International business 5th griffin chapter 16

Chapter Objectives 1• Characterize the nature of marketing management in international business • Discuss the basic kinds of product policies and decisions made in international business

Chapter Objectives 1

• Characterize the nature of marketing

management in international business

• Discuss the basic kinds of product

policies and decisions made in international business

• Identify pricing issues and evaluate

Marketing is “the process of planning and executing the

conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy

individual and organizational objectives.”

International marketing is the extension of these activities

across national boundaries.

Figure 16.1 International Marketing as an

Integrated Functional Area

Operations Management

Finance

Human Resource Management Accounting

Marketing

Market Strategy Must Support

Business Strategy

Differentiation

Cost leadership

Marketing Mix Decisions

• How to develop the firm’s product(s)

• How to price those products

• How to sell those products

• How to distribute those products to the firm’s customers

Figure 16.2 Elements of the Marketing Mix

for International Firms

Key Decision-Making Factors

• Standardization versus customization

Standardization versus Customization

Ethnocentric Approach

Polycentric Approach

Geocentric Approach

Table 16.1 Standardized International Marketing

Advantages

• Reduces marketing costs

• Facilitates centralized control of marketing

• Promotes efficiency in R&D

• Results in economies of scale in production

• Reflects the trend toward

a single global

Disadvantages

• Ignores different conditions of product use

• Ignores local legal differences

• Ignores differences in buyer behavior patterns

• Inhibits local marketing initiatives

• Ignores other differences

Table 16.1 Customized International Marketing

• Accounts for other

Disadvantages

• Increases costs/

inefficiencies

• Inhibits centralized control of marketing

• Reduces economies

of scale in production

Product comprises both the set of tangible factors that the

consumer can see or touch (the physical product and its packaging) and numerous intangible factors such as image, installation, warranties, and credit

terms

Factors Affecting the Standardization of Products

influencesEconomic

Factors Affecting Pricing Policies

Business strategy Competitive environment Costs of doing business Exchange rate fluctuations

Pricing Policies

Standard price

policy

MarketpricingTwo-tiered

pricing

Figure 16.3a Determining the

Profit-Maximizing Price

Figure 16.3b Determining the

Profit-Maximizing Price

Conditions for Market Pricing

• Firm must face different demand and/or cost conditions in the countries in which it sells its products

• Firm must be able to prevent arbitrage

Risks to Market Pricing Policy

Charges of dumping

Development of a gray marketDamage to brand name

Promotion Mix

Advertising Personal selling

Sales promotion Public relations

Factors Affecting Advertising Strategy

• The message it wants to convey

• The media available for conveying the message

• The extent to which the firm wants to globalize its

advertising effort

Advantages of Personal Selling for

International Firms

• Local sales representatives understand local culture, norms, and customs

• Personal selling promotes close,

personal contact with customers

• Personal selling makes it easier for firm

to adopt valuable market information

Sales Promotion

Sales promotion comprises specialized marketing efforts

designed to offer an incentive for behavior such as coupons, in-store promotions, sampling, direct mail campaigns, cooperative advertising, and trade fair

attendance

Public Relations

Public relations consists of efforts aimed at enhancing a

firm’s reputation and image with the general public, as opposed to touting the specific advantages of an individual

product or service

Distribution Issues

Physicaltransportation

mode

Merchandising

mode

Table 16.2 Advantages/Disadvantages of

Transportation Modes

Products

Train Safe, reliable,

inexpensive Limited to rail routes, slow Automobiles, grains

Airplane Safe, reliable, fast Expensive,

limited access Jewelry, medicine

Basic Parts of a Distribution Channel

Manufacturer

Wholesaler

Retailer

Figure 16.4 Distribution

Channel Options