Aspects of InternationalGlobal Marketing

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Aspects of International/Global Marketing
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Product Issues in International Marketing

• Standardization versus adaptation
• Product strategies in foreign markets
• Timing and sequence of product introductions
• New product development approaches
• Global branding
• Country-of-origin effects

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Adaptation versus Standardization

• Mandatory Adaptation
• Differences in standards
• metric systems
• left vs. right hand driving
• Government regulations
• efficiency standards
• packaging

• Discretionary Adaptation
• Levels of income
• Differences in consumer tastes
• Levels of education and technical sophistication

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The Tradeoff Between Standardization and
Adaptation
Incremental manufacturing cost
Combined costs
Cost of lost sales
Fully standardized
Fully adapted
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Two Approaches to Standardization

• Domestic Product as World Product
• Manufacturing economies of scale
• Marketing economies of scale
• Lower costs of market and product research
• Satisfying international customers
• Maximizes returns during different stages of the
  product life cycle
• Proactively Developing a World Product
• World Car approach of Ford (Mondeo, Mystique,
  Contour)
• Modular Approach GM, Volvo Trucks
• Core-Product/Common Platform Approach Honda,
  Toyota

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International Product Strategies

• Whether the product function or the need
  satisfied is the same or different in a new
  market?
• Whether the conditions of product use are the
  same in a new market?
• Whether the consumers in the new market have the
  ability to buy the product?

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Alternative Strategies
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Timing of Product Introductions in Foreign
Markets

• Waterfall Strategy
• product is introduced into foreign markets one at
  a time (IPLC model approach)
• Useful when
• lifecycle of product is long
• high fixed costs of entry into individual markets
• foreign markets are not equally developed
• some customization is needed
• firms have little foreign experience

• Sprinkler Strategy
• simultaneous introduction of the product in
  multiple markets
• Useful when
• short product life cycle
• high RD costs in product development
• competition is very strong (pre-emption of
  markets)
• firms have existing presence in target countries
• homogenized preferences

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New Product Development Approaches
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New Product Development Costs
U.S.
Japan
Market Research
Market Research
Product Characteristics
Product Characteristics
Design
Planned selling price less desired profit
Engineering
TARGET COST
Supplier Pricing
Design Engineering Supplier
Pricing Negotiate tradeoffs to meet target
costs
COST if cost is too high, return to
design phase
Manufacturing
Manufacturing
Periodic Cost Reduction
Continuous Cost Reduction
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Branding Issues

• Global/Regional Brands
• scale economies in brand development and
  promotion
• brand awareness and prestige
• Local Brands
• legal constraints
• dont translate well into local languages
• avoid negative nationalistic associations
• Umbrella Brands (corporate pre-fix or multiple
  product categories under same name)
• scale economies in building brand recognition
• easier for adding new products (extensions)

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Country-of-Origin Effects

• Impact of where the product is manufactured
• perceived quality?
• patriotism/nationalism?
• Country-of-origin versus country-of-manufacture
• Interaction of country-of-origin and brand name
  effects
• Hybrid products (e.g., components manufactured in
  multiple countries products via strategic
  alliances)

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Triggers of Internationalization

• Domestic Market Saturation
• Trade Deficit
• Foreign Competition
• New Market Opportunities
• Economies of Scale
• Others

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Globalization Forces Market Drivers

• Convergence of per capita income and lifestyles
  and tastes??
• Global Customers due to increased travel and
  organizational buying
• Growing global and regional channels
• Increasing number of world brands and global
  advertising

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Globalization Forces Cost Drivers

• Continuing push for economies of scale (but
  offset by flexible manufacturing)
• Accelerating technological innovation
• Increasing cost of product development relative
  to market life
• Advances in transportation
• Emergence of newly industrialized countries with
  productive capability and low labor costs

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Globalization Forces Competitive Drivers

• More countries becoming key competitive
  battlegrounds
• Rise of new competitors intent on becoming global
• Growth of global networks making countries
  interdependent in particular industries
• More companies becoming internationally oriented
  rather than nationally centered
• New global alliances

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Globalization Forces Government Drivers

• Reduction of tariff barriers
• Reduction of non-tariff barriers
• Creation of new trading blocs
• Decline in the role of government as producers
  and consumers
• Market liberalization and privatization
• Adoption of common standards

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Globalization Standardization Philosophy

• Customer needs and interests are becoming
  increasingly homogenous worldwide
• Consumers are willing to sacrifice preferences in
  product features for lower prices at higher
  quality
• Substantial economies of scale in production and
  marketing can be achieved by developing
  standardized marketing programs

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Constraints to Implementing Global
Standardization Strategy

• External
• Governmental and trade restrictions
• Differences in marketing systems
• Nature of competitive structure
• Socio-cultural influences on consumer preferences
• Internal
• Financial and managerial constraints
• Local management motivation and attitudes

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Terminology

• Export Marketing
• International/Multinational Marketing
• Global Marketing

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Roles of International Marketing Manager

• The Foreign Entry Role
• Country Potential Barriers to Entry
• Mode of Entry Expansion Paths
• Finding Middlemen Negotiating with partners
• Local Marketing
• Local buyer behavior Marketing research
• Localized marketing strategy
• Global Management
• Globalization (pros and cons) global customers
• Formulating global strategies
• Coordination on a global basis

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Framework
Economic Environment Political/Legal
Environment
Product
Price
International Customer
Socio-cultural Environment
Financial Environment
Promotion
Distribution
International Economic Institutions and Agreements