Summary of International Marketing PDF

1)​Introduction 6 transport methods: ​ ships ​ trains ​ planes ​ trucks ​ cloud ​ pipelines Costs go up but you don’t want to increase price à shrink the product (shrinkflation) (exam) USP = unique selling proposition, keep USP but add things along the way Grow a co...

1)​Introduction 6 transport methods: ​ ships ​ trains ​ planes ​ trucks ​ cloud ​ pipelines Costs go up but you don’t want to increase price à shrink the product (shrinkflation) (exam) USP = unique selling proposition, keep USP but add things along the way Grow a company: -​ go international -​ mergers & acquisitions (m&a’s) Volvo (safety) VS Ford who wanted to grow → Ford bought Volvo (+Land rover (off-hill, Jaguar(luxury), Range rover, Aston martin (sports car) → Ford sold these companies in harder times → Volvo is part of GEELY (China) China wants to take over the electric car market → created Polestar = Citroën was not amused ★​ Fika (Sweden) → coffee time (take a break and don’t push them) → importance of culture Hofstede: 1  1) Part 1 analysis (demographic) Glocalisation refers to the practice of conducting business according to both local and global consideration. (exam) (example McDonalds) Same everywhere = Iphone, Chanel perfume , Local = Toyota cars 1.​ Introduction : Strategic importance 2.​ Business Environment – DESTEP 3.​ International market planning process DESTEP (demographic,economic,socio-cultural,technology,ecological and political) → analyse external factors ​ Micro = the company (internal) ​ Meso = the industry (external) ​ Macro = the business environment (external) GDPR (general data protection regulation) Happening around the world with impact on international business? 1.​ Geopolitical 2.​ Supply chain 3.​ Energy 4.​ Climate Strategic importance of international marketing: ​ Market expansion & growth ​ Risk diversion & competitive advantage ​ Cost Efficiency ​ Access to new technologies and raw materials ​ More and stronger brand identity → Possible thanks to mobility of people, information and money → globalisation 2 SME Small Medium Enterprise ​ Simple Marketing mix decision ​ Distribution agreement with local agent ​ Production in home country MNE Multinational Enterprise ​ Complex marketing strategies ​ Complex marketing organisation ​ Integrated network of manufacturing plants 1)​ D (demographic) Key facts: almost all growth will be in emerging markets, ageing will play important role Youth Marketing trends: -​ Shop through social – IG, TikTok, Pinterest, IG-stories primary marketing channel -​ Fan-dom and Power of the micro-influencer -​ Pop-ups -​ Add-skipping generation -​ Bizarre foods -​ Playful and interactive - Augmented reality -​ Millennial moms -​ Gen Z: socially conscious Ex: Netflix has “tribe mentality” , divides people into taste communities instead of demographics 3 PANKs = Professional Aunts No Kids Millenial moms (1978-1994) = ​ Highly connected ​ Highly influential o Key advisors among their friends o Share info about products and services Different perspective on motherhood Silver generation (older consumers): ​ Increasing in numbers ​ Transnational in their consumer behavior ​ Most disposable income ​ Influence younger generations ​ Tech- and social savvy (make rational choices) Six habits: 1.​ (Insecure) surfers (data concerns & ad-blockers) 2.​ FB = the favourite (though Messenger and TikTok growing) 3.​ Networking (FB “Neighborhoods” → shut down) 4.​ Techadoptation (smart homes, cameras, banking) 5.​ Wellness – hobby 6.​ E-commerce (wealthy but remain price-sensitive) Education level: → influences: 1.​ Buying behaviour 2.​ Communication 3.​ Workforce 4 Family structure: ​ Size of the family ​ Life stage ​ Structure ​ Roles → Influences: 1.​ Buying behaviour 2.​ Decision process 3.​ Consumer choices Health: ​ Health trends (healthy eating, functional foods and supplements, superfoods, beauty products etc) ​ Technology: wearables and health apps ​ Regulations (labels, certificates, …) ​ Pandemic ​ Aging → Influences: 1.​ Buying behaviour 2.​ Decision processes 3.​ Consumer preferences Multicultural: ​ Consumers: taste, fashion, style, … ​ Segmentation ​ Religion and Culture → Influences: 1.​ Buying behavior 2.​ Communication 3.​ Consumer preferences 4.​ Work force 5 1b) Part 1 analysis (economic factor) Classification of economies based on their level of development and GDP 1.​ Traditional low income economies (agrarian) (ex: Ethiopia) ​ Cons: no trade/export, dependent on external factors, less innovation, low income) ​ Pros: simple division of work, minimal waste, socially satisfied community 2.​ Transitional resource exporting economies (have commodities) 3 types of resource exporting economies; 1.​ Low income: dependant on natural resources (ex: Congo) 2.​ Middle income: moderate GDP/capita but volatile due to dependence (ex: Brasil) 3.​ High income: high GDP/capita due to value of exports (ex: Qatar) ​ Cons: dependent on natural resources, price volatility, corruption, inequality ​ Pros: employment, infrastructure development, foreign investment 3.​ Developing economies (industrialising/emerging) (ex: Asia, South America, BRICS) growing industrial sector, technological progress, increase in foreign investment, export in finished goods, improving infrastructure, urbanisation ​ Cons: pollution, social inequality, urbanisation problems ​ Pros: growth, improved standard of living & infrastructure 4.​ Developed industrial economies (ex: Germany, US, Japan) ​ Cons: pollution, inequality, dependence on raw materials, automation & unemployment ​ Pros: high productivity/living standards/innovation, good infrastructure 6  5.​ → Post industrial economies ​ (service, knowledge and technology more important than production UNCTAD ( united nations conference on trade and development) → Roles: ​ Supporting developing countries ​ Promote sustainable trade ​ Stimulating foreign investment ​ Facilitate and encourage cooperation ​ Regulate, analyse BRICS ( Brasil, India, China, South Africa) ​ Formal institution (tax, interbank cooperation, innovation, energy efficiency, agricultural research, competition policy) ​ South Africa joined later ​ Yearly convention → Objectives: economic & financial cooperation , political influence, alternative to west → Challenges: internal differences, geopolitical tensions, resource dependence, aging pop. +​ Egypt, Ethiopia, Iran, Saudi Arabia, United Arab Emirates X Argentina X Richest countries: Luxembourg, Singapore, Qatar, Switzerland, Norway Gini coefficient = statistical measure to represent income/wealth distribution ​ 0 = perfect equality ​ 1 = maximal inequality Eurostat (website for reliable information/statistics) 7 1c) Part 1 analysis (socio-cultural) Social factors: 1.​ Social conditions 2.​ Religion 3.​ Material conditions Social factor: Cultural differences ​ Language ​ Culture ​ Regional ( ex: east/west) Culture = The sum total of learned beliefs, values and customs that serve to direct customer behaviour in a particular country market Culture = 1.​ Values (standards of behaviour) 2.​ Beliefs (opinion) 3.​ Customs (tradition) Ex: ​ absolute no-go in China = tasting from someone else’s plate ​ thumbs up rude in some countries ​ Only world wide understood gesture = flat palm with spread fingers (stop sign) ​ “It’s your shout” (Australia) → your turn to buy drinks ​ In Brasil saying “thank you” is really important A cultural framework: 1.​ Language 2.​ Religion 3.​ Values 4.​ Education 5.​ Social organizations 6.​ Technology 7.​ Law and politics 8.​ Aesthetics → leads to cultures 8 Cultural appropriation = the adoption of an element or elements of one culture or identity by members of another culture or identity. Can be controversial when dominant culture members appropriate from disadvantaged minority cultures. → Stealing an identity from another culture and using it as your own, without recognizing or understanding the meaning and true value of it. ELF = English as a Lingua Franca (English is often used and translated poorly) Maslow’s hierarchy of needs is consistent across all cultures ​ Needs cannot be created only satisfied The consumer buying process consistent across cultures ​ Consumer involvement ​ Perceived risk (corona) ​ Cognitive style (analytical & abstract versus synthetic & concrete oriented) 9 Hofstede's 6 dimensions of culture: (restraint = serious , indulgence = celebrating life) Culture according to Hofstede= “the collective programming of the mind distinguishing the members of one group or category of people from others” Culture & the workplace: ​ Punctuality ​ Greetings (handshake gentle/hard vs bow) ​ Making eye contact ​ Handing out business cards (Singapore & Japan both hands, don’t write, India left hand) ​ Small talk (common before meeting in UAE ​ Dress code (informal vs formal) ​ Work-life balance (ex: Singapore responsive after hours, in France right to disconnect) ​ Personal space (ex: South America less than Asian/Nordic countries) ​ Signing a contract (America = important, China/Nigeria = sign of mistrust) Changes in language often reflect the changing values of a culture Culture and cultural differences is influencing: 1.​ Management 2.​ All company levels 3.​ The product mix (product, price, place, promotion) 4.​ Consumer behaviour and purchase decisions 10  1d) Part 1 analysis (technology) Vuca = volatility, uncertainty, complexity & ambiguity Technology has an impact on 1.​ Production & work 2.​ Energy 3.​ Mobility & transport 4.​ Health 5.​ Communication 6.​ Data 1)​ Production & work Production: processes, robotica, automation, materials, quality, labour, … 2)​ Energy Renewable, 3D-printed, seaweed 3)​ Mobility & transport Shared, self-driving/autonomous vehicles, electrification 4)​ Health/healthcare Apps, 3D-printing, AI for medical decision making, monitoring 5)​ Communication Big data, GDPR (general data protection regulation), SaaS (software as a service), IOT (internet of things), blockchain (digital database, peer-to-peer network), cryptocurrency, metaverse, NFT (non-fungible token) 6)​ Data AI: generative AI (video & music), augmented working, ethical AI, legislation, quantum AI AR (augmented reality) , metaverse 11 1e) Part 1 analysis (ecological) Earth overshoot day = day where all resources for that year are used SDG = sustainable development goals Mandatory sustainability reporting for large companies, to CSRD ( = corporate sustainability reporting directive) ​ Green consumerism ​ Ethical consumerism ​ Guilt free consumerism ​ Conscious consumerism The seven deadly sins of greenwashing: 1.​ Vagueness, vague terminology (ex: “natural”, “eco-friendly”, “bio”) 2.​ Hidden trade-off (highlight one green thing but ignore other negative aspects) 3.​ No proof 4.​ Irrelevance 5.​ Fibbing (unproven, making false/misleading statements) 6.​ Lesser of two evils (show product as greener alternative but both options are bad) 7.​ Worshipping false labels → EU tries to regulate this Barriers preventing collective implementation and enforcement: ​ Lack of harmonisation (also in EU) ​ Limited enforcement resources (regulation is often nation, not EU) ​ Inconsistent penalties ​ Complexity of product assessment (from raw material to production to disposal/re-use) Good example: app “Too Good To Go” 12 1f) Part 1 analysis (politics) Political and legal factor 3 dimensions: 1.​ Local domestic laws 2.​ International laws 3.​ Domestic laws in the home country “CE trademark” ​ on many products traded on the extended single market in EEA (EEA = European Economic Area) ​ assessed to meet high safety, health and environmental protection requirements Legal factor: government actions ​ Operational restrictions ​ Discriminatory restrictions ​ Physical actions Politics can take several roles 1.​ Stimulating role 2.​ Obstructing role 3.​ Replacement role 1)​ Stimulating role ​ Cooperation (WTO, IMF, EU, ….) ​ Financial (subsidies, credit, taxation) ​ Information ( ex: FIT = Flanders Investments & Trades) ​ Export facilitating activities ( embassies, trade missions, specialist fairs) 13 European Union: Executive: ​ European Council (27 national leaders) ​ European Commission (27 nominated by European Council, approved by parliament) Legislative: ​ European Parliament (705 directly elected by EU citizens) ​ Council of the European Union (27 national ministers grouped by policy areas) Judicial: ​ Court of justice of the EU (interprets laws and settles disputes) ​ European court of auditors (audits budgets) Financial ​ ECB (=European Central Bank) ( stability of the euro and oversees financial system) Institutional headquarters 1.​ Brussels (commision, parliament, european council, council of the EU) 2.​ Frankfurt (ECB) 3.​ Luxembourg city (secretariat, court of justice, court of auditors) 4.​ Strasbourg (parliament) President European Council: Charles Michel President EU commission: Ursula von der Leyen President EU parliament: Roberta Metsola ECB: Christine Lagarde 14 IMF ( = international monetary fund) ​ Global monetary cooperation ​ Primary purpose: ensure stability of the monetary system, system of exchange rates and international payments. 2) Obstructing role: Financial ​ Import duties & taxes ​ Foreign exchange restrictions Non financial ​ Quota ​ Embargo ​ Content (+ ex: USB-C chargers) ​ Corruption UK’s ETA system (= electronic travel authorisation) Nanny state index (NSI) = a league table of the worst places in Europe to eat, drink, smoke and vape. 3) Replacement role: Nationalisation of certain industries ​ Ex: “Systembolaget” in Sweden (alcohol) 15 2) Part 2 strategy SME & MNE SME = small medium enterprise MNE = multinational enterprise/corporation 1)​ SME Why go abroad 1.​ Reactive stimuli 2.​ Proactive 3.​ Managerial 1)​ Reactive stimuli 16  2)​ Proactive stimuli 3)​ Managerial elements Barriers 1.​ Shortage of working capital to finance exports 2.​ Inadequate knowledge of overseas markets 3.​ Inability to contact overseas customers/finding right partners 4.​ Lack of managerial time, skills and knowledge Risks 1.​ SME’s have little influence over (environmental) change en recession, governments 2.​ Financial risk by growing too quickly SME: international marketing strategies ​ Exporting ​ International niche marketing ​ Domestically delivered or developed niche services ​ E-commerce ​ Participation in the int. supply chain of an MNE 17  1.​ Exporting ​ Possible due to globalisation ​ For most SME’s the first significant step ​ Popular approach ​ Less commitment/resources ​ Less impact on operations ​ Lower financial risk and investment (!) 2.​ International niche marketing Criteria: ​ Price (luxury, cheap, …) ​ Demographic (age, gender, income, education, …) ​ Quality (high end, low quality, …) ​ Psychographics (values, interest, ….) ​ Geographic (Specific area, …) Examples Requirements ​ Have good information about segment needs ​ Understand segmentation criteria ​ Understand value of the product niche to targeted segment ​ Provide high levels of service ​ Carry out small scale innovations ​ Seek cost efficiency in the supply chain ​ Maintain focus ​ Concentrate on profit rather than market share 18  3.​ Domestically delivered or developed niche services ​ Local economic importance, leads to wealth and jobs (like export) ​ Example safari tours 4.​ E-commerce ​ Ex: Amazon, Zalando, Wish, Bol.com, Alibaba, Etsy 5.​ Participation in the int. supply chain of an MNE Piggybacking on the MNE’s international development = dealing with a larger company (carrier) which already operates in a foreign country and is willing to act on behalf of the rider Piggy marketing = 2 companies form an alliance to promote certain products that are complementary but not competitive by nature (ex: car company & wheel company) 19 2) Global strategies/MNE: Global strategy = a detailed plan for how a business or product can be successful in all parts of the world Globalisation polarizing views: ​ Exploitation ​ MNE domination ​ Exploit resources ​ Attack cultures VS ​ Opportunity ​ Removal of barriers ​ Wealth ​ Greater exposure of cultures Drivers of globalisation: 1.​ Market access 2.​ Market opportunities 3.​ Industry standards 4.​ Global sourcing 5.​ Globalisation of products & services 6.​ Globalisation of technology 7.​ Customer requirements 8.​ Competition 9.​ Cooperation 10.​Distribution 11.​Communication 12.​Company’s strategy, business programmes and processes 20 Key question: What is the company orientation, standardization versus adaptation? (!) Global strategies: → High global integration: reduce costs, standardised product portfolio (economies of scale) → High local responsiveness: adapt product to local needs 21  1)​ Global strategy (ex: Google, WWF, Redbull, Pfizer) ​ No distinction between domestic and foreign market opportunities ​ Looking for identical segments of customers ​ Global strategy to deal with competitors ​ Globally standardized products ​ Economies of scale ​ Rapid diffusion of products into all possible markets 2)​ Multidomestic strategy (ex: water industry, Nestle → Nestle, Perrier, S.Pellegrino, …) No distinction between domestic and foreign market opportunities, but: ​ Differences between markets exist → adaptation is necessary to remain competitive ​ Local customer needs (cultural, different stages of domestic development) 3)​ Transnational strategy (ex: Unilever→ Axe, Cif, …, McDonalds) Characteristics of both global and multidomestic. ​ Aim: maximise local responsiveness + benefits from global integration ​ Economies of scale → upstream the value chain (R&D) ​ Integrated and interdependent system of subsidiaries over the world 4)​ International strategy (ex: wine) Exporting strategy, little need for local adaptation & global integration 5)​ Emerging markets (BRICS + MINT) Ex: China is investing in electric automotive industry Ex: india is good at IT consultancy and outsourcing MINT = Mexico, Indonesia, Nigeria and Turkiyë 22 McKinsey 7S framework Hardware: ​ Strategy (business plan that allows company to formulate plan of action) ​ Structure (the way a company is organized) ​ Systems (technical and business infrastructure, daily procedures) Software: ​ Style (attitude of senior employees, code of conduct) ​ Skills (capabilities) ​ Staff (talent management, HR, recruitment and reward systems) Shared values = The values, objectives and mission of the organization + norms and standards Country/Market selection: For SME ​ Passive method (opportunity, risk aversion,intuition, knowledge of market/customer) For MNE ​ Expansion (home market is starting point, customer segmentation) ​ Knock-out screening (start with huge number of markets and reduce by screening) 23  Market expansion strategy: 1)​ Concentration = limited number of markets, step-by-step (lower risk) 2)​ Simultaneous = all markets at same time, economies of scale (high risk) — International development 2 ways: Born local (becomes “adaptive exporter”) Born global (technological products/services) (ex: Skype, Spotify) → born global SME (vision & niche, dynamic approach) — GII = Global innovation index 24 3) Part 2 strategy (entry) Criteria for selecting appropriate entry strategy: 3 key questions: What level of control do we require? What level of risk are we willing to take? What cost can we afford to bear? Indirect exporting: ​ Pros: simple, low cost, easier to cancel) ​ Cons: less control, less easy to do after sales-service 5 methods: 1.​ Agents (independent people/firm, on commission) (ex: Tupperware) 2.​ Distributors (buy and stock products, take risk of unsold, high capital investment) 3.​ Brokers (take no ownership, on commission/fees, high exposure,difficult to withdraw) 4.​ Trading companies (take ownership, distribution network, buy in one country and sell) 5.​ Piggybacking (ride on the back of MNE) EMC/EH (broker) = Export Management Company/ Export House 25 Direct exporting: (ex: sales staff, e-commerce, management contracts) Pros: less resources, little effect on existing operations, lower investment Cons: direct investment for marketing, distribution, admin Direct investment: (assembly, own subsidiary, M&A) Why foreign manufacturing and service operations? → Wholly owned subsidiary: (ex: Toyota HQ, technical centre & training centre in Belgium) ​ Most expensive (commitment, time, resources) ​ Need for long-term view ​ R&D: even greater commitment ​ Full control = high level of control but also high level of risk 26  1)​ Assembly Assemble components in a new country, components made in home markets or other markets. Why? Tariff barriers usually lower on components than finished goods + reduce transport costs 2)​ M&A (merger and acquisition) (ex: Ahold, ABinbev, ING) Why? Speed of market entry, trained labour force & existing customer base and suppliers Acquisitions (ex: Amazon → Wholefoods, Microsoft → LinkedIn, Apple → Shazam) Mergers (ex: Exxon & Mobil) ​ Why? Synergy, combining activities to increase performance and decrease cost ​ fails, ex: Kraft Heinz → Unilever, Pfizer → AstraZeneca Risks: ​ Finding the right company ​ People (labour force) ​ Valuation, … Where can it go wrong? 27 Cooperation strategies: (joint ventures, licensing, franchising) Reasons: ​ Insufficient resources ​ Pace of innovation ​ High R&D cost ​ Concentration of companies ​ Government cooperation Examples of where to cooperate: ​ Technology ​ R&D ​ Marketing (ex: GoPro & RedBull) ​ Manufacturing swaps 1)​ Joint venture (ex: Google & NASA, Toyota & BMW, Deutsche Bank & Santander) ​ Contract → separate legal entity ​ Shared ownership of a specially set up new company for marketing/manufacturing ​ Each company takes equity stake in new company Ex international joint venture: Ardo & Bonduelle 2)​ Licensing (ex: Olympics, Monopoly, Disney, Simpsons → rights for books, games, …) Management contract in which the licensor grants access to one or more of: ​ Patent rights ​ Trademark rights ​ Copyrights ​ Process know-how Include in contract: duration, royalties, trade secrets, quality control and performance measures 28  3)​ Franchising (ex: McDonalds, Subway, KFC, 7eleven, Burger King) Contract where franchiser grants legal right to use branding, trademarks and products in return for a franchise fee. Can be single or multi-unit. Process: (ex: Lotus) 3 types: 1.​ Horizontal integration/expansion (companies that sell same goods/services) (mergers) 2.​ Vertical integration/expansion (going up/downstream in business column) ​ Backwards = acquire key supplier or take over process earlier in supply chain ​ Forward = the reverse 3.​ Diversification (activity not related to core business) 29 4) Part 2 strategy (product) Customer centric solution = product + service + brand 3 key questions: 1.​ Benefits for the customer 2.​ The attributes of the product 3.​ Support services Three aspects of international product or service offer: Questions to ask about product: ​ Purpose ​ What distinctive properties does it have compared to local competitors) ​ What benefits is the customer expected to get ​ Which consumer segments are expected to buy it ​ How does it fit in the total market 30 Product strategy: Factors that affect international product and service management: 1.​ Balance between standardization and adaptation 2.​ Product acceptability 3.​ Product accessibility 4.​ Environmental issues Balance between standardization and adaptation: → Reasons for standardization: ​ Markets are becoming more homogeneous ​ More identifiable international consumer segments ​ Increase in number of companies moving towards globalization ​ Forcing greater standardization in industry sectors ​ Economies of scale Reasons for adaptation ​ Cultural factors (ex: halal food) ​ Usage factors (ex: washing machines) ​ Legal factors (ex: food → EU-requirements) ​ Product liability (ex: pharmaceuticals, cars, tobacco) —- Product strategy different possibilities: 31  1)​ Keep existing product Pros: ​ No development cost ​ Economies of scale ​ Homogeneity ​ Brand consistency 2)​ Adjust product How? Product features/content Packaging Brand , name Services 3)​ New features (ex: instagram threads) Why? ​ Expands the scope ​ Expands usage ​ New customers/segments → may be risky 4)​ New product (ex: Coca Cola, Nalu) How? ​ ​ M&A ​ Copy ​ Piggybacking ​ Completely new development Completely new development: ​ R&D ​ Copyright ​ Quality (ex: evade product recalls: Senseo, Audi, VW) 32  5)​ Eliminate (ex: Nivea stops cosmetic line in Belgium, GM out of European market) 6)​ Relaunch (Ex: Nokia, Polaroid, Le creuset, Lego) —- Product components: 1)​ Product characteristics ​ Legal requirements (ex: USB-C charger, single use plastic) “Origin marking” = country where the product has undergone last substantial processing (EU) →For most products in EU “made in” is not obligatory ​ Market requirements (ex: sizes, metric system) ​ Consumer requirements (ex: Fanta, Dr. Oekter Taste, culture, habits, physical appearance 33  2)​ Packaging ​ Legal requirements (language, required info on label, content → ex: cigarettes) ​ Material trend: ecology, qr-codes, RFID-tags, customized (ex/ names on Coca Cola) ​ Language ​ Pictures ​ Colour Color can influence: ➔​ Brand recognition ➔​ Emotional appeal ➔​ Behaviour (website conversion) ➔​ Brand identity (ex: black for luxury) Red: in the West excitement, sometimes danger in Middle East but in China good luck Blue: safest ​ Symbols (watch out with religious and ex: Nazi symbols) ​ Numbers Ex: 3 and 7 neg in Morocco/pos in India Ex: 0 neg in India Ex: 4 neg in China 3)​ Brand - Name - Logo Perceived value is a central factor in positioning Country of origin effect: Ex: Italy = pizza and pasta Ex: Germany = cars Ex: Belgium = chocolate Risk for branding: piracy (ex: clothes, watches, …) ➔​ Outright piracy (product is same form and trademark) ➔​ Reverse engineering (ex: airpods) ➔​ Counterfeiting (quality changed but same trademark, ex: LV) ➔​ Passing-off (modified product but same/similar trademark, ex: football shirts Puma) ➔​ Wholesale infringement (use of works protected with copyright without permission) ➔​ Private label (your label on our product) 34  4)​ Warranty B2B or B2C (aftersales, manuals, legal aspects) 5)​ Home country “Country of origin effect” (see ex: above) More ex: ➔​ Swedish car = safe ➔​ French = good design ➔​ Japanese = good and cheaper ➔​ German = solid and strong 6)​ Labelling Legal requirements: ​ CE ​ HACCP (hazard analysis & critical control points) ​ IFS logistics (international food analysis) Commercial labels ​ Ex: Fairtrade, bio, halal 5) Part 3 implementation (communication) Role of international communication: ​ Presenting and exchanging information with various stakeholders (consumers, suppliers, authorities, press, agencies, …) ​ Offline & online ​ Complex due to differences in: market conditions, media availability, languages, culture, regulations, … Internal marketing (mission, values, objectives, procedures External marketing (4P’s, PR, corporate identity, relationship marketing (CRM)) 35 Challenges: ​ Inconsistency of messages in different countries and cultures ​ Different styles of presentation of corporate identity, brand and product image ​ Lack of coordination of messages ​ Differences in perception of sender and receiver (lack of knowledge of receiver) Challenges: influencing factors but out of control: 1)​ Piracy - counterfeiting 2)​ Pressure groups = organised group aiming to influence policies (ex: Greenpeace) 3)​ Parallel importing = non-counterfeit product imported withed permission (grey market) 4)​ Social proof (from experts, peers, celebs, users, wisdom of crowds) (!) → Wisdom of crowds = ex: “Customers who bought this item also bought” 5)​ Power of consumers (ex: Fred Perry stops polo shirt associated with “proud boys” Standardization versus adaptation: 36 Standardization (communication) ​ Pros: consistency → confidence, trust, loyalty ​ Necessary because of www, travelling, e-commerce ​ Works when: ➔​ Visual message ➔​ Well known personality ➔​ Music ➔​ Well know symbol ​ Difficult when: ➔​ Spoken and written language is important ➔​ Humour is used ➔​ Local personalities are used ➔​ Campaign builds on previous ads Adaptation Cultural differences (ex: US = individualistic, China = cooperation and harmony) Ex: smaller kitchen in China than in US Integration: Align communication tools Tools: ​ OOH (out of home) ​ Video ​ Audio ​ Cinema 37 Legal issues examples: 38 → Strategic choice to make ​ Globalisation = same from strategy to execution (Chanel perfume) ​ Adaptation = execution of ad is local (ex: Coco Pops colour of ad) ​ Localisation = strategy is global, execution local (ex: Coca Cola names) Co-branding (ex: Starbucks & Spotify, Billie Eillish & Nike) Ingredient co-branding (ex: Oreo & Milka) ​ Pros: bigger reach, cost efficiency, market size, shared resources ​ Cons: confusion, reputation risk, compatibility Product placement (positioning product as a form of ads, ex: in tv-show, game) Ex: Barbie with sandals, Stranger Things, La casa de papel Sponsorship Ex: Max Verstappen & RedBull PR (public relations) = practice of managing the release and spread of information between an individual and an organisation to affect the public perception +​ Exhibitions, trade fairs & trade missions Communication plan: ➔​ Objectives Quantify objections: Ex: influence knowledge = demonstration, tasting Ex: influence on behaviour = sales Ex: strengthen relationships = existing and future customers ➔​ Organisation ➔​ Marketing ➔​ Sales ➔​ Finance 39 In 3 steps 1.​ Preparation 2.​ Participation 3.​ Follow-up Long term relationship development ​ Database ​ Relationship marketing ​ CRM (strategy, policies, process, tools: database/software) 6) Part 3 implementation (price) Intro = pricing is a flexible and independent controllable element of the marketing mix; However (!) most see the importance of pricing at a tactical level in stimulating short-term demand but fail to recognize the importance of strategic pricing in international marketing Tactical pricing (short term): ​ Discounts ​ Push products ​ Get rid of excess product capacity ​ Seasonal reductions Strategic pricing (long term): ​ Image ​ Market share ​ Brand name ​ Distribution channels 40 Domestic pricing decisions = based on relatively straightforward process of allocating the cost of production, managing and marketing product or service International pricing decisions: added complexity: ​ Exchange rate fluctuations ​ Different inflation levels ​ Different payment methods ​ Different cost of living and purchase power ​ Customer taste may differ ​ Different perceptions of “value for money” ​ Local competition ​ Taxation Pricing is the most visible of 4P’s , must be in line and integrated (!) Yield pricing (dynamic pricing): determines price by how urgently people want the product (ex: Booking.com, Taylor Swift tickets) Price positioning is determined by whether consumers perceive product prices as expensive, neutral or cheap. This perception is associated with the quality of the product/service. (!) Ex: 41 7 C’s of international pricing 1)​ Cost: Product development, production, distribution, storage, advertising, labour, … + international elements: transportation, insurance, handling, tax Influencers 1.​ Corporate objectives 2.​ Product and service factors 3.​ Influence of cost structures 4.​ Specific export costs 5.​ Cost reduction (economies of scale & learning curve) 6.​ Location of production facility 6) Decided by many considerations: ​ Lower labour costs ​ Skills or specialization ​ Price ​ Sourcing of materials ​ Unions Offshoring to low cost countries, pros: ​ Risk mitigation ​ Cost reduction ​ Tax ​ Concentrate on core business 42 Reshoring = process of returning the production and manufacturing back to the company’s original country (Trump) (ex: Adidas to China and then back) Reasons: ​ Home market conditions & customer requirements ​ Product or production changes ​ Transport cost 2) Competition: (analysis of competitors) 3) Consumers: Consumers overseas might have a different perception of the value of a product due to cultural and other factors. Customers are able to compare prices with the prices of other countries. 4) Currency: Complexity of exchange rates. (ex: after Brexit British pound weakened a lot, ex: importing cacao was a lot more expensive for Toblerone) Especially difficult in FMCG-goods ( fast moving consumer goods) → Why? Raw materials: FMCG often rely on raw materials sourced internationally Global supply chains: fluctuations affect shipping, packaging and processing costs Consumer sensitivity → FMCG companies often opt for “shrinkflation” (= decrease weight, packaging or replace ingredients) 5) Channels: Longer channels of distribution increases cost and complexity Different channels of distribution increase complexity (and maybe cost) 6) Compliance: Control by government Ex: price of tobacco 7) Culture: Need of knowledge of the wants and needs of inhabitants 43 Pricing methods: 1.​ Cost-plus pricing (mark-up) 2.​ Perceived value pricing/ Value based pricing (ex: Gucci) 3.​ Competitive pricing (ex: Colruyt) 4.​ Target pricing (related to ROI) (ex: solar panels, buildings) 5.​ Freemium pricing (ex: Spotify, Tinder, LinkedIn, …) (not same as trial) (!) Cheapflation = ex: putting less meat in spaghetti sauce Pricing strategies: 1.​ Price skimming 2.​ Sequential skimming 3.​ Penetration pricing strategy 4.​ Pre- emptive strategy 1)​ Price skimming (ex: Apple, Tesla) ​ High price for new product (+) ​ Ensure short term profit (+) ​ Early adopters (+) ​ High R&D costs ​ When? Little competition, unique product ​ Less LT-vision (-) ​ Feeling of being ripped off (-) ​ Risk of parallel-import (-) 2)​ Sequential skimming (high to low price) ​ To discourage competition 3)​ Penetration ​ Gain fast market share, high volume ​ When? Fear of imitation, strong competition, large potential 4)​ Pre-emptive (= dumping) ​ EU fights against this 44 Challenges for international pricing & transactions: 45 46 7) Part 3 implementation (logistics) How? From completely owned to relying on other companies → Take all elements into consideration ​ Purchase of goods (who owns them) ​ Assembly ​ Stock of inventory ​ Promotion ​ Physical distribution ​ Warranty ​ CRM Challenges: ​ Selection of foreign country intermediaries ​ Building relationship ​ How to deal with variety of retailing structures ​ How to maximize new and innovative forms of distribution ​ How to manage physical distribution Physical distribution management: Total cost of distribution will be higher than domestic distribution due to: ​ Increased distance ​ New variables to consider (air, sea, rail, documentation, packaging) ​ Greater market complexity 6 ways of transportation: 1.​ Air 2.​ Schip 3.​ Train 4.​ Truck 5.​ Pipeline 6.​ Cloud 47 Ocean and inland waterways ​ Low cost/value ​ Non-perishable (bederfelijk/fragiel) ​ Cost-effective ​ Container - bulk ​ (80-90% of goods is transported by container) Container vs reefer (refrigerated container) Trends: Diversifying (green fuel and digital technology) (ex: Maersk) Size of containerships is growing Technology (remote control, vessel tracking, speed control) Asia - pacific is dominating the market (China car, India pharmaceuticals) Air ​ More expensive ​ High value ​ Low bulk ​ Perishable items ​ Packing cost ​ Insurance cost Road ​ Flexible ​ Efficient for short hauls ​ High-value goods ​ Restrictions at border control ​ Traffic Rail ​ Bulky goods ​ Long distance ​ Faster than ship, cheaper than plane Pipeline Oil, gas, chemicals 48 — Higher complexity more admin: ​ Border transfer of goods ​ Bureaucracy and “brown envelope” (omkoping) ​ Documentation (invoices, customs, clearance, taxation, insurance, …) ​ Packaging (damage/loss) ​ Export-sales contract (incoterms → describes all tasks, risks and costs) Export-sales ➔​ Ex-works (EXW) ➔​ Free on board (FOB) ➔​ Cost, insurance and freight (CIF) ➔​ Delivered duty paid (DDP) Things to consider for packaging ​ Climate ​ Geography ​ Cultural ​ Distribution channel ​ Labelling and handling instructions ​ Loss ​ Damage 49 Payment methods: 50 51 52