 1: Globalizing Your Concept
A globalized concept is important for:
- maintaining brand image
- lowering advertising production costs
- introducing products quickly
- simplifying the coordination among markets

Step 2: localing your message
Localization is important because of the differences in:
- culture
- language is one of the most barriers in global advertising
- advertising theme appeal differs around the world
- agency availability
- media availability and usage
- legal restrictions
- local competition
- adjust content, reach, and frequency of your advertisements based on local competition

Conclusion
- receivers of IMC may decode messages
- components of IMC should convey a consistent message that fit receivers' traits
- a global advertising concept which addresses a universal human is vital for maintaining global brand image
- success of global advertising also depends on the adaption of the global advertising concept to the differences in the global marketing environment

Tasks of Global Social Media Marketing
1. Content marketing: update regional and country specific content to keep readers engaged and also give search engines content to index
2. customer service
3. user-generated content campaigns

Localize Social Media Marketing
1. Choose social media platforms - identify the most social networks in each country you're targeting
2. Identify the type of content that goes in different countries - understand what appeals to the audience in your target country
3. Identify local who can carry the brand message

4. Select agencies (alternative): certain markets are much more difficult to break into than others and may require an to get you a head start
When selecting local agencies, consider:
- expertise of social media marketing
- creative
- scope and quality of support services
- size

Global Mobile Marketing
1. QR
2. Mobile Apps
3. Branded games on mobile social media

Global Mobile marketing:
Localize your app:
1. app store market description
2. update localized app screenshots on app store
3. translate mobile app launch tips, push notifications, help tips
4. adjust privacy and end user license agreement
5. hire local legal and customer service support

Global Digital Brand Communities
- Define the purpose of your community to create a sense of
- foster emotional connections and loyalty

Global search engine marketing: goal is to attract visitors to your when they search for products, service, or information related to your business
- search engine optimization
- paid search and display ads

Global Search Engine Marketing
Strategies:
- understand search engines and cost per click
- identify the local customers might use to look for your product or service
- use the keywords in your content and beware of language variations
- be well-balanced between improving keyword-focused content and earning visibility (links and mentions) from external sources

Global email marketing: email is an but effective way to reach mobile customers, to keep customers informed, and drive online in-store sales