The International Marketing Mix International Advertising. Lecture 2.
The International Marketing Mix• We have to bring in the concept of international marketing mix as any advertising whether local or international is dependent on the marketing mix.• Companies operating in foreign markets must decide whether or not to adapt their marketing mix to local conditions and to what degree?
The International Marketing Mix• Product: Design, development, branding and packaging.• Place: channels used to move the product from manufacturers to consumers.• Price: product offer at certain level of profit.• Promotion: advertising, personal selling, sales promotion, direct marketing, publicity, sponsorships, trade fairs etc.• 2001 was the turnaround year for Samsung. It earned US $2.5 billion profit and became premium producer of cell phones.• But this was a relatively simple product with simple deliverables.
Standardization of Marketing Mix• With a global approach to the marketing mix, a firm utilizes a common marketing plan for all the markets.• This means selling same product in the same way every where in the world.• Such standardization bring lower production, management and promotion costs.
Samsung Example (Standardization)o Consumers used to buy Samsung when theycould not afford Sony or Toshiba.o Now it is the name which consumers speciallyyoung ones seek out for most fun and style.o Samsung was producing some cool products butnobody was noticing mainly due to fuzzy imagefrom market to market.o They had 55 advertising agencies.o Single shop Foote, Cone and Belding.
Specialization of Marketing MixThe other school of thought advocatesSpecialization.• Consumers and marketing environments indifferent countries vary so greatly, it is necessaryto tailor the marketing mix elements.• Although this results in higher cost, stillmarketers believe that higher returns will offsetthe additional cost elements.
KFC, MaC Donalds, PIZZA Hut• They altered tastes and elements.• Do you think PIZZA in its original Italian formwould have clicked. Today we are eating ChickenTikka in a PIZZA.• They also had to move to Halal food elements.• Walmart Example. “Locals Know Best Model”.• Local managers have a say in what to stock. They have the authority to buy and stock locally.• Discussion Point – Which products should?
The International Marketing Mix• Selling same product in different marketseliminates duplication of cost related toresearch and development, product design andpackage design.• Economies of scale.• Coca Cola, Kellogs corn flakes, ponds cold cream,Gillette razor blades are few examples who sellsame product worldwide.
The International Marketing Mix• Durable and in durable goods.• Customization is more seen in in durable segment of goods mainly due to human tastes, habits and customs involved where cultures are more relevant.• Similarly industrial products are usually more into standardization.• Product standardization is also effective where target markets are similar. Youth all over the world are surprisingly similar. Marketers of jeans, hair products and colas find that they can sell same product world over.
The International Marketing Mix• High tech / high touch products are essentially more towards standardization.• Electrical appliances have to customize in certain markets.• Government regulations also play an important role. For example in US Cars manufacturers and importers have to strictly follow emission standards. Germany has strict guidelines for purity of beers sold in that country.• International food outlets seem to offer products matching our tastes. Isn’t that the case?• Country of origin effect.
The International Marketing MixPricing Standardization or Specialization• Corporate objectives.• Competition.• Consumer demand. Consumer satisfaction. Size of the market. Market’s ability to purchase a product.• Revenue equation P x Q.• Government and regulatory considerations.• Initially the prices may be low to penetrate themarket and later raised. Why?• Skim the cream strategy. Initially the prices are kept high. This happens when there is no competition or product is new in that market as competition walks in prices are reduced.
The International Marketing Mix• Prestige pricing strategy• Competitive pricing.Pricing is dependent on :• Product modification in that market.• Any additional operational cost such astransportation and insurance.• Costs incurred in entering that market. Like govtduties and taxes etc. pharma example. PIA example.• Export pricing. Freight and shipping, insurance, tariffs,taxes, storage costs, doc cost, middlemen margins all addup.• Prices may be low due to movement of overproduction. May be no storage capacity in the country of origin.• Dumping. Goods sold at a price lesser than the production cost.????
The International Marketing Mix• Goods produced abroad. Lower labor and material cost may be. That gives flexibility.Promotion.• Saatchi & Saatchi and BBDO believe inglobalization whereas Grey believe incustomization.• Cultural aspects at times compel to customize msg. islamic values and pepsodent example.• Language and creative driven by literacy rate.• Research plays a vital role in deciding standardization or localization of advertising message.