INTERNATIONAL MARKETING SECTION 9A LEGAL SYSTEMS AND ISSUES AROUND THE WORLD ALAN L. WHITEBREAD.

INTERNATIONAL MARKETING

SECTION 9A

LEGAL SYSTEMS AND ISSUES AROUND THE WORLD

ALAN L. WHITEBREAD

OECD

• The U.S. Foreign Corrupt Practices Act implements the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

• The convention requires signatory nations to– criminalize the bribery of foreign public officials, and– eliminate any remaining tax deductibility for bribes.

• U.S. agencies have established a comprehensive process for monitoring implementation and enforcement of the Convention.

CORRUPTIONincludes, but is not limited to,

• Extortion• Contract and other favors• Skimming• Fraud and/or misrepresentation• Embezzlement• Smuggling• Money laundering• Bribery [payoffs, kickbacks]

BEWARE OF ANYONE THAT

• does not want to keep records or has very poor records; or

• is an agent and a government official; or• claims this government official can … ;or• has other third parties involved in the

transaction [especially the payments]; or• requests double invoices.• If any of these issues come up, you need

to …!

If any of these issues come up

• If you are asked about things like this, as a U.S. official you are required to ….

– tell the party “we heard you” and gently show them to the door, and

– document the meeting for future reference in the files. There is no need to report unless something seriously wrong comes to your attention.

FOREIGN CORRUPT PRACTICES ACT - 1977

• Prohibits American companies from making payments [anything of value] to foreign officials knowing some or all of the funds will be used for the purpose of obtaining, keeping, or directing business [to themselves or an affiliated party] and it applies to all American firms’

• employees and agents• resellers of all kinds [distributors, retailers, OEMs, … - even

your reseller selling to a foreign government]• consultants• contractors• whether or not they are American citizens!

• For current information see http://www.usdoj.gov/criminal/fraud/fcpa/

http://www.usdoj.gov/criminal/fraud/fcpa/

FCPA - DETAILS

• FCPA basically says that any attempt to bribe any foreign official in any way is illegal.– Paying for a lavish lunch for a mid-level government

official.

• But FCPA allows facilitating payments. These are defined as items of insignificant value that would not influence a decision.– Paying a very small amount for a government official’s

lunch.

FOREIGN CORRUPT PRACTICES ACT - 1977

• Civil and criminal penalties include

– Fines up to $100,000 and / or– SEC fines up to $500,000 and / or– Up to five years imprisonment– Per offense and / or

– Loss of export privileges!

Foreign Corrupt Practices Act – SCENARIO 1

A very high level foreign government official which has done business with an American firm indicates interest in visiting their facilities. Before they invite him, his spouse, and two aides to fly first class to be their guests in Texas, visit company headquarters, manufacturing facilities and the Alamo, they should be able to answer a number of questions.

Foreign Corrupt Practices Act

Yes No

1. Can they extend the invitation without the involvement of any other level of management?

Answer Only a very senior [C-level] executive would do this and would likely have a legal review. Any other manager level should have approvals before extending the invitation.


Yes No

2. Are such trips permitted under the FCPA?

Answer Maybe. The amount of business in the past and/or the amount projected in the future will be a critical element of whether this visit would comply with FCPA.


Yes No

3. Would conditions be attached to this visit?

Answer Yes. Expenses must be reasonable and proper, and directly related to the promotion, demonstration, or explanation of products or services, or the execution or performance of an existing or pending contract.

FCPA UPDATE

• The FCPA was amended by the International Anti-Bribery Act of 1998 to implement the anti-bribery conventions of the Organization for Economic Cooperation and Development [OECD] Convention on Combating Bribery of Foreign Officials in International Business Transactions.

• The Act expands the FCPA's coverage to include all foreign persons who commit an act in furtherance of a foreign bribe while in the U.S.

FCPA VIOLATION GUIDANCE

• Reporting violations of FCPA or corrupt activities fall into one of two categories.– Specific cases where you suspect there may be a

violation of the FCPA, or– General reporting on corrupt activities that may not be

subject to the FCPA but are still of interest to Washington agencies.

• It is USG policy for all agencies at post to assist the DOJ and the SEC in enforcement of U.S. laws.

COMPARATIVE LEGAL SYSTEMS

• Different legal systems have different ways of dealing with the same issue. The major legal systems are – Common Law– Civil Law or Code Law or Statute Law– Religious Law– Customary Law– Mixed legal systems

LEGAL FRAMEWORK:COMMON LAW NATIONS

• Have legislative codes [written law]• Rely heavily on precedent [previous judicial

decisions]• American judges generally are not involved in

discovery if there is a jury trial• There is significant judicial discretion by

American judges in interpreting the penalties or remedies.

• Verbal and written communications are binding– USA and the old British Empire countries

LEGAL FRAMEWORK:STATUTE, CIVIL, or CODE LAW NATIONS

• Based on Roman Law• Relies heavily on legislative code• These nations generally have a strict,

literal interpretation of the code law with very little judicial discretion.

• Common in continental Europe and Latin America– France, Germany, Spain, and Portugal and

their old colonies, and Japan

LEGAL FRAMEWORK:RELIGIOUS LAW

• Religious law provides a model of ideal behavior of being moral rather than practical or abstract. The sources of law are often religious books [or sometimes religious leaders] rather than legislation or judicial decisions. Decisions often lie in the hands of religious leaders and are subject to religious interpretation.– Muslim nations– Israel

LEGAL FRAMEWORK;CUSTOMARY LAW NATIONS

• Communal and customary laws – Mongolia – Parts of Africa– ?

LEVELS OF INFLUENCE:DOMESTIC – in the U.S.

• Home country laws and/or international agreements that affect business activities– a ban on the import or export of specific

products • drugs, endangered species, fire arms, counterfeit

goods, certain agricultural products, …

– or to and from specific countries • Cuba, North Korea, and Iran

– and / or using specific practices• Foreign Corrupt Practices Act [FCPA]

LEVELS OF INFLUENCE:INTERNATIONAL

• Agreements made between and among nations that create a legal environment specific to trade among those countries– treaties

• WTO and its offspring [TRIMS, TRIPS, …]

– agreements • EU agreements such as the Maastrich Treaty,

NAFTA, investment, …

APPLICATION OF U.S. LAWSAROUND THE WORLD

• Antitrust Laws– Cartels or a Monopoly– US DOJ Antitrust Guidelines may be found at

http://www.usdoj.gov/atr/public/guidelines/internat.htm

• National Security Laws– Import restrictions– Export restrictions

• Anti-boycott Laws– Israel …

• Foreign Corrupt Practices Act

http://www.usdoj.gov/atr/public/guidelines/internat.htm

SECTION 9A: REVIEW

• You should now have knowledge of– Corruption– OECD– Foreign Corrupt Practices Act– Comparative legal systems– Levels of influence– Application of U.S. laws around the world


SECTION 9B

INTERNATIONAL CONTRACTS

ALAN L. WHITEBREAD

DISTRIBUTION AGREEMENTS

• TERRITORY: EXCLUSIVITY– Some statement is virtually required.

• Indonesia allows only one distributor.– What option[s] you do have?

• Some countries imply exclusivity unless the contract specifies differently.

• Exclusivity is not allowed.– What does country / trade area law require / allow in

terms of exclusivity?


• BASIC REQUIREMENTS

– Products and / or Services• All, extensive, or limited product accessibility• Supplier’s rights• Reseller’s rights

– Distributors, dealers, wholesalers, retailers, various types of representatives, …

– What does country law require or allow?– What restrictions exist?


• OBLIGATIONS CLAUSE

• The part of an agreement or contract that specifies what each party will do.

– Examples include1. The Buyer will introduce the Seller’s goods to all

major customers in the area.

2. Seller will provide a 5% advertising allowance against net purchases.



– Prices• What are they? How long are they good? • How are prices revised?• How are new products priced?

– Payment terms• Where? When? How?

– Is the agreement assignable?



– Key clauses• Force majeure clause

– This clause covers natural disasters or "Acts of God", war, or the failure of third parties--such as suppliers and subcontractors--to perform their obligations to the contracting party. Force majeure clauses are intended to excuse a party only if the failure to perform could not be avoided by the exercise of due care by that party.

• Power of Attorney– The Power of Attorney is an authorization to act on someone

else’s behalf in a business or legal affair.

• Do these two elements exist in the other legal system?



– Performance Clause requirements• Initial goals• Subsequent targets and resetting targets• Remedial measures


• BASIC REQUIREMENTS– Performance requirements

• Initial goals• Subsequent targets and resetting targets• Remedial measures

– Processes• Ordering [How? Who?]• Shipping

– Detail the responsibilities of the parties– Government filings or approvals

• Which party is responsible?



– Warranty and claims [processing]– Intellectual property rights– Termination

• With cause• Without cause• Special circumstances


• TERMINATION CLAUSE

– The typical American businessperson will generally treat the termination of a foreign reseller as an ordinary event because it just did not work out. In most cases in the U.S., there is very little financial impact on the Seller. The Buyer rarely seeks additional compensation.

– This is an especially risky area that American firms are not used to! Rarely does a seller have to make payment in the U.S. Make sure they consult an international contract attorney about specifics in your country before terminating a reseller.


• Termination– Varies greatly by country

• Belgium = normal costs + goodwill

– “Agent” – acting on behalf of the company– “Distributor” – acting independently with the

right to promote and sell the company’s products

– What is the law in the other country for termination of all types of business contracts?



– Post-termination rights– Dispute resolution options

• Jurisdiction• Arbitration• Legal action [litigation]


• ARBITRATION CLAUSE

• This contract clause describes the process of resolving a dispute or a grievance outside of the court system by presenting it to an impartial third party or panel for a decision that may or may not be binding.


• Beware of local [country] law

– It can invalidate some [or all] of the contract.

– The reseller should agree to comply with all local and country law including obtaining required licenses.

SECTION 9B: REVIEW

• You should now have knowledge of– Distribution agreements: basic requirements– The challenge of terminating a contract in another

country– Arbitration vs. litigation in another country– Government approval


SECTION 10A

INTERNATIONAL PRODUCT AND SERVICE DECISIONS

ALAN L. WHITEBREAD

INTERNATIONAL PRODUCT LINE PLANNING

– Which products should be supplied for which markets?

– What product modifications must be made for this specific market [segment]?

– How should we enter the market?

PRODUCT LINE PLANNING OBJECTIVES

• Key product objectives should include:

– Business definition

– Product offering • Product lines • Variety within the product line

– Marketing mix • 4P’s – Product, Place, Promotion, Price

LOCAL, NATIONAL, REGIONAL and GLOBAL PRODUCTS

• LOCAL– offered in only a portion of a national market

• NATIONAL– offered in a single national market

• REGIONAL– offered in multinational / regional markets

• GLOBAL or INTERNATIONAL– offered in the global market [multi-regional]

• Give examples of local, national, regional, and global products.

THE THREE LEVEL PRODUCT CONCEPT

Brand NameQualityLevel

Packaging

Design

FeaturesDelivery

Installation Warranty

After-Sale

ServiceActual / Branded Product

[what your are likely to see in a store]

Actual / Branded Product[what your are likely to see in a store]

Augmented Product[store product plus services]

Augmented Product[store product plus services]

Core Product[the most basic offering]

Core Product[the most basic offering]

CreditTerms

Manuals

THE EXPANDED PRODUCT CONCEPT

Brand NameQualityLevel

Packaging

Design

Features

CreditTerms

Installation Warranty

After-Sale

Service3-BRANDEDWhat you see in the store

3-BRANDEDWhat you see in the store

4-AUGMENTED PRODUCTAttributes, benefits, or servicesused for competitive advantage

4-AUGMENTED PRODUCTAttributes, benefits, or servicesused for competitive advantage

1-GENERIC [CORE] PRODUCTServes the fundamental need or want.

2-EXPECTED – Typical basic product

1-GENERIC [CORE] PRODUCTServes the fundamental need or want.

2-EXPECTED – Typical basic product

5-POTENTIAL PRODUCTFuture: the most advanced product

5-POTENTIAL PRODUCTFuture: the most advanced product

ExtendedWarranty

AdvancedFeatures

Delivery

Updates

THE PRODUCT LIFE CYCLE OVERVIEW[Countries or products in boxes]

TIME

DeclineMaturityIntroduction Growth

SALES

A

I

BC

D

E

E

G H

J

K

PRODUCT ATTRIBUTES

• DESIGN

• FEATURES

• SPECIFICATIONS

• QUALITY STANDARDS

• PERFORMANCE STANDARDS

GOODS - SERVICES CONTINUUM

PurePureServiceService

GoodGoodwithwith

ServicesServices

ServiceServicewithwith

GoodsGoodsHybridHybridPurePure

GoodGood

TANGIBLE INTANGIBLECHARACTERISTICS

HIGH IN SEARCH

QUALITIESVisual, tangible

inspection

HIGH IN EXPERIENCE QUALITIES

Some / all product attributes can be assessed only through experience

HIGH IN CREDENCE QUALITIESProduct attributes can

rarely be assessed / learned

Groceries Autos Restaurants Rental Movies

Medical Care

Co

mm

un

ica

tio

ns

Ne

ed

sS

am

e

Dif

fere

nt

AGGRESSIVEGROWTH

All new approachApple iPODTM

Your examples ?

EXPANSION

Simple roll-outVarious packages of

Campbell’s soups

ADAPTATION

Product changesor innovations

Various flavors of Coca-Cola products

Same DifferentProducts / Services Needs

EXTENSION

New messagesTV, Plasma TV

INTERNATIONAL BUSINESS: EXPANSION STRATEGY ALTERNATIVES

A BRAND IS A

• NAME, TERM, SYMBOL, or ANY OTHER UNIQUE ELEMENT of a product that identifies one firms’ product[s] and sets them apart from ALL competitive offerings.

• Beware of cultural, symbolic, and linguistic interpretations!

• See Interbrand’s Annual Ranking of The Best Global Brands. – See http://www.interbrand.com/surveys.asp for more information.

http://www.interbrand.com/surveys.asp

BRAND EQUITY

• THE VALUE OF THE BRAND TO THEIR CUSTOMERS AND AN ACQUIRER – AN OFF BALANCE SHEET NUMBER.

Altria [PMI] – Kraft Foods $13B 600% of bookKKR – RJR Nabisco $ 5.8B 550% of book

"The secret to our enduring brand lies in delivering an experience rather than just a

collection of products and services." - Harley-Davidson Annual Report, 2003

BRAND STRATEGY

• Standardization of brand names

– One corporate brand world-wide• Coca-cola, Perrier, Kodak

– Modified brand names for each regional market• Tide [U.S.] – Ariel [Europe]

– Family brand world-wide• Levi-Strauss, 3M

GLOBAL BRAND DISADVANTAGES

• Bad news travels fast. You can not afford bad news.

• One product’s problems can reflect on other products and damage the brand.

• Local brand loyalties may be hard to overcome.

FIVE KEY BRAND DECISIONS

BRAND SELECTION

•Brand

•No brand [Generic]

BRAND SPONSOR

• Manu-facturerBrand

•Private Label Brand

•Joint

•License

BRAND NAME

•IndividualBrand

•FamilyBrand

•SeparateFamilyBrands

BRAND STRATEGY

•LineExtension

•BrandExtension

•Multibrands

•Newbrand[s]

•Cobrand[s]

BRAND POSITION

•Reposition -brand OR THE -competitor

•MaintaincurrentPosition

BRAND DECISIONS

Selection

•Brand

•No brand [Generic]

Should the product have a brand name?

Go through the brand name selection process. See goals on the next slide.

Should all products be branded?What about sand and play sand?

BRAND NAME SELECTION

• The brand name should– Be distinctive [not found in any language]– Be easy to pronounce, recognize, and remember– Lack poor foreign language meanings– Project a positive image or characteristic– Suggest product benefits– Suggest product qualities– Be timeless [enduring]– Be versatile for expansion purposes

• If you do three or four of the above, you have likely done a good job.

BRAND DECISIONS

Sponsor

•Manu-facturerBrand

•Private Label Brand

•Joint

•License

Who owns the brand name?

If it is a joint brand [usually two entities] there are special considerations.

Licensing a brand is a common practice and can be a source of significant royalties.

BRAND DECISIONS

Name

•IndividualBrand

•FamilyBrand

•SeparateFamilyBrands

Should I have a brand name for an individual product?

Should I have a brand name for a set of product lines?

Should every product line have separate brand names?

BRAND DECISIONS

Strategy

•LineExtension

•BrandExtension

•Multibrands

•Newbrand[s]

•Cobrand[s]

Should I have a product line or brand name and then a surname to help identify the products?

Are the product families so different they would benefit from multiple brand names?

Is the product [line] so different it requires a new brand name?

Cobrands [brands of at least two companies used together] have special considerations.

BRAND DECISIONS

Position

•Reposition -brand? -competitor?

•Maintaincurrentposition?

Is there something significant to be gained by repositioning the brand?

Repositioning a competitor is risky and can be expensive.

Is maintaining the current position the best strategy?

See Positioning in Section 7.

PACKAGING AND LABELING[More asterisks indicates increased importance].

FUNCTION PACKAGE LABEL

Selling *** *Competitive advantages ***Product safety * ***Identify contents * ***Describe the product ** **Promote the product ** **

PACKAGING IS CRITICAL!USE IT FOR

Differentiation

Recognition

Company & brand image

An opportunity for innovation

Value perception – additional utility [reuse]

Promotion

Cost effectiveness

PACKAGING ISSUES

• Developing cost-effective packaging that will meet the requirements of– Intermodal transportation and climates, and– Package and handling testing, and– Labeling, and– Shelf life requirements, and– Fit with the infrastructure, and– Potentially fit with recycling requirements, and– Conform with promotional and legal issues.

PACKAGING ISSUES:INTERMODAL STRESS POINTS

TRUCK DOCK RAILROAD PORT SHIP

Acceleration / Retardation



Acceleration Heaving / Pitching

Centrifugal forces in curves

Drop impact Centrifugal forces in curves

Drop impact Rolling / Yawing / Swaying

Vibrations

[Group 1]

Vibrations

[Group 2]

Vibrations

[Group 3]

Shunting impact

Centrifugal forces

PACKAGE TESTING

• Numerous package testing standards exist for distribution system testing for pallet loads.– ISTA procedures– ASTM – Mil specs– Company specified tests– Custom test protocols – UN, IATA, ICAO– HAZMAT testing

http://www.lansmont.com/Testing/package/HazMat.htm

PACKAGE TESTING

• Product testing inside the package

• Temperature / Humidity testing

• Mullen Burst testing / ECT testing

• Shock testing

• Incline-impact testing

• Compression testing

• Drop testing

• Vibration testing

DUNNAGE

• Dunnage refers to materials or containers designed to minimize the movement of products during transit. It includes– package inserts to keep the product in place,– inflatable air bags that go inside trailers or

containers to squeeze the product into a fixed position,

– fillers, stuffings, and more.

LABELING

• ON-PACKAGE LABELS ARE USUALLY SPECIFIED BY COUNTRY LAW– Language[s]– Required information– Placement of the information

• COUNTRY, SOMETIMES TRADE AREA, NOT INTERNATIONAL STANDARDS

PRODUCT SUPPORT SERVICES

• QUALITY

• DESIGN

• FEATURES

• INSTALLATION

• WARRANTY / AFTER-SALE SUPPORT

INTERNATIONAL PRODUCT TRAINING

• LANGUAGES

• MANUALS

• PRESENTATIONS

• TRAINERS

• COMPATIBILITY

MANAGING INTERNATIONAL PRODUCTS

• Product line decisions [products and product changes]

• Product life cycle decisions

• Value [supply] chain systems and adjustments

• Quality [internal]• Standards

• Product/service elements– FAB’s– Brand[s]

• Global, regional, or local?

– Packaging– Warranty– Service[s]– Quality– Logistical efficiency

SECTION 10A: REVIEW

• You should now have knowledge of– International product planning– Three level and expanded product concepts– Business expansion strategy alternatives– Brands, brand name selection, strategy, decisions,

warranty– Packaging, intermodal stress points, package

testing, dunnage, labeling– Product support and product training– Managing international products


SECTION 10B

INTERNATIONAL DISTRIBUTION ALTERNATIVES, SYSTEMS, AND AGREEMENTS

ALAN L. WHITEBREAD

DISTRIBUTION STRATEGY:DIRECT AND / OR INDIRECT

Direct distribution

Manufacturer’s Sales Organizations Wholesaler

Manufacturer

CONSUMERS

Manufacturer’sInternet Site

Retail Store

Indirect distribution

JAPANESE DISTRIBUTION

• High density middlemen– Industries average 5-7 levels between the

manufacturer and the consumer

• High level of channel control– Market access is restricted

• Business philosophy– Full employment; life long employment is common

• Large-Scale Retail Store Law– Restrict construction of Wal-Mart type stores– Multi-year Wal-Mart acquisition in Japan

• Numerous resellers inflate consumer prices.

Automobile makers affiliated parts makers

Independent parts makers

Repair parts makers

Automobile makers

Wholesalers Special agents

Dealers

Sub-dealers

Cooperative sales firms

2nd-levelwholesalers

Retailers

Large usersGasoline stations

Auto repair shops

End users

1

2

3

4, 3

5

1

2

3

1

2

2

44Channels are usually described as having so many steps or levels. The large numbers indicate the step number at that level for the indicated color. The number of levels equals the number of steps + 1. So if a channel has five steps it could also be described as having six levels.

2

3

3

1

2

COMPLEX DISTRIBUTION CHANNELS: JAPAN

TYPES OF RESELLERS: WHOLESALING INTERMEDIARIESRESELLERS OR MERCHANT

WHOLESALERS• Take Title to Goods• Independently owned• Fairly standard

arrangements

EXAMPLES INCLUDE:• Distributor - Wholesaler• Dealer – Retailer• Jobber• Exporter• Export Trading Company• and more

OUTSIDE SALES ENTITIES• Independently owned firms• Never take Title to the goods• Help negotiate business

arrangements• Be careful of payments !

EXAMPLES INCLUDE:• Export Broker• Export Management Co.• Manufacturer’s Rep• Freelance Sales Person• and more

CHANNEL ROLES & EXPECTATIONS

• American firm expects of reseller

– Marketing mix: • product, place,

promotion, price

– Channel functions:• Contact, service,

information, promotion, negotiation, inventory, logistics, and financing

• Reseller expects of the American firm

– Marketing mix: • product, place,

promotion, price

– Channel functions:• Contact, service,

information, promotion, negotiation, inventory, logistics, and financing

In the best relationships, this is a fairly even set of items. If it gets too one-sided, the relationship may deteriorate.

ROLES OF CHANNEL MEMBERS

Entity Key Role Inventory? Financing?

Broker Bring buyers and sellers together No No

Manufacturer’s representative

Represents several manufacturers No No

Sales agent Negotiates on the seller’s behalf No No

Manufacturer Produces finished goods or components for sale

Yes Yes

OEM Manufacturers and/or assembles products into a final unit

Yes Yes

Distributor or Wholesaler

Provides goods to other resellers Yes Yes

Dealer or Retailer Carries goods for purchase by consumers

Yes Yes

RETAILER FOR CORE PRODUCT ONLY

RETAILER FOR BRANDED PRODUCT

RETAILER FOR AUGMENTED PRODUCT

PRODUCT DEFINITION[S]

Plain metal, one cycle, washer with only an on button

FEATURES include multiple wash rinse cycles, porcelain finish, multiple colors, ergonomic, and functionalVarious DESIGN and load styles, aestheticQuality parts and construction, some warrantyBrandedPackaging to protect promote, and reduce cognitive dissonance

Everything in the ACTUAL / BRANDED product plus Credit Delivery Installation After-sale service Extended warranty and service

CORE PRODUCT

Very low selling price to maximize volume for this market segment

Not available Not available

BRANDED PRODUCT

Push brand, product knowledge and sales training are required,Promotes the product line

These brands / models are not available

AUGMENTED PRODUCT

Excellent product knowledge, mandatory sales training, retailer has a strong local reputation, full service retailer providing credit, delivery, installation, after-sale and extended warranty service, spare parts inventory, participates vigorously in all promotions, frequently asks to run local promotions, …

RETAILER ROLES BASED ON LEVEL OF PRODUCT

ROLES OF CHANNEL INTERMEDIARIES

• Roles, expectations, and controls need to be defined for

– Resellers of all types– Sales organizations of all types– Third party logistics providers [3PL’s]– ?

CHANNEL CONFLICT

• The amount of channel conflict is directly related to the cleanliness of channels and programs.

– A lot of channel conflict indicates the management of the channel[s] is [are] ineffective!

– Channel conflict takes management time away from their primary objectives.

• Conflict must be minimized to maximize efficiency and profitability!

TYPES OF CHANNEL CONFLICT

Horizontal Conflict EXAMPLE:

Two resellers disagree in whose territory an account actually resides.

Vertical Conflict EXAMPLE:The manufacturer disagrees with a particular reseller's service policies.

MEXICO BEARING INDUSTRY - 2000

Domestic Mfgs.Foreign Mfgs. + Subs.

Wholesalers (also V. Large End-Usersmajor Importers) (auto assembly, …)

53% of consumption

Distributors <(20-30% MU)(11,000) brands

Retailers(20,000)

(20-30% MU)Major End-Users(few in number)

Sm. & Med. End-Users(???)

Copyright A. Whitebread 3/1/98, updated 12/1/00

CHANNEL CONTROL

• Is the ability to manage the efforts of channel members– Begins with the selection process– Depends on the implementation of roles,

expectations, and controls

• All firms [regardless of size] have the opportunity for channel control.

CHANNELS OF DISTRIBUTION SUMMARY

• Channel decisions are difficult to manage globally

• A global marketer must – tailor the marketing program to different types of channels, or– introduce new merchandising concepts

• Reseller selection is critical to long-term success.

• Set reasonable roles, expectations, and controls.

• Be sure to minimize conflict – always within the law.

SECTION 10B: REVIEW

• You should now have knowledge of– Major channel issues

• Complex channels of distribution• Channel roles and expectations• Channel conflict• Channel evaluation


SECTION 10C

INTERNATIONAL INTEGRATED MARKETING COMMUNICATIONS [IMC] DECISIONS

ALAN L. WHITEBREAD

SECTION 10C

• This section is has one set of lecture slides.

– This lecture details the many issues of a world-wide integrated marketing communications [IMC] program. It examines international advertising, public relations, consumer and trade promotion, and some of the legal constraints you may face leading IMC from country-to-country.

The careful integration and coordination of all communication channels to deliver

a clear, consistent, and compelling message.

INTEGRATED MARKETING COMMUNICATIONS (IMC)

INTERNATIONAL IMC ISSUES

• ALL MESSAGES ARE INFLUENCED BY CULTURES, CUSTOMS, AND SYMBOLISM.

• THE CONCEPT OF TIME VARIES FROM CULTURE TO CULTURE.

• THERE CAN BE VERY DIFFERENT LEGAL AND REGULATORY CONSTRAINTS ON VARIOUS IMC COMMUNICATION CHANNELS.

IMC COMMUNICATION VEHICLES

ADVERTISINGCONSUMER

PROMOTIONS

POINTOF

PURCHASE

TRADEPROMOTIONS

COLLATERAL EVENTSPUBLIC

RELATIONSPACKAGING& LABELING

DIRECTMARKETING

SALESAIDS

INTERNETTRADESHOWS

SETTING THE PROMOTION MIX:How do firms maximize the impact of many different

communication tools?

ADVERTISING-Extensive reach

-Expressive-Impersonal

PUBLICRELATIONS-Believable-Effective

-Economical

PROMOTION-Incentives to buy

-Short-lived

DIRECTMARKETING

-Can not be used everywhere

SALES-Collateral-Support

CREATIVE CHALLENGES

– The communication mix• Legal considerations• Production issues

– Size, color choices, symbolism

• Issues on acceptable communications by country and delivering the message

– Delivering and receiving the right message• Media availability limitations• Issues about receiving the message

CREATIVE CHALLENGES

– Getting through the NOISE

• Noise refers to the amount of additional communication messages competing for the attention of the target.

• There are a lot of messages

• Firms need to have your message heard or seen and remembered

STEPS FOR DEVELOPING AN EFFECTIVE COMMUNICATIONS PROGRAM

• Identify the target audience[s]• Establish the communication objectives• Design the message[s]• Select the best communication vehicle sets• Collect and monitor feedback• Adjust components as necessary

• NEVER FORGET THE CULTURAL DIFFERENCES !*Context *Class / *Social *Values *Religion *Beliefs *Time *Symbolism*Language / *Dialect *Thought processes

EFFECTIVE INTERNATIONAL ADVERTISING DEPENDS UPON

EXTERNAL FACTORS-culture-language-regulations

TYPES OF MEDIA-availability-habits

TYPE OF CAMPAIGN-standardized-customized-types of appeals

ORGANIZATION -agency [types] -coordination

AVAILABILITY OF ADVERTISING MEDIA

1. Determine the Desired Reach, Frequency, and Impact

2. Select Major Media Types – these will change by each of the following

– Media Habits of Target Market[s]– Nature of the Product[s]– Type of Message[s]– Cost by Media Type[s]

WHAT IS ALLOWED OR POSSIBLE IN

ANOTHER COUNTRY?

TV

Radio

Print

Outdoor

?

SELECTING ADVERTISING MEDIA

3. Select Specific Media Vehicles

– Specific Media By Type– Balance Media Cost and

Factors:

4. Decide on Media Timing– Program Advertising Schedule

WHAT IS ALLOWED OR POSSIBLE IN

ANOTHER COUNTRY?

TV

Radio

Print

Outdoor

?

Account ManagementDevelops the Campaign

Strategy for Client

Account ManagementDevelops the Campaign

Strategy for Client

Creative ServicesCreates and Produces

the Materials

Creative ServicesCreates and Produces

the Materials

Media PlanningDetermines Effective

Communication Vehicles

Media PlanningDetermines Effective

Communication Vehicles

Research & Marketing Services

Collects and Analyzes Information to Help Develop / Refine a Strategy

Research & Marketing Services

Collects and Analyzes Information to Help Develop / Refine a Strategy

AD AGENCY SERVICES

DEVELOPING THE PROMOTION MIX

• PUSH STRATEGY [B2B and B2C]– Pushes sales through channels of distribution to

resellers then to consumers.– The most common way in international business.

Manufacturer Reseller(s) Consumers

Advertising & promotion

DEVELOPING THE PROMOTION MIX

• PULL STRATEGY [B2C]– Advertise to consumers and pull sales back through

the channels of distribution.– Relatively rare in international business

Manufacturer Reseller(s) Consumers

Advertising & promotion

GLOBAL MEDIA CHALLENGES

• Variety of media– Availability and use varies by country

• Consistency of the delivered message• Scheduling and coordination• Multiple agencies

– Does your firm have a lead agency? – Where are the others?

• Legal restrictions vary by country– Comparative advertising is not allowed in the EU or in

many countries in Asia.

AN EXCELLENT PR PROGRAM WILL USE MANY PUBLIC RELATIONS TOOLS

Press releases / articles(Firm, products, services, and news)

Press releases / articles(Firm, products, services, and news)

Facility tours(Plants, offices, grand openings, sites)

Facility tours(Plants, offices, grand openings, sites)

TV / radio exposure(Interviews, news blurbs, stories, …)

TV / radio exposure(Interviews, news blurbs, stories, …)

Company Presentations(Conferences, events)

Company Presentations(Conferences, events)

Public Affairs(Community relations, sponsorship, …)

Public Affairs(Community relations, sponsorship, …)

Lobbying*(Specialized firms & tasks)

Lobbying*(Specialized firms & tasks)

Investor Relations(Information – corporate officer level)

Investor Relations(Information – corporate officer level)

IN COUNTRY / REGION / DIVISION RESPONSIBILITIES

CORPORATE RESPONSIBILITY SPECIALIZED RESPONSIBILITY

*Do not provide advice about or sources for lobbying!

SALES PROMOTION

• Any consumer or trade program of limited duration that adds value to a product/service offering.

• These are usually developed on a country-by-country basis due to restrictions on – Customs, laws, and regulations;– Size; and– The nature of the sample, premium, or prize.

SALES PROMOTION

• Sales promotion is used to– Stimulate customers to sample or make the first purchase

of a product;

– Increase consumer use;

– Increase product availability; and

– Expand into a new distribution channel / area.• China: Coke has been there since the 1930’s, Diet Coke was

introduced in 2001.

• Coke to began the DASANI rollout in Europe [3/15/04]. It later became a major problem due to clean water definitions in the UK. See the Internet for many more details.

CONSUMER PROMOTIONS[Y=Yes M=Maybe N=No]

PROMOTIONAL ITEM U.S. Germany Italy Another Country

Extra / Free product Y M / Y Y

Mail-in offers Y N Y

Purchase-with-purchase Y N Y

Contests Y M Y

Sweepstakes Y N M

Money-off coupons Y N M

Next-purchase coupons Y N M

Cash rebates Y M N

In-store demos Y Y Y

Other promotions in your country?

INTERNATIONAL TRADE PROMOTIONResellers of all types

Persuade Resellersto Carry a Brand

Persuade Resellersto Carry a Brand

Get a Brand Shelf Space[Amount, Location]

Get a Brand Shelf Space[Amount, Location]

Promote a BrandPromote a Brand

Push a Brand througha channel of distributionPush a Brand through

a channel of distribution

Price-OffsPrice-Offs

AllowancesAllowances

DisplaysDisplays

DiscountsDiscounts

Specialty Advertising

Items

Specialty Advertising

Items

Buy-BackGuarantees

Buy-BackGuarantees

Free GoodsFree Goods

ContestsContests

PremiumsPremiums

PaymentsPayments

INTERNATIONAL TRADE PROMOTIONBusiness Customers

Generate Sales LeadsGenerate Sales Leads

Stimulate Short-termPurchases

Stimulate Short-termPurchases

Motivate CustomerSalespeople

Motivate CustomerSalespeople

Reward CustomersReward Customers

AdvertisingAllowances

AdvertisingAllowances

POP and Other Displays

POP and Other Displays

Special Programs

Special Programs

InventoryBuy-Back[s]

InventoryBuy-Back[s]

ConventionsAnd Trade

Shows

ConventionsAnd Trade

Shows

Discounts /Free Goods

Discounts /Free Goods

SalesContests

SalesContests

Be sure to get expert legal assistance with all promotion tools and especially with rewarding customers, sales contests, or discounts which include free goods.

6 STEPS FOR DEVELOPING A SALES PROMOTION PROGRAM

1. Determine the Key Objectives of the Incentive1. Determine the Key Objectives of the Incentive

2. Determine the Size [Ranges] of the IncentiveProgram

2. Determine the Size [Ranges] of the IncentiveProgram

3. Establish Conditions for ParticipationGet expert legal assistance for this.

3. Establish Conditions for ParticipationGet expert legal assistance for this.

4. Determine How to Roll-out andDistribute the Promotion Program. 4. Determine How to Roll-out and

Distribute the Promotion Program.

5. Determine the Program Duration5. Determine the Program Duration

6. Monitor and Evaluate the Program[Be sure you have good systems].

6. Monitor and Evaluate the Program[Be sure you have good systems].

GLOBAL TRADE SHOWS

• They are massive

• Require extensive planning

• Logistics are critical

• Staffing and expense considerations

• Directories

SECTION 10C: REVIEW

• You should now have knowledge of– Integrated Marketing Communications

• Definition• All of the communication channels

– International considerations• Differences to U.S. advertising• Creative challenges• Selecting advertising media• Role of ad agencies and PR firms• Many sets of customs, laws, and rules for promotional

programs around the world• Global trade shows

INTERNATIONAL MARKETING SECTION 9A LEGAL SYSTEMS AND ISSUES AROUND THE WORLD ALAN L. WHITEBREAD.

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Transcript of INTERNATIONAL MARKETING SECTION 9A LEGAL SYSTEMS AND ISSUES AROUND THE WORLD ALAN L. WHITEBREAD.