Market Shaping Strategies: Marketing International

**Market shaping strategies** **Marketing international in its new context** 1. **What are the key difference between domestic and international marketing.** - Both aim to satisfy customers needs - Both use elements of the marketing mix - Both rely on market research - Both focus...

**Market shaping strategies** **Marketing international in its new context** 1. **What are the key difference between domestic and international marketing.** - Both aim to satisfy customers needs - Both use elements of the marketing mix - Both rely on market research - Both focus on relationship building: with customers, suppliers, distributors and other stakeholders - Both require adaptation to local conditions: To be successful, both domestic and international marketing must adapt to local conditions, such as language, culture, legal and regulatory requirements, and economic factors. **Domestic Marketing** **International Marketing** ------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------- Domestic marketing requires less investment as compared to international marketing. International marketing requires more investment as compared to domestic marketing. Mostly there is stable business environment. Mostly there is unstable business environment. It relatively deals with homogeneous market. It relatively deals with diverse market. In domestic marketing competitors behavior is easy to predict. In international marketing competitors behavior is difficult to predict. Research is required, but not to a great extent. High level of research is required because of the involved overseas markets. The same policies and tactics can be opted by the company in domestic marketing. he company requires different tactics and policies for advertising the products to their customers. Domestic marketing refers to carrying out marketing activities within the national boundaries. International marketing refers to carrying out marketing activities outside the national boundaries also. It refers to doing marketing in local market and its scope is limited. It refers to doing marketing in global market and its scope is wide. There is one nation, same language and one culture. There are many nations, many languages and culture. In domestic marketing only one currency is used. In international marketing different currencies are used. Controlling domestic marketing activities is easy as compared to international marketing. Controlling international marketing is difficult as compared to domestic marketing. Well familiarity with domestic or local market. Lack of familiarity with global or foreign market. page8image76667904 2. **What are the main challenges facing international marketing ?** **Advantage of IM** **Disadvantage of IM** ------------------------------------------------------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- Enables companies to access new and broader markets, which can translate into increased growth opportunities. Cultural differences: International marketing requires an understanding of different cultures and customs, which can be difficult. Diversification: International marketing enables companies to diversify their sources of revenue and reduce their dependence on a single market. Legal and regulatory challenges: International marketing involves navigating different legal and regulatory environments, which can be complex and time-consuming. Higher profit potential: International marketing can lead to higher profit potential, as companies can take advantage of price differences in different markets. Higher costs: International marketing often involves higher costs, such as customs duties and shipping costs, which can have an impact on a company\'s profitability. 1. **Is marketing an art or a science ?** Personally, I associate the world of marketing with clever and well-founded advertisements, spectacular posters and creative hooks. It is therefore not illogical that marketing and advertising are an art compared to creativity and expression. But when you remember that the demographic analysis, market research and sales and trend forecasting done by marketing and advertising professionals, you begin to think it\'s a science. Look around you and think of advertising strategies or campaigns that have caught your attention. You will probably be struck by the fact that they are based on information gathered from hard figures and data. Then the creative imagination was used to establish an emotional connection with the audience. This is what makes marketing so unique and challenging - the elegant proximity of analysis and creativity. Let\'s say you have a travel portal. If you choose to drive traffic to your portal from a social media site such as Instagram you will start with budgeting and audience targeting -- which is science and numbers. Then you need an ad creative. What title, image or video will interest your target audience? How can you motivate them to click through to your site and remember your brand? What should your ad contain to stand out from the competition? These are tough questions that require creative answers, or let\'s just say, making great ad creatives is an art. Once your ad is running, you need to monitor stats, such as how many people engaged with your ad and what your ROI was, so we come back to science. What does marketing really have in common with art? Art has the ability to create an emotional response in the viewer and can make us think or even act in a certain way. TIBITS VEGETARIAN RESTAURANT  ADIDAS PETR CECH A person in a red uniform with arms extended and a ferris wheel Description automatically generated A hand holding a container with a car and a straw Description automatically generated WHAT IS CULTURE ? Set of values, beliefs, rules and institutions held by a specific group of people **Ethnocentricity ( wrong)** **Cultural literacy ( right)** ----------------------------------------------------------------------------- ----------------------------------------------------------------------------------------- Belief that one's own ethnic group or culture is superior to that of others Detailed knowledge of a culture that enables a person to function effectively within it « global mindset is being comfortable with being uncomfortable is uncomfortable place » dr. Mansour Javidan COMPONENTS OF CULTURE : Culture : - Aesthetics - Values& attitudes - Manners & customs - Social structure - Religion - Personal communication - Education - Physical environments Standardization vs adaptation- international market strategies ***[DIFFERENT APPROACHES IN MARKETING STUDIES- CULTURAL FACTOR ]*** - **Emic approach** : adaptation of marketing studies to the specificities of a country. - **Etic approach **:development of universal technique that can be used in several cultural environments - **Hybrid approach** : combinaiso, of two approaches ***[DIFFERENT TYPES OF ENVIRONMENTS VS MARKET STUDY CONTEXT ]*** We have three types of environments characterizing the markets - countries and indirectly the markets - products. They are contrasted according to their stage of economic development (life cycle). - Underdeveloped market - Developing market - Mature market **Market context** **underdeveloped** **developing** **Mature** --------------------- --------------------- ----------------- --------------------- Life cycle Introduction/growth Growth/maturity Maturity/innovation Tarifs barriers Strong Strong/medium Weak Non-tariff barriers Strong Strong Medium Political risks Medium/strong Medium Weak Legal risks Strong Strong/medium Medium Cultural risks Very strongs Very strong Medium **Market context** **underdeveloping** **developing** **Mature** ---------------------------------------------------------------------- ----------------------- ---------------------------- ------------------------------- **MARKETING STUDY** Local weak growing saturated international growing strong Strong **MARKETING STUDY** Infrastructures of market studies (sources, data, local institution) Embryonic Medium / strong Saturated Principal objectif of studies Needs and faisability Aspiration and rentability Satisfaction and segmentation **Market context** **underdeveloping** **developing** **Mature** ------------------------------------- --------------------- ---------------- ------------ **MARKETING STUDY** Segmentation Revenue demographics Life style Reliability of information Weak Weak / medium Strong Need for methodological adaptations Weak Weak / medium Strong ***[MARKET SEGMENTATION-REMINDER ]*** Segmentation consists of identifying a group of customers who display similar behaviors with respect to a product/service - Four segmentation strategies are possible: - Geographic (country, region) - Socio-demographic (age, professional category, gender, income\...) - Psychographic (personality, values, opinions, lifestyle) - Behavioral (quantities purchased, place of purchase...) ***[WHAT ROLE DOES THE CULTURAL DIMENSION PLAY IN SEGMENTATION ?]*** The cultural dimension can have an impact on the different factors of segmentation ; - Geographic- attractiveness of certain countries - Lifestyle of consumers - Purchasing behaviors ***[WHAT IS A GLOBAL STANDARDIZATION ]*** It's the ability to use standard marketing internationally; it\'s the ability for a company to use the same marketing strategy from one country to the next, and across various cultures. **PROS (+)** **CONS(-)** ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- COST : a company **does not have to pay for special marketing** for each market. One marketing strategy can be used in multiple areas of the world, therefore cutting the cost of having to develop several marketing strategies. SENSITIVITY : while some countries may appreciate and accept a product, others may not agree or have a different opinion about that product. These **differences in perspective could force a company to develop a more customizable market strategy** for different areas of the world BRAND : a **strong brand can have the same effect in different areas** around the world. What makes a strong presence in one country, can have the same effect in other countries. ***[ARGUMENTS FOR STANDARDIZATION ]*** 1. The consumer's segments are homogeneous 2. We can apply the same marketing strategy internationally- **luxury or mass market products.** ***[ADAPTATION STRATEGY ]*** **▪Brand Adaptation**; retooling any number of the visual, typographical or messaging elements of a brand. ✔Can reposition a brand to convince those in a different market or market segment of the brand's relevance. ***[CONSIDERATION IN ADAPTATION STRATEGY ]*** Full adaptation strategies often prove **cost prohibitive** **Repositioning** can result in substancial short or long-term **loss of market share** if the strategy drives off existing customers without replacing them with new customers. ***[ADAPTATION OF PRODUCT POSITIONING]*** 1. **Product positioning :** a. The same positioning on different market \_luxury brands. b. Different types of positioning depending on the type of market. ***[IMPACT OF ADAPTATION ]*** 2. **Pricing on different markets** c. International currency fluctuations d. Price escalations due to tariffs e. Price controls, transfer pricing regulations f. Different forms of payment methods across the world ***[PRICING STRATEGIES ON DIFFERENT MARKETS ]*** a. The entry market positioning strategy b. The demand- cultural differences towards the price. c. Competitors d. The level of pricing control according to the entry market strategy- direct versus indirect export ***[ADAPTED STANDARDIZATION OR « GLOBALISATION »...]*** How to merge two models ? 1. Respond to cultural differences with certain modifications 2. Keep the standardizations policies of the multinational brand The market International marketing Example with the serie tv « mad men » create a sentimental bond with the product/ The man put some picture of him when he was a little boy with his family. So he use feeling to present his product ***[WHAT IS A GENERATION ? ]*** Social sciences agree to say that we can talk about a generation when there is a **certain characteristic bond, a community of values and beliefs.** In general terms, we can **evoque the joint generational experiences** as a factor of bond creation. ***[GEN Z--]*** **Some facts..** - Generation Z are **the largest generation ever, comprising around 20% of australia's population and almost 30% of the world's** population - Globally there are **almost 2 billion of them.** - Also known as 'generation connected' or 'dot com kids' - By 2025, will make up 27% of the workforce - Predicted to work 18 jobs across 6 careers and live in 15 homes in their lifetime. 1. The young were disrupted more by covid than other generations and are now enjoying the rebound. 2. According to McKinsey, american millennials ( born between 1980 and the late 1990s) spent 17% more in the year to march 2022 than they did in the year before. 3. Despite short-term recovery from the dark days of the pandemic, their long-term prospects are much less good. 4. American millennials and Gen Zs have accumulated less wealth than GENX or boomers at the same age. 5. Uncertainty about the future may be encouraging impulsive spending of limited ressources in the present. - Market structure analyse : 1. How the market will behave depending on the number of depending on the number of buyers or sellers, its dimensions 2. The existence of entry and exit barriers ***[COMPANIES HAVE TWO MARKET STRUCTURE APPROACHES ]*** Market driven versus driving market Red ocean VS blue ocean Chan kim& renée Mauborgne coined the terms red and blue oceans to denote the market universe. Red océ-eans are all the industries in existence today- the known market space, where industry boundaries are defined and companies try to outperform their rivals to grab a greater share of the existing market cutthroat competition turns the ocean bloody red. Hence, the term'red' oceans. Blue oceans denote all the industries not in existence today -- the unknown market space, unexplored and untained by competition. Like the « blue » ocean, it is vast, deep and powerful- in terms of opportunity and profitable growth. **RED OCEAN STRATEGY** **BLUE OCEAN STRATEGY** --------------------------------- ----------------------------------- Compete in existing market New market creation Beat competition Make competition irrevenant Capture more of existing demand Create new demand Make the value/cost trade-off Disprove the value/cost trade-off ***[DIFFERENCE BETWEEN DRIVING MARKET AND MARKET DRIVEN APPROACH ]*** DRIVING MARKET MARKET DRIVEN ---------------- --------------- DISRUPTIVE REACTIVE INNOVATIVE INCREMENTAL CREATIVE INSIGNIFICANT VALUE FEATURES AGILE RIGID COMPETITIVE TENTATIVE DECISIVE UNSURE CLEAR CONFUSED DYNAMIC STATIC ***[MARKET DRIVEN APPROACHRED OCEAN ]*** This approach has **dominated the practice of corporate strategy for the past 30 years.** In this approach **company strategy depands on external factors such as :** number of suppliers, buyers, entry barriers **Company's strategic opinion are bounded by the environment**- STRUCTURE SHAPES STRATEGY ***[MARKET DRIVEN STRATEGY ( RED OCEAN) ]*** Hear  »hear the voice of the customers » Adapt   adapt the offer  Accept accept the market structure & market behaviour ***[WHILE CHOOSING YOUR STRATEGY YOU NEED TO CONSIDER : ]*** - Internal ressources you can call on - Your external environment attractivness - Is your organization strategy focus on competing or innovationg - Diversified companies can use both approaches ***[MARKET DRIVEN COMPANIES STRENGTHS ]*** Clear **understanding of markets, customers, and competitors** Good understanding of how the market it is likely to change in the future Superior in their **market-sensing and customer-linking capabilities** Not the most innovative firm in their industry but they will **excel at adapting technologies to meet current and future customers needs.** ***[DRIVING MARKET COMPANIES' STRENGHTS]*** - Reflects a strong entrepreneurial orientation. - Discountinuous leap in the value proposition and the implementation of a unique business system (kotler, 2000) - Gain more viable competitive advantahe with greater performance. ***[3 APPROACHES IN « DRIVING MARKETS »]*** Contructionist Deconstructionist functional modification Example of « driving market » companies Amazon elimination of the players in the industry value chain (distributors, competitors, suppliers...) ***[FUNCTIONAL MODIFICATIONS ]*** Creating a unique « retail environment » for a consumer A diagram of different types of objects Description automatically generated Automative sector : two different market approaches A decale after tesla got in on the scene volkswagen announcef this week that is lauching its first over-the-air (OTA) update to its ID 3 and ID.4 EVs Two companies are right now in direct competition, however, volkswagen has more than 10 years of delay compared to telsa **Reverse innovation --** **International marketing**  ***[WHAT IS A REVERSE INNOVATION ]*** \'Reverse Innovation\' was an idea that disruptive innovations are best developed by first scaling them in low-income countries - lower barriers to entry, lower costs, and broader market base (bottom of the pyramid) - and then pursue market penetration back in the high-income country context; \'Reverse Innovation\' process takes place within the boundaries, albeit often complex and diffuse ones, of the same multinational corporation. ***[BOTTOM OF THE PYRAMID (BOP)]*** The majority of the world's population lives in precariousness: globally, 4.7 billion people (63%of the world's population) are part of the BoP, earning less than \$10 per day ( about €259 per month). ***[WHAT IS FRUGAL INNOVATION ?]*** **Frugal innovation** definition involves making goods and services adaptable, affordable, and minimizing the use of scarce natural resources. ***[FRUGAL INNOVATION AND THE BOTTOM OF THE PYRAMID CONCEP (BOP) ]*** The greatest achievement of the frugal innovation is that the rhetorical « bottom of pyramid » is its active supplier and receiver of the benefits. « when external ressources are scare, you have to go within yourself to tap the most abundant resource, human ingenuity, and use that inegenuity to find clever ways to solve problems with limited resources Examples of frugal & low-techn & sustainable innovation : A traditional clay craftsman, mansukhbhai prajapati, litterally turned soil into gold. He harnessed the cooling properties of clay and created a low-cost, biodegradable refrigerator made out of clay, mitticool. ***[R&D INVESTMENTS IN EMERGING MARKET IS EVOLVING]***  ***[4 RULES OF RI !]*** 1. **Awareness-** creating products and services awareness for the BOP (b of the pyramif) market in such a way, that consumers and producers know what is available in the offer and how to use it ; 2. **Access-** customers, even in remote locations, should have the access to products; 3. **Affordability**- ensuring that a product or service is affordable. The enterprises should guarantee a good quality product at a low price; 4. **Availability**- Building trust and loyalty on the BOP market has to be associated with the provision of continuous supply of products and services. **Examples of reverse innovation** A collage of a person and a car Description automatically generated ***[LIFESRTRAW BY VESTERGAARD ]*** Originally the product itself was supposed to be only a straw that would allow to filter out guinea worm larvae from infected waters. From this point on, the product knew great success in emerging countries. It is at this point on that Vestergaard decided to design a completely new product that would allow to filter any type of contaminated water. The straw has a filtering life of 4000L ( enough for 3 years of use for a single person), is easily disposable/transportable and of relatively low price. ***[KEY STRATEGICAL POINTS FOR COMPANIES PRACTICING RI ]***  ***[REVERSE INNOVATION AS A RISK ]*** 1\) **Pressure for Western companies to demonstrate product quality**, especially if components are built by third-party providers in countries of very different ethical and operational standards. 2\) **Emerging market subsidiaries as a threat for western HQ**; concerns about the potential of low-cost but good-enough quality competition from reverse innovation. 3\) **Management challenges in subsidiaries** - sensitivity to this attitude coming from HQ.  4\) **Product cannibalization at home** ***[DIFFUCULTIES WITH RI]*** Resistance in the parent company for innovations coming from subsidiaries Company's reputation in developed market; cheaper appearance of innovations from developing or emerging market subsidiaries