International Mkting-Environments (1)

8/3/2019 International Mkting-Environments (1)

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DefinitionDefinition

New Product DevelopmentNew Product Development

+Development of original products,+Development of original products,product improvements, productproduct improvements, productmodifications, and new brandsmodifications, and new brandsthrough the firms own R & D effortsthrough the firms own R & D efforts


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ProcessProcess

Idea generationIdea generation

Idea screeningIdea screening

Concept developmentConcept developmentMarket strategy developmentMarket strategy development

Business analysisBusiness analysis

Product developmentProduct developmentTest marketingTest marketing

commercializationcommercialization


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Product life cycleProduct life cycle

The Typical Product Life Cycle (PLC)The Typical Product Life Cycle (PLC)

Has Five StagesHas Five Stages+Product Development, Introduction,+Product Development, Introduction,

Growth, Maturity, DeclineGrowth, Maturity, Decline


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Product issues in internationalProduct issues in international

marketingmarketing

Product and services continuumProduct and services continuum

Product need satisfactionProduct need satisfaction

Approaches to Product introductionApproaches to Product introduction

1.1. CustomizationCustomization

2.2. StandardizationStandardization

3.3. AdaptationAdaptation


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Contd.Contd.

AdaptationsAdaptations

1.1. MandatoryMandatory

2.2. DiscretionaryDiscretionaryPhysical product vs. communicationPhysical product vs. communication

adaptationadaptation

BrandingBranding


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Contd.Contd.

International PLCInternational PLC

Diffusion of innovationDiffusion of innovation


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What is International Marketing?What is International Marketing?

Domestic marketingDomestic marketing

encompasses a firms efforts in itsencompasses a firms efforts in its

home countryhome country..International marketingInternational marketingInvolves marketing goods andInvolves marketing goods and

services outside the home countryservices outside the home country..


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The Marketing Environment

Uncontrollable environment

- Socio-economic and demographic environment- Cultural environment- Technological environment- Political and legal environment- Financial environment

Controllable environment- Product- Place- Price

- Promotion


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PHYSICAL/GEOGRAPHICALPHYSICAL/GEOGRAPHICAL

ENVIRONMENT INCLUDESENVIRONMENT INCLUDES--

Natural resourceNatural resourceendowmentsendowments

Weather andWeather and

climatic conditionsclimatic conditions TopographicalTopographical

factorsfactors

Location aspects inLocation aspects in

the global contextthe global context Port facilitiesPort facilities


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THREATSAND OPPORTUNITIESASSOCIATEDTHREATSAND OPPORTUNITIESASSOCIATED

WITHPHYSICALENVIRONMENTWITHPHYSICALENVIRONMENT

Shortage of raw materialShortage of raw material-- can lead to cost increasecan lead to cost increase

Increased energy costsIncreased energy costs

AntiAnti--pollution pressurespollution pressures

Changing role of governmentsChanging role of governments-- governments vary ingovernments vary intheir efforts and concerns to promote a cleantheir efforts and concerns to promote a cleanenvironmentenvironment


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POPULATIONSIZEPOPULATIONSIZE--

Poor countries withPoor countries withsmall populationsmall population

1.1. Not very attractive forNot very attractive forbusinessbusiness

2.2. Can serve as niches forCan serve as niches forsmall firmssmall firms

Advanced countries withAdvanced countries with

large populationlarge population

1.1. Attractive marketsAttractive markets

2.2. Strong competitionStrong competition


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POPULATIONGROWTHRATEPOPULATIONGROWTHRATE--

World population growthWorld population growthraterate--

1.1. In developing countriesIn developing countries--2% per year2% per year

2.2. In developed countriesIn developed countries--

0.6% per year0.6% per year

A growing populationA growing populationdoes not mean growingdoes not mean growingmarkets unless thesemarkets unless these

markets have sufficientmarkets have sufficientpurchasing power.purchasing power.

Falling death rateFalling death rate

Increasing birth rate inIncreasing birth rate indeveloping countriesdeveloping countries

Decreasing birth rate inDecreasing birth rate in

developed countriesdeveloped countries


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POPULATIONAGE MIXPOPULATIONAGE MIX--

Population can bePopulation can besubdivided into six agesubdivided into six agegroups:groups:

1.1. PreschoolPreschool

2.2. SchoolS

chool--age childrenage children3.3. TeensTeens

4.4. Young adults (age 25Young adults (age 25--4040years)years)

5.5. Middle aged adults (ageMiddle aged adults (age4040--65 years)65 years)

6.6. Older adults (age 65Older adults (age 65years and above)years and above)

For marketers,the mostFor marketers,the mostpopulous age groupspopulous age groupsshape the marketingshape the marketingenvironment.environment.


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ETHNICAND OTHER MARKETSETHNICAND OTHER MARKETS

Countries vary inCountries vary inethnic makeethnic make--upsups

Ethnic groups haveEthnic groups havecertain specific wantscertain specific wantsand buying habits.and buying habits.

Also, within eachAlso, within eachethnic group areethnic group areconsumers who areconsumers who arequite different fromquite different fromeach other.each other.


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EDUCATIONALGROUPSEDUCATIONALGROUPS--

Five educationalFive educationalgroupsgroups--

1.1. IlliteratesIlliterates

2.2. High schoolHigh schooldropoutsdropouts

3.3. High schoolHigh schooldiplomasdiplomas

4.4. College degreesCollege degrees

5.5. ProfessionalProfessional

degreesdegrees


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HOUSEHOLD PATTERNSHOUSEHOLD PATTERNS--

TraditionalTraditionalhouseholdshouseholds

Diverse/nonDiverse/non--

traditionaltraditionalhouseholdshouseholds--

1.1. SingleSingle--live aloneslive alones

2.2. Adult liveAdult livetogetherstogethers

3.3. Single parentSingle parentfamiliesfamilies

4.4. Childless marriedChildless marriedcouplescouples


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GEOGRAPHICALSHIFTS INGEOGRAPHICALSHIFTS IN

POPULATIONPOPULATION--

MigratoryMigratorymovementsmovementsbetween and withinbetween and withincountriescountries

Within countriesWithin countries--rural to urbanrural to urban

Regional differencesRegional differencescan occur withincan occur within

countriescountries

Marketers look atMarketers look atwhere consumerswhere consumersare gatheringare gathering


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Economic environmentEconomic environment

Economic systemsEconomic systems

Population, Income (per capita, GNP)Population, Income (per capita, GNP)

Possibility of effective utilization of resources, financialPossibility of effective utilization of resources, financialstability.stability.

Banking facilities available, nature of credit facilities offered,Banking facilities available, nature of credit facilities offered,short, medium and long term (terms and interest rates)short, medium and long term (terms and interest rates)

Availability of local accounting servicesAvailability of local accounting services

Foreign exchange facilitiesForeign exchange facilities

Remittance of profitsRemittance of profits

Availability of insuranceAvailability of insurance

Situation of balance of paymentsSituation of balance of payments Communication and transport infrastructureCommunication and transport infrastructure

UrbanizationUrbanization

Market prospectMarket prospect

Product and product modificationProduct and product modification


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CLASSIFICATIONOF ECONOMIESCLASSIFICATIONOF ECONOMIES

BASED ONGNIBASED ONGNI

1)LOW INCOME ECONOMIES:1)LOW INCOME ECONOMIES:

Economies with per capita GNI ofEconomies with per capita GNI of

$825 or less in 2004$825 or less in 200459 low income economies59 low income economies

2)HIGH INCOME ECONOMIES:2)HIGH INCOME ECONOMIES:Economies with per capita GNI ofEconomies with per capita GNI of

$10,066 or above in 2004$10,066 or above in 2004


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ContdContd

56 high income economies56 high income economies

3)MIDDLE INCOME ECONOMIES3)MIDDLE INCOME ECONOMIESEconomies with per capita incomeEconomies with per capita income

between $826 and $10,065 in 2004between $826 and $10,065 in 2004

94 middle income economies94 middle income economies


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Low priced modelsLow priced modelsfor developingfor developingcountries.countries.

Example: LOGANExample: LOGANlaunched bylaunched byRENAULT.RENAULT.


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Technological EnvironmentTechnological Environment

Technological developmentsTechnological developmentshave been revolutionizing thehave been revolutionizing the

business scene.business scene.

Facilitates introduction of newFacilitates introduction of newproducts.products.

Improves operationalImproves operationalefficiencyefficiency

Some modern technologicalSome modern technologicalbreakthroughs :breakthroughs :

1)1) BiotechnologyBiotechnology

2)2) NanotechnologyNanotechnology

3)3) SatellitesSatellites4)4) SupercomputersSupercomputers


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Technology facilitating communicationsTechnology facilitating communications

EE--mailmail

InternetInternet

EE--commercecommerce

TelecommunicationTelecommunicationss


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SocioSocio--culturalcultural

EnvironmentEnvironment

EncompassesEncompasses

LanguageLanguage Non verbal languageNon verbal language

ReligionReligion Values and attitudesValues and attitudes Manners and customsManners and customs Material elementsMaterial elements AestheticsAesthetics EducationEducation Social institutionsSocial institutions FamilyFamily


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Contd.Contd.

Never touch the head of a Thai asNever touch the head of a Thai asthe head is considered sacred.the head is considered sacred.

RedRed colourcolour implies death in Africaimplies death in Africa

Number 7 is unlucky in KenyaNumber 7 is unlucky in KenyaTriangular shapes should be avoidedTriangular shapes should be avoided

inin HongkongHongkong

Market for computers is moreMarket for computers is morelucrative in advanced countries likelucrative in advanced countries likeUS where education levels are alsoUS where education levels are alsohigh.high.


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Different cultures and different ways to greetDifferent cultures and different ways to greet


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Contd.Contd.

India: NamasteIndia: Namaste

Netherland: GoddagNetherland: Goddag Sweden: pleased to meet youSweden: pleased to meet you

Tanzania : JamboTanzania : Jambo

United Kingdom : how do you doUnited Kingdom : how do you do


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Intercultural socializationIntercultural socialization

Be culturally preparedBe culturally prepared

Learn local communicationLearn local communicationcomplexitiescomplexities

Mix with nationalsMix with nationals

Be creative and experimentalBe creative and experimental

Be culturally sensitiveBe culturally sensitiveBe realistic in expectationsBe realistic in expectations


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HofstedeHofstede DimensionsDimensions Gert Hofstede, a Dutch researcher, was able to interview a

large number ofIBM executives in various countries, andfound that cultural differences tended to centre around fourkey dimensions:

Individualism vs. collectivism: To what extent do peoplebelieve in individual responsibility and reward rather than

having these measures aimed at the larger group? Japanactually ranks in the middle of this dimension, whileIndonesia and West Africa rank toward the collectivisticside. The U.S., Britain, and the Netherlands rate towardindividualism.

Power distance: To what extent is there a strongseparation of individuals based on rank? Power distancetends to be particularly high in some Latin Americancountries, while it is more modest in Northern Europe andthe U.S.


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ContdContd..

Masculinity vs. femininity. Masculine values involvecompetition and conquering nature by means such aslarge construction projects, while feminine values involveharmony and environmental protection. Japan is one ofthe more masculine countries, while the Netherlands rank

relatively low. The U.S. is close to the middle, slightlytoward the masculine side.

Uncertainty avoidance involves the extent to which astructured situation with clear rules is preferred to a moreambiguous one; in general, countries with lower

uncertainty avoidance tend to be more tolerant ofrisk. Japan ranks very high and the U.S. is in the lower

range of the distribution.


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Political EnvironmentPolitical Environment

Government stabilityGovernment stability

Incentives for international tradeIncentives for international trade

(low interest on loans, construction subsidies, tax(low interest on loans, construction subsidies, taxbreaks)breaks) egeg--Walt Disney theme park in FranceWalt Disney theme park in France

Controls on international trade (tariffs, quotas,Controls on international trade (tariffs, quotas,

buy national) to protect domestic manufacturersbuy national) to protect domestic manufacturers

1.1. Tariff on US Tobacco cos. in JapanTariff on US Tobacco cos. in Japan

2.2. Quota on number of vehicles Honda sells in USQuota on number of vehicles Honda sells in US

3.3. Buy nationally made military uniforms in USBuy nationally made military uniforms in US

Regional Trade AgreementsRegional Trade Agreements--EconomicEconomiccommunity(EU)community(EU)


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Political environmentPolitical environment

Regulations to protect purity ofRegulations to protect purity ofenvironment and preserve the ecologicalenvironment and preserve the ecologicalbalance have assumed importance inbalance have assumed importance in

many countriesmany countries In most countries promotional activitiesIn most countries promotional activities

are subject to various controls.are subject to various controls.

Many countries have laws to educeMany countries have laws to educe

monopolistic power and thereby givemonopolistic power and thereby giveopportunity to small and newopportunity to small and newentrepreneurs.eg. MRTP in India.entrepreneurs.eg. MRTP in India.


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Legal environmentLegal environment

Laws across borders. When lawsof two countries differ, it may bepossible in a contract to specify inadvance which laws will apply duringcourse of dealing among the partiesin question.


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Contd.Contd.

The reality of legal systems. Some legalsystems, such as that of the U.S., are relatively

transparentthat is, the law tends to be whatits plain meaning would suggest. In somecountries, however, there are laws on the books

which are not enforced (e.g., although Japan hasantitrust laws similar to those of the U.S.,collusion is openly tolerated). Further, theamount of discretion left to government officials

tends to vary.In Japan, through the doctrine ofadministrative guidance, great latitude is left to

government officials, who effectively make up thelaws.


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Contd.Contd.

Legal systems of the World. approaches tolaw across the World, with some differenceswithin each:

Common law, the system in effect in the U.S., isbased on a legal tradition ofprecedent. Each

case that raises new issues is considered on itsown merits, and then becomes a precedent forfuture decisions on that same issue.

Code law, which is common in Europe, gives

considerably shorter leeway to judges, who arecharged with matching specific laws tosituationsthey cannot come up with innovativesolutions when new issues come up.


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Contd.Contd.

Socialist lawis based on the premise thatthe government is always right andtypically has not developed a sophisticatedframework of contracts (you do what the

governments tells you to do) or intellectualproperty protection (royalties areunwarranted since the governmentultimately owns everything). Former

communist countries such as those ofEastern Europe and Russia are trying toadvance their legal systems toaccommodate issues in a free market.


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Case studyCase study

U S Ice cream co.U S Ice cream co. in Koreain Korea


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Def.Def.--Intl.Intl. MktingMkting

International marketing refers toInternational marketing refers tomarketing carried out by companiesmarketing carried out by companiesoverseas. It refers to firmoverseas. It refers to firm--levellevel

marketing activities across bordermarketing activities across borderincluding market identification andincluding market identification andtargeting, entry mode selection,targeting, entry mode selection,

marketing mix and strategicmarketing mix and strategicdecisions to compete in internationaldecisions to compete in internationalmarkets.markets.


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Main steps in marketing managementMain steps in marketing management

processprocess

RR--STPSTP--MMMM--II--CC

RR--ResearchResearch

STPSTP--Segmentation, Targeting,Segmentation, Targeting,positioningpositioning

MMMM--Marketing mixMarketing mix

II--ImplementationImplementationCC--ControlControl


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Global information systemsGlobal information systems

Information is one of the most basic ingredients of asuccessful marketing strategy.

For achieving success in International Markets, informationabout buyer behaviour and the overall business environment

is vital to effective managerial decision making.

In order to research markets, marketers must be awareabout information sources, methods of data acquisition andanalysis.

The global marketer must scan the world for informationabout opportunities and threats and make informationavailable via a management information system in order toreduce the uncertainty around marketing decision making.


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Overview of global marketing information systemsOverview of global marketing information systems

Marketing Information System (MIS) provides managers andother decision makers with continuous flow of information

about markets, customers, competitors, and companyoperations.

A MIS should provide a means of gathering, analysing,classifying, storing, retrieving and reporting relevant dataabout customers, channels, sales and competitors.

A companys MIS should also cover important aspects of acompanys external environment.

Global competition intensifies the need for an effective MIS.Global companies like Toyota and Ford have sophisticatedelectronic data interchange (EDI) systems to improve inter

company information sharing. Internet has complemented and dramatically expanded the

ability to access up to date information anywhere in the world.

MIS must provide relevant information in a timely, cost-efficient and actionable manner.


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Elements of information systemElements of information system

The following constitute the elements of the global

information system. Economic

- rate of growth of GNP, level of inflation, incomes

Social

- people, demographics, culture

Political

- risk, instability, attitudes to "foreigners"

Technology

- current, rate of change, infrastructure

Resources

- money, manpower, materials,

Fiscal

- taxes, exchange rates

Institutions

- banks, interest rates


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Tools of information systemsTools of information systems

Electronic Data Interchange(EDI)Electronic Data Interchange(EDI)

Efficient Consumer ResponseEfficient Consumer Response

(ECR)(ECR)Electronic Point of Sale (EPOS)Electronic Point of Sale (EPOS)

IntranetsIntranets

Data warehousesData warehouses


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Formal Marketing ResearchFormal Marketing Research

Marketing Research is the projectspecific systematic gathering of datain the search scanning mode.

Marketing research can be taken upby in-house team of the global firm

or outsourced to outside firmsspecialized in marketing research.


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Steps in Market researchSteps in Market research

Problem definition:

The purpose of the study, background and required information, anddecision making usage of the information is detailed. Defining theresearch problem to be addressed is the most important stepbecause all other steps will be based on this definition.

Developing an approach to the problem:

A broad specification of how the problem will be addressed isdeveloped to allow the researcher to break the problem into salientissues and manageable pieces. Required information is identified.This step is guided by discussions with decision makers, industry

experts.

Research design formulation:

Framework / blueprint for conducting the Marketing Research projectare prepared


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Contd.Contd.

Fieldwork or data collection:A properly selected and trained field force gathers project datathrough personal interviewing, telephone, mail or electronically.

Data preparation and analysis:

Data collected is edited, coded, transcribed and verified to allowresearchers to derive meaning from the data.

Report preparation and presentation:

The research findings are documented and presented to decisionmakers through written reports and presentations. The report should

address the specific research questions identified, describe approach,research design, adopted data collection and data analysisprocedures and conclude the results and major findings.


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Marketing decision and intelligence requirementMarketing decision and intelligence requirement

Marketing decisionMarketing decision

Go international orGo international orremain domesticremain domestic

MarketingMarketingintelligenceintelligence

Assessment ofAssessment ofglobal market andglobal market and

firms potentialfirms potentialshare in it, in viewshare in it, in viewof local andof local andinternationalinternational

competition .competition .


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Contd.Contd.

Which markets toWhich markets toenterenter

A ranking of worldA ranking of worldmarkets accordingmarkets accordingto marketto marketpotential, localpotential, local

competition andcompetition andpolitical situation.political situation.


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Contd.Contd.

How to enterHow to entertarget marketstarget markets Size of markets,Size of markets,intl. trade barriers,intl. trade barriers,

transport costs,transport costs,local competition,local competition,

govt. requirement,govt. requirement,political stability.political stability.


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Contd.Contd.

How to market inHow to market intarget marketstarget markets

For each marketFor each marketbuyerbuyer behaviourbehaviour,,competitivecompetitivepractisepractise,,

distributiondistributionchannel, media.channel, media.


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Scope ofResearchScope ofResearch

Market measurement studiesMarket measurement studies

Competitive studiesCompetitive studies

Environmental studiesEnvironmental studies


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Sources of informationSources of information

Secondary dataSecondary data

1.1. Internal sourceInternal source

2.2. External sourceExternal source

Primary dataPrimary data


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Internal sourceInternal source

Sales and cost records of theSales and cost records of theorganizationorganization


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External sourceExternal source

UN, WB, EU, Embassy, CompetitorsUN, WB, EU, Embassy, Competitorsannual budgets, Internetannual budgets, Internet


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Major issuesMajor issues--

1.1. Availability of dataAvailability of data2.2. Reliability of dataReliability of data

3.3. Comparability of dataComparability of data


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Collection methodsCollection methods

1.1. ObservationObservation2.2. Focus groupsFocus groups

3.3. SurveysSurveys

4.4. ExperimentsExperiments


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ObservationObservation

Fresh data can be gathered byFresh data can be gathered by

observing relevant actors andobserving relevant actors andsettings. A record of consumersettings. A record of consumerreactions is prepared by observer.reactions is prepared by observer.


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Focus groupFocus group

Focus group is a gathering of 6Focus group is a gathering of 6--1010persons who spend a few hours withpersons who spend a few hours witha skilled interviewer to discuss aa skilled interviewer to discuss a

project, service, organization orproject, service, organization orother marketing entity. Theother marketing entity. Thediscussion is recorded through notediscussion is recorded through notetaking/ audio/ videotape and istaking/ audio/ videotape and is

subsequently studied to understandsubsequently studied to understandconsumer belief andconsumer belief and behaviourbehaviour..


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Survey ResearchSurvey Research

Companies undertake surveys toCompanies undertake surveys tolearn peoples knowledge, beliefs,learn peoples knowledge, beliefs,preferences, satisfaction and so onpreferences, satisfaction and so on

and to measure magnitudes in theand to measure magnitudes in thepopulation.population.


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Experiments ResearchExperiments Research

Experimental research calls forExperimental research calls forselecting matched group of subjects,selecting matched group of subjects,subjecting them to differentsubjecting them to different

treatments, controlling extraneoustreatments, controlling extraneousvariable and checking whethervariable and checking whetherobserved response differences areobserved response differences arestatistically significant.statistically significant.


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Research instrumentResearch instrument--QuestionnairesQuestionnaires

Contact methodsContact methods

1.1. Mail questionnaireMail questionnaire2.2. Telephonic interviewTelephonic interview

3.3. Personal interviewPersonal interview


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Main issuesMain issues

1.1. Comparability of dataComparability of data

2.2. Willingness of potential respondentWillingness of potential respondent3.3. Ability of respondent to understandAbility of respondent to understand

and communicate. Languageand communicate. Languageproblem. Use back translation.problem. Use back translation.


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Global Market entry strategiesGlobal Market entry strategies

Once a company decides to target aOnce a company decides to target aparticular country, it has toparticular country, it has todetermine the best mode of entry.determine the best mode of entry.

Its broad choices are indirectIts broad choices are indirectexporting, direct exporting, licensing,exporting, direct exporting, licensing,joint ventures and direct investment.joint ventures and direct investment.

Each succeeding strategy involvesEach succeeding strategy involvesmore commitment , risk, control andmore commitment , risk, control andprofit potential.profit potential.


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Indirect ExportIndirect Export

Companies work through independentCompanies work through independentintermediaries to export their product.intermediaries to export their product.

There are 4 types of intermediariesThere are 4 types of intermediaries--

1.1. Domestic based export merchantsDomestic based export merchants--buy manufacturersbuy manufacturersproducts and sell them abroad.products and sell them abroad.

2.2. Domestic based export agentsDomestic based export agents--seek and negotiate foreignseek and negotiate foreignpurchases and are paid a commission. They do notpurchases and are paid a commission. They do notpurchase the product on their own account likepurchase the product on their own account likemerchants.merchants.

3.3. CoCo--operative organizationsoperative organizations--carry out exporting activitiescarry out exporting activities

on behalf of several producerson behalf of several producers4.4. Export management companiesExport management companies--agree to manage aagree to manage a

companys export activities for a fee. They find customers,companys export activities for a fee. They find customers,arrange for the transportation formalities and also arrangearrange for the transportation formalities and also arrangefor the receipt of payment from the customer.for the receipt of payment from the customer.


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Direct ExportDirect Export

Companies may decide to handleCompanies may decide to handletheir own export.their own export.

A co. can carry on direct exporting inA co. can carry on direct exporting in

several waysseveral ways--1.1. Domestic based export departmentDomestic based export department

2.2. Overseas sales branchOverseas sales branch

3.3. Travelling export salesTravelling export salesrepresentativerepresentative

4.4. Foreign based agentsForeign based agents


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LicensingLicensing

The licensor licenses a foreign co. to use aThe licensor licenses a foreign co. to use amanufacturing process, trademark,manufacturing process, trademark,patent, trade secret, or other item ofpatent, trade secret, or other item ofvalue for a fee or royalty.value for a fee or royalty.

The licensor gains entry in foreign marketThe licensor gains entry in foreign marketat little risk.at little risk.

The licensee gains production expertise orThe licensee gains production expertise ora well known product or brand name.a well known product or brand name.

Once contract ends the licensee mayOnce contract ends the licensee maybecome potential competitor.become potential competitor.

ExampleExample--KFCKFC


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Turnkey projectsTurnkey projects

A firm uses knowledge and expertise it hasgained in one or more markets to provide aworking projecte.g., a factory, building,bridge, or other structureto a buyer in a newcountry.

The firm can take advantage of investmentsalready made in technology and/or developmentand may be able to receive greater profits sincethese investments do not have to be started from

scratch again.


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Management contractsManagement contracts

A firm agrees to manage a facilitye.g., a factory, port, or airportin aforeign country, using knowledge

gained in other markets.The co. can use similar expertise it

has used in similar venture earlier .

The co. may encounter difficulties towork in a new country with adifferent infrastructure, culture, andpolitical/legal environment.


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Contract manufacturingContract manufacturing

Contract manufacturing involveshaving someone else manufactureproducts while you take on some of

the marketing efforts yourself.

This saves investment, but again youmay be training a competitor.


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Joint venturesJoint ventures

Foreign investors may join with local investors toForeign investors may join with local investors tocreate a joint venture co. in which they sharecreate a joint venture co. in which they shareownership and control.ownership and control.

Forming a JV may be necessary as the foreignForming a JV may be necessary as the foreign

firm might lack the financial, physical orfirm might lack the financial, physical ormanagerial resources to undertake the venturemanagerial resources to undertake the venturealone.alone.

ExampleExample--when Unilever wanted to enter icewhen Unilever wanted to enter ice--cream market in China it joined forces withcream market in China it joined forces withSumstarSumstar to deal with formidable Chineseto deal with formidable Chinesebureaucracybureaucracy


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Direct InvestmentDirect Investment

The ultimate form of foreign involvementThe ultimate form of foreign involvementis direct ownership of foreign basedis direct ownership of foreign basedassembly or manufacturing facilities.assembly or manufacturing facilities.

The foreign co. can buy part or fullThe foreign co. can buy part or fullinterest in a local co. or build its owninterest in a local co. or build its ownfacilities.facilities.

This can be done if foreign marketThis can be done if foreign market

appears large enough.appears large enough. ExampleExample--CPCCPC InternationaleInternationale


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TopicTopic

Segmentation, Targeting, andSegmentation, Targeting, andPositioning: Building the RightPositioning: Building the RightRelationships with the RightRelationships with the Right

CustomersCustomers

OObj tibj ti


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OObjectivesbjectives

BeBe able to define the three steps ofable to define the three steps oftarget marketing: markettarget marketing: marketsegmentation,segmentation, targeting,targeting, and marketand marketpositioning.positioning.

Understand the major bases forUnderstand the major bases forsegmenting consumer and businesssegmenting consumer and businessmarkets.markets.


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DefinitionDefinition

MarketMarket SegmentationSegmentation:: DividingDividing aamarket into distinct groups with distinctmarket into distinct groups with distinctneeds, characteristics, orneeds, characteristics, or behaviourbehaviour whowho

might require separate products ormight require separate products ormarketing mixes.marketing mixes.


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Need formarket segmentationNeed formarket segmentation

MarketersMarketers understand that theyunderstand that theycannot be all things to all people, allcannot be all things to all people, allof the time. Buyers and markets areof the time. Buyers and markets are

too complex and diverse for onetoo complex and diverse for onesimple marketing formula tosimple marketing formula toadequately address the needs of all.adequately address the needs of all.


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Segmentation and positioningSegmentation and positioning

MarketMarket segmentationsegmentation IdentifiesIdentifies markets withmarkets withcommon traits.common traits.

MarketMarket targetingtargeting ProcessProcess of evaluation of theof evaluation of theselected segments and then deciding which marketselected segments and then deciding which marketsegments to operate within.segments to operate within.

MarketMarket positioningpositioning ProcessProcess whereby marketerswhereby marketers

position the product to occupy a clear and distinctiveposition the product to occupy a clear and distinctiveposition relative to other competing products.position relative to other competing products.


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Market segmentationMarket segmentation

Markets are comprised of buyers andMarkets are comprised of buyers andthey differ in wants, resources,they differ in wants, resources,locations and buying patterns.locations and buying patterns.

MarketMarket segmentation is the processsegmentation is the processthat marketers use to divide up thethat marketers use to divide up the

market into smaller segments thatmarket into smaller segments thatcan be efficiently addressed.can be efficiently addressed.


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S ti k tS ti k t


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Segmenting consumermarketsSegmenting consumermarkets

Geographical segmentationGeographical segmentation--Region (Region (egeg. Whole of Europe),. Whole of Europe),

Country size (giant, large, medium, small), density (urban,Country size (giant, large, medium, small), density (urban,suburban, rural), climate.suburban, rural), climate.

Demographic segmentationDemographic segmentation-- (Most(Most popularpopular segmentation)segmentation)

Age, gender, family size, income, occupation(professional,Age, gender, family size, income, occupation(professional,

homemaker, businessman), education.homemaker, businessman), education.

-- PsychographicPsychographic segmentationsegmentation-- Lifestyle (achievers/Lifestyle (achievers/striversstrivers),), and personalityand personality-- basedbased (authoritarian/ ambitious/(authoritarian/ ambitious/gregarious) segmentationgregarious) segmentation

-- Behavioural segmentationBehavioural segmentation purchase occasion (regular /purchase occasion (regular /special), benefit sought (quality, economy, service), usagespecial), benefit sought (quality, economy, service), usage(light, medium or heavy user) , readiness state (unaware,(light, medium or heavy user) , readiness state (unaware,aware, interested), loyalty status, attitude towards product.aware, interested), loyalty status, attitude towards product.


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Segmenting business marketsSegmenting business markets

Demographic segmentationDemographic segmentation --which Industries ,which Industries , companycompanysize,size, location.location.

Operating variablesOperating variables-- TechnologyTechnology, usage, usage status (heavy,status (heavy,medium or light users).medium or light users).

PurchasingPurchasing approachesapproaches--should we focus on cos. seekingshould we focus on cos. seeking

quality, service, or price ?quality, service, or price ? SituationalSituational factorsfactors-- Urgency (should we focus on cos.Urgency (should we focus on cos.

Wanting fast delivery or not), sizeWanting fast delivery or not), size ofof order.order.

Personal characteristicsPersonal characteristics-- BuyerBuyer--seller similarity (should weseller similarity (should wefocus on clients having same values as us or not), loyalty.focus on clients having same values as us or not), loyalty.


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Segmenting international marketsSegmenting international markets

GeographicGeographic segmentation Locationsegmentation Location or regionor region

EconomicEconomic factors Populationfactors Population income or level of economicincome or level of economicdevelopmentdevelopment

Political and legalPolitical and legal factors Typefactors Type / stability of government,/ stability of government,monetary regulations, amount of bureaucracy, etc.monetary regulations, amount of bureaucracy, etc.

CulturalCultural factors Languagefactors Language, religion, values, attitudes,, religion, values, attitudes,customs,customs, behaviouralbehavioural patternspatterns


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Requirements foreffective segmentationRequirements foreffective segmentation

Measurable SizeMeasurable Size--to have estimate of salesto have estimate of salesturnover possible from serving the segment.turnover possible from serving the segment.

AccessibleAccessible -- CanCan be reached and servedbe reached and served ..

Substantially LargeSubstantially Large and profitable enough toand profitable enough to

serve.serve.

ActionableActionable -- EffectiveEffective programs can beprograms can be developeddevelopedto serve the segment.to serve the segment.

M k t t tiM k t t ti


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Market segmentationMarket segmentation


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TargetingTargeting

EvaluatingEvaluating MarketMarket SegmentsSegments-- SegmentSegment size andsize and growth and segmentgrowth and segment

structural attractiveness.structural attractiveness.

LevelLevel ofof competition and availability ofcompetition and availability ofsubstitute products.substitute products.

Power ofPower of buyers and power of suppliersbuyers and power of suppliers

Company objectives and resourcesCompany objectives and resources


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Target marketing strategiesTarget marketing strategies

UndifferentiatedUndifferentiated (mass) marketing(mass) marketing

Differentiated (segmented) marketingDifferentiated (segmented) marketing

Concentrated (niche)Concentrated (niche) marketingmarketing--targetingtargetingsegments where there are no competitorssegments where there are no competitors

MicromarketingMicromarketing--tailor made products fortailor made products forindividuals.individuals. Eg.insuranceEg.insurance policiespolicies


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PositioningPositioning

PositioningPositioning:: TheThe place the productplace the productoccupies in consumers minds relative tooccupies in consumers minds relative to

competing products.competing products.

Typically defined by consumers on theTypically defined by consumers on thebasis of important attributes.basis of important attributes.


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AA range of positioning alternatives based on the valuerange of positioning alternatives based on the valuean offering delivers and its pricean offering delivers and its price..

MoreMore forfor moremore PremiumPremium product and premiumproduct and premiumprice, supported by a premium imageprice, supported by a premium image. E.g. E.g. Mont. MontBlancBlanc penspens

More for theMore for the samesame BrandBrand offering comparableoffering comparablequality at a lower pricequality at a lower price..

The same forThe same for lessless ValueValue propositionproposition

Less for muchLess for much lessless TradeTrade off between luxury andoff between luxury andnecessity. E.g. Five star hotel versus a budget hotel.necessity. E.g. Five star hotel versus a budget hotel.

Lower performance for much lower costLower performance for much lower cost..More forMore for lessless NoNo--namename house brands versus the bighouse brands versus the big

brands.brands.

Essential criteria to accomplish a goodEssential criteria to accomplish a good positioningpositioning


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p gp g p gp g

strategystrategy

FeaturesFeatures and benefits must beand benefits must be importantimportantto the consumer.to the consumer.

Must beMust be distinctivedistinctive from the competition.from the competition.

Must deliverMust deliversuperiorsuperiorquality or service.quality or service.

Difference must beDifference must be communicablecommunicable andandvisible to buyers.visible to buyers.

PrePre--emptiveemptive and competitors unable toand competitors unable to

replicate.replicate. AffordableAffordable

ProfitableProfitable

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Common positioning errorsCommon positioning errors

UnderUnder--positioningpositioning AA positioning error referring to failurepositioning error referring to failureto position a company, its product or brand.to position a company, its product or brand.

OverOver--positioningpositioning AA positioning error referring to toopositioning error referring to too

narrow a picture of the company, its products or a brandnarrow a picture of the company, its products or a brandbeing communicated to target customers.being communicated to target customers.

ConfusedConfused positioningpositioning LeavesLeaves consumers with a confusedconsumers with a confusedimage of the company, its product or brand.image of the company, its product or brand.

ImplausibleImplausible positioningpositioning MakingMaking claims that stretch theclaims that stretch theperception of the buyers too far to beperception of the buyers too far to be believedbelieved


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By definition, then, a business that focuses on a nichemarket is addressing a need for a product or service that is

not being addressed by mainstream providers. You canthink of a niche market as a narrowly defined group ofpotential customers.

For instance, instead of offering cleaning services, abusiness might establish a niche market by specializing in

blind cleaning services. Why should you bother to establish a niche market?

Because of the great advantage of being alone there; othersmall businesses may not be aware of your particular nichemarket, and large businesses won't want to bother with it.

The trick to capitalizing on a niche market is to find ordevelop a market niche that has customers who areaccessible, that is growing fast enough, and that is notowned by one established vendor already. See How to Findand Master a Niche Market for more information.


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Micromarketing can be defined as tailoring products andMicromarketing can be defined as tailoring products andprograms or services to the needs and wants of individualsprograms or services to the needs and wants of individualsand groups, including local marketing and individualand groups, including local marketing and individualmarketing. The term local marketing refers to tailoringmarketing. The term local marketing refers to tailoringbrands and promotions to the needs and want of localbrands and promotions to the needs and want of local

groups, such as cities andgroups, such as cities and neighborhoodsneighborhoods. Individual. Individualmarketing is tailoring the product or service to onemarketing is tailoring the product or service to oneindividual, also known as "oneindividual, also known as "one--toto--one marketing".one marketing".

Insurance policies must be changed according theInsurance policies must be changed according thecustomer. A policy for a male differs from a female, smokercustomer. A policy for a male differs from a female, smoker

andand nonsmokernonsmoker, age and many other factors in day, age and many other factors in day--toto--daydayliving.living.


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Micromarketing is the practice of tailoring products andmarketing strategies locally within a smaller region such ascity and/or county. This practice of marketing is commonwith mom and pop restaurants, grocers, and other smallbusiness establishments that cater to a local audience.

Micromarketing includes the practice of individualmarketing where a marketing message is crafted morepersonally to a buyer.

International marketingInternational marketing--Product decisionsProduct decisions


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International marketingInternational marketing Product decisionsProduct decisions

What is a product?

Put simply, a product is a bundle ofutilities. To be more concise, a productcan be defined as a collection of physical,service and symbolic attributes which yieldsatisfaction or benefits to a user or buyer.A product is a combination of physicalattributes say, size and shape, andsubjective attributes say image or quality.A customer purchases on bothdimensions.



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StagesStagesExport strength is evident byExport strength is evident by

innovator countryinnovator country

Foreign production startsForeign production startsForeign production becomesForeign production becomes

competitive in export marketcompetitive in export market

Import competition startsImport competition starts

International Product policyInternational Product policy


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International Product policyInternational Product policy

Product communications extensionProduct communications extensionExtended productExtended product--communicationscommunications

adaptationadaptation

Product adaptationProduct adaptation communicationscommunicationsextensionextension

Product adaptationProduct adaptation--communicationscommunicationsadaptationadaptation

Product inventionProduct invention

S d di iS d di i d id i


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StandardizationStandardization vsvs adaptationadaptation

Customer orientationCustomer orientation

Stage of market developmentStage of market development

Legal considerationsLegal considerations

Climatic conditionsClimatic conditions

Oth i t f di iOth i t f di i


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Otherpoints of discussionOtherpoints of discussion

BrandingBranding

LabellingLabelling

PackagingPackaging

Warranties and servicesWarranties and services

International Mkting-Environments (1)

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