International Marketing

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International Marketing

• Tim Beal
• Lecture 5
• 3 August 2005

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Today

• Housekeeping
• Impact of Technology
• transportation
• internet
• Changing social fabric implications for IM
• DVD Changing face of Japan

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Housekeeping

• Wine assignment due FRIDAY 12 August 5.00pm
• Assignment box 1 Mezzanine floor
• penalties 2 per weekday
• Hand in to Mrs Jessie Johnston, SMIB office,
  Rutherford House 11th fl
• Tim Fowler's QA sessions

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Technology

• Technology affects every aspect of marketing/IM
• every good/service is produced, promoted and
  distributed by technology
• even price and payment affected
• Here concentrate on some key elements
• distribution
• internet
• two are closely connected

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Distribution

• distribution tends to be more important in IM
  than in M
• distances tend to be greater
• distance from NY to Toronto less than NY to SF
• Costs of distribution are substantial
• Falling transportation costs key driver of
  international marketing

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Transportation costs

• Silk route an example
• only very high value (expensive), non-perishable
  items feasible
• transportation revolution made global economy
  possible
• Ships gtgtgtrailways gtgtInternal combustion
  engine/roadsgtgtships (tankers/containers) gtgtair

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Example

• The cost of moving farm produce and manufactured
  goods over long distances fell 95 percent between
  1815 and 1860. With that drop, farmers could grow
  wheat in Indiana and sell it at a profit in New
  York City, while New England manufacturers could
  make work shoes and sell them to the farmers of
  Indiana

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Other technological impacts on transportation

• Can create new IM possibilities
• refrigeration
• transformed 19th century NZ
• now chilled, gas-packed meats can fetch high
  prices in affluent markets
• also happening with fruits and vegetables
• much sent by plane

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Combination

• Combination of
• cheaper
• faster
• improved storage
• greatly increases range of products that can be
  marketed internationally
• distance
• market segments

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Investment

• Development of new planes, airports, container
  terminals etc. extremely costly
• Nevertheless, new airports have been built
  recently in
• Korea (Incheon)
• Kuala Lumpur
• Hong Kong
• Japan (Kansai)
• airports around the world being upgraded
• proximity to airport important for IM business
• goods, tourism

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Globalisation of production

• Because of cheaper transport, production can be
  moved away from target markets
• US, Japan, KoreaTaiwan gtgtgtproduction shifting to
  cheaper places
• labour
• land
• environmental standards
• increases role of IM
• domestic productiongtgtgtmove offshoregtgtgtimported
  back

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Geography is history

• Internet takes this process to its limits
• Distance has little effect on
• cost
• time

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What is the internet?

• global network of computers
• origins in US defense
• gtgtuniversities
• business use very recent
• IBM survey in US
• 1994 - less 50 aware of internet
• 1999 - intricate part
• Raid growth and spread

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Growth of the Internet

• number of people/businesses online has grown
  markedly
• Internet has spread from US to Europe, NZ,
  India, ChinaNK
• Data on consumer base
• growth
• uneven spread
• Look at some recent data

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Future

• Rapid but uneven growth in users
• e-commerce - predictions vary widely

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What is Internet best for?

• Positive
• global niche
• electronic delivery
• high information content
• Negative
• low value physical product
• undifferentiated product
• local market (eg local baker)

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Examples

• Information agency
• specialised field
• with alliances offers 24 hour service
• quick turnaround (all electronic)
• Software developers
• Bangalore
• utilises relatively cheap, skilled labour
• but delivers as fast as Silicon Valley

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E-Commerce and Globalisation

• Internet (WWW) inherently global
• uneven spread of connectivity but does allow
  unprecedented access to global markets
• Still often physical constraints
• distribution
• payment systems (eg lack of credit cards in
  China)
• Global environment is complex - legal, political
  and cultural

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Global cultures and exposure

• Internet exposes companies usually to wider range
  of cultures and languages
• Few, if any, companies - even largest- have yet
  addressed challenge of multicultural, polyglot
  Internet customers
• Internet exposes companies to unprecedented
  global competition
• local bookshop - Amazon.com

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Localisation

• websites should reflect needs of customers
• language
• local currency
• local information
• Victoria International - costs calculator

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Conclusions

• Internet will grow but predications vary
  considerably
• Topography of business will change in
  unpredictable ways
• More volatile relationship between companies and
• each other
• customers
• large companies

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Internet no longer American

• Local growth and use will differ from the States
• leapfrogging
• adoption truncation
• local variation

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Leapfrogging

• follower advantage you know whats ahead so can
  cut corners
• leapfrog over old technologies into new
• ie mobile in China..
• Not many landline telephones so great growth in
  mobiles

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Adoption truncation

• in States better off, better educated males took
  lead
• uptake elsewhere more evenly spread

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Local variation

• China credit cards uncommon so payment on
  delivery
• Japan use network of convenience stores
• India Cybercafes
• use of vernacular languages will grow

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basic rule

• as elsewhere in IM
• keep asking questions
• every aspect of marketing strategy needs to be
  re-examined
• customer focus
• what does the customer wanthow do customers vary
  across the world?

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What weve covered on the Internet

• Global data growth, distribution of internet
  markets
• Globalisation
• Internet and marketing

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Changing social fabric

• Marketing takes place within society
• Consumer behaviour course discussed interaction
  between individual CB and social environment
• families, reference groups, lifestyle changes,
  attitudes
• What happens in a particular society (eg NZ)
  happens globally
• extremely complex manner

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Three examples

• Immigration/tourism
• aging society
• changing (globalising) tastes

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Immigration

• Why is it important to IM?
• Germans, Italians, and English live around the
  world (inc NZ), many Turks live in Germany
• old identification of a country with an
  ethnic/cultural group is becoming increasingly
  invalid
• in many countries immigration is main social
  trend
• on increase in EU, USA, etc.
• creation of multiethnic societies

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Tourism

• Tourism has somewhat similar effects
• 700 million international tourism arrivals in
  2000
• in many countries a large part of the market is
  made up of permanent or temporary foreigners
• eg Chinas tourism market is important for NZ
  exports
• they want to eat familiar foods

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Ageing society

• part of general issue of changing age structure
  in societies
• why is age structure important for marketing?
• population pyramids the case of Japan
• Japan is foremost example of aging society
• http//www.vuw.ac.nz/caplabtb/m302w05/Japan_pop_p
  yramid.gif

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Japans ageing society

• implications for NZ?
• China moving that way

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Globalisation of tastes

• McDonalds -Epitome of globalisation few
  countries where they yet to penetrate
• http//www.mcdonalds.com/home.html
• Who hasnt had a Big Mac?
• other examples Coke, Pepsi, jeans.
• Often connected with American cultural hegemony
• but other things move as well
• Chinese food, Italian foodetc

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Transmitted by

• media (films, TV) (images)
• migration, tourism..(people)
• Companies themselves ..IM programmes
• result is that tastes do change and can be changed

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Change

• Change is the key word
• Societies are changing around the world
• getting older, better educated, more aware of
  global trends
• Some products are facing shrinking markets
• Generating demand for new products marketed in
  new ways
• marketing strategies need to be constantly
  reexamined

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Japan as case study

• DVD the changing face of Japan
• On order for the library

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Next week

• Janet Carruthers
• Culture
• FB 3