International Marketing

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International Marketing

• Tim Beal
• Lecture 6
• 15 August 2005

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Today

• Housekeeping
• Impact of Technology
• transportation
• Internet
• Dr Mustafa Farouk Marketing to Muslims

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Housekeeping

• Wine assignment due this Friday 5.00pm
• Assignment box 1 Mezzanine floor
• penalties 2 per weekday
• Hand in to Mrs Jessie Johnston, SMIB office,
  Rutherford House 11th fl

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Technology

• Is for everyone
• Not just the young
• Not just developed countries

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Not just DevelopedgtDeveloping
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South-South IM
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Technology in IM

• 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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But

• Dont forget environmental costs
• Articles on links page under Ethics, boycotts,
  environment

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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) second runway
• 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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Offshore outsourcing

• Hot issue
• Jobs
• Product quality
• China peanut butter
• India call centres

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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
• Reading Internet in Asia

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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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BPOBusiness process outsourcing
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Call centres

• Call Centers India

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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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Thats only part of the story

• BPO in India
• More important is China and ICT hardware
• China and IT exports
• Try some video links

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Lenovo

• Bought IBMs PC division in 2004
• Links page has video and transcript
• Lenovo

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Video links from OECD

• China and IT

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More from OECD on China

• OECD - Organisation for Economic Co-operation and
  Development

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Today

• Technology
• Marketing to Muslims
• After the break
• Market selection and distribution
• Country study India