🌍Intro to International Business Unit 6 – International Marketing

Key Concepts in International Marketing

• International marketing involves promoting and selling goods or services across national borders
• Requires understanding of cultural, economic, legal, and political differences between countries
• Adaptation of marketing mix (product, price, place, promotion) to suit local preferences and conditions
• Standardization vs. localization debate centers on whether to offer a uniform or customized marketing approach across countries
  • Standardization leverages economies of scale and consistent brand image
  • Localization caters to unique needs and preferences of each market
• Global branding strategies aim to create a unified brand identity across international markets
• Market segmentation divides international markets into distinct groups of consumers with similar characteristics or needs
• Positioning strategies differentiate a company's offerings from competitors in the minds of target customers

Global Market Analysis

• Involves researching and assessing potential international markets for entry or expansion
• PESTEL analysis examines political, economic, social, technological, environmental, and legal factors influencing a market
• Assesses market size, growth potential, competition, and consumer behavior in target countries
• Identifies target segments and their unique needs, preferences, and purchasing power
• Evaluates market accessibility, considering trade barriers, regulations, and infrastructure
• SWOT analysis helps determine a company's strengths, weaknesses, opportunities, and threats in a specific market
• Competitor analysis studies the strategies, offerings, and market share of rival firms in the target market

Cultural Considerations

• Culture encompasses values, beliefs, customs, and behaviors shared by a society
• Impacts consumer preferences, communication styles, and business practices in international markets
• Hofstede's cultural dimensions theory compares national cultures along power distance, individualism, masculinity, uncertainty avoidance, long-term orientation, and indulgence
• High-context cultures (Japan) rely on implicit communication and established relationships, while low-context cultures (Germany) prefer explicit and direct communication
• Differences in language, religion, aesthetics, and social norms influence marketing decisions
  • Language translation and cultural adaptation of marketing messages are crucial
  • Religious beliefs may affect product acceptability and advertising content
  • Aesthetic preferences vary in terms of colors, designs, and packaging
• Cross-cultural communication skills are essential for building relationships and negotiating with international partners
• Failing to consider cultural differences can lead to marketing blunders and damage brand reputation

Market Entry Strategies

• Exporting involves selling goods or services produced in one country to customers in another country
  • Direct exporting sells directly to end customers or distributors in the target market
  • Indirect exporting uses intermediaries (export management companies) to handle sales and distribution
• Licensing grants a foreign company the rights to manufacture and sell a firm's products in exchange for royalties
• Franchising allows a franchisor to sell the right to use its brand, products, and processes to a franchisee in a foreign market
• Joint ventures involve partnering with a local firm to share ownership, control, and profits of a business entity in the target market
• Wholly-owned subsidiaries are foreign operations completely owned and controlled by the parent company
  • Greenfield investments establish new facilities from the ground up
  • Acquisitions involve purchasing an existing company in the target market
• Market entry mode depends on factors such as control, risk, investment, and local knowledge

Product Adaptation and Localization

• Product adaptation modifies existing products to meet the needs and preferences of international markets
  • Mandatory adaptations comply with local regulations and technical requirements (electrical voltage)
  • Discretionary adaptations cater to local tastes, habits, and cultural norms
• Localization tailors products, packaging, and marketing to suit the language, culture, and aesthetics of a specific market
  • McDonald's offers local menu items (McArabia in Middle East, Maharaja Mac in India)
  • Procter & Gamble adapts Pampers diapers to fit local baby sizes and changing habits
• Standardization offers a uniform product across markets to leverage economies of scale and maintain consistent quality
• Global product development creates new products specifically designed for international markets
• Packaging and labeling requirements vary across countries, necessitating adaptation
  • Language translation, unit measurements, and recycling symbols must comply with local regulations
• Balancing adaptation and standardization depends on the nature of the product, target market, and company strategy

International Pricing Strategies

• Pricing decisions consider costs, competition, customer demand, and market conditions in each country
• Skimming strategy sets high initial prices to capture value from early adopters and premium segments
• Penetration pricing offers low prices to attract price-sensitive customers and gain market share quickly
• Value-based pricing sets prices based on the perceived value of the product to customers in each market
• Cost-plus pricing adds a markup to the total cost of producing and delivering the product
• Transfer pricing determines the price of goods or services exchanged between subsidiaries of a multinational company
  • Aims to minimize tax liabilities and comply with local regulations
• Dumping involves selling products at a lower price in foreign markets than in the home market, often to drive out competition
• Price escalation occurs when the final price of a product increases due to additional costs (tariffs, transportation) incurred in international markets
• Pricing must account for currency fluctuations, inflation rates, and purchasing power parity across countries

Global Distribution Channels

• Distribution channels move products from manufacturers to end customers in international markets
• Channel length depends on the number of intermediaries involved (wholesalers, distributors, retailers)
• Direct distribution sells directly to end customers through company-owned channels (e-commerce, sales representatives)
• Indirect distribution relies on independent intermediaries to reach end customers
  • One-level channel includes a retailer between the manufacturer and end customer
  • Two-level channel includes a wholesaler and retailer between the manufacturer and end customer
• Factors influencing channel design include market size, product characteristics, customer expectations, and local infrastructure
• Intensive distribution aims to sell products through as many outlets as possible for maximum market coverage
• Selective distribution limits the number of intermediaries to maintain greater control over the brand and customer experience
• Exclusive distribution grants a single distributor the rights to sell a product in a specific market or region
• Managing global distribution requires coordination, communication, and trust among channel partners across borders

Cross-Border Marketing Communication

• Marketing communication informs, persuades, and reminds target audiences about a company's offerings in international markets
• Advertising uses paid media (television, print, digital) to promote products or services
  • Global advertising campaigns maintain a consistent message and creative concept across countries
  • Local advertising adapts messages and visuals to suit cultural preferences and media habits
• Public relations builds positive relationships with stakeholders (media, government, communities) through earned media and events
• Sales promotions offer short-term incentives (discounts, coupons, contests) to stimulate sales and trial
• Personal selling involves face-to-face interactions between salespeople and customers to generate sales and build relationships
• Direct marketing communicates directly with individual customers through channels (email, direct mail, telemarketing)
• Digital marketing leverages online platforms (websites, social media, mobile apps) to engage and convert international customers
• Integrated marketing communication ensures consistency and synergy among various communication tools and channels
• Cultural sensitivity is crucial in adapting marketing messages and avoiding offensive or misleading content

Challenges and Opportunities in International Marketing

• Language and cultural barriers can hinder effective communication and relationship building with international partners and customers
• Differences in legal and regulatory environments across countries complicate compliance and standardization efforts
  • Intellectual property rights, product safety standards, and advertising regulations vary widely
• Political risks, such as instability, corruption, and expropriation, can disrupt operations and investments in foreign markets
• Economic factors, including exchange rate fluctuations, inflation, and economic downturns, impact demand and profitability
• Infrastructure challenges, such as inadequate transportation and distribution networks, can limit market access and increase costs
• Intense global competition from both local and international players puts pressure on market share and margins
• Rapid technological advancements create opportunities for innovation, efficiency, and customer engagement
  • E-commerce platforms enable direct sales to international customers
  • Social media facilitates global brand building and customer interaction
• Emerging markets offer untapped growth potential due to rising incomes, urbanization, and consumer spending
• Global sustainability concerns drive demand for eco-friendly and socially responsible products and practices
• Collaborative partnerships with local firms, governments, and NGOs can help navigate challenges and seize opportunities in international markets