International Marketing

1
International Marketing

• Tim Beal
• Lecture 9
• 14 September 2005

2
Today

• Assignments
• Market and Environment research and analysis
• Zespri example of branding, and research
• DVD Zespri in Korea
• Sound quality poor

3
Housekeeping

• Wine assignment and award
• Marks on course page
• Plagiarism
• From published sources, unattributed
• From each other
• university policy
• Zespri handouts
• From tutors
• Extra copies at SMIB office, 11th fl Rutherford

4
Research project

• Guidelines on coursepage

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Frexineit award

• Janet Carruthers chooses the winner at 4.30!

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Market and Environmental research and analysis

• Environment broader term than market
• eg wine market in China
• Start broad then narrow
• start with examination of broad business
  environment
• Then focus on characteristics of wine market
• customer tastes, distribution etc

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research and analysis

• Research - getting and structuring information
• Analysis - using the information to answer
  specific questions
• eg what price will consumers pay for my bottle of
  chardonnay?

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Overview

• Environmental frameworks
• overview of environmental and market analysis
• environmental analysis for screening
• identifying promising markets
• Use of indicators
• pc GDP
• Market research companies

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Relevance

• Relevance is vital
• Focus on information which is relevant to task at
  hand (eg assessing market opportunities for
  educational services)
• Exclude irrelevant
• Often relevance is a matter of judgement
• May not be spelled out in original source
• You need to make connection explicit
• Eg religion

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Environmental frameworks

• PEST
• SLEPT
• C factors
• Overlap
• Link with SWOT

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PEST - political

• Political
• Examples?
• Examples
• Malaysian government and sending students abroad
• Attitude of government to imports from NZ (lamb,
  apples)
• Boycotts (South Africa, Japan, US)
• protection of local industry
• But keep it RELEVANT

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PEST - economic

• Economic
• Examples?
• Examples
• size of economy
• growth rate
• type of economy (market orientation?)
• But keep it RELEVANT

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PEST -Social/cultural

• Social/cultural
• Examples?
• Examples
• do people drink wine?
• Only men? What age? Class?
• Effect of religion
• Preference of different ethnic gropups in
  Malaysia for education subjects

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PEST - Technological

• Technological
• Examples?
• Examples
• electrical standards (240V 110V?)
• telecommunications
• repair and servicing facilities

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SLEPT

• add Legal
• Social/cultural, Legal, Economic, Political,
  Technological

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SLEPT -legal

• Legal
• Examples?
• Examples
• can your goods be imported?
• (eg Alcohol banned)
• packaging and labelling requirements
• permitted additives

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C factors

• Culture
• separate and important factor
• Competitors
• Currencies
• Specific companies may develop own frameworks
• Key is to identify factors which will have impact
  on your marketing

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Overview of environmental analysis

• majority of mistakes could be avoided with better
  information
• Information is the key component in developing
  successful marketing strategies
• General information for market opportunity
  assessment (environmental)
• Specific information for 4 Ps

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International information

• Information becomes more crucial in international
  markets
• constraints of time and cost
• Even large corporations face constraints
• Research is the art of the possible
• never enough time or money
• Quality information is expensive

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Objectives

• Marketing research is the systematic gathering,
  recording, and analysing of data to provide
  information useful in marketing decision making

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Systematic and useful

• systematic
• what you do for one market you should do for the
  others to enable comparisons
• learn from mistakes
• gain experience - build up institutional
  knowledge
• Useful
• not knowledge for its own sake
• tool for decision making

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Tools and techniques

• Basically the same whatever the market
• Used for same purposes
• marketing decisions
• Questions vary
• Availability of techniques, data, etc vary
• Some countries difficult to interview women

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Types of research

• General information about country, area, market
• country ltgt market
• information about trends to forecast marketing
  requirements
• Specific market information

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General to specific

• Broad picture
• which countries drink/import wine?
• Select promising countries for further research
  (screening)
• Go into more depth
• perhaps exclude further countries (iterative
  process)

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Ending up

• End with specific answers for marketing decision
  making
• Which distributor should we use?
• What should our pricing strategy be?
• What should the package look like?

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What happens in practice?

• Information and analysis is expensive
• IM extends the boundaries for what is required
• Reluctance

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International domestic

• When companies go from domestic to international
  they need to spend money on things that werent
  necessary before
• They knew their customers, the laws, the
  geography
• Learning curve
• But domestic markets becoming more multicultural
  gtgt requiring more research

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Examples

• Kid R us in Puerto Rico
• Didnt realise that kids wore uniforms to school
• Clothes too heavy for hotter climate
• US auto manufacturers exported left-hand drive
  cars to Japan
• Japanese drive on left

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Research process

• Define problem and objectives
• Determine sources of information
• Compile information
• Analyse, interpret and present the results

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Define problem and objectives

• Self reference criterion blinds us to questions
• Questions are usually based on assumptions
• eg hot milk-based drinks

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hot milk-based drinks

• Use varies examples?
• UK - evening, sleep-inducing
• Thailand - morning for stimulation
• US - either morning or evening but only in cold
  weather
• Need to step back to ask the right questions

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Availability of data

• Varies considerably from country to country
• Lot in US..not so much in China
• Data collected by government, trade associations,
  private companies
• Data may be collected but not made available
• eg security reasons

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Reliability of data

• Healthy scepticism
• Why is data collected?
• eg tax
• What are incentives for falsification?
• tax, customs, etc
• World exports gt world imports
• Why?
• Tariffs apply to imports not exports

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Comparability of data

• Time periods may vary
• Categories may be different
• even if same words are used
• Read the small print

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Validating secondary data

• Who collected and why?
• why would it be falsely reported?
• For what purpose was it collected?
• How collected (methodology)?
• Is data consistent?
• with other known data
• Internally
• Wine assignment

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Data consistency

• Statistical data often has errors
• Eg arithmetical sume ltgt given total
• Jo Brown pointed out this in respect of data on
  wine export 2003
• Given toal was 281.839m, arithmetical sum was
  277.313
• Why?
• Someone, somewhere had made a mistake
• Moral?
• Wherever possible check

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Secondary gtgtPrimary

• Secondary data starting point
• then move on to primary data
• Secondary data is published data
• Cheaper (though may be more expensive)
• Tends to be general
• Not collected for your specific purpose
• Primary data research you do/commission
• More focussed, up to data and expensive

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Examples of indicators

• Political stability
• Economic growth rate
• Disposable income
• pc GDP

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pc GDP

• pc GDP/GNP most popular single measure of wealth
• Country A - pc GDP US30,000
• Country B - pc GDP US300
• Customers in A are 100 times richer than in B
• But are they?

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Limitations of pc GDP

• pc - hence an average
• distribution not equal
• Even in poor countries rich and middle class
  can be affluent markets

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distribution of wealth

• distribution of wealth varies
• social class
• ethnicity
• may be related to class
• geographical location
• eg Chinese coastal provinces
• Auckland versus Invercargill

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Exchange rate fluctuations

• As currency fluctuates against US so does
  apparent GDP
• real changes less than currency fluctuation
• Lot of economy is domestic
• leads to questioning of appropriateness of
  trade-based exchange rates

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Purchasing power parity rates

• measures relative purchasing power of currencies
  over same types of goods and services
• Still uncertain but gives better indication of
  real wealth
• Differences between two calculations can be
  dramatic

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China

• conventional calculation - US300-370
• PPP - I770-1044
• Moreover, disposable income high in relation to
  pc GDP
• rents, etc. low
• Unequal distribution of income
• Undeclared income

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China - market opportunity?

• gtgtmuch more market opportunity than conventional
  pc GDP figures suggest
• Same happens in many other poor countries
• eg India - 100-120 million middle class

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Market research in action

• Examples on course webpage
• Your major research project is environmental and
  market research in action
• Quality information is expensive and difficult to
  obtain
• But lack of quality information is more expensive
• missed opportunities
• expensive mistakes

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Zespri

• Example of branding what was a commodity
• Also, move from traditional Producer Board
  marketing NZ produce internationally, to a
  company that also sources from outside NZ
• http//www.zespri.com
• Video interview with Ms Kim Hee Jung, Market
  Manager Korea, Zespri
• Sound quality is poor, so wont watch much

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Today and next week

• Today
• Environmental analysis
• Market research
• Zespri
• Next week
• Tim Beal Pricing and Communication