Introduction To International Marketing PDF

International Marketing @ Uni Tübingen Introduction to international marketing Prof. Dr. Kristina Klein Agenda Introduction to international 1 marketing 2 Market selection and market entry 3 The role of culture Marketing decisions: The product 4 and the...

International Marketing @ Uni Tübingen Introduction to international marketing Prof. Dr. Kristina Klein Agenda Introduction to international 1 marketing 2 Market selection and market entry 3 The role of culture Marketing decisions: The product 4 and the brand Marketing decisions: International 5 pricing Marketing decisions: International 6 distribution Marketing decisions: International 7 communication and advertising Agenda What is international 1.1 marketing? 1.2 Internationalization theories 1.3 Globalization versus localization Decisions of the international 1.4 marketing process Global versus local marketplace paradox We live in a global marketplace We live in a world where markets are local Shanghai Copenhagen NYC -Why does BMW need to operate in all these different markets? --> to maximize their profit through reaching more audiences, maintain their competitive advantage 1 Ad: Bayerische Motoren Werke: target audience is DACH --> details of the product, interior design, focus is 2 Ad: BMW India: emphasize on experiences, life stages --> linked to emotions and indian culture 3. Ad: BMW USA: american football (culture) , humorous, informal, car isn't on the focus but what you can get from it 4 AD: BMW New Zealand : humorous but at the same time the product is adapted to the country (steering wheel is on the right side) 4 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de  What is international marketing? International Marketing Global Marketing = ≠ -distinction between global and international, there is no difference -easier to define what it is not: only one nation National Marketing ≠ 5 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de International marketing: definitions International marketing is…. “[…] the performance of business activities designed to plan, price, promote and direct the flow of a company’s goods and services to consumers or users in more than one nation for a profit” (Cateora, Gilly and Graham, 2010, p. 9) “Global marketing refers to marketing activities coordinated and integrated across multiple country markets” (Johansson, 2000, p. 14) “Global marketing reflects the trend of firms selling and distributing products and services in many countries around the world” (Hollensen, 2011, p. xvi) exam: no definitions Scope of activities is outside the home country market 6 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de International marketing – a scope issue Product orientation Existing product New product Market orientation Existing market Market Product developement penetration strategy strategy New market Market development Diversification strategy strategy for international marketing focus on new markets with existing and new products example Starbucks: existing product: app, new product: instant coffee, new market/existing product: India, new market/new product: selling CDs 7 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Why internationalize? potential question on the exam: explain two/three motives from each category Motives of Internationalization Risk Reduction Realization of Opportunities - Stabilization of sales by supplying various markets with different business cycles - Compensation for lost market shares to Sales Opportunities Pricing Opportunities Cost Opportunities competitors in the home country - Development of new sources for - Skimming of higher - Reduction of market - Counteracting danger of losses in the home sales (profit and growth goals) willingness to pay development costs by scale country - Extension of sales of seasonal of consumers in effects (as a result of a higher - Preservation of current market positions products foreign markets sales volume; economies of abroad (e.g., after export) by stronger inventory - Overproduction/excess capacity scales) engagement (e.g., a foreign branch) - Following important customers - Capitalization on lower costs - Following the competition overseas to abroad of market development in counterbalance their competitive advantage foreign markets - Participation in growth on foreign markets the more I produce, the more I - Accomplishment of growth can take advantage of scale targets that cannot be met in the home market because of e.g., saturated markets or antitrust limitations Homburg, C./Krohmer, H. (2009): Marketingmanagement, p. 1055; Hollensen, S. (2011), Global Marketing, pp. 51-55 8 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Global marketing: what it is and what it isn’t Single-country marketing Global marketing Target market strategy Global market participation Marketing mix development Marketing mix development Product Product adaptation Price focus of lecture Price adaptation or standardization Promotion Promotion adaptation or standardization Place adaptation or standardization Place Concentration of marketing activities Coordination of marketing activities how can these activities be done Integration of competitive moves 9 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Agenda 1.1 What is international marketing? 1.2 Internationalization theories 1.3 Globalization versus localization Decisions of the international 1.4 marketing process Selected internationalization theories (1) The Uppsala Model (2) The Traditional Cost Model (3) Born Globals Hollensen, S. (2011), Global Marketing, p. 72-84; Homburg, C./Krohmer, H. (2009), Marketingmanagement, p. 915 11 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de The Uppsala model a.k.a. stage model Firms begin international activity in nearby markets and only gradually move into more distant markets Firms enter through successive stages Stage 1: No regular export activities – sporadic exporting Stage 2: Export via independent representatives – export modes Stage 3: Establishment of a foreign sales subsidiary Stage 4: Foreign production Market commitment (amount of resources committed and degree of commitment) increases in small steps (with some exceptions) Hollensen, S. (2011), Global Marketing, pp. 74-77 12 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de The incremental approach of the Uppsala model Hollensen, S. (2011), Global Marketing, pp. 72-84 13 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de The Uppsala model Cultural distance: degree to which cultural values in one country differ from those in another country Psychic distance: cannot be measured objectively, only from the manager's perspective individual manager‘s perception of the differences between home and foreign markets not measurable by factual indicators (statistical indices on education, religion, language etc.) disturbs the flow of information from a firm to the market firms start to internationalize to markets with low psychic distance, which they understand better Hollensen, S. (2011), Global Marketing, pp. 74-77 14 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de The Uppsala model Firms begin international activity in nearby markets and only gradually move into more distant markets Firms enter through successive stages Stage 1: No regular export activities – sporadic exporting Stage 2: Export via independent representatives – export modes Stage 3: Establishment of a foreign sales subsidiary Stage 4: Foreign production Market commitment (amount of resources committed and degree of commitment) increases in small steps (with some exceptions) Not valid for all industries Criticism industries against Uppsala model: technological industries e.g. smartphones Model is too deterministic Does not account for country market interdependencies Leapfrogging tendency (entering more ‘distant’ markets or using other entry modes) Hollensen, S. (2011), Global Marketing, pp. 74-77 15 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Selected internationalization theories (1) The Uppsala Model (2) The Traditional Cost Model (3) Born Globals Hollensen, S. (2011), Global Marketing, p. 72-84; Homburg, C./Krohmer, H. (2009), Marketingmanagement, p. 915 16 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Transaction cost model Hollensen, S. (2011), Global Marketing, pp. 77-80 17 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Selected internationalization theories (1) The Uppsala Model (2) The Traditional Cost Model (3) Born Globals Hollensen, S. (2011), Global Marketing, p. 72-84; Homburg, C./Krohmer, H. (2009), Marketingmanagement, p. 915 18 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Born globals challenge traditional theories A firm that from its birth globalizes rapidly without any preceding long-term internationalization period Rely on cutting edge technology in developing unique product or process innovations Usually managed by entrepreneurial visionaries Decision maker has a large influence over the type of internationalization followed Education, experience of living abroad, etc. reduces psychic distances to specific markets  small, technology-oriented companies that operate in international markets from the earliest days of their establishment Influencing factors Growing importance of niche markets Advances in process/technology production Flexibility of SMEs Global networks Advances in information technology Hollensen, S. (2011), Global Marketing, pp. 87-90 19 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Two extreme pathways of internationalization – organic versus born global e.g. internationalization of zumba Hollensen, S. (2011), Global Marketing, pp. 77-80 20 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Summary of internationalization theories Hollensen, S. (2011), Global Marketing, pp. 77-80 21 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Agenda 1.1 What is international marketing? 1.2 Internationalization theories Globalization versus 1.3 localization Decisions of the international 1.4 marketing process  in a post covid era are markets still going to be predominantly global? --> The convergence thesis of Levitt Sociodemographic development In many developed nations trend towards small families and aging of population Standardization of offers Education Early on, consumers deal with foreign cultures (cosmopolitanism) Convergence of Centralization of consumer needs decisons Transport technologies Overcoming large distances at increasingly lower costs Lower costs and thus lower prices Communication technology Better information supply of consumers Levitt, T. (1983), The Globalization of Markets, Harvard Business Review, 61 (May-June), p. 92-102; Homburg, C./Krohmer, H. (2003), Marketingmanagement, p. 914 23 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Factors influencing globalization and localization Globalization Localization Removal of trade barriers (deregulation); multilateral Market myopia trade agreements Cultural differences Converging market needs - worldwide markets – “global village” Regionalism/protectionism (national controls) Global accounts/customers De-Globalization trend (Opposition to globalization) Standardized worldwide technology and communication (communication improvements) Organizational culture Transportation improvements Keegan/Green (2011), Global Marketing, pp. 22-23. 24 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Global localization – The contingency perspective “The essence of being a global company is to maintain a kind of tension without being undone by it. Some companies say the new world requires homogenous products – ‘one size fits all’ – everywhere. Others say the new world requires endless customization – special products for every region. The best global companies understand it’s neither and it’s both. They keep the two perspectives in mind simultaneously.”, Kenichi Ohmae (in: Keegan/Green (2011), p. 45) Market Contingency perspective Market Standardization Adaptation The difference between standardization and adaptation is in degree rather than in kind Critical Issue: Identifying contextual factors that determine Industrial the appropriate degree of marketing program products, e.g., standardization and determine which individual industrial clue marketing-mix elements are influenced by each factor and to which extent Most cosmetics products 25 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Standardization versus adaptation Standardization (Globalization) Adaptation (Global Localization) Developing standardized products marketed Mixing standardization and customization worldwide Think globally, act locally Standardized marketing mix Appropriate costs for max. satisfaction Essence of mass marketing Essence of segmentation Standardized Adapted McAloo Tikka potato burger (India) Product Big Mac Slang Macca‘s (Australia) MakDo (Philippines) Brand Name McJoy magazine and „Hawaii Surfing Promotion Advertising Slogan Hula“ promotion (Japan) („I‘m loving it“) Place Free-standing Home delivery (India) Average price for Big Mac Most expensive in Switzerland Price like in the USA Cheapest in China Keegan/Green (2011), Global Marketing, pp. 43-48 26 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Anti-globalization In most developed economies, a small minority of consumers exists who oppose all things corporate and fight globalization trends in general (termed “politically motivated brand rejection” by Sandikci and Ekici 2008) According to Holt, Quelch, Taylor (2004): 10 % of the world’s population These anti-global consumers will be highly negative about global (=standardized) brands Effect may even be more pronounced as a result from financial crises, recessions, and unemployment Concepts (such as anti-consumerism, political consumerism, consumer boycotts, animosity) explain why consumers may intentionally choose not to consume a particular brand beyond product-related reasons. Keegan/Green (2017) 27 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Agenda 1.1 What is international marketing? 1.2 Internationalization theories 1.3 Globalization versus localization Decisions of the international 1.4 marketing process Different stages in the international marketing process Should the company go international or not? What are the competences of the firm and how should they be utilized internationally? External analysis Political forces Internal analysis Economic forces Identifying firm competences Socio-cultural forces Market size SWOT- analysis International Market Selection Selection of target market Positioning in chosen target market Entry mode strategy Developing the international marketing mix Hollensen, S. (2011), Global Marketing, pp. 8-11 29 © Univ.-Prof. Dr. Kristina Klein, markstones Institute of Marketing, Branding & Technology, www.markstones.de Universität Bremen Prof. Dr. Kristina Klein Max-von-Laue-Straße 1 Gebäude WiWi 2 F3210 [email protected] 0421 218-66970